Petrohawk Energy Corporation Announces 340 Million Barrel Risked Resource Potential In Eagle Ford Shale
HOUSTON, April 13 /PRNewswire-FirstCall/ — Petrohawk Energy Corporation (“Petrohawk” or the “Company”) (NYSE: HK) today announced that it will transition capital toward its 225,000 net acres in the oil and condensate windows of the Eagle Ford Shale, prompting a reallocation and overall reduction in its 2010 capital budget. The reallocation and $100 million reduction in capital spending program highlights Petrohawk’s flexibility in reducing its rig count in the Haynesville Shale play, which will decrease by 20% based on drilling efficiencies, and in recognition of lower natural gas prices. The capital budget adjustments are expected to significantly increase the oil and condensate component of Petrohawk’s production.
“Petrohawk now holds equal amounts of acreage in the Haynesville and Eagle Ford Shales — approximately 360,000 net acres each. Our ability to access oil and condensate opportunities in the Eagle Ford Shale at a time of depressed natural gas prices will enhance our business plan. Petrohawk is not necessarily perceived to have this kind of flexibility in its portfolio, but with approximately 225,000 net acres of oil and condensate-rich property in the Eagle Ford Shale to access, we do,” said Floyd C. Wilson, Chairman and CEO. “The stabilizing effect of the restricted rate production program in the Haynesville Shale also allows this transition of capital without significantly affecting our growth rate. Our drilling pace in the Haynesville Shale is on track to achieve acreage and production goals thanks to drilling efficiencies gained during the past year. We will continue to use technical improvements, our competitive cost structure and our robust hedging program to protect margins.”
Petrohawk additionally announced the results of its second well in the Eagle Ford Shale Black Hawk prospect, the Lanik #1H, which initially produced 2.7 Mmcf/d and 930 Bbls/d on a restricted 12/64″ choke with 6,950 pounds of flowing casing pressure. The well is located in DeWitt County, Texas, approximately 20 miles southwest of the Black Hawk discovery well, the Krause #1H.
Of the Company’s total Eagle Ford Shale holdings of approximately 360,000 net acres, approximately 225,000 net acres are located within those areas prone to significant crude oil and condensate production. In addition to natural gas resource potential from these areas, the Company currently estimates that these 225,000 net acres represent approximately 340 million barrels of risked resource potential. Petrohawk’s gathering subsidiary, Hawk Field Services, is currently constructing both natural gas and crude oil and condensate gathering systems to service a large portion of the Company’s condensate-rich productive area.
Petrohawk’s revised drilling and completion budget of $1.35 billion will allocate $175 million to recently announced oil and condensate-rich areas of the Eagle Ford Shale play, bringing the total amount of drilling and completion capital budgeted for the Eagle Ford Shale to $390 million and doubling the rig count in the play from four to eight rigs by mid-year. The rig count in the Haynesville Shale will be reduced to 14 rigs by mid-2010, averaging 15 rigs for the year with approximately $850 million budgeted in the play for 2010. Production guidance for 2010 will be reduced by 20 Mmcfe/d to between 650 Mmcfe/d and 660 Mmcfe/d due to the effect of previously announced divestitures. This range projects a 31% year over year growth rate, pro forma for divestitures. Based on current pricing, 2010 revenues are expected to increase due to today’s announced capital shift.
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, Arkansas, South Texas and East Texas.
For more information contact Joan Dunlap, Vice President – Investor Relations, at 832-204-2737 or firstname.lastname@example.org. For additional information about Petrohawk, please visit our website at 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 the Private Securities Litigation Reform Act of 1995, based on Petrohawk’s current expectations and forward-looking statements include statements regarding estimates of future production, capital expenditures and results of operations, and other statements reflecting 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). 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 these 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 planned 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 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 expectations 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.
The SEC generally permits oil and gas companies, in filings made with the SEC, to disclose only proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. In this press release, Petrohawk uses the term “resource potential” which the SEC guidelines may prohibit from being included in filings with the SEC. Resource potential refers to unproved reserves that may potentially be recoverable through additional drilling or recovery techniques and which are by their nature much more uncertain than estimates of proved reserves and are accordingly subject to substantially greater risk of not actually being realized by the Company. While the Company believes its calculations of resource potential and unproved reserves are reasonable, such estimates have not been reviewed by third party engineers or appraisers. In addition, Petrohawk’s production forecasts and expectations for future periods are dependant upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
SOURCE Petrohawk Energy Corporation