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Petrohawk Energy Corporation First Quarter 2007 Production Expected to Exceed Guidance

Posted on: Tuesday, 24 April 2007, 12:01 CDT

Petrohawk Energy Corporation (NYSE:HK)("Petrohawk" or "the Company") announced today that it expects to exceed its first quarter 2007 production targets and is increasing its 2007 capital budget and full year production forecast. Petrohawk provided an update on current operations and detailed plans to expand on its early success in the Fayetteville Shale as well as additional offset wells to recent Gulf Coast discoveries.

During the first quarter, the Company averaged an estimated 322 million cubic feet of natural gas equivalent (Mmcfe/d) production, of which approximately 85% was natural gas, in excess of stated guidance of 310-320 Mmcfe/d. This production level represented a 5% sequential increase over the fourth quarter 2006 average production from current properties (ongoing operations) of 307 Mmcfe/d.

Activities most significantly impacting first quarter production growth included 1) continued successful drilling at the Company's two largest fields, Elm Grove and Terryville, both part of Petrohawk's low-risk, low-cost Cotton Valley initiative in North Louisiana; 2) production coming online from recently established operations in the Fayetteville Shale; and 3) high-impact drilling in the onshore Gulf Coast region from recent discoveries -- Nabors, Colson and Winchester fields.

Petrohawk currently expects to achieve average production of 320-330 Mmcfe/d during second quarter 2007, before anticipated divestments of approximately 2 Mmcfe/d of production from non-core properties. Additionally, the Company is increasing production guidance for full year 2007 to 322-332 Mmcfe/d before divestments, representing a 13-16% growth rate over pro forma 2006.

The Company also announced that it has increased its capital budget to $600 million from $575 million to fund additional drilling in the Fayetteville Shale as well as additional offsets to recent Gulf Coast discoveries. Higher revenues from increased production supported by Petrohawk's current view of commodity prices are expected to fund the incremental capital spending.

Petrohawk is 73% hedged based on its current and increased production outlook for 2007

Operational Update

"During the first quarter, our results exceeded our expectations: Low risk, low cost drilling in the Mid-Continent region complemented by high-impact drilling in the Gulf Coast region, including offsets to recent discoveries fueled these improvements," said Floyd C. Wilson, President and Chief Executive Officer. "We're especially excited about the expansion of our drilling program in the Fayetteville Shale based on great results from our first wells. Our overall growth speaks to a balanced approach to exploration and development, and the application of completion technologies which have been a grassroots effort at Petrohawk."

Petrohawk drilled 81 wells in the first quarter with a 93% success rate. By region, 49 out of 51 wells were successful in the Mid-Continent region, 18 out of 22 wells were successfully drilled in the Gulf Coast region, and eight wells were drilled in the Permian region with 100% success. The Company is currently utilizing 28 drilling rigs, including 18 operated rigs.

Elm Grove and Terryville Fields -- Petrohawk continued to achieve excellent results with the drilling program in these two flagship fields. In the Elm Grove field, the Company utilized five operated rigs and drilled 23 wells averaging 68% working interest (WI) and with average initial production (IP) rates of approximately 2.0 Mmcfe/d. Five 20-acre spaced wells were drilled during the quarter, providing additional support that the program will be expanded as it continues to produce results comparable to 40-acre spaced wells. In Terryville, Petrohawk operated three rigs to drill 10 wells averaging 98% WI, with resulting IP rates averaging approximately 2.9 Mmcfe/d for Lower Cotton Valley completions. Also in Terryville, one Gray Sand well (WI=86%) was drilled with an IP of 5.0 Mmcfe/d.

Fayetteville Shale -- One of the most significant areas of success for the Company during the first quarter was in this resource play as three successful operated wells (WI=85%) were brought online along with participation in five non-operated wells (WI=12%). The three operated wells had initial production rates of 2.9, 4.1 and 2.4 Mmcfe/d, which ranked them among the best initial production rates of Fayetteville shale wells reported to the State of Arkansas since 2005. Petrohawk's increased 2007 capital budget, discussed later in this release, includes plans to participate in 27 Fayetteville wells.

Other Mid-Continent Activity -- Petrohawk continued its success in the James Lime horizontal trend of East Texas and North Louisiana. Two James Lime wells (74% WI and 50% WI) were drilled during first quarter in East Texas and are currently being tested; one well is flowing without stimulation at 2.1 Mmcfe/d. Three additional wells were drilled in the Talihina field and five other Mid-Continent wells were drilled during the first quarter.

Recent Gulf Coast Discoveries -- The Company's strategy of drilling 3D seismic controlled exploratory prospects on trapping fault trends in the Gulf Coast proved effective during the first quarter. New production volumes were brought on from discoveries at Winchester and Colson fields and an additional high rate well was added in the Nabors field.

Nabors Field (Starr County, Texas): Petrohawk achieved a production rate of 19 Mmcfe/d during the quarter after completing a third Lower Vicksburg well. The Cleopatra #8 (100% WI) had initial production of 6.5 Mmcfe/d. In addition, the Company is drilling and completing two additional wells, both with 100% WI.

Colson Field (Brooks County, Texas): The first two wells from this new discovery began producing during the first quarter. The Palo Blanco GU #1 and #2 (both 100% WI) had initial production rates of 7.0 and 8.1 Mmcfe/d, respectively, from Lower Vicksburg sands. The Company is also in the process of completing two additional 100% WI wells.

Winchester Field (Wayne County, Miss.): Petrohawk put three wells on production during the first quarter from this prolific Smackover discovery made in late 2006. The three wells (33% WI) are currently producing at a gross combined rate of 13.7 Mmcfe/d. A fourth well is completing and two additional development wells are being drilled.

Lions Field -- During the first quarter, the Weise GU #4 (45% WI) began producing at an IP of 5.8 Mmcfe/d. Three additional wells, the Dehnert #3 (53% WI), Wright Materials #2 (44% WI) and the Weise GU "A" #4 (42% WI), are currently completing.

Other Gulf Coast Activity -- At Heard Ranch Field (Bee County, Texas, WI=77%), seven shallow Frio wells were drilled in the first quarter, increasing gross operated production to 8.5 Mmcfe/d, a marked ramp-up from gross operated production of 1.8 Mmcfe/d just one year ago. In La Reforma Field (Starr County, Texas), two 50% working interest wells were completed during the first quarter. One tested at 8.2 Mmcfe/d, and the other has reached total depth with log results similar to the first well.

Updated Capital Budget and Outlook

Petrohawk announced today that it has increased its 2007 capital budget from $575 million to $600 million in order to expand drilling in the Mid-Continent region with additional Fayetteville locations as well as to fund offsets to recent Gulf Coast discoveries. Approximately 60% of the 2007 capital budget is expected to be expended during the first half of the year.

For the first quarter, production is expected to average approximately 322 Mmcfe/d, above the Company's midpoint expectation of 315 Mmcfe/d. For the second quarter, Petrohawk expects to produce between 320 and 330 Mmcfe/d before planned divestments of approximately 2 Mmcfe/d of production from miscellaneous non-core properties. Additionally, Petrohawk increased its 2007 production outlook by 7 Mmcfe/d to 322-332 Mmcfe/d before divestments, representing 13-16% growth over pro forma 2006.

Petrohawk Analyst Day

Petrohawk will provide an opportunity for investors and other interested parties to participate in an in-depth discussion of its major properties as well as current operations, and meet key personnel at its annual Analyst Day. The meeting will be held on Thursday, April 26, 2007, from 8:30 a.m. to 12:00 noon Eastern Time.

Institutional analysts may attend the meeting, which will be held at the Hudson Hotel (Hudson Room, Third Floor), 356 West 58th Street, New York City. In person attendees must pre-register by April 25 through Petrohawk Energy by contacting Brittany Oliver (832) 204-2785 or boliver@petrohawk.com.

The meeting will be Webcast. Participants will need to pre-register for the Webcast by clicking the "Analyst Day" link on Petrohawk's homepage, www.petrohawk.com.

Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration and development of oil and gas, with properties concentrated in the Mid-Continent, Onshore Gulf Coast and Permian regions.

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; 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 other 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.

Source: Business Wire

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