Acquisitions in the Current Market: Navigating Through the Perfect Storm Society of Petroleum Engineers General Meeting January 13, 2005
Forward-Looking Statements This presentation includes certain statements that may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this…
Todays Discussion Introduction to Petrohawk Current Acquisitions Market Wynn-Crosby Transaction 3
Who is Petrohawk Energy Corporation Houston-based E&P company formed in June 2003 Initial capitalization - 60 million Significant management investment 10% Search for opportunities that are not price-driven Principals have a proven…
Management Team Experienced management team with significant investment in the Company Former Chairman, CEO and founder of 3TEC Energy Floyd C. Wilson Proven track record of building companies and shareholder value Chairman,…
How This Team Builds Value Establish a well-capitalized platform Oil and gas business is capital intensive Start out with adequate funding Grow reserves and production Additional corporate or asset acquisitions Primarily operated…
Case History 3TEC Energy Corporation Strategy Execution 1999: Recapitalization of Middle Bay Oil Company EnCap/Wilson completed 21.4 million recapitalization in August 1999 Initial Investment No market liquidity or debt capacity 50…
The Current Acquisitions Market
Is This Boom Different 1981 2004 Oil Prices 40 45 Interest Rates 18% 3% Rig Count 4,500 1,200 Hedging Markets none mature A&D Market infancy deal every day Astros heartbreak heartbreak YES Because Global oil demand keeps…
Acquisition Market: The Perfect Storm 10
Current Acquisition Market: Why Buy Now Property prices at all-time highs Who would have thought wed see 2.00+ / Mcfe in the ground More competition than ever before Everyone is chasing the next hot deal Every seller hires a…
Why Now is a Great Time to Buy Better margins than ever before Isnt it better to buy at 2.00/Mcfe and sell for 6.00/Mcfe than to buy at 1.00/Mcfe and sell for 2.50/Mcfe Borrow money cheaply Rates are low and banks are hungry for…
This Time The Food Chain in Reverse WYNN-CROSBY PETROHAWK 15
Petrohawk Why Buy Wynn-Crosby Significant reserves and production achieve critical mass quickly 200 Bcfe proved reserves, 46 Mmcfe per day production 75% proved developed, 74% natural gas Underdeveloped property base numerous upside…
Wynn-Crosby Why Sell to Petrohawk One buyer for all properties Operated, Non-operated, Royalty Eliminate long, multiple data room process Preparation for data rooms would add months to sale process Willing to pay good price for good…
425 Million From Where Conventional Bank Debt 160 million 200 million borrowing base Bank group led by BNP Paribas 2nd Lien Bank Debt 50 million Five-year term, no prepayment penalty Placed within bank group Public Equity 200…
Getting it Done All Hands on Deck Introductory Meeting Start Technical Evaluation Agree on Deal Framework Finish Technical Evaluation Negotiate PSA Sign PSA Execute Hedges Equity Roadshow Bank Facility Price Equity…
Pro Forma Highlights At July 1, 2004 pro forma for acquisition 233 Bcfe Estimated Total Proved Reserves 68% PDP, 8% PDNP, 24% PUD 74% Natural Gas, 60% Operated, R/P Ratio of 11 years 57 MMcfe/day growing to 65 MMcfe/day average…
Petrohawk Today At July 1, 2004 pro forma for acquisition 233 Bcfe 57 MMcfe / day Anadarko 29% Reserves & Production Non-Op Probable Upside 67 Bcfe Arkoma 9% Reserves & Production 80,000 Net Undeveloped Acres 20 Bcfe East…
Conclusion Strong industry fundamentals High product prices in at least the medium term Capital available to proven companies Best sellers market of all time Very efficient, competitive marketplace Food chain at work every day…
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