Petrohawk announced that its proved oil and gas reserves at December 31, 2008 are internally estimated to range between 1.35 and 1.40 trillion cubic feet of natural gas equivalent (Tcfe), an increase of between 275 and 325 billion cubic feet of natural gas equivalent (Bcfe). Based on the midpoint of this range, Petrohawk replaced 300% of production and grew reserves by approximately 30% year over year.
Proved reserve estimates were calculated using unescalated oil and natural gas prices at December 31, 2008 of $41.00 per barrel (Bbl) of oil and $5.71 per million British thermal units (MMbtu) of natural gas, adjusted for quality and regional price differentials.
Excluding downward revisions based on pricing, proved reserves are internally estimated to range between 1.41 and 1.46 Tcfe at December 31, 2008, a year-over-year increase of between 33% and 37%. Oil and natural gas prices at December 31, 2007 were $95.98 per Bbl of oil and $6.80 per MMbtu of natural gas.
Additionally, the Company expects to report a pre-tax, non-cash impairment expense of between $1.1 and $1.3 billion, based on lower commodity prices at December 31, 2008. Petrohawk accounts for oil and natural gas properties according to the full cost method of accounting. The full cost ceiling limitation as of December 31, 2008 cannot be finally determined until estimates of year-end proved reserves are final and will depend on the market price for natural gas on a date shortly prior to the Company's filing of its Annual Report on Form 10-K for the year ended December 31, 2008. Any impairment expense could be reduced or eliminated if market prices for oil or natural gas increase between December 31, 2008 and the filing of the Company's Annual Report on Form 10-K with the SEC.
Petrohawk's fourth quarter 2008 production averaged 361 million cubic feet of natural gas equivalent per day (Mmcfe/d), in line with the Company's stated guidance, and full year 2008 production averaged 305 Mmcfe/d. Fourth quarter production represented a 15% increase over third quarter 2008 and a 53% increase over the same period in 2007 on a pro forma basis. Petrohawk exited 2008 producing approximately 400 Mmcfe/d.
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