In a blaze of good news, Petrohawk Energy Corp., Houston, (NYSE: HK) outperformed its peers by 13%, according to the Tudor, Pickering, Holt & Co. Securities Inc. research team of David Heikkinen and Brad Pattarozzi.
 
Heikkinen says that Petrohawk’s good news included its unveiling the Eagle Ford shale in South Texas, increasing confidence in the Haynesville shale and providing a positive bias to 2009 estimates.

With the unveiling of its work in the Eagle Ford shale, Heikkinen says two things stood out—gas and condensate reservoir was reported at slightly greater than normal pressure. 

“This says steeper initial declines as the lower reservoir pressure provides less flow rate support and liquids may lead to wells loading-up with fluid as pressure decline making them harder to produce,” he says. Heikkinen says the estimate is a typical well will recover 3.5- to 4 billion cubic feet equivalent.

“We also assume the additional fluids will lead to higher operating costs,” Heikkinen says.  This is a new play, he adds, with Petrohawk having pulled together about 100,000 net acres.

He adds that a $5-million well generates a 12% internal rate of return at $5 gas. 
 
“Under these assumptions, Eagle Ford economics fall behind Haynesville and Fayetteville, but certainly nothing to sneeze at,” Heikkinen says. “We continue to be impressed—and close to amazed—by the sustained production rates from Petrohawk’s first three Haynesville wells.”

Heikkinen says that his new 2009 estimate is 42% production growth, versus guidance of 25% to 35%.

“Our previous 25% estimate was too conservative on the Haynesville,” Heikkinen says, “but our confidence in Petrohawk’s ability to grow increases with every well reported from Petrohawk and the industry.”

Petrohawk reports it will have 18 wells producing by year-end and should drill 70 or more wells in 2009.  Heikkinen says the estimated Haynesville volumes jump from 13 billion cubic feet equivalent to 39 billion.—JAS