Heritage Bumps Production at Russian Field

- Heritage Bumps Production at Russian Field

Tuesday, August 16, 2011
Heritage Oil plc

Heritage announced that the drilling and testing of horizontal well 363 has been completed in the Zapadno Chumpasskoye Field in Russia, resulting in a significant increase in production.

Highlights

• Production from the field has increased from 431 bopd in the first quarter to a current level of c.1,600 bopd
• Oil is light gravity (39˚ API) and sweet
• The well tested at rates of up to 1,405 bopd and is currently producing 1,205 bopd
• Maximum well potential calculated to be 2,365 bopd
• Further horizontal drilling is planned with the next well scheduled to spud in the fourth quarter

Heritage announced the drilling and testing of the first horizontal well in the Zapadno Chumpasskoye Field has completed and results have exceeded pre-drill expectations. Production from the field is currently c.1,600 bopd, which is a significant increase on the level achieved in the first quarter of 431 bopd.

Well 363 is currently producing at a controlled rate of 1,205 bopd. During the flow test, the well produced at rates of up to 1,405 bopd and the well potential has been calculated to be 2,365 bopd. Currently, we plan to drill a further horizontal well in the field in the fourth quarter.

Historical development of this reservoir throughout the region has been through conventional drilling on a grid pattern. Heritage recognized a potential opportunity to improve the efficiency and economics of field development by utilizing horizontal drilling technology, thus decreasing the number of wells and the total cost required to develop the field while potentially improving recovery. The previous reserves review and development plan undertaken by RPS Energy in June 2009 will be updated in due course incorporating the results of well 363 and management expect these results will increase the valuation of the field.

Tony Buckingham, Chief Executive Officer, commented, "We are delighted that the first horizontal well drilled on the field has surpassed our expectations and provided a step change in our production levels. This is the fourth well we have drilled on the license and its success indicates this is the best technique to optimize development of the field. We look forward to further increases in production with the next horizontal well scheduled to spud in the fourth quarter."

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Gulf Keystone Bumps Up Resources at Sheikh Adi

- Gulf Keystone Bumps Up Resources at Sheikh Adi

Wednesday, August 10, 2011
Gulf Keystone Petroleum Ltd.

Gulf Keystone announced results of an independent preliminary evaluation of the Sheikh Adi resources by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants.

The DGA report, based on Sheikh Adi-1 wireline logging data, core samples, 2D and 3D seismic and regional data, has indicated a significant range of between 1 billion barrels and 3 billion barrels of gross oil-in-place volumes calculated on the P90 to P10 basis, with a P50 estimate of 1.9 billion barrels.

Gulf Keystone has completed drilling of Sheikh Adi-1, the first exploration well to be drilled on the Sheikh Adi structure, to a TD (total depth) of 3,780 meters in the Triassic zone. A series of flow tests will now be performed on a number of Jurassic zones in the Sheikh Adi-1 well. Testing in the Triassic zone will not be possible due to issues relating to casing integrity at these depths.

The Sheikh Adi block is located immediately to the west of the Company's Shaikan block, where a major discovery was made in 2009. Gulf Keystone is the Operator of the Sheikh Adi block with an 80 percent working interest and is carrying the Kurdistan Regional Government's 20 percent working interest in the block.

DGA's previous assessments of assets on behalf of Gulf Keystone included independent evaluation of the Shaikan discovery, including a major revision of the gross oil-in-place volumes (4.9 billion barrels to 10.8 billion barrels calculated on the P90 to P10 basis) announced in April 2011.

John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented, "This independent report demonstrates the potential of the Sheikh Adi block with between 1 and 3 billion barrels of gross oil-in-place. This report reinforces our belief in having encountered yet another potential world class oil source. We plan to further evaluate the Sheikh Adi structure and define and assess this complicated geological structure. The Sheikh Adi oil-in-place numbers are all the more significant due to our 80 percent interest in the block. These numbers are in addition to 7.5 billion barrels of P50 oil-in-place at Shaikan, 2.4 billion barrels of P50 oil-in-place at Akri-Bijeel and 1.9 billion barrels of estimated petroleum-initially-in-place at Ber Bahr. This report further demonstrates the world class nature of Gulf Keystone's assets in the Kurdistan Region of Iraq".

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Petrohawk Bumps 2Q Production by 15%

- Petrohawk Bumps 2Q Production by 15%

Wednesday, August 03, 2011
Petrohawk Energy Corp.

Petrohawk announced its second quarter 2011 operational and financial results, including significant growth in production, revenues, and cash flows.

Production for second quarter averaged 943 Mmcfe/d, a 15% quarter-over-quarter increase. Second quarter total production was 85,803 Mmcfe, of which approximately 89% was natural gas, 7% was crude oil or condensate, and 4% was natural gas liquids. Revenues for the quarter were $595 million, a 21% increase over first quarter 2011 and a 69% increase compared to the same period one year ago. The Company realized 92% of the average NYMEX oil price, 97% of the average NYMEX natural gas price, and 47% of the NYMEX oil price for natural gas liquids during second quarter.

Cash flow from operations before changes in working capital was $302 million for the quarter, or $0.99 per fully diluted common share, compared to $246 million, or $0.81 per fully diluted common share for the first quarter 2011, and $163 million, or $0.54 per fully diluted common share for the same period one year ago. Net income for the quarter, after adjusting for selected items (primarily related to the non-cash impact of derivatives), was $57 million, or $0.19 per fully diluted common share (see Selected Item Review and Reconciliation table for additional information). Before excluding selected items, the Company reported net income of $104 million, or $0.34 per fully diluted common share for the quarter.

Cash operating costs (including lease operating expense, workover expense, taxes other than income, gathering and transportation expense, and general and administrative expense) were $1.69 per Mcfe for the quarter, compared to $1.56 per Mcfe for first quarter 2011 and $1.64 per Mcfe for the same period one year ago. General and administrative expense of $0.50 per Mcfe, compared to $0.45 per Mcfe in first quarter and $0.65 per Mcfe for the same period one year ago, reflected advisory fees associated with the Kinder Morgan Energy Partners L.P. transaction (discussed below) as well as a legal settlement paid during the quarter. Lease operating expense was $0.16 per Mcfe for the quarter, compared to $0.17 per Mcfe for the prior period and $0.29 per Mcfe during the second quarter of 2010. Taxes other than income increased from $0.16 per Mcfe for the first quarter 2011 to $0.20 per Mcfe for the second quarter. Gathering and transportation expense for oil and gas increased from $0.69 per Mcfe for the prior period to $0.75 per Mcfe, and depletion expense, a non-cash item, was $2.20 per Mcfe for the quarter compared to $2.06 per Mcfe for the first quarter of 2011.

During the second quarter, Petrohawk spent approximately $621 million on drilling and completions, $239 million on leasehold acquisitions, primarily in the Permian region, and $77 million on gathering and treating infrastructure, primarily in the Eagle Ford Shale. At June 30, the Company's revolving credit facility had an outstanding balance of approximately $559 million.

On July 1, Petrohawk completed the sale of its remaining interest in KinderHawk Field Services LLC and a 25% interest in EagleHawk Field Services LLC to affiliates of Kinder Morgan Energy Partners, L.P. This transaction netted pre-tax proceeds of approximately $836 million, which were used to pay down the Company's revolving credit facility and as working capital for general corporate purposes.

Haynesville Shale

During the quarter, the Company averaged 11 operated rigs and drilled 21 operated wells, with net production in the field averaging 684 Mmcfe/d. Sixty-seven non-operated Haynesville Shale wells and 3 Bossier Shale wells were drilled during the quarter. Non-operated activity exceeded expectations during the quarter, in terms of both activity level and capital expenditures, primarily due to the transition to full section development by some operators during the quarter. Petrohawk expects that lower rig counts publicly announced by many industry partners point to lower activity levels in the Haynesville Shale during the second half of the year. Petrohawk is currently operating six rigs and has two dedicated frac fleets in the Haynesville Shale.

The Company achieved an overall cost reduction trend in Haynesville Shale completions during the quarter. Savings of approximately $600,000 to $800,000 per well were accomplished largely as a result of changes in well design that require two fewer frac stages per well, lower overall sand requirements per well, and improved pricing for resin coated sand. During the quarter Petrohawk averaged slightly less than 45 days spud to spud, more than 5 fewer days than during the preceding quarter. Significant additional improvements are expected as the Company moves toward pad drilling and full section development toward the end of 2012.

Improvements in water handling and usage have contributed to more flexibility in water sourcing in the Haynesville Shale. Approximately half of all Petrohawk-operated wells in field have been completed with 20% recycled water. Year to date, the Company has pumped approximately over 2 million gallons of recycled waste water on well completions in the Haynesville Shale.

Eagle Ford Shale

The Black Hawk area (DeWitt County, Texas) continues to produce excellent results. A majority of Petrohawk-operated wells were produced on a constrained basis due to transportation infrastructure limitations. During the quarter, Petrohawk averaged nine operated rigs in the Black Hawk area, with 25 operated and one non-operated wells drilled. Net production from Black Hawk averaged 73 Mmcfe/d, comprised of 22% natural gas, 62% condensate and 16% natural gas liquids. Transportation infrastructure issues for the Company are moderating in the area with the addition of a dedicated truck fleet. Modifications to facilities at the Company's Point Comfort barge facility are nearly complete and the facility is expected to begin operating during the third quarter.

In Hawkville Field (LaSalle and McMullen Counties, Texas), Petrohawk averaged five operated rigs and drilled 15 operated wells and two non-operated wells during the quarter. Net production in the field averaged 129 Mmcfe/d, comprised of 67% natural gas, 14% condensate and 20% natural gas liquids. Well performance in Hawkville Field has continued to improve as a result of the expanded implementation of HiWAY frac technology, deployed by two dedicated Schlumberger hydraulic fracturing fleets. Petrohawk and Schlumberger are experimenting with variations in the HiWAY design, including higher sand volumes and fiber concentrations, in an attempt to optimize well performance for each area of the Eagle Ford trend. In addition, the Company is testing new frac designs in both the Hawkville Field and Black Hawk area with its Halliburton dedicated hydraulic fracturing fleet.

Results in the Red Hawk prospect in Zavala County, Texas, failed to meet minimum expectations during the quarter. As a result, capital spending at Red Hawk will be terminated and capital budgeted for 2011 will be reallocated to other operating areas.

Permian Region

Petrohawk is currently operating four rigs in the Permian region, all concentrated in the Delaware Basin where the majority of the Company's leasehold is located. An initial vertical well in Culberson County, Texas tested approximately 1.0 Mmcf/d of 1250 BTU gas from the Wolfcamp formation. Total depth was reached on the Company's first horizontal Bone Springs well in Reeves County, Texas. A completion date for this well has been set for early August. A commingled Wolfcamp and Bone Springs vertical completion in Reeves County is planned with a completion date expected in mid-August. The Company is also currently drilling the lateral portion of its first horizontal Wolfcamp well in Culberson County with a planned completion date of mid-August. In addition, the Company is undertaking necessary infrastructure construction in order to market all products with minimum delays as wells come online.

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