Forward Looking Statements

Transcription

1 August 2008

2 Forward Looking Statements This communication contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding planned capital expenditures (including the amount and nature thereof), estimates of future production, the number of wells we anticipate drilling in 2008 and beyond, availability and costs of drilling rigs and other oil field services, the number and nature of potential drilling locations, our growth strategies, anticipated trends in our business, our future results of operations, estimates regarding future net revenues from oil and natural gas reserves and the present value thereof, estimates, plans and projections relating to acquired properties, quality and nature of our asset base, our ability to successfully and economically explore for and develop oil and gas resources and market conditions in the oil and gas industry. The assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, models, strategies, assumptions or statements about future events or performance often, but not always, using such words as expects, anticipates, plans, estimates, seeks, believes, hopes, predicts, envisions, intends, potential, possible, probable, opportunities, confident, or stating that certain actions may, will, should, or could, be taken, occur or be achieved ("forward looking qualifiers"). Statements concerning oil and gas reserves also may be deemed to be forward-looking statements in that they reflect estimates based on certain assumptions that the resources involved can be economically exploited and other assumptions. All forward-looking statements contained in this communication (whether or not accompanied by a forward looking qualifier) are based on current expectations, plans, estimates and projections that involve a number of risks and certainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration, development projects or capital expenditures; and health, safety and environmental risks); uncertainties as to the availability and cost of financing; fluctuations in oil and gas prices; risks related to our hedging program; inability to realize expected value from acquisitions; inability of our management team to execute its plans to meet its goals; loss of services of our management team; inability to replace oil and gas reserves; shortage of drilling equipment, oil field personnel and services; and unavailability of gathering systems, pipelines and processing facilities. All forward-looking statements contained in this communication (whether or not accompanied by a forward looking qualifier) are based on the estimates, opinions and beliefs of our management at the time the statements are made and should be considered approximations unless specifically indicated otherwise. We assume no obligation to update forward-looking statements should circumstances or our management s estimates or opinions change. Unless the context otherwise indicates, when we refer to Petrohawk, the Company, us, we, our, or ours in this presentation, we are describing Petrohawk Energy Corporation, together with its subsidiaries. 2

3 Petrohawk Today Petrohawk has continued to build its position in the Haynesville Shale, and has a strategic development plan in place to unlock value Early Leasing During 2008, Haynesville acreage position has grown to 300,000 net acres; average total leasehold cost is approximately $5,000 per acre New acreage selectively added around existing positions in core of the play Attainable Development ~50% of acreage has lease term greater than three years, extending development timeframe Expect 10 operated rigs by YE 2008 and 20 by YE 2009; all rigs currently committed to Petrohawk Arranging sufficient takeaway capacity for anticipated long-term production ramp-up Significant Growth Potential Current Haynesville acreage position constitutes over 2,400 potential risked drilling locations; 9.1 Tcfe of net risked resource potential (1) Two wells completed to date with initial production rates of 16.8 and 16.7 MMcfe/d Expect to drill 28 gross operated wells in 2008 Fayetteville Shale, Elm Grove and Terryville programs continue to outperform Exceptional Fayetteville results improving as drilling and completion technology evolves In 2Q 2008, three Lower Cotton Valley Taylor wells completed in Elm Grove with initial production rates of 7.8, 9.8, and 11.0 MMcfe/d Terryville Bossier Wedge development and Terryville Extension 3D seismic acquisition 2009 production guidance of 30-40% increase over full-year 2008 (1) Current Petrohawk net risked estimates. 3

4 Premier Assets As of June 30, Tcfe of proved reserves (1) 58% Proved developed 91% Natural gas 81% Operated 6,500 net potential drilling locations (2) 13.8 Tcfe of Resource Potential (2) Permian Low-decline / stable cash flow properties 400 net potential drilling locations (2) WEHLU Oklahoma vertical and horizontal oil resource project ~29,000 net acres Haynesville Shale Bossier Shale ~300,000 net acres 2,400+ net potential drilling locations (2) 9.1 Tcfe Resource Potential (2) James Lime Travis Peak ~12,000 net acre JV with EOG Fayetteville Shale ~157,000 net acres 2,500+ net potential drilling locations (2) 0.1 Tcfe Proved Reserves (1) 3.1 Tcfe Resource Potential (2) Elm Grove ~34,000 net acres ~650 net potential drilling locations (2) 0.7 Tcfe Proved Reserves (1) 0.7 Tcfe Resource Potential (2) Terryville ~42,000 net acres 450+ net potential drilling locations (2) 0.2 Tcfe Proved Reserves (1) 0.5 Tcfe Resource Potential (2) Note: WEHLU, Permian and James Lime / Travis Peak are part of the Western Region. (1) Proved reserves as of 6/30/08 based on internal Petrohawk estimates. (2) Current Petrohawk net risked estimates. Resource potential reflects potential hydrocarbon quantities that may not constitute reserves. 64

5 Aggressive Development Program 2008 Revised Capital Budget (1) $ Millions $500 $400 $ Capital Budget of $1.1 billion $300 $200 $218 $208 $193 $100 $86 $0 Haynesville Fayetteville Elm Grove Western Terryville 2008 Year-End Operated Rig Count Target 2009 Year-End Operated Rig Count Target Haynesville Fayetteville Elm Grove Western Terryville Haynesville Fayetteville Elm Grove Western Terryville 36 Operated Rigs 44 Operated Rigs (1) Includes drilling, completions, seismic and facilities. Excludes leasehold and other acquisitions, which may be significant. 5

6 Strong Production Growth Q production guidance of MMcfe/d 30-40% production growth over 2008 expected in 2009 MMcfe/d 400 Quarterly Average Production MMcfe/d 450 Annual Average Production (2) 350 ~14% Growth % Growth % Growth 237 8% Growth ~11% Growth % Growth Haynesville Fayetteville Elm Grove Terryville Western Q4A 2007 (1) Q1A Q2A Q3E Q4E 2008 (1) Pro forma production for divestments and acquisitions. (2) Haynesville production growth will be largely dependent upon outcome of expected exploratory drilling program Pro Forma (1) Guidance 6

7 Haynesville - A Growing Core Asset for HK Haynesville Net Acreage 2008 Haynesville Capital Budget (1) Net Acres 400,000 $ Millions $240 $ , ,000 $ , ,000 $120 $ ,000 58,000 $60 0 March 2008 Analyst Day May 2008 Equity Offering Current $0 $0 March 2008 Analyst Day May 2008 Equity Offering Current Haynesville Resource Potential (2) Dedicated Haynesville Operated Rigs Tcfe 12.0 # Rigs March 2008 Analyst Day May 2008 Equity Offering Current March 2008 Analyst Day 2 May 2008 Equity Offering YE 2008E YE 2009E (1) Includes drilling, completions, seismic and facilities. Excludes leasehold and other acquisitions, which may be significant. (2) Current Petrohawk net risked estimates. 7

8 Leverage to the Haynesville Shale Haynesville Shale Net Acreage / Enterprise Value ($MM) HK GMXR CRK XCO SM PVA PXP FST CHK DVN GDP COG ECA STR XTO EP Haynesville Shale Net Acreage (000s) DVN ECA CHK HK XCO PXP XTO FST CRK SM PVA EP GMXR COG STR GDP Note: Acreage figures per company announcements. Enterprise values per FactSet as of August 8,

9 Haynesville - Compelling Economics IRR% 280% 240% 200% 160% 120% Key Assumptions 80 Acre Spacing 75% NRI 5 Bcf Gross EUR / Well 8 MMcfe/d Gross IP $7.5 MM Drill and Complete Capex Assumed Leasehold $ per acre $5,000 (HK Avg) $10,000 $20,000 $30,000 80% 40% 0% $6.00 $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 Flat Gas Price ($ per MMBtu) Note: Rates of return assume drilling and completion within 60 days of lease acquisition. See page 22 for an explanation of hydrocarbon quantities. 9

10 Low Cost / High Margin Operator Lease operating costs among the lowest in the sector Q LOE = $0.50 / Mcfe Significant cash margins over a wide range of gas prices Active hedging program; target ~70% of expected current year production Premium price realizations 101% of NYMEX for gas / 95% of NYMEX for oil (1) Resource Companies Q Operating Cost Comparison (2) Non Resource Companies $/Mcfe $3.00 $/Mcfe $3.00 $2.00 $2.00 $0.94 $0.94 $1.00 $1.00 $0.00 SWN UPL HK RRC SD KWK GDP $0.00 HK FST XTO CRK SM XEC SFY EAC COG PXP WLL (1) Based on Q realized prices. Gas prices include NGLs. Before impact of hedges. (2) Operating costs include LOE, workover, gathering and transportation. 10

11 Creating Shareholder Value 2008 capital raises have supported strong growth in both proved reserves and resource potential Capital deployed year-to-date continues to create significant value for shareholders Indexed Price (%) 300 1/1/2008 Current Growth 250 Proved Reserves Resource Potential (2) 1.1 Tcfe 3.4 Tcfe 1.3 Tcfe 13.8 Tcfe (1) ~25% ~300% May 8, 2008 Offering Resource Potential (2) : 10.3 Tcfe HK YTD 71% Resource Potential (2) : 13.8 Tcfe Peers YTD (1)% 50 January 29, 2008 Offering Resource Potential (2) : 3.4 Tcfe 0 1/1/2008 1/25/2008 2/18/2008 3/14/2008 4/7/2008 5/2/2008 5/26/2008 6/20/2008 7/14/2008 8/8/2008 Petrohawk Peer Group (3) (1) Proved reserves as of 6/30/08 based on internal Petrohawk estimates. (2) Current Petrohawk net risked estimates. (3) Peer group includes: RRC, SD, SWN, KWK, GDP, UPL. 11

12 Capital Structure and Liquidity Strong credit profile HK's asset base provides additional financial flexibility including potential asset sales or joint venture opportunities Anticipate ~$1.5 billion in liquidity post closing (1) $ Millions, unless otherwise noted As of June 30, 2008 As Adjusted for Actual this Offering Cash (2) $1 $638 Long-term debt Senior revolving credit facility (2) $0 $0 9 7/8% senior notes /8% $775 million senior notes /8% $800 million senior notes /8% $275 million senior notes Deferred premiums on derivatives 5 5 Total long-term debt $1,831 $1,831 Total stockholders' equity 2,900 3,538 Total capitalization $4,732 $5,369 Credit Statistics: Net Debt / Net Book Capitalization (3) 39% 25% Net Debt / Proved Reserves ($/Mcfe) (3) (4) $1.37 $0.89 Note: Net proceeds assumes a 25 million share offering and stock price of $26.53 as of August 11, (1) Borrowing base redetermination is in process. Liquidity estimate based on expected borrowing base increase from current $800 million to $1.1 billion and adjusted for revolver balance of $258 million as of August 11, (2) As of August 11, 2008, there was $258 million of borrowings outstanding under the senior revolving credit facility, all of which will be repaid with a portion of the proceeds from the offering. Marketable securities of $490 million as of June 30, 2008 have been liquidated and used in operations as of August 11, (3) Calculation of net debt excludes $490 million of marketable securities as of June 30, (4) Proved reserves of 1.33 Tcfe as of June 30, 2008 based on internal Petrohawk estimates. 12

13 Haynesville Shale Net Acreage: ~300,000 Net Potential Drilling Locations: 2,400+ on 80 acre spacing (1) Harrison Caddo Bossier Webster Resource Potential: 9.1 Tcfe (1) Bienville Est. Well Cost: $7.5 MM Panola De Soto Red River Est. EUR: 5.0 Bcfe / Well (2) 2008 Budget: ~99% operated Shelby 2008 capital budget $218 million Expect to drill 28 operated gross horizontal wells in 2008 and 140 in 2009 Sufficient rigs committed to retain all leases; expect 10 rigs by year-end 2008 and 20 by year-end 2009; all rigs are identified and allocated to this program Approximately 50% of acreage position has lease term greater than three years Assumed 60 days drill-to-connection time for 2009 and beyond (down from 2008 budgeted time of 75 days) Independent core analysis from EGP #63 indicated ~170 Bcf of total gas in place in the section All activities focused on highest quality areas Midstream strategy builds on advantages in take-away capacity and price realizations Substantial existing infrastructure in-place from current Elm Grove Cotton Valley production provides competitive advantage in hookup time, takeaway capacity and marketing optionality for future Haynesville completions Arranging sufficient capacity for anticipated long-term production; $30 million expansion capital budgeted in 2008 (1) Current Petrohawk net risked estimates. (2) Current Petrohawk gross estimates. Note: Highlighted area on map represents acreage ownership at 1/1/08. Activity Update 13

14 2008 Haynesville Drilling Program 8 MMcfe/d IP HORIZONTAL 14 MMcfe/d IP HORIZONTAL PETROHAWK EGP # MMcfe/d IP 2.6 MMcfe/d IP VERTICAL PETROHAWK HUTCHINSON 9 # MMcfe/d IP HK Completed 3.3 MMcfe/d IP VERTICAL 15 MMcfe/d IP HORIZONTAL 8 MMcfe/d IP HORIZONTAL HK Currently Drilling HK 2 nd Half 2008 Drill Industry Completed 5 MMcfe/d IP VERTICAL 5 MMcfe/d IP VERTICAL HK 2009 Activity: 140 Planned Gross Operated Wells ~ 110 Miles 14

15 Fayetteville Shale Net Acreage: ~157,000 (155,000 undeveloped) Net Potential Drilling Locations: 2,500+ on 40 acre spacing (1) Resource Potential: 3.1 Tcfe (1) Proved Reserves: Est. Well Cost: 0.1 Tcfe $ MM Pope Van Buren Cleburne Independence Est. EUR: 1 4 Bcfe / Well (2) 2008 Budget: ~80% operated Conway Faulkner White Activity Update 2008 capital budget of $395 million Currently operating 9 rigs growing to 10 rigs by late 3Q 2008 Drilled 30 gross operated wells and 59 gross non-operated wells in 2Q 2008 Capitalizing on tight-gas drilling and completion expertise Northern development area continues to show promise with lower drilling time and costs compared to other areas in the play Two wells completed in 2Q had initial production rates of 3.2 MMcfe/d and 2.7 MMcfe/d Realizing benefits of midstream infrastructure investment Newly-formed Hawk Field Services, LLC will gather nearly all of Petrohawk s operated production Improved access to market, price realizations and reduced cost structure $30 million of midstream capital spent YTD in acquisitions and new construction, $90 million budgeted Facilities sized to handle significant additional capacity with nominal incremental capital investment (1) Current Petrohawk net risked estimates. (2) Current Petrohawk gross estimates. 15

16 Elm Grove Field Net Acreage: ~34,000 (20,000 undeveloped) Net Potential Drilling Locations: Resource Potential: 650 on 20 acre spacing (1) 0.7 Tcfe (1) Bossier Webster Proved Reserves: 0.7 Tcfe Est. Well Cost: Vertical: $1.8 MM Horizontal: $4.5 MM Hosston Recompletion: $0.6 MM De Soto Caddo Bienville Est. EUR / Well (2) : Vertical: 1.2 Bcfe Horizontal: 5.0 Bcfe Hosston Recompletion: 0.5 Bcfe Red River 2008 Budget: 90%+ operated Activity Update 2008 capital budget of $208 million Expect to drill ~115 gross operated wells and 39 gross non-operated wells in 2008 Drilled 30 gross operated wells and 10 gross non-operated wells in 2Q 2008 Currently running 10 rigs Re-completed 14 wells in May 2008 with incremental production of 11 MMcfe/d gross (7.5 MMcfe/d net) Drilled three Lower Cotton Valley Taylor horizontal wells in 2Q08 with initial production rates of 7.8, 9.8 and 11.0 MMcfe/d (1) Current Petrohawk net risked estimates. (2) Current Petrohawk gross estimates. 16

17 Terryville Field Net Acreage: Net Potential Drilling Locations: Resource Potential: ~42,000 (37,000 undeveloped) 450+ on 40 acre spacing (1) 0.5 Tcfe (1) Claiborne Proved Reserves: 0.2 Tcfe Est. Well Cost: Est. EUR: $ MM Bcfe / Well (2) Bienville Lincoln 2008 Budget: 90%+ operated Activity Update 2008 capital budget of $86 million Expect to drill ~49 gross operated wells and 10 gross non-operated wells in 2008 Drilled 16 gross operated wells and 3 gross non-operated wells in 2Q targeted Bossier sands in addition to Lower Cotton Valley sands; average initial production rate for these wells averaged 5.6 MMcfe/d 50 sq. mile 3D survey completed; survey underway for additional 60 sq. miles Currently completing first two wells in the western extension of the field Horizontal exploitation; Gray sand and Bossier sand exploration (1) Current Petrohawk net risked estimates. (2) Current Petrohawk gross estimates. 17

18 The Opportunity Petrohawk is an exceptional operator of accelerated, ground-up development programs in resource plays Success in exploiting Cotton Valley and Fayetteville Shale potential in current core asset base ~14 Tcfe of current resource potential; over 6,000 net potential drilling locations (1) Petrohawk is a leader in the Haynesville Shale Expect Haynesville potential to eclipse total value of legacy resource asset base Excellent early results; ~17 MMcfe/d IPs from two Petrohawk completions to date 300,000 net acres owned or committed, up from 150,000 net acres in May Average cost per acre of approximately $5,000 to date; focusing on quality additions Rigs, leasehold term, and marketing arrangements in place to execute accelerated program Petrohawk continues to deliver on its concentrated, high-quality, lower-risk and lower-cost development strategy ~25% reserve growth at mid-year 2008 from year end 2007 Production expected to grow 50% from Q to Q4 2008; full year 2009 production expected to grow 30-40% over full year 2008 Lease operating costs continue to be among the lowest in the sector, price realizations are among the highest Cash margins to generate strong returns in almost any commodity price environment Petrohawk believes its NAV per share is substantially higher than current trading values (1) Current Petrohawk net risked estimates. Resource potential reflects potential hydrocarbon quantities that may not constitute reserves. 18

19 August 2008