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Petrohawk Energy Corporation Announces Third Quarter 2010 Operational Update and Financial Results

November 2, 2010

HOUSTON, Nov. 2, 2010 /PRNewswire-FirstCall/ — Petrohawk Energy Corporation (“Petrohawk” or the “Company”) (NYSE: HK) today announced its third quarter 2010 financial and operational results and provided a preview of 2011 capital spending plans and production guidance.

Third Quarter 2010 Highlights


           Petrohawk reported average third quarter production of 685
           million cubic feet equivalent per day (Mmcfe/d), a 10% increase
           over second quarter 2010 production, a 34% year over year
           increase, and above the Company's stated third quarter guidance
    --     range of 650-660 Mmcfe/d.

      Total production for the quarter was 60.1 billion cubic feet (Bcf) of
       natural gas, 290 thousand barrels (MBbls) of oil, and 186 MBbls of
       natural gas liquids, or 63.0 billion cubic feet of natural gas
       equivalent (Bcfe) of which 95% was natural gas. Petrohawk's
       production was 3% crude oil and 2% natural gas liquids.

           High production rates and price realizations produced revenues of
           $409 million during the third quarter, a 16% increase over
      --   second quarter 2010 and a 72% increase over third quarter 2009.

      Petrohawk's average realized natural gas price for the quarter was
       $5.19 per Mcf, which included a realized gain from natural gas
       derivatives of $0.99 per Mcf. The Company's average realized price
       for natural gas, before the impact of realized derivative gains, was
       $4.20 per Mcf, a 34% increase in the realized natural gas price
       compared to the third quarter of 2009 and 96% of the average NYMEX
       price for the quarter of $4.38 per Mcf. Petrohawk's average realized
       oil price for the quarter was $75.15 per Bbl, which included a $2.19
       per Bbl of realized gain from oil derivatives. Before the impact of
       realized derivative gains, the average realized price for oil was
       $72.96 per Bbl, or 96% of the average NYMEX price for the quarter of
       $76.20 per Bbl and a 13% increase compared to the third quarter of
       2009. Natural gas liquids were sold at an average of 46% of the per
       barrel NYMEX price of oil.

      Cash flow from operations before changes in working capital (a non-
       GAAP financial measure; see Condensed Consolidated Statements of
       Cash Flows for a reconciliation to net cash provided by operating
       activities) was $188 million, or $0.62 per fully diluted common
       share, compared to $163 million, or $0.54 per fully diluted common
       share, reported for second quarter 2010 and $152 million, or $0.52
       per fully diluted common share one year ago. The Company benefited
       from a strong and high volume of particularly natural gas hedges in
       effect during the quarter. Realized hedged receipts of $60.3 million
       were reported for the third quarter. Cash flow was negatively
       affected by $39 million in cash payments, reported as non-recurring
       interest expense, related to the early tender of long term debt that
       was refinanced at a lower interest rate during the quarter. After
       adjusting for selected items, primarily related to the non-cash
       impact of derivatives and the non-recurring interest expense, net
       income for the quarter was $39.9 million, or $0.13 per fully diluted
       common share, versus $31.2 million, or $0.11 per fully diluted
       common share one year ago (see Selected Item Review and
       Reconciliation table for additional information). Before excluding
       selected items, net income of $99 million was reported for the
       quarter, or $0.33 per fully diluted common share.

           During the third quarter, Petrohawk achieved improvements in
           recurring expenses, enhanced the Company's liquidity through
           divestments,  refinanced its long-term debt maturing in 2013,
           and most recently increased the capacity of its revolving credit
      --   facility.

      Lease operating costs were a reported at a record low of $0.25 per
       million cubic feet of natural gas equivalent (Mcfe), or $15.8
       million, primarily driven by increased low-cost production from the
       Haynesville Shale. Taxes other than income were reported as a credit
       of $3 million, affected by the timing of certain severance tax
       refunds. Interest expense included certain non-recurring payments
       related to a major debt refinancing which closed during the quarter;
       approximately $775 million in senior notes due in 2013 with an
       interest rate of 9-1/8% were refinanced through the issuance of new
       senior notes issued at par with an interest rate of 7-1/4% and a
       maturity of 2018.

      As of November 1, 2010, the borrowing base under the Company's
       revolving credit facility has been increased to $1.75 billion for
       oil and natural gas assets, a 75% increase over its previous
       borrowing base. At the end of the third quarter, Petrohawk's
       outstanding balance on its revolving credit facility was $129
       million.

      In addition, the Company has begun the marketing process for the
       potential sale of its natural gas and midstream assets in the
       Fayetteville Shale. Bank of America Merrill Lynch is acting as
       advisor on the sale process. During the third quarter, net
       production from the Fayetteville Shale averaged 95 Mmcfe/d.

           Petrohawk's 2010 capital spending is largely driven by the
           Company's desire to conclude the leasehold capture phase in the
           Haynesville Shale. More than adequate liquidity has been
           achieved through cash flow, non-core asset sales and
           significant proved reserve bookings leading to substantially
           higher bank revolver capacity. Petrohawk is preparing for
      --   significant drilling flexibility by mid-2011 and beyond.

      The Company is adjusting its 2010 capital budget to $2.55 billion,
       from the prior amount of $2.13 billion. This increase is largely
       driven by service cost inflation, specifically pressure pumping
       services both in the Haynesville Shale and the Eagle Ford Shale, and
       a much larger amount of non-operated drilling than was estimated in
       early 2010. Petrohawk estimates that 2010 and 2011 capital spending
       will be amply covered by a combination of cash flow, prior non-core
       asset sales and capacity under its $1.75 billion revolving credit
       facility. Additional non-core asset sales may add to this already
       substantial liquidity.

      Full year 2010 production guidance is increased to between 665 and
       675 Mmcfe/d, indicating 58% organic growth over 2009, with
       divestitures taken into account. Fourth quarter 2010 production
       guidance is increased to between 740 and 760 Mmcfe/d, indicating 9%
       quarter over quarter and 33% year over year growth, not accounting
       for approximately 15 Mmcfe/d which was sold at the end of third
       quarter. Management expects 2010 proved reserve percentage growth to
       be in line with expected full year production growth rates.

      In keeping with the Company's strategy of less emphasis on dry gas
       development and more emphasis on condensate-rich property
       development, capital spending for 2011 is estimated at $2.3 billion,
       of which $1.9 billion will be allocated for drilling and
       completions, $200 million will be allocated for midstream businesses
       and $200 million will be allocated for potential acquisitions. Of
       the $1.9 billion budget for drilling and completions, approximately
       $900 million is planned for the Haynesville Shale, approximately
       $900 million is budgeted for the Eagle Ford Shale, and approximately
       $100 million is budgeted for the Fayetteville Shale. Petrohawk's
       2011 spending plans contemplate an increase in drilling activity in
       the Eagle Ford Shale throughout the year and a significant decrease
       in the Haynesville Shale operated rig count in the second half of
       the year, down to approximately seven rigs. Production growth for
       2011 is estimated to be 30% to 40% year over year before potential
       divestitures.

           Petrohawk has successfully developed a new well design to help
      --   mitigate service cost inflation in the Haynesville Shale.

      During the third quarter, Petrohawk completed its first well in the
       Haynesville Shale incorporating a revised well design which requires
       significantly less surface treating pressure during the completion
       phase than a traditional well. The Mendenhall 10H #1 was completed
       in early October with a frac cost that was approximately $1 million
       less than a traditionally drilled well. No problems were encountered
       during the drilling, completion and production phases of the well,
       which was put on production at a restricted initial production rate
       of 8.4 Mmcfe/d. Petrohawk expects to have between 15-20 wells
       utilizing the new well design drilled, and a portion of those
       completed, by the end of 2010.

           Petrohawk expects continued high growth rates with a
           progressively higher proportion of revenue from condensate and
           natural gas liquids, and has outlined a 2011 capital program
           that takes advantage of the large condensate and high-BTU gas
      --   opportunity in the Eagle Ford Shale.
      The Company's 2011 capital budget includes running an average of 15
       operated rigs in the Eagle Ford Shale, approximately twice the
       number of rigs operated in 2010. Petrohawk estimates that there are
       approximately 1,900 net risked condensate-rich locations in both
       its Hawkville Field and Black Hawk that comprise over 50% of the
       Company's total acreage position in the Eagle Ford Shale.

“With core positions in both the Haynesville Shale and Eagle Ford Shale, we are weighing current capital expenditures against available liquidity and keeping our focus on strategies geared toward creating long-term value. We believe that our positions in these important plays would be impossible to replicate. We project that Petrohawk will be the first large operator in the Haynesville Shale to meet its leasehold capture goals in mid-2011, and the first to have significant and meaningful flexibility to rebalance the program at that time,” said Floyd C. Wilson, Petrohawk’s Chairman and Chief Executive Officer. “Despite weak gas prices, our lease-capture drilling activity in the Haynesville Shale is generating significant value by adding low cost proved reserves and setting the stage for decades of low risk development activity. Currently our Eagle Ford Shale production is less than a sixth of the amount we produce in the Haynesville Shale. It is important that we take the necessary steps today to accelerate the condensate-rich opportunities in the Eagle Ford Shale. As we decelerate our activity in the Haynesville Shale in mid 2011, the Eagle Ford is poised to live up to its full potential within our portfolio.”

Operational Highlights

Petrohawk’s average production of 685 Mmcfe/d during the quarter included 434 Mmcfe/d in the Haynesville Shale and 67 Mmcfe/d from the Eagle Ford Shale. An additional 95 Mmcfe/d was produced from the Fayetteville Shale, and 89 Mmcfe/d was produced from other areas, including 15 Mmcfe/d from miscellaneous Mid-Continent properties which were divested at the end of the quarter.

During the third quarter, Petrohawk drilled 281 gross wells, of which 50 were operated, with a 100% success rate. Of these, 102 were in the Haynesville Shale, 21 in the Eagle Ford Shale, and 149 Fayetteville Shale (primarily non-operated).


    Q3 2010 Operational Statistics

                         Haynesville                             Fayetteville
                             Shale        Eagle Ford Shale          Shale
                                        Hawkville     Blackhawk
                                            Field       Field
    Operated Wells
     Drilled                     29          11             8        2
    Non-operated
     Wells Drilled               73           2             0      147
    Total Wells
     Drilled                    102          13             8      149
    Avg. Operated Rigs
     Running                     14           3             5        1
    Avg. Lateral
     Length                    4700'        5500'         5500'     3000'

    Avg. Forecast
     2010 Operated
     Well Cost (Drill
     & Complete) ($MM)        $10.5        $7.1          $7.7      N/A
    ------------------        -----        ----          ----      ---
    Avg. Forecast
     2011 Operated
     Well Cost (Drill
     & Complete) ($MM)         $9.8        $7.5          $7.7      N/A
    ------------------         ----        ----          ----      ---

Haynesville Shale

Petrohawk began the third quarter with 16 operated rigs running in the play, and is currently running 12 operated rigs, a level it expects to maintain through the end of 2010. Twenty nine operated wells and 73 non-operated wells were drilled during third quarter.

Drilling costs continue to trend down due to increased drilling efficiencies; however, completion costs are trending higher due to inflation in pressure pumping services. The third quarter saw a significant decrease in spud-to spud days, down from 52 days in second quarter to 47 days in third quarter. As further example of this trend, there were 6 wells drilled in less than 40 days, with one of those wells drilled in 30 days spud to spud. A direct result of the increased drilling efficiency is the number of wells drilled. The Company drilled 29 operated wells during the quarter, its highest number of wells ever drilled in one quarter. While this is excellent progress for the long term development of the field and Petrohawk’s lease capture program, it has put additional pressure on the 2010 budget.

Petrohawk completed its first well in the Lower Bossier Shale, the Whitney Corp. 19H #1, during the third quarter. The well had an initial production rate on a restricted rate of 7.6 Mmcf/d on a 14/64″ choke with 8,300 lbs. of flowing casing pressure. The well is comparable in quality to Haynesville wells that have been produced using restricted rate production practices. Petrohawk will drill a limited number of Lower Bossier Shale wells until the Haynesville Shale lease capture effort is complete, with plans to drill approximately 25% of all wells in the field in the Lower Bossier Shale beginning in 2013.

As mentioned above, Petrohawk’s first well incorporating a modified well design, engineered to require lower pressure pumping equipment and decrease overall completion costs, was completed during third quarter. The Mendenhall 10H #1 was successfully completed at a rate of 8.4 Mmcfe/d on a 14/64″ choke with 8,320 lbs. flowing casing pressure, with treating pressures that were in line with pre-frac expectations. The Company plans to continue to incorporate and refine this well design with between 15 and 20 similar wells scheduled to be drilled through the remainder of 2010. This reduction in overall hydraulic horsepower requirements needed to fracture stimulate wells drilled using this wellbore design, along with an increase in the number of pressure pumping companies capable of pumping these fracs, could be effective in lowering pressure pumping costs in 2011.

Eagle Ford Shale

Petrohawk operated three rigs in Hawkville Field and five rigs in Black Hawk during the third quarter during which 19 operated wells and 2 non-operated wells were drilled. The total number of Company operated wells drilled in the Eagle Ford Shale to date is 75, with 52 located in Hawkville Field, 21 located in Black Hawk and two located in Red Hawk.

In much the same manner as development in the Haynesville Shale, reservoir optimization methods, related to completion and production practices, are being utilized in the Eagle Ford Shale, and completion results from both Hawkville Field and Black Hawk significantly improved during the quarter. In Hawkville Field, the ten most recent wells completed have averaged 6.2 Mmcf/d and 240 Bc/d (7.6 Mmcfe/d using a 6:1 ratio and 9.0 Mmcfe/d using a 12:1 ratio) on an average choke size of 19/64″, a notable reduction in choke size over previous wells. Additionally, initial decline rates appear to be more gradual, not only as a result of restricting production, but also higher performance results from of the recent implementation of hybrid completion technology.

Improved well performance has also been experienced in Black Hawk, where the Company has been producing with slightly larger chokes (15/64″) and completing wells with increased proppant volumes and decreased the perforation spacing during completion operations. The average IP rate for the three most recent wells was 3.6 Mcf/d and 1,485 barrels of condensate per day (Bc/d) (13.2 Mmcfe/d using a 6:1 ratio and 22.1 Mmcfe/d using a 12:1 ratio).

Recent results in both of these areas of the Eagle Ford Shale underscore the more precise mapping of a developing core of the Eagle Ford trend. Of over 280,000 net acres controlled by Petrohawk in Hawkville Field and Black Hawk, approximately 60% is in the portion of the gas condensate window that contains approximately 1200 BTU gas, with condensate yields as much as 500 barrels of condensate/Mmcf and an estimated weighted average of approximately 115 barrels of condensate/Mmcf.

2011 Operational Preview

Petrohawk’s $1.9 billion drilling and completion budget for 2011 emphasizes a shift in capital spending based on market conditions, opportunities to accelerate certain areas of the Company’s Eagle Ford Shale position, and the desire to reduce capital allocated to pure natural gas drilling once the Haynesville Shale lease capture period is effectively completed in mid-year. Capital allocated to the Eagle Ford Shale in 2011 is approximately two and a half times the amount budgeted in 2010. Year-over-year production from the Eagle Ford Shale is expected to increase nearly threefold from approximately 67 Mmcfe/d to approximately 175 Mmcfe/d, of which half is expected to be condensate and natural gas liquids. Capital allocated to the Haynesville Shale is expected to decrease by approximately 35% from 2010 levels, but it should still generate approximately 45% year over year growth. The combined result of the 2011 capital program is expected to generate year-over-year production growth of approximately 30-40%.

Petrohawk Conference Call and Webcast

Petrohawk will host a conference call today, Tuesday, November 2, 2010 at 11:00 a.m. EDT (10:00 a.m. CDT) to discuss third quarter 2010 financial and operating results. To access, dial 888-263-2919 five to ten minutes before the call begins. Please reference Petrohawk Energy Conference ID 5621024. International callers may also participate by dialing 913-312-1433. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until November 9, 2010. To access the replay, please dial 888-203-1112 and reference conference ID 5621024. International callers may listen to a playback by dialing 719-457-0820. In addition, the call will be webcast live on Petrohawk’s website at http://www.petrohawk.com.

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 the Haynesville Shale of North Louisiana, the Fayetteville Shale of Central Arkansas and the Eagle Ford Shale of South Texas.

For more information contact Joan Dunlap, Vice President – Investor Relations, at 832-204-2737 or jdunlap@petrohawk.com. 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 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 and proceeds of potential divestitures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses, especially costs and expenses related to pressure pumping services; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; changes in capital expenditures related to non-operated wells, 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
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                          (In thousands, except per share amounts)

                                                    Three Months Ended
                                                       September 30,
                                                     ------------------
                                                     2010            2009
                                                     ----            ----
    Operating revenues:
      Oil and natural gas                        $280,328        $166,683
      Marketing                                   122,981          63,155
      Midstream                                     5,873           8,100
           Total operating revenues               409,182         237,938
                                                  -------         -------
    Operating expenses:
      Marketing                                   139,053          66,586
      Production:
        Lease operating                            15,794          20,788
        Workover and other                          2,758             865
      Taxes other than income                      (3,185)         15,204
      Gathering, transportation and
       other:
        Oil and natural gas                        46,641          17,672
        Midstream                                   3,405           5,071
      General and administrative:
                General and administrative         33,784          20,405
                Stock-based compensation            6,641           4,145
      Depletion, depreciation and
       amortization                               107,812          91,692
      Full cost ceiling impairment                      -               -
               Total operating expenses           352,703         242,428

    Amortization of deferred gain                  59,472               -
                                                   ------             ---

    Income (loss) from operations                 115,951          (4,490)

    Other income (expenses):
      Net gain (loss) on derivative
       contracts                                  147,892          (1,568)
      Interest expense and other                 (110,714)        (58,981)
      Equity investment income                      8,572               -
               Total other income (expenses)       45,750         (60,549)
                                                   ------         -------
    Income (loss) before income taxes             161,701         (65,039)
    Income tax (provision) benefit                (63,020)         24,862
    Net income (loss)                             $98,681        $(40,177)
                                                  =======        ========

    Net income (loss) per share:
      Basic                                         $0.33          $(0.14)
                                                    =====          ======
      Diluted                                       $0.33          $(0.14)
                                                    =====          ======

    Weighted average shares
     outstanding:
      Basic                                       300,543         287,913
                                                  =======         =======
      Diluted                                     301,941         287,913
                                                  =======         =======


                                                    Nine Months Ended
                                                      September 30,
                                                      -----------------
                                                    2010              2009
                                                    ----              ----
    Operating revenues:
      Oil and natural gas                       $820,753          $492,214
      Marketing                                  360,438           216,165
      Midstream                                   21,810            20,314
           Total operating revenues            1,203,001           728,693
                                               ---------           -------
    Operating expenses:
      Marketing                                  392,984           211,722
      Production:
        Lease operating                           49,573            55,903
        Workover and other                         6,707             1,793
      Taxes other than income                     14,849            39,921
      Gathering, transportation and
       other:
        Oil and natural gas                       99,219            52,401
        Midstream                                 15,077            13,469
      General and administrative:
                General and administrative        98,936            57,419
                Stock-based compensation          17,038            10,762
      Depletion, depreciation and
       amortization                              315,061           290,383
      Full cost ceiling impairment                     -         1,732,486
               Total operating expenses        1,009,444         2,466,259

    Amortization of deferred gain                123,839                 -
                                                 -------               ---

    Income (loss) from operations                317,396        (1,737,566)

    Other income (expenses):
      Net gain (loss) on derivative
       contracts                                 345,970           196,360
      Interest expense and other                (235,093)         (170,929)
      Equity investment income                    10,619                 -
               Total other income (expenses)     121,496            25,431
                                                 -------            ------
    Income (loss) before income taxes            438,892        (1,712,135)
    Income tax (provision) benefit              (170,581)          650,201
    Net income (loss)                           $268,311       $(1,061,934)
                                                ========       ===========

    Net income (loss) per share:
      Basic                                        $0.89            $(3.88)
                                                   =====            ======
      Diluted                                      $0.89            $(3.88)
                                                   =====            ======

    Weighted average shares
     outstanding:
      Basic                                      300,377           273,477
                                                 =======           =======
      Diluted                                    302,541           273,477
                                                 =======           =======

               PETROHAWK ENERGY CORPORATION
    CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                      (In thousands)

                                September        December
                                    30,             31,
                                      2010            2009
                                      ----            ----
    Assets:
      Current assets              $646,465        $385,650
      Net oil and natural gas
       properties                5,127,420       4,167,733
      Restricted cash               42,922         213,704
      Equity investment            206,485               -
      Other noncurrent assets    1,678,203       1,894,984
                                 ---------       ---------
    Total assets                $7,701,495      $6,662,071
                                ==========      ==========

    Liabilities and
     stockholders' equity:
      Current liabilities         $862,582        $698,832
      Long-term debt             2,593,062       2,592,544
      Other noncurrent
       liabilities                 630,274          47,023
      Stockholders' equity       3,615,577       3,323,672
                                 ---------       ---------
    Total liabilities and
     stockholders' equity       $7,701,495      $6,662,071
                                ==========      ==========

                    PETROHAWK ENERGY CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                           (In thousands)

                                                   Three Months Ended
                                                      September 30,
                                                    ------------------
                                                     2010           2009
                                                     ----           ----
    Cash flows from operating activities:
    Net income (loss)                             $98,681       $(40,177)
    Adjustments to reconcile net income
     (loss) to net cash
    provided by operating activities:
      Depletion, depreciation and amortization    107,812         91,692
      Full cost ceiling impairment                      -              -
      Income tax provision (benefit)               63,020        (24,862)
      Stock-based compensation                      6,641          4,145
      Net unrealized (gain) loss on derivative
       contracts                                  (87,557)       115,171
      Amortization of deferred gain               (59,472)             -
      Equity investment income                     (8,572)             -
      Distributions from equity affiliate           8,954              -
      Other operating                              58,341          6,466
                                                   ------          -----
    Cash flow from operations before changes
     in working capital                           187,848        152,435
    Changes in working capital                   (144,961)        (3,801)
                                                 --------         ------
    Net cash provided by operating activities      42,887        148,634
                                                   ------        -------

    Cash flows from investing activities:
      Oil and natural gas capital expenditures   (525,419)      (416,290)
      Proceeds received from sale of oil and
       natural gas properties                     122,223            724
      Proceeds received from sale of
       Haynesville gas gathering systems                -              -
      Marketable securities purchased            (112,999)      (519,509)
      Marketable securities redeemed              394,005        386,501
      Increase in restricted cash                (123,204)             -
      Decrease in restricted cash                 137,468              -
      Other operating property and equipment
       capital expenditures                       (38,297)       (79,971)
      Other intangible assets acquired                  -       (105,108)
      Contributions to equity affiliate           (10,974)             -
      Other                                             -         37,600
                                                      ---         ------
    Net cash used in investing activities        (157,197)      (696,053)
                                                 --------       --------

    Cash flows from financing activities:
      Proceeds from exercise of stock options
       and warrants                                   545            711
      Proceeds from issuance of common stock            -        571,500
      Offering costs                                    -        (21,696)
      Proceeds from borrowings                  1,242,000        303,000
      Repayment of borrowings                  (1,109,108)      (307,354)
      Debt issuance costs                         (17,002)           212
      Other                                          (115)             -
                                                     ----            ---
    Net cash provided by (used in) financing
     activities                                   116,320        546,373
                                                  -------        -------

    Net increase (decrease) in cash                 2,010         (1,046)

    Cash at beginning of period                     2,142          2,738
                                                    -----          -----
    Cash at end of period                          $4,152         $1,692
                                                   ======         ======


                                                  Nine Months Ended
                                                    September 30,
                                                     -----------------
                                                    2010             2009
                                                    ----             ----
    Cash flows from operating activities:
    Net income (loss)                           $268,311      $(1,061,934)
    Adjustments to reconcile net income
     (loss) to net cash
    provided by operating activities:
      Depletion, depreciation and
       amortization                              315,061          290,383
      Full cost ceiling impairment                     -        1,732,486
      Income tax provision (benefit)             170,581         (650,201)
      Stock-based compensation                    17,038           10,762
      Net unrealized (gain) loss on
       derivative contracts                     (190,228)          96,752
      Amortization of deferred gain             (123,839)               -
      Equity investment income                   (10,619)               -
      Distributions from equity affiliate         13,190                -
      Other operating                             75,098           15,926
                                                  ------           ------
    Cash flow from operations before
     changes in working capital                  534,593          434,174
    Changes in working capital                  (172,180)          40,576
                                                --------           ------
    Net cash provided by operating
     activities                                  362,413          474,750
                                                 -------          -------

    Cash flows from investing activities:
      Oil and natural gas capital
       expenditures                           (1,731,707)      (1,164,392)
      Proceeds received from sale of oil and
       natural gas properties                    613,317              724
      Proceeds received from sale of
       Haynesville gas gathering systems         921,408                -
      Marketable securities purchased         (1,091,005)      (1,282,601)
      Marketable securities redeemed           1,091,005        1,255,582
      Increase in restricted cash               (198,209)               -
      Decrease in restricted cash                368,991                -
      Other operating property and equipment
       capital expenditures                     (212,137)        (225,322)
      Other intangible assets acquired                 -         (105,108)
      Contributions to equity affiliate          (10,974)               -
      Other                                            -           37,600
                                                     ---           ------
    Net cash used in investing activities       (249,311)      (1,483,517)
                                                --------       ----------

    Cash flows from financing activities:
      Proceeds from exercise of stock options
       and warrants                                1,821            2,667
      Proceeds from issuance of common stock           -          956,500
      Offering costs                                   -          (30,727)
      Proceeds from borrowings                 2,184,000          937,674
      Repayment of borrowings                 (2,274,888)        (849,513)
      Debt issuance costs                        (17,706)         (13,025)
      Other                                       (3,688)               -
                                                  ------              ---
    Net cash provided by (used in)
     financing activities                       (110,461)       1,003,576
                                                --------        ---------

    Net increase (decrease) in cash                2,641           (5,191)

    Cash at beginning of period                    1,511            6,883
                                                   -----            -----
    Cash at end of period                         $4,152           $1,692
                                                  ======           ======

                       PETROHAWK ENERGY CORPORATION
                   SELECTED OPERATING DATA (Unaudited)
     (In thousands, except per unit, per share and per mcfe amounts)

                                              Three Months Ended September
                                                           30,
                                             -----------------------------
                                                    2010              2009
                                                    ----              ----

    Production:
    Natural gas - Mmcf                            60,128            44,376
    Crude oil - MBbl                                 290               383
    Natural gas liquids - MBbl                       186                79
    Natural gas equivalent - Mmcfe                62,984            47,148
    Daily production - Mmcfe                         685               512

    Average price per unit:
    Realized crude oil price -as
     reported                                     $72.96            $64.64
    Realized impact of derivatives                  2.19              1.57
                                                    ----              ----
    Net realized crude oil price (Bbl)            $75.15            $66.21
                                                  ======            ======

    Realized natural gas price -as
     reported                                      $4.20             $3.13
    Realized impact of derivatives                  0.99              2.43
                                                    ----              ----
    Net realized natural gas price (Mcf)           $5.19             $5.56
                                                   =====             =====

    Realized natural gas liquids price -
     as reported                                  $34.97            $30.98
    Realized impact of derivatives                 (0.22)                -
    Net realized natural gas liquids
     price (Bbl)                                  $34.75            $30.98
                                                  ======            ======

    Cash flow from operations (1)                187,848           152,435
    Cash flow from operations  -per
     share (diluted)                                0.62              0.52

    Average cost per Mcfe:
    Production:
       Lease operating                              0.25              0.44
       Workover and other                           0.04              0.02
    Taxes other than income                        (0.05)             0.32
    Gathering, transportation and other:
        Oil and natural gas                         0.74              0.37
        Midstream                                   0.05              0.11
    General and administrative:
       General and administrative                   0.54              0.43
       Stock-based compensation                     0.11              0.09
    Depletion                                       1.65              1.85


                                                  Nine Months Ended
                                                    September 30,
                                                   -----------------
                                                 2010             2009
                                                 ----             ----

    Production:
    Natural gas - Mmcf                        169,397          119,376
    Crude oil - MBbl                              756            1,204
    Natural gas liquids - MBbl                    373              258
    Natural gas equivalent - Mmcfe            176,171          128,150
    Daily production - Mmcfe                      645              469

    Average price per unit:
    Realized crude oil price -as
     reported                                  $74.17           $51.82
    Realized impact of derivatives               0.76             3.38
                                                 ----             ----
    Net realized crude oil price (Bbl)         $74.93           $55.20
                                               ======           ======

    Realized natural gas price -as
     reported                                   $4.43            $3.53
    Realized impact of derivatives               0.92             2.37
                                                 ----             ----
    Net realized natural gas price (Mcf)        $5.35            $5.90
                                                =====            =====

    Realized natural gas liquids price -
     as reported                               $35.66           $27.04
    Realized impact of derivatives              (0.11)               -
    Net realized natural gas liquids
     price (Bbl)                               $35.55           $27.04
                                               ======           ======

    Cash flow from operations (1)             534,593          434,174
    Cash flow from operations  -per
     share (diluted)                             1.77             1.57

    Average cost per Mcfe:
    Production:
       Lease operating                           0.28             0.44
       Workover and other                        0.04             0.01
    Taxes other than income                      0.08             0.31
    Gathering, transportation and other:
        Oil and natural gas                      0.56             0.41
        Midstream                                0.09             0.10
    General and administrative:
       General and administrative                0.56             0.45
       Stock-based compensation                  0.10             0.08
    Depletion                                    1.72             2.18
    (1) Represents cash flow from operations before changes in working
    capital.  See the Condensed Consolidated Statements of Cash
         Flows for a reconciliation from this non-GAAP financial measure to
         the most comparable GAAP financial measure.


                                     PETROHAWK ENERGY CORPORATION
                          SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)
                               (In thousands, except per share amounts)

                                                         Three Months Ended
                                                           September 30,
                                                         ------------------
                                                          2010           2009
                                                          ----           ----

    Unrealized (gain) loss on derivative
     contracts:(1)
         Natural gas                                 $(102,281)      $112,861
         Crude oil                                      14,437             30
         Natural gas liquids                               287              -
         Interest                                            -          2,280
                                                           ---          -----
             Total mark-to-market noncash charge       (87,557)       115,171
    Full cost ceiling impairment                             -              -
    Amortization of deferred gain                      (59,472)             -
    Expense of deferred financing costs(2)               3,361              -
    Loss on early extinguishment of debt(3)             47,084              -
                                                        ------            ---
    Total selected items, before tax                   (96,584)       115,171
    Income tax effect of selected items                 37,765        (43,788)
                                                        ------        -------
    Selected items, net of tax                         (58,819)        71,383
    Net income (loss), as reported                      98,681        (40,177)
    Net income, excluding selected items               $39,862        $31,206
                                                       =======        =======

    Basic net income (loss) per share, as reported       $0.33         $(0.14)
    Impact of selected items                             (0.20)          0.25
                                                         -----           ----
    Basic net income per share, excluding selected
     items                                               $0.13          $0.11
                                                         =====          =====

    Diluted net income (loss) per share, as reported     $0.33         $(0.14)
    Impact of selected items                             (0.20)          0.25
                                                         -----           ----
    Diluted net income per share, excluding selected
     items                                               $0.13          $0.11
                                                         =====          =====

                                                      Nine Months Ended
                                                        September 30,
                                                        -----------------
                                                      2010              2009
                                                      ----              ----

    Unrealized (gain) loss on derivative
     contracts:(1)
         Natural gas                             $(182,871)          $88,177
         Crude oil                                  (7,644)            8,575
         Natural gas liquids                           287                 -
         Interest                                        -                 -
                                                       ---               ---
             Total mark-to-market noncash charge  (190,228)           96,752
    Full cost ceiling impairment                         -         1,732,486
    Amortization of deferred gain                 (123,839)                -
    Expense of deferred financing costs(2)           3,361               911
    Loss on early extinguishment of debt(3)         47,084                 -
                                                    ------               ---
    Total selected items, before tax              (263,622)        1,830,149
    Income tax effect of selected items            102,575          (695,823)
                                                   -------          --------
    Selected items, net of tax                    (161,047)        1,134,326
    Net income (loss), as reported                 268,311        (1,061,934)
    Net income, excluding selected items          $107,264           $72,392
                                                  ========           =======

    Basic net income (loss) per share, as
     reported                                        $0.89            $(3.88)
    Impact of selected items                         (0.54)             4.15
                                                     -----              ----
    Basic net income per share, excluding
     selected items                                  $0.35             $0.27
                                                     =====             =====

    Diluted net income (loss) per share, as
     reported                                        $0.89            $(3.88)
    Impact of selected items                         (0.54)             4.11
                                                     -----              ----
    Diluted net income per share, excluding
     selected items                                  $0.35             $0.23
                                                     =====             =====

    (1) Represents the unrealized (gain) loss associated with the mark-
        to-market valuation of outstanding derivative
        positions at September 30, 2010 and 2009.
    (2) Represents charges related to the write-off of debt issuance
        costs in conjunction with a decrease in the Company's borrowing base
        under its senior revolving credit facility.
    (3) Represents charges related to the write-off of debt issuance
        costs, discounts and premiums in conjunction with the redemption of
        the Company's 9.125% Senior Notes due July 15, 2013.  Also represents
        the premiums paid to noteholders for early redemption of the 9.125%
        Senior Notes.

SOURCE Petrohawk Energy Corporation


Source: newswire



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