Thursday, February 17, 2011

Petrohawk Energy Corp. (NYSE: HK): Q4 Earnings Preview

Petrohawk Energy Corporation (NYSE: HK) is scheduled to release its fourth-quarter earnings before the opening bell on Tuesday, February 22, 2011. Analysts, on average, expect the company to report earnings of 15 cents a share on revenue of $454.75 million. In the year ago period, the company reported earnings of 12 cents per share on revenue of $354.89 million.

Petrohawk Energy Corporation engages in the exploration, development, and production of oil and natural gas properties in the United States.

Natural gas has been touted as the next big fuel, as it burns cleaner, more efficiently, and can be cheaper than oil. Natural gas is taking on a bigger energy role in the U.S., especially for electricity generation. However, natural gas prices are likely to remain low for the foreseeable future. Oil prices rose 15 percent in 2010, while natural gas fell 21 percent. The reason for the drop in natural gas prices wass simply supply and demand. Natural gas supplies have grown in recent years as new technologies have made it easier for producers to unlock previously unreachable reservoirs in onshore shale formations. In addition, natural gas is expensive to drill and energy companies are required to sign leases that require that they keep producing.

In the preceding third quarter, the Houston, Texas-based company's net income was $98.68 million or $0.33 per share, compared to a loss of $40.18 million or $0.14 per share in the same quarter last year. Excluding selected items, adjusted net income was $39.86 million or $0.13 per share, up from $31.21 million or $0.11 per share in the prior-year quarter. Total operating revenues rose sharply to $409.18 million from $237.94 million in the year-ago quarter. Analysts, on average, expected the company to report earnings of $0.14 per share on revenue of $415.37 million.

Recently, the company said that its fourth-quarter output rose about 48 percent to average 761 million cubic feet of natural gas equivalent per day. In the fourth quarter, net production from the two shales in the south-eastern part of United States doubled from a year ago. The company also said that oil, condensate and natural gas liquids will make up for 12 percent of its production in the current year, up from 5 percent in 2010. The midpoint of its full-year 2011 production outlook of 885 mmcfe/d is 31 percent higher than last year. It forecast a 23 percent jump in first-quarter production at 770 mmcfe/d.

In November, Petrohawk Energy announced a preliminary capital budget for 2011 of $2.3 billion. The company has allocated $1.9 billion in capital in 2011 to drill and complete wells on its acreage in the United States. The company will allocate $900 million each to the Haynesville and Eagle Ford Shale. This capital will be used to drill 332 gross wells in the Haynesville Shale and 145 gross wells in the Eagle Ford Shale. Petrohawk Energy estimates that this capital will be enough to grow production by 35% in 2011 compared to 2010. The Eagle Ford shale play in South Texas is Petrohawk Energy Corp.'s key asset to transition away from being focused nearly totally on natural gas.

In both Haynesville and Eagle Shale, Petrohawk spent readily in 2010 to bring acreage to held by production, securing acreage for ongoing production. The company plans to reduce its activity in Haynesville by year end to 7 from 16 rigs. A maturing of its development in Haynesville allows Petrohawks capex to focus on ramping Eagle Shale, where the company plans to operate 12 rigs this year.

Last month, Petrohawk Energy Corp. that it sold natural-gas wells and pipelines in the Fayetteville Shale to Exxon Corp. for $575 million.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire