Petrohawk Energy will transition capital toward its 225,000 net acres in the oil and condensate windows of the Eagle Ford Shale, prompting a reallocation and overall reduction in its 2010 capital budget. The reallocation and $100 million reduction in capital spending program highlights Petrohawk's flexibility in reducing its rig count in the Haynesville Shale play, which will decrease by 20% based on drilling efficiencies, and in recognition of lower natural gas prices. The capital budget adjustments are expected to significantly increase the oil and condensate component of Petrohawk's production.
"Petrohawk now holds equal amounts of acreage in the Haynesville and Eagle Ford Shales -- approximately 360,000 net acres each. 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. Petrohawk is not necessarily perceived to have this kind of flexibility in its portfolio, but with approximately 225,000 net acres of oil and condensate-rich property in the Eagle Ford Shale to access, we do," said Floyd C. Wilson, Chairman and CEO. "The stabilizing effect of the restricted rate production program in the Haynesville Shale also allows this transition of capital without significantly affecting our growth rate. 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. We will continue to use technical improvements, our competitive cost structure and our robust hedging program to protect margins."
Petrohawk's revised drilling and completion budget of $1.35 billion will allocate $175 million to recently announced oil and condensate-rich areas of the Eagle Ford Shale play, bringing the total amount of drilling and completion capital budgeted for the Eagle Ford Shale to $390 million and doubling the rig count in the play from four to eight rigs by mid-year. The rig count in the Haynesville Shale will be reduced to 14 rigs by mid-2010, averaging 15 rigs for the year with approximately $850 million budgeted in the play for 2010. Production guidance for 2010 will be reduced by 20 Mmcfe/d to between 650 Mmcfe/d and 660 Mmcfe/d due to the effect of previously announced divestitures. This range projects a 31% year over year growth rate, pro forma for divestitures. Based on current pricing, 2010 revenues are expected to increase due to today's announced capital shift.
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