Thursday, November 4, 2010

Petrohawk Energy's (NYSE:HK) Margins, Debt Will Keep Company Under Pressure

Petrohawk Energy (NYSE:HK) has problems in the short term because of their high debt and margins being pressured, according to FBR Capital.

HBP drilling will continue to cause the company to struggle as a result in the short term.

FBR said, "We continue to remain fans of significant long-term asset value embedded within the Haynesville and Eagle Ford franchises. Near term, though, continued Haynesville drilling for HBP reasons despite margin squeeze and high (though manageable debt position) continues to give investors heartburn. Also, the Eagle Ford position, though highly prospective, still needs to mature, thereby exacerbating the funding gap issue. As such, we are reiterating our rating but are lowering our 12-month price target to $23/share to reflect a larger-than-expected funding gap."

Petrohawk closed Wednesday at 16.49, dropping $0.71, or 4.13 percent.

FBR maintains their "Outperform" rating on them, while Lazard Capital downgraded Petrohawk from "Buy" to "Hold." FBR has a price target of $20 on the energy company, dropping them from $23.

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