New Operating Area: Permian Basin

Petrohawk began building an acreage position in the Permian Basin in the second half of 2010, and has now acquired or has committed to acquire approximately 325,000 net acres at an average cost of approximately $1,400/acre with over 90% expected to be operated. The Company's core position includes acreage in the Midland Basin, where the primary target is the Lower Wolfcamp, and acreage in the Delaware Basin, where the primary targets are the Lower Wolfcamp Shale, Bone Springs Sands and Avalon Shale.

Petrohawk will allocate approximately $75 million of drilling and completion capital to drill on its Permian Basin acreage during 2011. The Company plans to run four rigs in the Basin with 15 wells scheduled to be drilled. Capital spending in this area is scheduled to gradually increase throughout 2012 and beyond with most lease terms providing for a four to five year development window. Hawk Field Services LLC, the Company's midstream subsidiary, is in the planning stages to address infrastructure issues and opportunities for both Petrohawk and third-parties.

In the Midland Basin, Petrohawk plans to target oil with associated natural gas in the Wolfcamp Shale at a vertical depth of approximately 8,000 feet. The Company projects that horizontal wells will have laterals in excess of 5,000 feet at an estimated cost of approximately $7.0 million per well. Petrohawk's acreage position is concentrated in two primary areas. In the southern portion of the basin, Petrohawk's position has been moderately de-risked with multiple successful horizontal wells reported by other operators. The Company's position in the northern end of the basin is largely untested, but the Company's geological evaluation indicates encouraging petrophysical characteristics in the Wolfcamp Shale that are believed to be comparable in reservoir quality and reserve potential to the southern end of the basin.

The Delaware Basin holds three objectives - the Avalon Shale, Bone Springs Sands and the Wolfcamp Shale, in a gross interval of approximately 3,000 feet. These targets are found at a vertical depth of between 5,000 and 12,000 feet across the basin. The Company expects a product mix of primarily condensate and natural gas with significant NGL yield. Horizontal wells are forecasted to cost between $6.5 and $8.0 million.

Eagle Ford Shale Update

Petrohawk is currently operating 14 rigs in the Eagle Ford Shale and expects to maintain that level for the balance of the year with five rigs in Hawkville Field and 9 rigs in the Black Hawk area. The Company drilled 25 operated and 3 non-operated wells total in the Eagle Ford during the first quarter. Twelve operated wells and 2 non-operated wells were drilled in Hawkville Field, 11 operated wells and 1 non-operated well were drilled in Black Hawk and 2 operated wells were drilled in Red Hawk. Net production in the play averaged 7.5 Mbo/d, 5.9 Mbngl/d and 76 Mmcf/d (156 Mmcfe/d) for the quarter.

In the Black Hawk area, spud to spud days ranged between 19 and 40 days during the first quarter with an average of 30 days. In Hawkville Field, spud to spud days ranged between 26 and 44 days during the first quarter with an average of 32 days. Increased drilling efficiencies are a result of several improvements that have been made as the Company gains experience in the Eagle Ford, including a high-grading of the rig fleet, improved bit design, modified mud systems and other technology enhancements.

Petrohawk has experienced continued improvement in well performance as a result of optimizing the completion design. This improvement is being led by the use of the HiWay frac technique, developed by Schlumberger, primarily in Hawkville Field, where virtually all of the wells completed with HiWay display higher initial rates with higher flowing pressure on comparable choke settings. Petrohawk has fracture stimulated two Black Hawk wells utilizing the HiWay technique; quantitative results will be made available when these and subsequent wells have achieved sufficient production history.

On April 12th Petrohawk released updated type curves for the various well types within the Hawkville and Black Hawk areas. Multiple curves for the play have been released is due to the wide variety in the product mix that occurs across each play area. The estimated ultimate recoveries (EURs) implied by those type curves range from 5 Bcf + 207 Mbngl and 2.5 Bcf + 250 Mbc + 195 Mbngl in Hawkville, and 1.8 Bcf + 550 Mbc + 220 Mbngl in Black Hawk. These type curves are based upon the historical performance of each area and assume that the wells will be capable of producing at an optimum choke setting, and do not take into account additional curtailment that might occur from infrastructure constraints.

In the Red Hawk area, the Company has drilled a total of five wells. Three of those wells are on production, with only one of them expected to be commercial at this time. During the first quarter, two additional wells were drilled. One is flowing back following its fracture stimulation and the other will be stimulated during the second week of May. Drilling and petrophysical data gathered to date in these two wells suggests that the reservoir quality may be marginal. Should these two wells prove to be sub-commercial, the Company will likely cease spending in this part of the Eagle Ford play.

Three significant infrastructure agreements have been made to transport and handle growing Eagle Ford Shale condensate production. Hawk Field Services, LLC has arranged to lease property at Point Comfort, Texas to build and operate a condensate handling facility. The facility, which is expected to be in operation this summer, will receive Petrohawk's truck-borne condensate and store and load the condensate onto barges for transit to markets along the Gulf Coast. In addition, the Company has negotiated a transportation agreement with Kinder Morgan, whereby Kinder Morgan will build and/or convert approximately 175 miles of condensate-transporting pipeline from the Black Hawk area. Petrohawk has agreed to be the lead shipper on this system, which is expected to be in service by July 1, 2012. Finally, the Company has signed a transportation agreement with Enterprise Products Partners LP to transport condensate from the Black Hawk area, which is also scheduled to be in service by second quarter 2012.

Haynesville Shale Update

Petrohawk drilled 84 wells in the Haynesville Shale during the first quarter, with an average of approximately 16 rigs operating in the field. Thirty-one operated wells and 53 non-operated wells were drilled, with net production in the play averaging 607 Mmcfe/d for the quarter, 488 Mmcfe/d operated and 119 Mmcfe/d non-operated.

Two primary objectives in the Haynesville Shale are expected to be met during 2011. First, the Company expects to have the vast majority of its leasehold held by production by the end of the second quarter of 2011. Additionally, based on current projections of production growth and using current strip pricing along with Petrohawk's budget updated in this release, the Haynesville Shale is expected to become cash flow positive during the third quarter of 2011.

Petrohawk's better than expected production results for first quarter, as wells as the increase in its 2011 production outlook, were due to significantly higher volumes from the Eagle Ford as well as the Haynesville Shales. During the second quarter, the Company will begin reducing its rig count in the Haynesville Shale to bring the rig count in line with market conditions following the initial drilling phase, which was directed by leasehold requirements. By the beginning of the third quarter, Petrohawk expects to be operating six rigs in the play, a level that the Company expects to maintain through the end of the year.

Since the inception of production in the Haynesville Shale in June 2008, the Company has produced over 410 Bcf gas from approximately 200 operated wells. Over this period, Petrohawk has continually strived to optimize well performance, while at the same time minimizing costs. With greater experience in the play, the Company has deployed a specific completion design for each area of the field that is defined by a calculated performance index that allows for normalization of performance data between optimized and non-optimized wells. This region-specific completion design has had the effect of reducing completion costs an average of $500,000 per well by utilizing 1) slightly less sand, 2) slightly wider perforation spacing, and 3) a component of Ottawa sand in conjunction with the Premium Resin Coated sand. This modification in completion design, along with a very steady reduction in spud to spud days over the past two quarters, is expected to result in a reduction in average well costs over time.

Press Release:http://www.petrohawk.com/news_rsslib_text.php?id=1559902

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