Tuesday, May 25, 2010

Petrohawk: Post Script

Lest any Haynesville fans get too full of a head from Petrohawk's very positive analyst day, there was one comment towards the end of the Eagle Ford Shale section of the presentation that doesn't bode well for the Haynesville.  When management was asked by an analyst about its three year plan for rig utilization, the speaker responded:
"The three year plan is going to be dictated by commodity prices, don't you think?...If we're still at $4 gas in early '12, and we really have lease capture in the bag, which we will, do we need to spend $800 million in the Haynesville?  Probably not.  And then we can shift some more money over into Blackhawk (in Eagle Ford Shale), just to accelerate Blackhawk.  Just because we want to and we can."
In other words, if prices continue to suck wind for the next few years, when companies stop drilling to hold leases, drilling activity in the Haynesville Play will decline dramatically.   File that away under "impact of low gas prices."

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