Petrohawk, KCS Energy agree to merge

Petrohawk Energy Corp. and KCS Energy Inc. agreed to merge in a $1.6 billion cash and stock transaction. Upon closing, KCS stockholders will own 50% of the resulting Petrohawk. Both companies are based in Houston.
April 21, 2006

By OGJ editors
HOUSTON, Apr. 21 -- Petrohawk Energy Corp. and KCS Energy Inc. agreed to merge in a $1.6 billion cash and stock transaction. Upon closing, KCS stockholders will own 50% of the resulting Petrohawk. Both companies are based in Houston.

On a pro forma basis, the combined company will have estimated proved reserves of 1 tcf of natural gas equivalent, of which 68% will be proved developed and 82% will be gas.

Combined, the companies produce 291 MMcfd of gas equivalent. Elm Grove and Caspiana gas fields in northern Louisiana will be a core area for the combined company.

KCS stockholders will receive $9/share and 1.65 shares of Petrohawk stock for each share of KCS stock. This represents consideration to KCS stockholders of $31.41/share based on Petrohawk's Apr. 20 closing price of $13.58/share.

Petrohawk said the price encompasses $450 million in addition to 84 million Petrohawk shares, not including KCS stock options that convert into Petrohawk options upon closing, which is expected in the third quarter.

Sign up for Oil & Gas Journal Newsletters