Company Gross Operated Haynesville Shale Production Exceeds 500
Mmcfe/d HOUSTON, Feb. 22 /PRNewswire-FirstCall/ -- Petrohawk Energy
Corporation ("Petrohawk" or the "Company") (NYSE:HK) today
announced its fourth quarter and full year 2009 financial results,
including detail on its year end estimated proved reserves and
hedging activities as well as production and cost guidance for
2010. -- Cash flows from operations before changes in working
capital (cash flow from operations, a non-GAAP measure) were $179.6
million, or $0.60 per fully diluted common share for the quarter,
and $613.8 million, or $2.19 per fully diluted common share, for
the full year. Petrohawk generated revenues of $354.9 million for
the quarter ended December 31, 2009 and revenues of over $1 billion
for the full year 2009. Petrohawk reported net income for the
quarter of $0.12 per fully diluted common share, or $36.5 million.
After adjusting for selected items, the Company's quarterly net
income remained at $0.12 per fully diluted common share (see
Selected Item Review and Reconciliation table for additional
information). -- As reported in its press release dated February 1,
2010, the Company produced an average of 598 million cubic feet
natural gas equivalent per day (Mmcfe/d) during the fourth quarter
and 502 Mmcfe/d on average during 2009. Total production for the
quarter was 55.0 billion cubic feet of natural gas equivalent
(Bcfe), which includes 53.1 billion cubic feet (Bcf) of natural gas
and 316 thousand barrels (MBbls) of oil. For the full year 2009,
production totaled 174 Bcfe pro forma for the sale of the Permian
Basin properties, a 76% year over year increase. This large
increase in production growth is mainly attributable to activities
in the Haynesville Shale, where Petrohawk is currently running 17
rigs with gross operated production of over 500 Mmcfe/d. -- Before
the effect of derivatives, the Company realized $3.70 per Mcf of
natural gas, or 93% of NYMEX, and $56.15 per barrel of oil, or 91%
of NYMEX, during 2009. During the fourth quarter, Petrohawk
realized $4.08 per Mcf of natural gas, or 98% of NYMEX, and $72.65
per barrel of oil, or 95% of NYMEX. Taking into account the effect
of hedges, Petrohawk realized $5.83 per Mcf of natural gas and
$58.86 per barrel of oil for the full year. Petrohawk collected
approximately $375 million from realized hedges over 2009, which
increased prices 58% for natural gas and 5% for oil. -- At the end
of the quarter, Petrohawk had cash and restricted cash of $215.2
million with $203.0 million drawn on its revolving credit facility.
Total available liquidity at the end of the quarter was
approximately $1.2 billion. The Company's net debt to book
capitalization at the end of the quarter was approximately 44%. --
Petrohawk increased its hedged oil and gas portfolio during the
quarter, bringing the total of natural gas hedged to 68% of
expected production in 2010 at an average floor of $5.83 per
million British thermal unit (MMbtu) and an average ceiling of
$9.21 per MMbtu. The Company also increased its hedge position in
2011 to over 50% of expected production with an average floor of
$5.55 per MMbtu and an average ceiling of $9.66 per MMbtu for
natural gas. A summary of Petrohawk's derivative positions for 2010
and 2011 can be found on the Company's website,
http://www.petrohawk.com/. -- During the fourth quarter, per unit
lease operating costs were $0.41 per thousand cubic feet of natural
gas equivalent (Mcfe), or $22.8 million. Lease operating expense
for the year was $78.7 million, or $0.43 per Mcfe. Total cash
operating costs, excluding fourth quarter 2009 legal settlements
and marketing expense, were $1.62 per Mcfe for the fourth quarter,
and $1.70 per Mcfe for the year. Divestment Plan Update Petrohawk
is currently conducting data rooms on three components of its 2010
divestment program. The sale of a portion of the Company's
midstream business in the Haynesville Shale is being coordinated by
Barclays Capital, the sale of Terryville field in Lincoln Parish,
Louisiana, is being coordinated by Bank of America Merrill Lynch,
and the sale of WEHLU field in Oklahoma County, Oklahoma is being
coordinated by RBC Richardson Barr. The Company expects to announce
and potentially close these three transactions during the first
half of 2010. Operations and Proved Reserves Recap As of December
31, 2009, Petrohawk had estimated proved reserves of 2.75 trillion
cubic feet of natural gas equivalent (Tcfe) compared to 1.42 Tcfe
reported at year end 2008. Proved developed reserves increased to
905 Bcfe, representing proved developed reserve additions of 452
Bcfe. The majority of the Company's proved reserves were added
through the drillbit in the Haynesville Shale in Northwest
Louisiana, where approximately 1.45 Tcfe of proved reserves were
added. Of this, 307 Bcfe of proved developed reserves were added
with direct capital of approximately $621 million. Average reserves
per proved location booked in the Haynesville Shale in Northwest
Louisiana were 7.1 Bcfe (operated wells were booked at an average
of 7.5 Bcfe). Also in the Haynesville Shale, the Company
experienced significant drilling cost decreases during 2009 and
expects further drilling cost reductions in 2010. Petrohawk began
2009 running 8 rigs in the Haynesville Shale, averaged 11 rigs
during the year, exited the year with 13 rigs running and currently
have 17 rigs running in the play. Average days to drill decreased
from 70 in the first quarter of 2009 to 54 in the fourth quarter of
2009, and the Company expected to average 42 days to drill per well
in 2010. Average per well drill, complete and hook up costs
decreased from approximately $12 million in the first quarter to
approximately $9 million in the fourth quarter, with an average of
approximately $10.5 million in 2009. Average drill, complete and
hook-up costs are expected to range from $8.0 to $9.0 million in
2010. During 2010, Petrohawk plans to expand its use of restricted
rate production practices in the Haynesville Shale, which has
already been accounted for in the Company's 2010 production
guidance. For wells brought on under the restricted rate program,
initial production rates are expected to average between 7 and 10
Mmcfe/d. Delineation wells will continue to be produced under
normal production practices (standard choke size of 22/64" or
24/64"). Based on the results of a 2009 pilot program, Petrohawk
believes that in certain of its Northwest Louisiana development
areas, wells produced from a smaller choke size may produce
approximately equivalent amounts of natural gas in a twelve month
period as a well produced on a standard choke size. The Company
believes that its restricted rate practices in some areas may
create a more stable future production base for the Company and
could result in higher EURs compared to neighboring wells produced
under normal production practices. In the Eagle Ford Shale,
Petrohawk is continuing its delineation of the Hawkville Field and
is transitioning into the development of the field. There are
currently four rigs running in the field. In order to acquire 3D
seismic data over the entire Hawkville field, the Company is
currently shooting approximately 350 square miles of 3D seismic,
adding to the 100 square mile data set completed in 2009.
Additionally, Petrohawk is encouraged by the observed increase in
the b factor, or hyperbolic factor, as more historical production
data is gathered. Wells with longer production histories are
displaying a 1.5, and possibly even higher, b factor. Petrohawk's
current average EUR estimate is 5.5 Bcfe per well. Also, at the Red
Hawk prospect in Zavala County, the Company is in the process of
fracture stimulating its initial test well with a second well soon
to spud. 2010 Guidance In 2010, the Company expects average daily
production to be between 670 and 680 MMcfe/d, an approximate 36%
increase over the 2009 average daily production rate of 502 MMcfe/d
and a 42% increase pro forma for the sale of the Permian Basin
properties. For the first quarter 2010, average daily production is
expected to be between 615 and 625 Mmcfe/d. It should be noted that
current guidance does not take into account the potential
divestments noted above. Additional guided items for the full year
2010 are as follows: Production (Mmcfe/d) 670 - 680 Lease Operating
Expense ($/Mcfe) $0.31 - $0.39 Workover Expense and Other ($/Mcfe)
$0.02 - $0.06 Production (Ad Valorem and Severance) Taxes $0.33 -
$0.43 Gathering, Transportation and Other ($/Mcfe) $0.48 - $0.56
General and Administrative ($/Mcfe) (1) $0.35 - $0.45 Income Taxes
Effective rate of 38 - 41% (1) Excludes non-cash stock based
compensation charges of $0.06 - $0.12 / Mcfe Petrohawk Fourth
Quarter and Full Year 2009 Earnings Conference Call Petrohawk has
scheduled a conference call for Tuesday, February 23, 2010 at 10:00
a.m. EST (9:00 a.m. CST) to discuss fourth quarter and full year
2009 financial results. To access, dial 800-644-8607 five to ten
minutes before the call begins. Please reference Petrohawk Energy
Conference ID 49843062. International callers may also participate
by dialing 706-679-8184. In addition, the call will be webcast live
on Petrohawk's website at http://www.petrohawk.com/. A replay of
the call will be available at that site through March 10, 2010.
Petrohawk Energy Corporation is an independent energy company
engaged in the acquisition, production, exploration and development
of natural gas and oil with properties concentrated in North
Louisiana and East Texas (Haynesville Shale), Arkansas
(Fayetteville Shale), South Texas (Eagle Ford Shale) and Oklahoma.
For more information contact Joan Dunlap, Vice President - Investor
Relations, at 832-204-2737 or . For additional information about
Petrohawk, please visit our website at http://www.petrohawk.com/.
Additional Information for Investors This press release contains
forward-looking information regarding Petrohawk that is intended to
be covered by the safe harbor "forward-looking statements" provided
by of the Private Securities Litigation Reform Act of 1995, based
on Petrohawk's current expectations and includes statements
regarding acquisitions and divestitures, estimates of future
production, future results of operations, quality and nature of the
asset base, the assumptions upon which estimates are based and
other expectations, beliefs, plans, objectives, assumptions,
strategies or statements about future events or performance (often,
but not always, using words such as "expects", "anticipates",
"plans", "estimates", "potential", "possible", "probable", or
"intends", or stating that certain actions, events or results
"may", "will", "should", or "could" be taken, occur or be
achieved). Statements concerning oil and gas reserves also may be
deemed to be forward-looking statements in that they reflect
estimates based on certain assumptions that the resources involved
can be economically exploited. Forward-looking statements are based
on current expectations, estimates and projections that involve a
number of risks and uncertainties, which could cause actual results
to differ materially from those reflected in the statements. These
risks include, but are not limited to: the risks of the oil and gas
industry (for example, operational risks in exploring for,
developing and producing crude oil and natural gas; risks and
uncertainties involving geology of oil and gas deposits; risks
associated with the timing of and potential proceeds from
divestitures; the uncertainty of reserve estimates; the uncertainty
of estimates and projections relating to future production, costs
and expenses; potential delays or changes in plans with respect to
exploration or development projects or capital expenditures;
health, safety and environmental risks and risks related to weather
such as hurricanes and other natural disasters); uncertainties as
to the availability and cost of financing; fluctuations in oil and
gas prices; risks associated with derivative positions; inability
to realize expected value from acquisitions, inability of our
management team to execute its plans to meet its goals, shortages
of drilling equipment, oil field personnel and services,
unavailability of gathering systems, pipelines and processing
facilities and the possibility that government policies may change
or governmental approvals may be delayed or withheld. Additional
information on these and other factors which could affect
Petrohawk's operations or financial results are included in
Petrohawk's reports on file with the SEC. Investors are cautioned
that any forward-looking statements are not guarantees of future
performance and actual results or developments may differ
materially from the projections in the forward-looking statements.
Forward-looking statements are based on the estimates and opinions
of management at the time the statements are made. Petrohawk does
not assume any obligation to update forward-looking statements
should circumstances or management's estimates or opinions change.
PETROHAWK ENERGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share amounts) Three Months
Ended Years Ended December 31, December 31, ------------
------------ 2009 2008 2009 2008 ---- ---- ---- ---- Operating
revenues: Oil and natural gas $239,923 $203,976 $732,137 $1,025,995
Marketing 103,956 63,553 320,121 63,553 Midstream 11,011 3,150
31,325 5,662 ------ ----- ------ ----- Total operating revenues
354,890 270,679 1,083,583 1,095,210 Operating expenses: Marketing
105,265 58,581 316,987 58,581 Production: Lease operating 22,795
14,856 78,698 52,477 Workover and other 956 2,142 2,749 5,624 Taxes
other than income 17,791 9,919 57,712 47,104 Gathering,
transportation and other: Oil and natural gas 16,886 12,426 69,287
43,012 Midstream 7,609 1,927 21,078 4,297 General and
administrative: General and administrative 41,355 19,204 98,774
62,500 Stock-based compensation 3,696 3,242 14,458 12,310
Depletion, depreciation and amortization 106,261 127,335 396,644
396,556 Full cost ceiling impairment 105,958 950,799 1,838,444
950,799 ------- ------- --------- ------- Total operating expenses
428,572 1,200,431 2,894,831 1,633,260 ------- --------- ---------
--------- Loss from operations (73,682) (929,752) (1,811,248)
(538,050) Other income (expenses): Net gain on derivative contracts
63,888 189,000 260,248 156,870 Interest expense and other (58,490)
(49,116) (229,419) (151,825) ------- ------- -------- --------
Total other income (expenses) 5,398 139,884 30,829 5,045 -----
------- ------ ----- Loss before income taxes (68,284) (789,868)
(1,780,419) (533,005) Income tax benefit 104,767 244,729 754,968
144,953 ------- ------- ------- ------- Net income (loss) available
to common stockholders $36,483 $(545,139) $(1,025,451) $(388,052)
======= ========= =========== ========= Net income (loss) per share
of common stock: Basic $0.12 $(2.18) $(3.66) $(1.77) ===== ======
====== ====== Diluted $0.12 $(2.18) $(3.66) $(1.77) ===== ======
====== ====== Weighted average shares outstanding: Basic 299,510
250,100 280,039 218,993 ======= ======= ======= ======= Diluted
301,784 250,100 280,039 218,993 ======= ======= ======= =======
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
December 31, ------------ 2009 2008 ---- ---- Assets: Current
assets $385,650 $648,432 Net oil and natural gas properties
4,167,733 5,071,287 Restricted cash 213,704 - Other noncurrent
assets 1,894,984 1,187,610 --------- --------- Total assets
$6,662,071 $6,907,329 ========== ========== Liabilities and
stockholders' equity: Current liabilities $698,832 $726,312
Long-term debt 2,592,544 2,283,874 Other noncurrent liabilities
47,023 492,233 Stockholders' equity 3,323,672 3,404,910 ---------
--------- Total liabilities and stockholders' equity $6,662,071
$6,907,329 ========== ========== PETROHAWK ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended Years Ended December 31, December 31,
------------ ------------ 2009 2008 2009 2008 ---- ---- ---- ----
Cash flows from operating activities: Net income (loss) $36,483
$(545,139) $(1,025,451) (388,052) Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization 106,261 127,335 396,644
396,556 Full cost ceiling impairment 105,958 950,799 1,838,444
950,799 Income tax benefit (104,767) (244,729) (754,968) (144,953)
Stock-based compensation 3,696 3,242 14,458 12,310 Net unrealized
loss (gain) on derivative contracts 23,649 (173,303) 120,401
(230,640) Other 8,304 2,260 24,230 4,552 ----- ----- ------ -----
Cash flow from operations before changes in working capital 179,584
120,465 613,758 600,572 Changes in working capital 24,793 (37,294)
65,369 8,383 ------ ------- ------ ----- Net cash provided by
operating activities 204,377 83,171 679,127 608,955 ------- ------
------- ------- Cash flows from investing activities: Oil and
natural gas capital expenditures (554,349) (575,792) (1,718,741)
(3,121,736) Proceeds received from sale of oil and natural gas
properties 356,636 1,944 357,360 109,268 Marketable securities
purchased (175,007) (1,626,350) (1,457,608) (3,777,427) Marketable
securities redeemed 325,035 1,756,060 1,580,617 3,654,418 Increase
in restricted cash (331,561) - (331,561) - Decrease in restricted
cash 117,857 - 117,857 269,837 Other operating property and
equipment expenditures (84,132) (89,285) (309,454) (164,810) Other
intangible assets acquired - - (105,108) - Other (37,600) - - -
------- --- --- --- Net cash used in investing activities (383,121)
(533,423) (1,866,638) (3,030,450) -------- -------- ----------
---------- Cash flows from financing activities: Proceeds from
exercise of options and warrants 1,278 3,668 3,945 14,438 Proceeds
from issuance of common stock - (1) 956,500 1,831,950 Offering
costs (21) (9) (30,748) (73,763) Proceeds from borrowings 511,000
800,000 1,448,674 2,764,000 Repayment of borrowings (317,198)
(350,000) (1,166,711) (2,086,266) Debt issuance costs (11,023)
(402) (24,048) (23,793) Other (5,473) - (5,473) - ------ --- ------
--- Net cash provided by financing activities 178,563 453,256
1,182,139 2,426,566 ------- ------- --------- --------- Net
(decrease) increase in cash (181) 3,004 (5,372) 5,071 Cash at
beginning of period 1,692 3,879 6,883 1,812 ----- ----- ----- -----
Cash at end of period $1,511 $6,883 $1,511 $6,883 ====== ======
====== ====== PETROHAWK ENERGY CORPORATION SELECTED OPERATING DATA
(Unaudited) (In thousands, except per share amounts) Three Months
Ended Years Ended December 31, December 31, ------------
------------ 2009 2008 2009 2008 ---- ---- ---- ---- Production:
Natural gas - Mmcf 53,110 30,636 174,036 102,273 Crude oil - MBbl
316 426 1,520 1,554 Natural gas equivalent - Mmcfe 55,006 33,192
183,156 111,597 Daily production - Mmcfe 598 361 502 305 Average
price per unit: Realized oil price - as reported $72.65 $55.42
$56.15 $95.16 Realized impact of derivatives 0.18 6.50 2.71 (20.34)
---- ---- ---- ------ Net realized oil price (Bbl) 72.83 61.92
58.86 74.82 Realized gas price - as reported 4.08 5.87 3.70 8.56
Realized impact of derivatives 1.65 0.42 2.13 (0.43) ---- ---- ----
----- Net realized gas price (Mcf) 5.73 6.29 5.83 8.13 Cash flow
from operations (1) 179,584 120,465 613,758 600,572 Cash flow from
operations - per share (diluted) 0.60 0.48 2.19 2.74 Average cost
per Mcfe: Production: Lease operating 0.41 0.45 0.43 0.47 Workover
and other 0.02 0.06 0.02 0.05 Taxes other than income 0.32 0.30
0.32 0.42 Gathering, transportation and other: Oil and Gas 0.31
0.37 0.38 0.39 Midstream 0.14 0.06 0.11 0.03 General and
administrative: General and administrative 0.75 0.58 0.54 0.56
Stock-based compensation 0.07 0.10 0.08 0.11 Depletion 1.83 3.77
2.07 3.50 (1) Represents cash flow from operations before changes
in working capital. See the Consolidated Statements of Cash Flows
for a reconciliation from this non-GAAP financial measure to the
most comparable GAAP financial measure. SELECTED ITEM REVIEW AND
RECONCILIATION (Unaudited) (In thousands, except per share amounts)
Three Months Ended Years Ended December 31, December 31,
------------ ------------ 2009 2008 2009 2008 ---- ---- ---- ----
Unrealized loss (gain) on derivatives:(1) Natural gas $21,186
$(142,396) $109,363 $(193,507) Crude oil 2,463 (30,905) 11,038
(37,131) ----- ------- ------ ------- Total mark-to-market non-cash
charge 23,649 (173,301) 120,401 (230,638) Full cost ceiling
impairment 105,958 950,799 1,838,444 950,799 Expense of deferred
financing costs(2) - - 911 782 Master limited partnership
withdrawal - - - 3,352 --- --- --- ----- Total selected items,
before tax 129,607 777,498 1,959,756 724,295 Income tax effect of
selected items(3) (130,363) (242,334) (826,186) (221,952) --------
-------- -------- -------- Selected items, net of tax (756) 535,164
1,133,570 502,343 Net income (loss) available to common
stockholders, as reported 36,483 (545,139) (1,025,451) (388,052)
------- ------- -------- -------- Net income (loss) available to
common stockholders, excluding selected items $35,727 $(9,975)
$108,119 $114,291 ======= ======= ======== ======== Basic net
income (loss) per share of common stock, as reported $0.12 $(2.18)
$(3.66) $(1.77) Impact of selected items - 2.14 4.05 2.29 --- ----
---- ---- Basic net income (loss) per share of common stock,
excluding selected items $0.12 $(0.04) $0.39 $0.52 ===== ======
===== ===== Diluted net income (loss) per share of common stock, as
reported $0.12 $(2.18) $(3.66) $(1.77) Impact of selected items -
2.14 4.02 2.26 --- ---- ---- ---- Diluted net income (loss) per
share of common stock, excluding selected items $0.12 $(0.04) $0.36
$0.49 ===== ====== ===== ===== (1) Represents the non-cash
unrealized loss (gain) associated with the mark-to-market valuation
of outstanding derivative contracts. (2) Represents non-cash
charges related to the write-off of debt issue costs associated
with the senior revolving credit facility. (3) Includes $70.7
million and $64.8 million for non-cash deferred income tax
adjustment for 2009 and 2008, respectively. DATASOURCE: Petrohawk
Energy Corporation CONTACT: Joan Dunlap, Vice President - Investor
Relations of Petrohawk Energy Corporation, +1-832-204-2737, Web
Site: http://www.petrohawk.com/
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