Petrohawk Cuts 2009 Capital Budget by 33%
Petrohawk Energy Corporation will reduce its 2009 capital budget by a third and reallocate spending to more heavily weight projects with the highest internal rates of return and highest potential for reserve growth, namely, development in the Haynesville and Fayetteville Shales.
The shift allows the Company to further affirm its strong capitalization. The 2009 capital budget, which includes drilling, completions, seismic and facilities, is currently $1.0 billion, revised from a previously announced budget of $1.5 billion. The Company has no current plans or need to access the equity capital markets.
The reallocation of capital reflects an increased emphasis on development of non-proved locations in Petrohawk's successful Haynesville and Fayetteville Shale projects, with the benefit of higher expected overall reserve growth potential for the Company. Petrohawk's production guidance for 2009 represents 25% to 35% drillbit growth over 2008 estimated annual production of 305 million cubic feet of natural gas equivalent per day (Mmfe/d).
In conjunction with 2009 capital planning, Petrohawk completed the redetermination of its credit facility, which was increased to $1.1 billion from $800 million, on September, 10, 2008. The facility is currently undrawn.
Additionally, the Company is evaluating the divestiture of certain conventional assets in its Permian Basin region during 2009. These properties include interests in Waddell Ranch, Sawyer, Jalmat and TXL fields of West Texas and Southeastern New Mexico. The Permian Basin properties currently produce approximately 35 Mmcfe/d.
Third Quarter and Full Year 2008 Production Guidance Reaffirmed
For the third quarter, Petrohawk reaffirms its previously stated production guidance range of 310 to 320 Mmcfe/d. The Company also reiterates previously stated guidance for the full year 2008 of 295 to 315 Mmcfe/d, a more than 25% organic increase over pro forma 2007 production.
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