Petrohawk Announces Sale of Fayetteville Shale Interests (to ExxonMobil) for $650 Million (12/23/10)
HOUSTON, Dec. 23, 2010 /PRNewswire via COMTEX/ -- Petrohawk Energy Corporation ("Petrohawk" or the "Company") (NYSE: HK) today announced that it has completed the sale of its natural gas assets in the Fayetteville Shale, located primarily in Cleburne and Van Buren Counties, Arkansas, to XTO Energy Inc., a subsidiary of ExxonMobil, for $575 million. The sale has an effective date of October 1, 2010.
In addition, the Company has entered into a definitive agreement with XTO Energy to sell its midstream assets in the Fayetteville Shale for $75 million. The portion of the transaction involving the midstream assets is expected to close in early 2011 and is subject to regulatory approval and customary closing conditions.
As of December 31, 2009, Petrohawk had estimated proved reserves in the Fayetteville Shale of approximately 299 billion cubic feet of natural gas (Bcf). Current production is approximately 98 million cubic feet of natural gas equivalent per day (Mmcfe/d).
Continued indication of ExxonMobil's growing position in unconventional US natural gas production. This is a good fit as XTO already has ~ 200 MMcfd of operated production in the Fayetteville Shale and Petrohawk's operated production was less than 50 MMcfd.
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Replies to This Discussion
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Permalink Reply by john goodday on
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XTO / XOM acquired @ 200,000 acres, midstream assets along with producing wells in the Fayetteville for $650 million from Petrohawk. I could be wrong, but I don't think HK made any profit in this deal. XTO played their cards right, bid low at a time when Wilson was strapped for cash and no other assets to sell.
The hedge departments for XTO, CHK, SWN, etc. will have to earn their keep to stay competitive in this anti-fossil-fuel geo-political enviornment!
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Permalink Reply by Les Bamburg on
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John, I would say Petrohawk probably made a profit on the deal since it is likely they picked the acreage up at low cost.
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Permalink Reply by ken hatcher on -
All strictly speculation...just regretable it came to this for the Hawk.
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Permalink Reply by HBP on
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IMHO I don't think it "came to this for the Hawk" in this situation. I agree the price seems (or is) low, but to hold onto the 3rd gas prospect in Arkansas long enough for the price to rebound probably looked to be a budget/resource drain in relation to its productivity. Also, their filings indicated they had planned this sale all year, so they already had it in their mind that they would like to shed it within a specific time period.
It appears they divested to get lean and polish up their preferred prospects (haynesville and eagle ford). Eagle Ford needs resources to continue developing and HBP. Haynesville still needs budget/resources after it gets HBPd so they can maintain it for a better price environment.
I may be wrong, but I don't think it is an overall bad thing for HK looking in as an investor.
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In 2007, HK paid Alta Res. $350 million for @ 20,000 acres - not a low cost acquisition. Other costly investments - midstream, drilling of many wells along with 180,000 acres - if HK made a profit - it wasn't much!
Had greed not been part of the equation, HK could have sold the same asset for $1 Billion last year.
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Permalink Reply by Bud on
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Do you think Petrohawk may use some of the funds to drill in areas in Haynesville they have under lease but have no wells yet? Or could they possibly expand some of their holdings in Haynesville?
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Permalink Reply by Les Bamburg on
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Bud, funds are focused on Eagle Ford Shale and Haynesville Shale.
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