Petrohawk Energy Promises Free Cash Flow By 2012

Petrohawk Energy (HK-$22.16) is nursing a mighty hangover after awaking from a 2 ½-year buying binge — $5 billion spent on acquiring leasehold interests in unconventional pay zones, specifically the Haynesville Shale, Fayetteville Shale, and Eagle Ford Shale plays. Petrohawk is like the U.S. Treasury in some respects, having funded its expansive appetite with paper — common stock outstanding has almost doubled since 2006 to 300 million shares — and deficit spending: At September 30, long-term stood at approximately $2.4 billion, roughly 73 percent of stockholder equity. And, interest expense to service this debt totaled $174 million through September, up from $88.4 million in all of 2006, according to regulatory filings.

“Today we stand with an excellent liquidity position sufficient to execute our 2010 drilling program,” chairman and chief executive officer Floyd Wilson proclaimed to analysts on the February 1 operations call. Management also anticipates turning free cash flow positive (operating cash flow less capex) come 2012.

Wilson gave a similar speech in May 2006. Can he deliver this time around? Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.