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PETROHAWK CUTS CAPEX, MOVES TO LIQUIDS - Upstreamonline.com article - 4/13/10

US independent Petrohawk Energy said it is cutting its capital budget by
$100 million and reallocating its spending from the dry-gas Haynesville
Shale to the wetter Eagle Ford Shale.


  13 April 2010 20:52 GMT 


The company said the move was spurred by continued low gas prices and drilling
efficiencies realised in the Haynesville play.

Petrohawk holds about 360,000 acres in each play, but about 225,000 acres of
the Eagle Ford total are considered to be “oil and condensate rich,”
according to boss Floyd Wilson.

“Our ability to access oil and condensate opportunities in the Eagle Ford
Shale at a time of depressed natural gas prices will enhance our
business
plan,” Wilson said in a release.

Under the revised programme, Petrohawk will spend about $1.35 billion this
year, about $175 million of which will target liquids in the Eagle
Ford.

Petrohawk will spend about $390 million total on the play and plans to double
its rig count from four to eight rigs.

Petrohawk said its latest appraisal well in the Eagle Ford, the Lanik 1H, in
DeWitt County, Texas, came on at 2.7 million cubic feet of gas per day
and
930 barrels of liquids per day on a 12/64" choke with 6,950 pounds of
flowing casing pressure.

Conversely, the company plans to cut its Haynesville spend by 20% to $850
million.

The new plan will cut Petrohawk’s rig count there to 14 rigs by the middle of
the year.

"The stabilising effect of the restricted rate production programme in the Haynesville Shale also allows this transition of capital without
significantly affecting our growth rate,” Wilson said in a release.

“Our drilling pace in the Haynesville Shale is on track to achieve acreage and
production goals thanks to drilling efficiencies gained during the
past year."

The changes will hit the company’s production estimate for the year, taking it
down from between 670MMcfpd and 680 MMcfpd to between 650 MMcfpd and
660
MMcfpd.

But revenue from production is expected to increase due to the higher value
liquids stream generated from Eagle Ford, Petrohawk said in a release.



Published: 13 April 2010 20:52 GMT  | Last updated: 13 April 2010 20:52 GMT

Views: 22

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Oil & Gas ProPermalink Reply by Les Bamburg on April 13, 2010 at 16:13
Skip, obviously the person that wrote the article didn't take the time to listen to Floyd's presentation because the headline is absurd. Floyd started his talk by saying obviously Petrohawk will not be an "oil company" unless they are bought by ExxonMobil which was met by applause. Petrohawk is 98% natural gas and he went on to say how he is not listening to his advisors about being more oily because the shale gas plays are great. He also stated this Wall Street push for liquids is BS. Floyd simply sees the oil & condensate in the Eagle Ford as an enhancement which is inconsistent with the implication of the headline.

Also, the author needs to take a little math course as the reduction in Haynesville Shale capital was $50MM or < 6% rather than the 20% quoted in the article.

Floyd said Petrohawk would have all their Haynesville Shale acreage HBP'd by mid-2011 but seem to indicate there are no plans to reduce rig count at that time. He said it would take decades to fully develope all their US acreage holdings and they would have a 100 years of natural gas production.

It is a shame these poorly written news articles seem to always get the most attention. In most cases people are better off to read the company press releases and presentations as the media just seems to foul it up.

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on April 14, 2010 at 2:22
Les~

Your objections to the article headline and accuracy sre noted. I find little about Petrohawk "becoming an oil company" and much about a new emphasis on "liquids". As this is an industry-wide trend, I find nothing strange about it. I did find it of interest that " "The stabilising (sic) effect of the restricted rate production programme (sic) in the Haynesville Shale also allows this transition of capital without significantly affecting our growth rate,” Wilson said in a release. “Our drilling pace in the Haynesville Shale is on track to achieve acreage and production goals thanks to drilling efficiencies gained during the past year." I take this to mean what it appears to state, Petrohawk can meet its production and HBP goals with fewer rigs owing to increased efficiencies. I'll take your word on the math.

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