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.