Natural gas-weighted independent Petrohawk Energy Corp. is “shooting for 25% production growth” in 2008 from its onshore properties, the CEO said last week.
The Houston-based producer posted 4Q2007 earnings above estimates, pushed by lower operating costs and higher gas prices. Excluding one-time charges, Petrohawk’s net profit was $27.6 million (16 cents/share), compared with $10.5 million (6 cents) in 4Q2006. Operating revenue jumped 13% to $227.3 million. Wall Street analysts were expecting Petrohawk to earn on average 14 cents/share, excluding items, on revenue of $224.7 million.
“All in all it was an exciting and successful year,” CEO Floyd C. Wilson told financial analysts during a conference call Wednesday. Petrohawk sold its Gulf Coast division for $825 million last year, and in the past few months it has snatched up more acreage in its core areas (see NGI, Dec. 24, 2007).
“In our Fayetteville Shale position we opened up never-before-drilled expanses to future development and growth. In the Elm Grove Field [in Louisiana] we completed what is believed to be one of the largest Cotton Valley wells on record, and at Terryville Field we have scheduled additional 3-D seismic to follow up on our outstanding results and new zone discoveries there,” Wilson said.
Petrohawk intends to “unlock substantial value by executing a multi-year plan to develop our concentrated positions, much of it acreage we have only just begun to tap, in our lower-cost, lower-risk natural gas plays. Our plan offers the potential for double-digit reserve growth coupled with continued operating efficiencies for years to come.”
Most of Petrohawk’s reserve additions last year were in the company’s core areas, which include Elm Grove and the Terryville fields in North Louisiana, along with the Fayetteville Shale in Arkansas.
Petrohawk reported 1.062 Tcfe of proved reserves at year-end, up from 872 Bcfe at the end of 2006 — and a record 326 Bcfe was added last year through drilling. After adjusting for 2007 property sales, proved reserves grew by 22% year over year. Organic finding and development costs, exclusive of acquisitions, were $2.38/Mcfe. Including the cost of acreage purchased as part of the company’s expansion in the Fayetteville Shale, all-in finding and development costs were $3.51/Mcfe.
Reserves were computed using unescalated year-end 2007 prices of $6.80/MMBtu for natural gas and $92.50/bbl for oil, with adjustments for quality and basis differentials.
Average production in the final three months of 2007 reached 303 MMcfe/d. Total production in the quarter was 24.3 Bcf of gas and 595,000 bbl of oil, or 27.9 Bcfe, 87% weighted to natural gas. Excluding its Gulf Coast division, production averaged 226 MMcfe/d in 2007, which was 21% higher than in 2006. Before the effect of derivatives, Petrohawk realized $7.16/Mcf for its gas and $87.93/bbl for oil. For the year its realized prices averaged $6.92/Mcf and $68.84/bbl.
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