Petrohawk Energy 8-K/A Receivables from derivative contracts

Exhibit 99.1

Petrohawk Energy Corporation

Unaudited Pro Forma Consolidated Balance Sheet

(In thousands)

	September 30, 2007
	Historical			Adjustments			Pro Forma
Current assets:
Cash	$	9,801		$	—		$	9,801
Accounts receivable		137,533			—			137,533
Receivables from derivative contracts		23,168			—			23,168
Prepaid expenses and other		17,659			—			17,659
Total current assets		188,161			—			188,161
Oil and gas properties(full cost method):
Evaluated		3,647,045			(686,642	)(1)		2,960,403
Unevaluated		532,200			(108,796	)(2)		423,404
Gross oil and gas properties		4,179,245			(795,438	)		3,383,807
Less—accumulated depletion		(672,527	)		—			(672,527	)
Net oil and gas properties		3,506,718			(795,438	)		2,711,280
Other operating property and equipment:
Gross other operating property and equipment		18,452			—			18,452
Less—accumulated depreciation		(6,042	)		—			(6,042	)
Net other operating property and equipment		12,410			—			12,410
Other noncurrent assets:
Goodwill		938,002			—			938,002
Debt issuance costs, net of amortization		12,899			—			12,899
Receivables from derivative contracts		1,257			—			1,257
Note receivable		—			95,147	(3)		95,147
Restricted cash		—			650,000	(4)		650,000
Other		6,357			—			6,357
Total assets	$	4,665,804		$	(50,291	)	$	4,615,513
Current liabilities:
Accounts payable and accrued liabilities	$	305,797		$	—		$	305,797
Current portion of deferred income taxes		3,593			—			3,593
Liabilities from derivative contracts		13,419			—			13,419
Current portion of long-term debt		1,431			—			1,431
Total current liabilities		324,240			—			324,240
Long-term debt		1,613,422			(27,000	)(5)		1,586,422
Liabilities from derivative contracts		3,628			—			3,628
Asset retirement obligations		45,910			(23,291	)(6)		22,619
Deferred income taxes		681,107			—			681,107
Other noncurrent liabilities		2,658			—			2,658
Commitments and contingencies
Stockholders’ equity:
Common stock		170			—			170
Additional paid-in capital		1,857,345			—			1,857,345
Retained earnings		137,324			—			137,324
Total stockholders’ equity		1,994,839			—			1,994,839
Total liabilities and stockholders’ equity	$	4,665,804		$	(50,291	)	$	4,615,513

See accompanying notes to the unaudited pro forma consolidated financial statements.

Petrohawk Energy Corporation

Unaudited Pro Forma Consolidated Statement of Operations

(In thousands, except per share amounts)

	Nine Months Ended September 30, 2007
	Petrohawk Historical			Adjustments			Petrohawk Pro Forma
Operating revenues:
Oil and gas	$	656,062		$	(211,577	)(7)	$	444,485
Operating expenses:
Production:
Lease operating		50,528			(18,107	)(7)		32,421
Workover and other		6,132			(2,800	)(7)		3,332
Taxes other than income		43,122			(13,594	)(7)		29,528
Gathering, transportation and other		23,288			(5,625	)(7)		17,663
General and administrative		48,420			—			48,420
Depletion, depreciation and amortization		297,160			(82,941	)(8)		213,661
					(558	)(6)
Total operating expenses		468,650			(123,625	)		345,025
Income from operations		187,412			(87,952	)		99,460
Other expenses:
Net loss on derivative contracts		(7,005	)		—			(7,005	)
Interest expense and other		(96,847	)		1,245	(9)		(95,602	)
Total other expenses		(103,852	)		1,245			(102,607	)
Net income (loss) before income taxes		83,560			(86,707	)		(3,147	)
Income tax (provision) benefit		(30,549	)		30,549	(10)		1,151
					1,151	(10)
Net income (loss)	$	53,011		$	(55,007	)	$	(1,996	)
Earnings (loss) per share of common stock:
Basic	$	0.32					$	(0.01	)
Diluted	$	0.31					$	(0.01	)
Weighted average shares outstanding:
Basic		167,671						167,671
Diluted		171,779						171,779

See accompanying notes to the unaudited pro forma consolidated financial statements.

Petrohawk Energy Corporation

Unaudited Pro Forma Consolidated Statement of Operations

(In thousands, except per share amounts)

	Year Ended December 31, 2006
	Petrohawk Historical			Adjustments			Petrohawk Pro Forma
Operating revenues:
Oil and gas	$	587,762		$	(228,196	)(7)	$	359,566
Operating expenses:
Production:
Lease operating		58,029			(20,940	)(7)		37,089
Workover and other		8,118			(6,943	)(7)		1,175
Taxes other than income		45,547			(18,473	)(7)		27,074
Gathering, transportation and other		16,187			(5,062	)(7)		11,125
General and administrative		44,069			—			44,069
Depletion, depreciation and amortization		261,272			(96,641	)(8)		164,029
					(602	)(6)
Total operating expenses		433,222			(148,661	)		284,561
Income from operations		154,540			(79,535	)		75,005
Other income:
Net income on derivative contracts		124,442			—			124,442
Interest expense and other		(89,884	)		1,736	(9)		(88,148	)
Total other income		34,558			1,736			36,294
Net income before income taxes		189,098			(77,799	)		111,299
Income tax provision		(72,535	)		72,535	(10)		(42,693	)
					(42,693	)(10)
Net income		116,563			(47,957	)		68,606
Preferred dividends		(217	)		—			(217	)
Net income available to common stockholders	$	116,346		$	(47,957	)	$	68,389
Earnings per share of common stock:
Basic	$	0.95					$	0.56
Diluted	$	0.92					$	0.54
Weighted average shares outstanding:
Basic		122,452						122,452
Diluted		126,135						126,135

See accompanying notes to the unaudited pro forma consolidated financial statements.

Petrohawk Energy Corporation

Notes to Unaudited Pro Forma Consolidated Financial Statements

Note 1—Basis of Presentation

The unaudited pro forma financial information is presented to illustrate the effect of Petrohawk’s November 30, 2007 sale of its Gulf Coast division on its historical financial position and operating results. The unaudited pro forma balance sheet as of September 30, 2007 is based on the historical statements of Petrohawk as of September 30, 2007 after giving effect to the transaction as if it had occurred on September 30, 2007. The unaudited pro forma statements of operations for the nine months ended September 30, 2007 and the fiscal year ended December 31, 2006 are based on the historical financial statements of Petrohawk for such periods after giving effect to the transaction as if it had occurred on January 1, 2006. The unaudited pro forma financial information should be read in conjunction with Petrohawk’s historical consolidated financial statements and notes thereto contained in Petrohawk’s 2006 Annual Report on Form 10-K/A, filed on June 4, 2007, and Petrohawk’s Form 10-Q for the quarter ended September 30, 2007, filed on November 8, 2007.

The preparation of the unaudited pro forma consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.

The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of operations or the financial position of the company would have been had the transactions occurred on the respective dates assumed, nor is it necessarily indicative of the Company’s future operating results or financial position. However, the pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that the company’s management believes to be reasonable.

Note 2—Pro Forma Adjustments

The unaudited pro forma consolidated balance sheet at September 30, 2007 reflects the following adjustments:

  (1) Adjustment to reduce the full cost pool for the sale of the Company’s Gulf Coast assets;

  (2) Adjustment to reduce unevaluated oil and gas properties associated with the Company’s Gulf Coast assets;

  (3) Reflects the discounted note receivable received as partial purchase consideration. The face amount of the note is $125 million and it will mature five years and 91 days from November 30, 2007 and bears interest at 12% per annum. The maker may redeem the note for $100 million prior to 150 days after the closing with accrued interest waived or pay $100 million, plus all accrued and unpaid interest after the expiration of the 150 day-period but before the end of one year from November 30, 2007. If the note remains outstanding after one year, then the maker will owe $125 million, plus interest;

  (4) Reflects the $650 million received directly by a qualified intermediary to facilitate potential like-kind exchange transactions;

  (5) Reflects the use of the remaining $27 million of cash proceeds to reduce the Company’s outstanding balance under its senior revolving credit facility; and

  (6) Reflects the elimination of asset retirement obligations associated with the assets that were sold.

The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2007 and for the year ended December 31, 2006 reflect the following adjustments:

  (7) Reflects the elimination of oil and gas revenues and operating expenses associated with the assets that were sold;

  (8) To adjust historical depletion expense associated with oil and gas properties as if the sale of assets had occurred on January 1, 2006. Depletion expense is calculated using the unit of production method under full cost accounting;

  (9) Adjustments to reduce interest expense and other for the repayment of $27 million in outstanding borrowings under the Company’s senior revolving credit facility as of January 1, 2006; and

(10) Adjustment to record income tax expense on the unaudited pro forma consolidated results of operations based on the Company’s historical effective tax rates of 36.6% for the nine months ended September 30, 2007 and 38.4% for the year ended December 31, 2006.

Petrohawk will incur approximately $12.3 million in transaction costs. This amount consists of costs associated with employee severance payments. These costs are directly attributable to the transaction and have been excluded from the pro forma financial statements as they represent material nonrecurring charges.