Tickers in this Article: HK, GMXR, XCO, EPD
Petrohawk Energy (NYSE:HK) continue its rapid development of its properties in the Haynesville Shale as the company worked toward its goal of converting its acreage before leases expire. The company also moved forward on its three projects in the Eagle Ford Shale in Texas, where the company has acreage in the dry gas, oil window and wet gas areas of the play.

The company narrowly missed analyst expectations, partly as a result of lower production of crude and a drop in natural gas prices. Let's dig in to the details

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Second Quarter Production
Petrohawk reported average production during the quarter of 625 million cubic feet natural gas equivalent per day. Although the company is making some inroads into oil-producing areas, this production was overwhelmingly composed of natural gas, with oil and natural gas liquids adding up to only 4% of production in the quarter.

This production was also skewed toward the Haynesville Shale, where Petrohawk Energy produced an average of 386 million cubic feet natural gas equivalent per day, or approximately 62% of its production for the quarter.

Haynesville Shale
Petrohawk Energy participated in 94 gross wells in the Haynesville Shale during the second quarter of 2010, and operated 28 of these wells. The company estimates that the bulk of its leasehold in the Haynesville Shale will be held by production by the middle of 2011.

Petrohawk Energy also reported success with its efforts to increase the productivity of wells in the Haynesville Shale. The company has been experimenting with optimizing its wells over the last 12 months by restricting production and tinkering with the completion designs on its wells.

Petrohawk Energy said that the practice has led to much lower decline rates on many of its wells. A new well bore design will also save costs on future drilling on all the company's properties.

Other companies active in the Haynesville Shale in the second quarter of 2010 include EXCO Resources (NYSE:XCO), which produced an average of 128 million cubic feet per day from here, and GMX Resources (NYSE:GMXR), which brought six new wells on line in the Haynesville Shale.

Eagle Ford Shale
Petrohawk Energy is also developing the Eagle Ford Shale and is focusing on the Hawkville Field, and the Black Hawk and Red Hawk prospects. The company reported average production of 51 million cubic feet natural gas equivalent per day and drilled 18 wells here in the second quarter of 2010.

At the Black Hawk prospect, which is in the wet gas part of the Eagle Ford Shale, the company reported five well completions during the second quarter of 2010. These wells all produced a mix of natural gas and condensate. Management of Petrohawk Energy called the prospect the "the most economic drilling area" in the company's portfolio based on rate of return.

All this development in the Eagle Ford Shale has created the need for pipelines and processing infrastructure. Enterprise Products Partners L.P. (NYSE:EPD) recently announced several new projects here to help meet this need for new capacity.

The Bottom Line
Petrohawk Energy is developing the company's properties in the Haynesville Shale and will have the majority of the acreage held by production by 2011. This will give the company the flexibility to reallocate some capital to other areas, including the Eagle Ford Shale in Texas. (To learn more, check out our Oil And Gas Industry Primer.)

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