Independent energy company Petrohawk Energy Corp. (HK) on Wednesday reported a net loss for the fourth quarter that widened from a year ago, hurt by a hefty impairment charge to reflect a fall in the value of the company's assets due to the sharp fall in commodity prices during the quarter. The company raised its forecast for fiscal year 2009 average daily production.
Oil prices, which touched a record high in July 2008, receded during the fourth quarter owing to the decline in demand brought about by a recession-gripped economy. From $147 a barrel in July 2008, the price of crude oil plunged to less than $45 per barrel by the turn of the year. The price of natural gas is also off nearly 66% from its summer peak of $13.58.
Fourth Quarter Results
For the fourth quarter, the Houston, Texas-based company's net loss available to common shareholders widened to $545.14 million, or $2.18 per share, from net loss of $114 thousand in the previous-year quarter.
The results for the latest quarter include non-cash impairment charge of the full cost pool of approximately $950.80 million, a hedging related non-cash mark-to-market gain of $173.30 million and an income tax benefit of $242.33 million primarily related to the full cost pool impairment.
The adjusted net loss for the quarter was $9.98 million, or $0.04 per share, compared to adjusted net income of $25.81 million, or $0.15 per share, in the same period last year. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings for the quarter of $0.03 per share. Analysts' estimates typically exclude special items.
Total operating revenues for the quarter increased 19% to $270.70 million from $227.34 million in the prior-year quarter. Analysts expected revenues for the quarter of $225.87 million.
Oil and gas revenues for the quarter declined 9% to $207.13 million from $227.34 million a year ago, while marketing revenues for the quarter were $63.55 million.
Peer Performance
In early February, Comstock Resources Inc. (CRK) reported a net loss for the fourth quarter of $96.4 million or $2.15 per share, compared to net income of $21.7 million or $0.48 per share in the same quarter last year. Revenues for the quarter increased to $100.2 million from $95.5 million in the comparable quarter last year.
Other Metrics
Petrohawk's depletion, depreciation and amortization costs for the latest quarter were $127.34 million, up from $98.00 million in the year-ago quarter. Total operating expenses for the quarter surged to $1.20 billion from $164.11 million in the same period last year.
Cash flow from operations before changes in working capital was $120.47 million or $0.48 per share, compared to $138.00 million or $0.82 per share in the previous-year quarter.
Petrohawk's production for the fourth quarter was 361 million cubic feet natural gas equivalent per day, or Mmcfe/d, up 19.1% from 303 Mmcfe in the previous-year quarter. Total production for the quarter was 33.2 billion cubic feet of natural gas equivalent, or Bcfe, which includes 30.6 billion cubic feet of natural gas and 426 thousand barrels of oil. The total production for the year-ago period was 27.9 Bcfe.
The company's net realized natural gas price for the quarter declined to $6.29 per Mcf from $7.51 per Mcf a year ago, while net realized oil price declined to $61.92 per Bbl from $78.51 per Bbl in the prior-year quarter.
Before the effect of derivatives, natural gas price realizations for the quarter were $5.87 per Mcf, or 85% of the average Nymex price for the quarter. Oil price realizations for the quarter were $55.42 per barrel, or 94% of the Nymex price.
The company noted that during the quarter, price realizations in the Fayetteville Shale area were substantially reduced due to delays in completion of the Boardwalk pipeline.
Fiscal Year 2008 Results
For the full year 2008, Petrohawk posted a net loss available to common shareholders of $388.05 million, or $1.77 per share, compared to net income of $52.90 million, or $0.31 per share, a year ago.
On an adjusted basis, net income for the year was $114.29 million, or $0.49 per share, compared to net income of $109.31 million, or $0.64 per share, in the previous year. Wall Street analysts expected the company to report earnings for the year of $0.60 per share.
Total operating revenues for the year were $1.10 billion, up 24% from $883.41 million last year. Analysts had a consensus revenue estimate for the year of $1.05 billion.
Oil and gas revenues for the year rose to $1.03 billion from $883.41 million in the prior year, while marketing revenues for the year were $63.55 million.
For the year, Petrohawk's production averaged 305 Mmcfe/d and totaled 111.6 Bcfe, a 39% increase from a year ago, excluding divestments.
Cash flow from operations for the year before changes in working capital was $600.57 million or $2.74 per share for the year, compared to $577.80 million or $3.37 per share in the prior year. Petrohawk reported 1.418 trillion cubic feet of natural gas equivalent, or Tcfe, of proved reserves as of December 31, 2008, adding a record 465 Bcfe through drilling, resulting in 34% year-over-year reserve growth. The total proved reserves consist of 1.335 Bcf of natural gas and natural gas liquids and 13.8 million barrels of oil.
Outlook
For the first quarter of fiscal year 2009, Petrohawk forecasts average daily production to be between 400 and 410 MMcfe/d.
For fiscal year 2009, the company raised its forecast for average daily production to a range of 422-432 MMcfe/d, from the prior range of 392-402 Mmcfe/d. The revised forecast represents an increase of about 40% over the average daily production rate of 305 MMcfe/d in 2008.
Petrohawk said that about 252 million British thermal unit, or MMbtu, of natural gas per day and 750 Bbls of oil per day, or 60% of the company's current expected annual production, is currently hedged at weighted average prices between $7.57 and $11.79 per MMbtu for natural gas and swapped at $77.00 per barrel for oil.
Stock Quotes
In Wednesday's regular trading session, HK is trading at $18.49, up $0.99 or 5.66% on a volume of 1.79 million shares. The stock has been trading in a range of $8.49-$54.49 in the past 52 weeks.
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