Petrohawk Energy Corporation Announces Fourth Quarter and Full Year 2009 Financial Results

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, [phone], 



Web Site:  http://www.petrohawk.com/ 

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