##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 June 30, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 000-25717
 PETROHAWK ENERGY CORPORATION
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    86-0876964
(I.R.S. Employer
Identification Number)
 1100 Louisiana, Suite 4400, Houston, Texas 77002
 (832) 204-2700
  þ  o
  o  þ




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TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1.Consolidated Financial Statements (Unaudited)Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2005 and 2004
    
    
    3Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    4Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004
    
    
    6Notes to the Consolidated Financial Statements
    
    
    7ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19ITEM 3.Quantitative and Qualitative Disclosures about Market Risk
    
    
    28ITEM 4.Controls and Procedures.
    
    
    29PART II. OTHER INFORMATIONITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30ITEM 6.Exhibits
    
    
    30SignaturesForm of Stock Option Agmt for Amended 2004 Non-Employee Director Incentive PlanForm of Restricted Stock Agmt for Amended 2004 Non-Employee Director Incentive PlanForm of Incentive Stock Agmt for Amended 2004 Non-Employee Director Incentive PlanForm of Stock Option Agmt for Amended 2004 Employee Incentive PlanForm of Restricted Stock Agmt for Amended 2004 Employee Incentive PlanForm of Incentive Stock Agmt for Amended 2004 Employee Incentive PlanCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO & CFO Pursuant to Section 906
   
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PETROHAWK ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
In thousands, except per share amounts
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004OPERATING REVENUES:Oil and gas sales
    
    $
    36,067
    
    
    $
    4,893
    
    
    $
    68,284
    
    
    $
    8,847Other
    
    
    117
    
    
    
    95
    
    
    
    226
    
    
    
    193Total operating revenues
    
    
    36,184
    
    
    
    4,988
    
    
    
    68,510
    
    
    
    9,040OPERATING EXPENSES:Production expenses:Lease operating
    
    
    5,100
    
    
    
    812
    
    
    
    9,624
    
    
    
    1,488Workovers and other
    
    
    818
    
    
    
    92
    
    
    
    1,239
    
    
    
    173Taxes other than income
    
    
    2,083
    
    
    
    263
    
    
    
    4,409
    
    
    
    490Gathering, transportation and other
    
    
    213
    
    
    
    
    
    
    
    546
    
    
    
    5General and administrative:General and administrative
    
    
    4,205
    
    
    
    1,621
    
    
    
    7,504
    
    
    
    2,420Stock-based compensation
    
    
    644
    
    
    
    2,003
    
    
    
    2,223
    
    
    
    2,027Accretion expense
    
    
    195
    
    
    
    23
    
    
    
    384
    
    
    
    46Depletion, Depreciation and amortization
    
    
    11,499
    
    
    
    1,189
    
    
    
    22,124
    
    
    
    2,260Total operating expenses
    
    
    24,757
    
    
    
    6,003
    
    
    
    48,053
    
    
    
    8,909INCOME (LOSS) FROM OPERATIONS
    
    
    11,427
    
    
    
    (1,015
    )
    
    
    20,457
    
    
    
    131Net loss on derivative contracts (Note 7)
    
    
    (8,331
    )
    
    
    
    
    
    
    (36,983
    )
    
    
    Interest expense and other (Note 4)
    
    
    (7,033
    )
    
    
    (364
    )
    
    
    (10,383
    )
    
    
    (475
    )Loss before income taxes
    
    
    (3,937
    )
    
    
    (1,379
    )
    
    
    (26,909
    )
    
    
    (344
    )Income tax benefit (provision)
    
    
    1,735
    
    
    
    (14
    )
    
    
    10,455
    
    
    
    (37
    )NET LOSS
    
    
    (2,202
    )
    
    
    (1,393
    )
    
    
    (16,454
    )
    
    
    (381
    )Preferred dividends
    
    
    (110
    )
    
    
    (111
    )
    
    
    (219
    )
    
    
    (222
    )Net loss applicable to common shareholders
    
    $
    (2,312
    )
    
    $
    (1,504
    )
    
    $
    (16,673
    )
    
    $
    (603
    )Basic loss per share
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.42
    )
    
    $
    (0.08
    )Diluted loss per share
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.42
    )
    
    $
    (0.08
    )WEIGHTED AVERAGE SHARES OUTSTANDING:Basic
    
    
    40,146
    
    
    
    9,212
    
    
    
    40,063
    
    
    
    7,713Fully Diluted
    
    
    40,146
    
    
    
    9,212
    
    
    
    40,063
    
    
    
    7,713
 The accompanying notes are an integral part of these consolidated financial statements.
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PETROHAWK ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
In thousands, except share and per share amounts
 June 30, 2005
    
    
    December 31, 2004CURRENT ASSETSCash and cash equivalents
    
    $
    5,879
    
    
    $
    5,660Accounts receivable
    
    
    22,541
    
    
    
    23,151Deferred income taxes
    
    
    2,826
    
    
    
    Receivables from price risk management activities
    
    
    74
    
    
    
    4,973Prepaid expenses and other
    
    
    3,859
    
    
    
    2,238Total current assets
    
    
    35,179
    
    
    
    36,022OIL AND GAS PROPERTY(full cost method)Evaluated properties
    
    
    492,646
    
    
    
    484,233Unevaluated properties
    
    
    77,605
    
    
    
    48,840Total gross oil and gas property
    
    
    570,251
    
    
    
    533,073Less  accumulated depletion
    
    
    (70,644
    )
    
    
    (48,740
    )Net oil and gas properties
    
    
    499,607
    
    
    
    484,333OTHER OPERATING PROPERTY AND EQUIPMENTGas gathering system and equipment
    
    
    1,506
    
    
    
    1,504Support equipment
    
    
    220
    
    
    
    220Other
    
    
    2,016
    
    
    
    1,041Total gross other operating property and equipment
    
    
    3,742
    
    
    
    2,765Less  accumulated depreciation
    
    
    (1,154
    )
    
    
    (934
    )Net other operating property and equipment
    
    
    2,588
    
    
    
    1,831OTHER NON-CURRENT ASSETSReceivables from price risk management activities
    
    
    
    
    
    
    3,363Deferred income taxes
    
    
    
    
    
    
    981Debt issuance costs, net of amortization
    
    
    2,328
    
    
    
    3,875Other
    
    
    3,778
    
    
    
    3,794TOTAL ASSETS
    
    $
    543,480
    
    
    $
    534,199
 The accompanying notes are an integral part of these consolidated financial statements.
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PETROHAWK ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
In thousands, except share and per share amounts (Continued)
 June 30, 2005
    
    
    December 31, 2004CURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    25,565
    
    
    $
    24,676Liabilities from price risk management activities
    
    
    7,730
    
    
    
    1,990Current portion of long-term debt
    
    
    500
    
    
    
    500Total current liabilities
    
    
    33,795
    
    
    
    27,166LONG-TERM DEBTRevolving credit facility
    
    
    133,000
    
    
    
    155,000Term B facility loan
    
    
    49,500
    
    
    
    49,500Subordinated convertible note payable
    
    
    
    
    
    
    35,000Total long-term debt
    
    
    182,500
    
    
    
    239,500LIABILITIES FROM PRICE RISK MANAGEMENT ACTIVITIES
    
    
    20,637
    
    
    
    67ASSET RETIREMENT OBLIGATIONS
    
    
    13,740
    
    
    
    12,726DEFERRED INCOME TAXES
    
    
    17,005
    
    
    
    OTHER NONCURRENT LIABILITIES
    
    
    7,288
    
    
    
    7,649COMMITMENTS AND CONTINGENCIES (NOTE 6)
STOCKHOLDERS EQUITYConvertible Preferred Stock: 5,000,000 shares of
$.001 par value authorized; 598,271 shares issued
and outstanding at June 30, 2005 and December 31,
2004. Liquidation value at June 30, 2005 and
December 31, 2004 of $5,533,890.
    
    
    1
    
    
    
    1Common Stock: 75,000,000 shares of $.001 par value
authorized; 48,889,156 and 39,788,238 shares issued
and outstanding at June 30, 2005 and December 31,
2004, respectively.
    
    
    49
    
    
    
    40Additional paid-in capital
    
    
    300,133
    
    
    
    262,045Treasury Stock, at cost; 8,382 shares at June 30,
2005 and December 31, 2004.
    
    
    (36
    )
    
    
    (36
    )Accumulated deficit
    
    
    (31,632
    )
    
    
    (14,959
    )Total stockholders equity
    
    
    268,515
    
    
    
    247,091TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    543,480
    
    
    $
    534,199
 The accompanying notes are an integral part of these consolidated financial statements.
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PETROHAWK ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
In thousands
 Six Months Ended June 30,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (16,454
    )
    
    $
    (381
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depletion, depreciation and amortization
    
    
    22,124
    
    
    
    2,260Deferred income tax benefit
    
    
    (10,789
    )
    
    
    Stock-based compensation
    
    
    2,223
    
    
    
    2,027Accretion expense
    
    
    384
    
    
    
    46Net unrealized loss on mark-to-markets derivative contracts
    
    
    34,572
    
    
    
    Other
    
    
    1,515
    
    
    
    32Change in assets and liabilities:Accounts receivable
    
    
    1,816
    
    
    
    (1,657
    )Prepaid expenses and other
    
    
    (1,597
    )
    
    
    (373
    )Accounts payable and accrued liabilities
    
    
    (1,145
    )
    
    
    820Other non-current assets
    
    
    16
    
    
    
    (3
    )Net cash provided by operating activities
    
    
    32,665
    
    
    
    2,771CASH FLOWS FROM INVESTING ACTIVITIES:Oil and gas property expenditures
    
    
    (36,839
    )
    
    
    (4,170
    )Acquisition of Proton, net of cash acquired of $870
    
    
    (52,625
    )
    
    
    Proceeds received from sale of oil and gas properties
    
    
    79,394
    
    
    
    733Gas gathering and equipment expenditures
    
    
    (978
    )
    
    
    (159
    )Net cash used in investing activities
    
    
    (11,048
    )
    
    
    (3,596
    )CASH FLOWS FROM FINANCING ACTIVITIES(1):Proceeds from exercise of stock options
    
    
    822
    
    
    
    Repayments of notes payable
    
    
    
    
    
    
    (13,285
    )Proceeds from issuance of common stock and warrants
    
    
    
    
    
    
    25,000Proceeds from issuance of subordinated convertible note payable
    
    
    
    
    
    
    35,000Debt issue costs related to PHAWK, LLC transaction
    
    
    
    
    
    
    (1,304
    )Equity offering costs related to PHAWK, LLC transaction
    
    
    
    
    
    
    (683
    )Proceeds from borrowings under credit facility
    
    
    68,000
    
    
    
    Repayment of borrowings under credit facility
    
    
    (90,000
    )
    
    
    Dividends paid
    
    
    (220
    )
    
    
    (224
    )Net cash (used in) provided by financing activities
    
    
    (21,398
    )
    
    
    44,504NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    219
    
    
    
    43,679CASH AND CASH EQUIVALENTSBeginning of period
    
    
    5,660
    
    
    
    2,110End of period
    
    $
    5,879
    
    
    $
    45,789
  (1)During the three months ended June 30, 2005 the Company converted the $35 million
subordinated convertible note payable into 8.75 million shares of common stock. See Note
4, Long Term Debt, for additional information.
 The accompanying notes are an integral part to these consolidated financial statements.
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PETROHAWK ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1 FINANCIAL STATEMENT PRESENTATION
    Recently Issued Accounting Pronouncements
 Accounting for Conditional Asset Retirement Obligations Accounting for Asset Retirement Obligations
  Share-Based Payment Accounting for Stock Based Compensation Accounting for Stock Issued to Employees
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Exchanges of Nonmonetary Assets  an amendment of APB
Opinion 29
 Stock-Based Compensation
 Accounting for Stock-Based Compensation  Transition and Disclosure Accounting for Stock Issued to Employees
  8




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Three Months Ended
    
    
    Six Months EndedJune 30, 2004
    
    
    June 30, 2004(In thousands, except per share amounts)Net loss applicable to common shareholders as reported
    
    $
    (1,504
    )
    
    $
    (603
    )Add: Stock-based compensation expense included in reported net loss, net of tax
    
    
    2,003
    
    
    
    2,027Deduct: Total stock-based compensation expense determined under fair value
method for all awards, net of tax
    
    
    (2,177
    )
    
    
    (2,235
    )Pro forma net loss applicable to common shareholders
    
    $
    (1,678
    )
    
    $
    (811
    )Net loss per share:Basic  as reported
    
    $
    (0.16
    )
    
    $
    (0.08
    )Basic  pro forma
    
    $
    (0.18
    )
    
    $
    (0.11
    )Diluted  as reported
    
    $
    (0.16
    )
    
    $
    (0.08
    )Diluted  pro forma
    
    $
    (0.18
    )
    
    $
    (0.11
    )
  Three Months Ended
    
    
    Six Months EndedJune 30, 2005
    
    
    June 30, 2005Weighted average value per option granted during the period (1)
    
    $
    2.39
    
    
    $
    1.99Assumptions:Stock price volatility
    
    
    27.2
    %
    
    
    27.2
    %Risk free rate of return
    
    
    3.4
    %
    
    
    3.4
    %Expected term
    
    3 years
    
    3 yearsDividends
    
    
    
    
    
    
    
  (1) Calculated using the Black-Scholes fair value based method.
  9




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2 ACQUISITIONS AND DIVESTITURES
 Proton Oil & Gas Corporation
    Sale of Royalty Interest Properties
  Wynn-Crosby Transaction
    Three Months Ended
    
    
    Six Months EndedJune 30, 2004
    
    
    June 30, 2004(In thousands, except per share amounts)Pro forma:Revenue
    
    $
    30,812
    
    
    $
    59,607Net income available to common stockholders
    
    $
    637
    
    
    $
    4,108Basic earnings per share
    
    $
    0.02
    
    
    $
    0.12Diluted earnings per share
    
    $
    0.02
    
    
    $
    0.11
 PHAWK, LLC Transaction
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Recapitalization by PHAWK
  3. OIL AND GAS PROPERTY
  June 30,
    
    
    December 31,2005
    
    
    2004Evaluated (subject to amortization)
    
    $
    492,646
    
    
    $
    484,233Unevaluated (not subject to amortization)Unproved costs incurred in 2004
    
    
    39,453
    
    
    
    48,679Unproved costs incurred in 2005
    
    
    34,231
    
    
    
    Exploration wells in progress
    
    
    3,921
    
    
    
    161Total unevaluated (not subject to amortization)
    
    
    77,605
    
    
    
    48,840Gross natural gas and crude oil properties
    
    
    570,251
    
    
    
    533,073Less accumulated amortization
    
    
    (70,644
    )
    
    
    (48,740
    )Net oil and gas property
    
    $
    499,607
    
    
    $
    484,333
 4. LONG-TERM DEBT
 Revolving Credit Facility
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Second Lien Term Loan Facility
   Subordinated Convertible Note Payable
  Debt Issuance Costs
  5. ASSET RETIREMENT OBLIGATIONS
   Beginning balance  liability for asset retirement
obligations
    
    $
    12,726Liabilities settled
    
    
    (80
    )Liabilities added
    
    
    185Acquisition of Proton Oil and Gas Corporation (1)
    
    
    525Accretion expense
    
    
    384Ending balance  liability for asset retirement obligations
    
    $
    13,740
 
 (1) Refer to Note 2, Acquisitions and Divestitures for more details.
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6. COMMITMENTS AND CONTINGENCIES
  7 DERIVATIVE AND HEDGING ACTIVITIES
     Natural Gas
 
 Contract Price per MmbtuCollarsFloors
    
    
    CeilingsVolume in
    
    
    Price /
    
    
    Weighted
    
    
    Price /
    
    
    WeightedPeriod
    
    Mmbtu's
    
    
    Price Range
    
    
    Average Price
    
    
    Price Range
    
    
    Average PriceJuly 2005 - December 2005
    
    
    6,298,000
    
    
    $
    5.00 - $7.00
    
    
    $
    6.08
    
    
    $
    7.59 - $10.05
    
    
    $
    9.01January 2006 - December 2006
    
    
    10,250,000
    
    
    
    5.50 - 6.00
    
    
    
    5.77
    
    
    
    8.26 - 9.54
    
    
    
    9.23January 2007 - December 2007
    
    
    2,880,000
    
    
    
    5.30
    
    
    
    5.30
    
    
    
    7.12
    
    
    
    7.12January 2008 - December 2008
    
    
    3,600,000
    
    
    
    5.00 - 5.15
    
    
    
    5.05
    
    
    
    6.45 - 6.71
    
    
    
    6.53
  Contract Price per MmbtuSwapsVolume in
    
    WeightedPeriod
    
    Mmbtu's
    
    Average PriceJanuary 2007 - December 2007
    
    1,200,000
    
    $6.06
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Crude Oil
  Contract Price per BblCollarsFloors
    
    
    CeilingsVolume in
    
    
    Price /
    
    
    Weighted
    
    
    Price /
    
    
    WeightedPeriod
    
    Bbls
    
    
    Price Range
    
    
    Average Price
    
    
    Price Range
    
    
    Average PriceJuly 2005 - December 2005
    
    
    393,200
    
    
    $
    38.00 - $45.00
    
    
    $
    43.37
    
    
    $
    51.40 - $63.30
    
    
    $
    58.29January 2006 - December 2006
    
    
    700,000
    
    
    
    40.00 - 45.00
    
    
    
    42.09
    
    
    
    47.30 - 62.70
    
    
    
    54.65January 2007 - December 2007
    
    
    240,000
    
    
    
    35.00 - 36.00
    
    
    
    35.30
    
    
    
    43.20 - 45.75
    
    
    
    43.97January 2008 - December 2008
    
    
    60,000
    
    
    
    34.00
    
    
    
    34.00
    
    
    
    45.30
    
    
    
    45.30
  Contract Price per BblSwapsVolume in
    
    WeightedPeriod
    
    Bbls
    
    Average PriceJanuary 2008 - December 2008
    
    144,000
    
    $38.10
 8. STOCKHOLDERS EQUITY
  
    
    $0.2 million of stock-based compensation expense as a result of the accelerated
vesting of certain stock options of employees who were employed on May 25, 2004 (closing
of the PHAWK, LLC Transaction).
    
    $1.8 million of stock-based compensation expense as a result of the modification of
certain stock options of employees whereby the period for which the employee has to
exercise was extended to the earlier of the option expiration date or five years from
the date of the closing of the PHAWK, LLC Transaction.
 Stock Option Grants
  Restricted Stock
   14




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Common Stock Warrants
 Treasury Stock
 9. RELATED PARTY TRANSACTIONS
     15




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10. NET LOSS PER COMMON SHARE
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands, except per share amounts)
    
    
    (In thousands, except per share amounts)Basic:Net loss
    
    $
    (2,202
    )
    
    $
    (1,393
    )
    
    $
    (16,454
    )
    
    $
    (381
    )Less: Preferred dividends
    
    
    (110
    )
    
    
    (111
    )
    
    
    (219
    )
    
    
    (222
    )Net loss applicable to common shareholders
    
    $
    (2,312
    )
    
    $
    (1,504
    )
    
    $
    (16,673
    )
    
    $
    (603
    )Weighted average number of common shares
    
    
    40,146
    
    
    
    9,212
    
    
    
    40,063
    
    
    
    7,713Basic loss per share
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.42
    )
    
    $
    (0.08
    )Diluted:Net loss applicable to common shareholders
    
    $
    (2,312
    )
    
    $
    (1,504
    )
    
    $
    (16,673
    )
    
    $
    (603
    )Plus: Preferred dividends (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plus: Interest on 8% subordinated convertible
note payable (net of tax) (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss for diluted loss per share
    
    $
    (2,312
    )
    
    $
    (1,504
    )
    
    $
    (16,673
    )
    
    $
    (603
    )Weighted average number of common shares
    
    
    40,146
    
    
    
    9,212
    
    
    
    40,063
    
    
    
    7,713Common stock equivalent shares  stock options
    
    Antidilutive
    
    Antidilutive
    
    Antidilutive
    
    AntidilutiveCommon stock equivalent shares  warrants
    
    Antidilutive
    
    Antidilutive
    
    Antidilutive
    
    AntidilutiveCommon stock equivalent shares representing
shares as-if conversion of convertible
subordinated note payable
    
    Antidilutive
    
    Antidilutive
    
    Antidilutive
    
    AntidilutiveCommon stock equivalent shares representing
shares as-if conversion of preferred shares
    
    Antidilutive
    
    Antidilutive
    
    Antidilutive
    
    AntidilutiveWeighted average number of shares used in
calculation of diluted loss per share
    
    
    40,146
    
    
    
    9,212
    
    
    
    40,063
    
    
    
    7,713Diluted loss per share
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.42
    )
    
    $
    (0.08
    )
 
 (1)
    
    Due to the antidilutive nature of these items, these amounts have been excluded
from the diluted earnings per share calculation for the three and six months ended June 30, 2005
and 2004.  June 30,Common Stock Equivalents:
    
    2005
    
    
    2004(In thousands)Options
    
    
    2,024
    
    
    
    749Warrants
    
    
    5,274
    
    
    
    5,920As-if conversion of:Subordinated Convertible Note Payable
    
    
    
    
    
    
    8,750Preferred Stock
    
    
    598
    
    
    
    6047,896
    
    
    
    16,023
 16




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11 SUBSEQUENT EVENT
        7 8
 17




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##### Table of Contents



18




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Overview
       Capital Resources and Liquidity
  19




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##### Table of Contents



Six Months EndedJune 30,Increase2005
    
    
    2004
    
    
    (Decrease)Cash flows provided by operating activities
    
    $
    32,665
    
    
    $
    2,771
    
    
    $
    29,894Cash flows used in investing activities
    
    
    (11,048
    )
    
    
    (3,596
    )
    
    
    (7,452
    )Cash flows (used in) provided by financing activities
    
    
    (21,398
    )
    
    
    44,504
    
    
    
    (65,902
    )Net increase in cash and cash equivalents
    
    $
    219
    
    
    $
    43,679
    
    
    $
    (43,460
    )
 Operating Activities
 Investing Activities
 Financing Activities.
 Contractual Obligations
  Critical Accounting Policies and Estimates
  20




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##### Table of Contents



Results of Operations
 Quarters ended June 30, 2005 and 2004
   Three Months EndedJune 30,
    
    
    IncreaseIn Thousands (Except price and per Mcfe amounts)
    
    2005
    
    
    2004
    
    
    (Decrease)Net loss
    
    $
    (2,202
    )
    
    $
    (1,393
    )
    
    $
    (809
    )Oil and gas sales
    
    
    36,067
    
    
    
    4,893
    
    
    
    31,174Other revenues
    
    
    117
    
    
    
    95
    
    
    
    22Production expenses:Lease operating
    
    
    5,100
    
    
    
    812
    
    
    
    4,288Workovers and other
    
    
    818
    
    
    
    92
    
    
    
    726Taxes other than income
    
    
    2,083
    
    
    
    263
    
    
    
    1,820Gathering, transportation and other
    
    
    213
    
    
    
    
    
    
    
    213General and administrative:General and administrative
    
    
    4,205
    
    
    
    1,621
    
    
    
    2,584Stock-based compensation
    
    
    644
    
    
    
    2,003
    
    
    
    (1,359
    )Accretion expense
    
    
    195
    
    
    
    23
    
    
    
    172Depletion  Full cost
    
    
    11,377
    
    
    
    1,146
    
    
    
    10,231Depreciation  Field service and other
    
    
    122
    
    
    
    43
    
    
    
    79Net loss on derivative contracts:Unrealized loss on derivative contracts
    
    
    (7,153
    )
    
    
    
    
    
    
    (7,153
    )Realized loss on derivative contracts
    
    
    (1,178
    )
    
    
    
    
    
    
    (1,178
    )Interest expense and other
    
    
    (7,033
    )
    
    
    (364
    )
    
    
    (6,669
    )Income tax benefit (expense)
    
    
    1,735
    
    
    
    (14
    )
    
    
    1,749Production:Natural Gas  Mmcf
    
    
    3,548.9
    
    
    
    577.0
    
    
    
    2,971.9Crude Oil  Mbbl
    
    
    265.2
    
    
    
    36.0
    
    
    
    229.2Natural Gas Equivalent  Mmcfe
    
    
    5,140.1
    
    
    
    795.0
    
    
    
    4,345.1Daily Production  Mmcfe
    
    
    56.5
    
    
    
    8.7
    
    
    
    47.8Average price per unit (1):Gas price per Mcf
    
    $
    6.47
    
    
    $
    5.88
    
    
    $
    0.59Oil price per Bbl
    
    
    49.45
    
    
    
    35.22
    
    
    
    14.23Equivalent per Mcfe
    
    
    7.02
    
    
    
    6.16
    
    
    
    0.86Average cost per Mcfe:Lease operating
    
    
    0.99
    
    
    
    1.02
    
    
    
    (0.03
    )Taxes other than income
    
    
    0.41
    
    
    
    0.33
    
    
    
    0.08General and administrative
    
    
    0.82
    
    
    
    2.04
    
    
    
    (1.22
    )Depletion
    
    
    2.21
    
    
    
    1.44
    
    
    
    0.77
 
 (1)
    
    Amounts exclude the impact of derivatives, as the Company
does did not apply hedge accounting. 21




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##### Table of Contents



2005 increaseDescription
    
    over 2004Increase in legal and professional fees
    
    $
    2,018Increase in office expenses
    
    
    310Other
    
    
    256Total
    
    
    2,584
      22




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23




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Six Months ended June 30, 2005 and 2004
   Six Months EndedJune 30,
    
    
    IncreaseIn Thousands (Except price and per Mcfe amounts)
    
    2005
    
    
    2004
    
    
    (Decrease)Net loss
    
    $
    (16,454
    )
    
    $
    (381
    )
    
    $
    (16,073
    )Oil and gas sales
    
    
    68,284
    
    
    
    8,847
    
    
    
    59,437Other revenues
    
    
    226
    
    
    
    193
    
    
    
    33Production expenses:Lease operating
    
    
    9,624
    
    
    
    1,488
    
    
    
    8,136Workovers and other
    
    
    1,239
    
    
    
    173
    
    
    
    1,066Taxes other than income
    
    
    4,409
    
    
    
    490
    
    
    
    3,919Gathering, transportation and other
    
    
    546
    
    
    
    5
    
    
    
    541General and administrative:General and administrative
    
    
    7,504
    
    
    
    2,420
    
    
    
    5,084Stock-based compensation
    
    
    2,223
    
    
    
    2,027
    
    
    
    196Accretion expense
    
    
    384
    
    
    
    46
    
    
    
    338Depletion  Full cost
    
    
    21,903
    
    
    
    2,168
    
    
    
    19,735Depreciation  Field service and other
    
    
    221
    
    
    
    92
    
    
    
    129Net loss on derivative contracts:Unrealized loss on derivative contracts
    
    
    (34,505
    )
    
    
    
    
    
    
    (34,505
    )Realized loss on derivative contracts
    
    
    (2,478
    )
    
    
    
    
    
    
    (2,478
    )Interest expense and other
    
    
    (10,383
    )
    
    
    (475
    )
    
    
    (9,908
    )Income tax benefit (expense)
    
    
    10,455
    
    
    
    (37
    )
    
    
    10,492Production:Natural Gas  Mmcf
    
    
    6,986.4
    
    
    
    1,058.0
    
    
    
    5,928.4Crude Oil  Mbbl
    
    
    496.0
    
    
    
    70.0
    
    
    
    426.0Natural Gas Equivalent  Mmcfe
    
    
    9,962.1
    
    
    
    1,478.0
    
    
    
    8,484.1Daily Production  Mmcfe
    
    
    55.0
    
    
    
    8.2
    
    
    
    46.8Average price per unit (1):Gas price per Mcf
    
    $
    6.36
    
    
    $
    6.03
    
    
    $
    0.33Oil price per Bbl
    
    
    48.13
    
    
    
    35.22
    
    
    
    12.91Equivalent per Mcfe
    
    
    6.85
    
    
    
    5.99
    
    
    
    0.86Average cost per Mcfe:Lease operating
    
    
    0.97
    
    
    
    1.01
    
    
    
    (0.04
    )Taxes other than income
    
    
    0.44
    
    
    
    0.33
    
    
    
    0.11General and administrative
    
    
    0.75
    
    
    
    1.64
    
    
    
    (0.89
    )Depletion
    
    
    2.20
    
    
    
    1.47
    
    
    
    0.73
 
 (1)
    
    Amounts exclude the impact of derivatives, as the Company
does did not apply hedge accounting. 24




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##### Table of Contents



2005 increaseDescription
    
    over 2004Increase in legal and professional fees
    
    $
    3,759Increase in office expenses
    
    
    477Other
    
    
    848Total
    
    
    5,084
      25




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26




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##### Table of Contents



Recently Issued Accounting Pronouncements
 Accounting for Conditional Asset Retirement Obligations Accounting for Asset Retirement Obligations
  Share-Based Payment Accounting for Stock Based Compensation Accounting for Stock Issued to Employees
  Exchanges of Nonmonetary Assets  an amendment of APB
Opinion 29
 Forward-Looking Information
  27




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosure about Market Risk
 Derivative Instruments and Hedging Activity
     Natural Gas
  Contract Price per MmbtuCollarsFloors
    
    
    CeilingsVolume in
    
    
    Price /
    
    
    Weighted
    
    
    Price /
    
    
    WeightedPeriod
    
    Mmbtu's
    
    
    Price Range
    
    
    Average Price
    
    
    Price Range
    
    
    Average PriceJuly 2005 - December 2005
    
    
    6,298,000
    
    
    $
    5.00 - $7.00
    
    
    $
    6.08
    
    
    $
    7.59 - $10.05
    
    
    $
    9.01January 2006 - December 2006
    
    
    10,250,000
    
    
    
    5.50 - 6.00
    
    
    
    5.77
    
    
    
    8.26 - 9.54
    
    
    
    9.23January 2007 - December 2007
    
    
    2,880,000
    
    
    
    5.30
    
    
    
    5.30
    
    
    
    7.12
    
    
    
    7.12January 2008 - December 2008
    
    
    3,600,000
    
    
    
    5.00 - 5.15
    
    
    
    5.05
    
    
    
    6.45 - 6.71
    
    
    
    6.53
  Contract Price per MmbtuSwapsVolume in
    
    WeightedPeriod
    
    Mmbtu's
    
    Average PriceJanuary 2007 - December 2007
    
    1,200,000
    
    $6.06
 28




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##### Table of Contents



Crude Oil
  Contract Price per BblCollarsFloors
    
    
    CeilingsVolume in
    
    
    Price /
    
    
    Weighted
    
    
    Price /
    
    
    WeightedPeriod
    
    Bbls
    
    
    Price Range
    
    
    Average Price
    
    
    Price Range
    
    
    Average PriceJuly 2005 - December 2005
    
    
    393,200
    
    
    $
    38.00 - $45.00
    
    
    $
    43.37
    
    
    $
    51.40 - $63.30
    
    
    $
    58.29January 2006 - December 2006
    
    
    700,000
    
    
    
    40.00 - 45.00
    
    
    
    42.09
    
    
    
    47.30 - 62.70
    
    
    
    54.65January 2007 - December 2007
    
    
    240,000
    
    
    
    35.00 - 36.00
    
    
    
    35.30
    
    
    
    43.20 - 45.75
    
    
    
    43.97January 2008 - December 2008
    
    
    60,000
    
    
    
    34.00
    
    
    
    34.00
    
    
    
    45.30
    
    
    
    45.30
  Contract Price per BblSwapsVolume in
    
    WeightedPeriod
    
    Bbls
    
    Average PriceJanuary 2008 - December 2008
    
    144,000
    
    $38.10
  
 Item 4. Controls and Procedures
   29




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
 Item 6. Exhibits
  2.1
    
    Agreement and Plan of Merger, dated April 3, 2005 (and as amended through June 8, 2005), by and among Petrohawk Energy
Corporation, Petrohawk Acquisition Corporation, and Mission
Resources Corporation (Incorporated by reference to Annex A
of our Registration Statement on Form S-4/A filed on June 22, 2005)2.2
    
    Agreement and Plan of Merger, dated October 13, 2004,
among Petrohawk Energy Corporation, Wynn-Crosby Energy,
Inc., Ronald W. Crosby and Paige L. Crosby (Incorporated by
reference to Exhibit 2.1 of our Current Report on Form 8-K
filed on November 24, 2004)2.3
    
    Agreement and Plan of Mergers, dated October 13, 2004,
among Petrohawk Energy Corporation, Wynn-Crosby Energy,
Inc., Wynn-Crosby 1994, Ltd.; Wynn-Crosby 1995, Ltd.;
Wynn-Crosby 1996, Ltd.; Wynn-Crosby 1997, Ltd.; Wynn-Crosby
1998, Ltd.; Wynn-Crosby 1999, Ltd.; Wynn-Crosby 2000, Ltd.;
Wynn-Crosby 2002, Ltd.; WCOG Properties, Ltd.; Kara Nicole
Limited; Kristen Lee Limited; Eric Wynn Limited; Christopher
David Limited; Paige Lee Limited; Bernadien Wynn Limited;
Roger Lee Limited; and George Heaps Limited, and Ronald W.
Crosby (Incorporated by reference to Exhibit 2.2 of our
Current Report on Form 8-K filed on November 24, 2004)2.4
    
    Amendment to Agreement and Plan of Mergers among
Petrohawk Energy Corporation, Wynn-Crosby Energy, Inc.,
Wynn-Crosby 1994, Ltd.; Wynn-Crosby 1995, Ltd.; Wynn-Crosby
1996, Ltd.; Wynn-Crosby 1997, Ltd.; Wynn-Crosby 1998, Ltd.;
Wynn-Crosby 1999, Ltd.; Wynn-Crosby 2000, Ltd.; Wynn-Crosby
2002, Ltd.; WCOG Properties, Ltd.; Kara Nicole Limited;
Kristen Lee Limited; Eric Wynn Limited; Christopher David
Limited; Paige Lee Limited; Bernadien Wynn Limited; Roger
Lee Limited; and George Heaps Limited, and Ronald W. Crosby,
dated October 26, 2004 (Incorporated by reference to Exhibit
2.3 of our Current Report on Form 8-K filed on November 24, 2004)3.1
    
    Certificate of Incorporation for Petrohawk Energy 2004)
Corporation (Incorporated by reference to Exhibit 3.1 to the
Form S-8 that we filed on July 29, 2004)3.2
    
    Certificate of Amendment of Certificate of
Incorporation of Petrohawk Energy Corporation (Incorporated 2001)
by reference to Exhibit 3.1 of our Current Report on Form
8-K filed on November 24, 2004)3.3
    
    Certificate of Amendment of Certificate of Incorporation of
Petrohawk Energy Corporation (Incorporated by reference to
Exhibit 3.1 of our Current Report on Form 8-K filed on
August 3, 2005)3.4
    
    Amended and Restated Bylaws of Petrohawk Energy
Corporation (Incorporated by reference to Exhibit 3.2 of our
Third Quarter 2004 Form 10-Q filed on August 13, 2004)
 30




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##### Table of Contents



4.1
    
    Form of Warrant Agreement covering warrants issued to
employees as employment inducements (Incorporated by
reference to Exhibit 4.1 of Beta Oil & Gas, Inc.s Annual
Report on Form 10-K for the year ended December 31, 2003
filed on March 26, 2004)4.2
    
    Warrant Agreement between Beta Oil & Gas, Inc. and
Brookstreet Securities dated July 30, 1999 (Incorporated by
reference to Exhibit 4.2 of Beta Oil & Gas, Inc.s Annual
Report for the year ended December 31, 2003 Form 10K filed
on March 26, 2004)4.3
    
    Form of Warrant Agreement with suppliers, service
providers and other third parties (Incorporated by reference
to Exhibit 4.3 of Beta Oil & Gas, Inc.s Annual Report for
the year ended December 31, 2003 Form 10K filed on
March 26, 2004)4.4
    
    Certificate of Designation of Beta Oil & Gas, Inc.s 8%
Cumulative Convertible Preferred Stock (Incorporated by
reference to Exhibit 3.1 of Betas Form 8-K filed on
July 3, 2001)4.5
    
    Certificate of Designation, Preferences, Rights and
Limitations of Series B 8% Automatically Convertible
Preferred Stock of Petrohawk Energy Corporation
(Incorporated by reference to Exhibit 10.4 of our Current
Report on Form 8-K filed on November 24, 2004)4.6
    
    Warrant Agreement between Beta Oil & Gas, Inc. and its
preferred shareholders, including Warrant Certificates A and
B (Incorporated by reference to Exhibit 4.1 of Beta Oil &
Gas, Inc.s Form 8-K filed on July 3, 2001)4.7
    
    Registration Rights Agreement dated April 1, 2005 among
Petrohawk Energy Corporation and the certain parties set
forth on Exhibit A of the Registration Rights Agreement
(Incorporated by reference to Exhibit 4.6 of our First
Quarter 2005 Form 10-Q filed on May 12, 2005)4.8
    
    Registration Rights Agreement dated
November 23, 2004, among Petrohawk Energy Corporation and Friedman, Billings,
Ramsey & Co., Inc. (Incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K filed on
November 24, 2004)4.9
    
    Registration Rights Agreement, dated May 25, 2004,
between Beta and PHAWK, LLC (Incorporated by reference to
Exhibit 4.11 to our Registration Statement No. 333-120881
on Form S-3 filed December 1, 2004)10.1
    
    The Petrohawk Energy Corporation Amended and Restated
1999 Incentive and Nonstatutory Stock Option Plan
(Incorporated by reference to Exhibit 99.3 of our Current
Report on Form 8-K filed on August 18, 2004)10.2
    
    The Petrohawk Energy Corporation Second Amended and
Restated 2004 Non-Employee Director Incentive Plan
(Incorporated by reference to Exhibit 4.1 to our
Registration Statement No. 333-117733 on Form S-8 filed
July 29, 2005)10.3
    
    Form of Stock Option Agreement for the Second Amended
and Restated 2004 Non-Employee Director Incentive Plan.
(Second Quarter 2005 Form 10-Q)10.4
    
    Form of Restricted Stock Agreement for the Second
Amended and Restated 2004 Non-Employee Director Incentive
Plan. (Second Quarter 2005 Form 10-Q)10.5
    
    Form of Incentive Stock Agreement for the Second
Amended and Restated 2004 Non-Employee Director Incentive
Plan (Second Quarter 2005 Form 10-Q)10.6
    
    The Petrohawk Energy Corporation Second Amended and
Restated 2004 Employee Incentive Plan, (Incorporated by
reference to Exhibit 4.2 to our Registration Statement No.
333-117733 on Form S-8 filed July 29, 2005)10.7
    
    Form of Stock Option Agreement for the Second Amended
and Restated 2004 Employee Incentive Plan. (Second Quarter
2005 Form 10-Q)10.8
    
    Form of Restricted Stock Agreement for the Second
Amended and Restated 2004 Employee Incentive Plan (Second
Quarter 2005 Form 10-Q)
 31




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##### Table of Contents



10.9
    
    Form of Incentive Stock Agreement for the Second
Amended and Restated 2004 Employee Incentive Plan (Second
Quarter 2005 Form 10-Q)10.10
    
    Mission Resources Corporation 1994 Stock Incentive Plan
(Incorporated by reference to Exhibit 10.9 of Mission
Resources Corporations Registration Statement No.
33-76570 filed on March 17, 1994) (File No. 000-9498)10.11
    
    Mission Resources Corporation 1996 Stock Incentive Plan
(Incorporated by reference to Exhibit A of Mission
Resources Corporations Proxy Statement on Schedule 14A
filed on October 21, 1996) (File No. 000-9498)10.12
    
    Mission Resources Corporation 2004 Incentive Plan
(Incorporated by reference to Appendix C to Mission
Resources Corporations Proxy Statement on Schedule 14A
filed on March 30, 2004) (File No. 000-9498)10.13
    
    Nonstatutory Stock Option Grant Agreement dated as of
November 1, 2004, between Mission Resources Corporation
and Thomas C. Langford (Incorporated by reference to
Exhibit 10.1 to Mission Resources Corporations Current
Report on Form 8-K filed on November 2, 2004) (File No.
000-9498)10.14
    
    Nonstatutory Stock Option Grant Agreement dated as of
March 14, 2005, between Mission Resources Corporation and
William R. Picquet (Incorporated by reference to Exhibit
10.2 to Mission Resources Corporations Current Report on
Form 8-K filed on March 16, 2005) (File No. 000-9498)10.15
    
    Form of Director and Officer Indemnity Agreement
(Incorporated by reference to Exhibit 10.11 of our Annual
Report on Form 10-K filed on March 31, 2005)10.16
    
    Securities Purchase Agreement dated December 12, 2003
between Beta Oil & Gas, Inc. and Petrohawk Energy, LLC
(Incorporated by reference to Appendix A to Betas
Preliminary Proxy Statement filed on Schedule 14A on
January 9, 2004)10.17
    
    Amended and Restated Senior Revolving Credit
Agreement dated July 28, 2005, among Petrohawk Energy
Corporation, each of the Lenders from time to time party
thereto, BNP Paribas as administrative agent for the
Lenders, Bank of America, N.A., as syndication agent for
the Lenders, and JPMorgan Chase Bank, N.A. and Wells Fargo
Bank, N.A., as co-documentation agents for the Lenders
(Incorporated by reference to Exhibit 10.1 of our Current
Report on Form 8-K filed on August 3, 2005)10.18
    
    Amended and Restated Second Lien Term Loan Agreement
dated July 28, 2005, among Petrohawk Energy Corporation,
as Borrower, and BNP Paribas, as Administrative Agent, and
the lenders party thereto (Incorporated by reference to
Exhibit 10.2 of our Current Report on Form 8-K filed on
August 3, 2005)10.19
    
    Amended and Restated Guarantee and Collateral
Agreement dated July 28, 2005, made by Petrohawk Energy
Corporation and each of its subsidiaries, as Grantors, in
favor of BNP Paribas, as Administrative Agent
(Incorporated by reference to Exhibit 10.3 to our Current
Report on Form 8-K filed on August 3, 2005)10.20
    
    Amended and Restated Second Lien Term Loan Agreement
Amended and Restated Guarantee and Collateral Agreement
dated July 28, 2005, made by Petrohawk Energy Corporation
and each of its subsidiaries, as Grantors, in favor of BNP
Paribas, as Administrative Agent (Incorporated by
reference to Exhibit 10.4 to our Current Report on Form
8-K filed on August 3, 2005)10.21
    
    Convertible Promissory Note dated May 25, 2004
between PHAWK, LLC f/k/a Petrohawk Energy, LLC and the
Company (Incorporated by reference to Exhibit 10.16 of our
Annual Report on Form 10-K filed on March 31, 2005)10.22
    
    Agreement to Amend Note dated June 30, 2005 between
Petrohawk Energy Corporation and PHAWK, LLC (Incorporated
by reference to Exhibit 11 of Schedule 13D/A filed by
PHAWK, LLC on July 19, 2005)10.23
    
    Purchase and Sale Agreement executed January 14,
2005, by and between Wynn-Crosby 1994, Ltd., et al and
Noble Royalties, Inc. d/b/a Brown Drake Royalties
(Incorporated by reference to Exhibit 2.1 to our Current
Form 8-K filed on March 3, 2005)
 32




---



##### Table of Contents



10.24
    
    Amendment to Purchase and Sale Agreement executed on
February 15, 2005, by and between Wynn-Crosby 1994, Ltd.,
et al and Noble Royalty, Inc. d/b/a Brown Drake Royalties
(Incorporated by reference to Exhibit 2.2 to our Current
Form 8-K filed on March 3, 2005)10.25
    
    Stock Purchase Agreement dated February 4, 2005 by
and among the Company and Proton Oil & Gas Corporation, et
al (Incorporated by reference to Exhibit 2.3 to our
Current Form 8-K filed on March 3, 2005)10.26
    
    Agreement of Sale and Purchase dated August 11, 2004, by
and between the Company and PHAWK, LLC (Incorporated by
reference to Exhibit 10.20 of our Annual Report on Form
10-K filed on March 31, 2005)10.27
    
    Indenture dated as of April 8, 2004, among Mission
Resources Corporation, the Guarantors named therein and
The Bank of New York, as Trustee, relating to the Companys 97/8% Senior Notes due 2011 (Incorporated
by reference to Exhibit 4.1 to Mission Resources
Corporations Current Report on Form 8-K/A filed on April
15, 2004)10.28
    
    First Supplemental Indenture dated as of July 28, 2005,
among Petrohawk Energy Corporation, the successor by way
of merger to Mission Resources Corporation, the parties
named therein as Existing Subsidiary Guarantors, the
parties named therein as Additional Subsidiary Guarantors,
and The Bank of New York Trust Company, N.A., as successor
trustee to The Bank of New York (Incorporated by reference
to Exhibit 4.2 to our Current Report on Form 8-K filed on
August 3, 2005)31.1
    
    Certificate of Chief Executive Officer under Section
302 of the Sarbanes-Oxley Act of 2002 (Second Quarter 2005
Form 10-Q)31.2
    
    Certificate of Chief Financial Officer under Section
302 of Sarbanes-Oxley Act of 2002 (Second Quarter 2005
Form 10-Q)32.1
    
    Certificate of Chief Executive Officer and Chief
Financial Officer under Section 906 of the Sarbanes-Oxley
Act of 2002 (Second Quarter 2005 Form 10-Q)
 33




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SIGNATURES
  PETROHAWK ENERGY CORPORATIONDate: August 11, 2005
    By:
    /s/ Floyd C. WilsonFloyd C. WilsonChief Executive Officer and President By:
    /s/ Shane M. BaylessShane M. BaylessChief Financial Officer, Executive Vice President and Treasurer 34




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##### Table of Contents



ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger, dated April 3, 2005 (and as
amended through June 8, 2005), by and among Petrohawk Energy
Corporation, Petrohawk Acquisition Corporation, and Mission
Resources Corporation (Incorporated by reference to Annex A
of our Registration Statement on Form S-4/A filed on June 22, 2005)2.2
    
    Agreement and Plan of Merger, dated October 13, 2004,
among Petrohawk Energy Corporation, Wynn-Crosby Energy,
Inc., Ronald W. Crosby and Paige L. Crosby (Incorporated by
reference to Exhibit 2.1 of our Current Report on Form 8-K
filed on November 24, 2004)2.3
    
    Agreement and Plan of Mergers, dated October 13, 2004,
among Petrohawk Energy Corporation, Wynn-Crosby Energy,
Inc., Wynn-Crosby 1994, Ltd.; Wynn-Crosby 1995, Ltd.;
Wynn-Crosby 1996, Ltd.; Wynn-Crosby 1997, Ltd.; Wynn-Crosby
1998, Ltd.; Wynn-Crosby 1999, Ltd.; Wynn-Crosby 2000, Ltd.;
Wynn-Crosby 2002, Ltd.; WCOG Properties, Ltd.; Kara Nicole
Limited; Kristen Lee Limited; Eric Wynn Limited; Christopher
David Limited; Paige Lee Limited; Bernadien Wynn Limited;
Roger Lee Limited; and George Heaps Limited, and Ronald W.
Crosby (Incorporated by reference to Exhibit 2.2 of our
Current Report on Form 8-K filed on November 24, 2004)2.4
    
    Amendment to Agreement and Plan of Mergers among
Petrohawk Energy Corporation, Wynn-Crosby Energy, Inc.,
Wynn-Crosby 1994, Ltd.; Wynn-Crosby 1995, Ltd.; Wynn-Crosby
1996, Ltd.; Wynn-Crosby 1997, Ltd.; Wynn-Crosby 1998, Ltd.;
Wynn-Crosby 1999, Ltd.; Wynn-Crosby 2000, Ltd.; Wynn-Crosby
2002, Ltd.; WCOG Properties, Ltd.; Kara Nicole Limited;
Kristen Lee Limited; Eric Wynn Limited; Christopher David
Limited; Paige Lee Limited; Bernadien Wynn Limited; Roger
Lee Limited; and George Heaps Limited, and Ronald W. Crosby,
dated October 26, 2004 (Incorporated by reference to Exhibit
2.3 of our Current Report on Form 8-K filed on November 24, 2004)3.1
    
    Certificate of Incorporation for Petrohawk Energy 2004)
Corporation (Incorporated by reference to Exhibit 3.1 to the
Form S-8 that we filed on July 29, 2004)3.2
    
    Certificate of Amendment of Certificate of
Incorporation of Petrohawk Energy Corporation (Incorporated 2001)
by reference to Exhibit 3.1 of our Current Report on Form
8-K filed on November 24, 2004)3.3
    
    Certificate of Amendment of Certificate of Incorporation of
Petrohawk Energy Corporation (Incorporated by reference to
Exhibit 3.1 of our Current Report on Form 8-K filed on
August 3, 2005)3.4
    
    Amended and Restated Bylaws of Petrohawk Energy
Corporation (Incorporated by reference to Exhibit 3.2 of our
Third Quarter 2004 Form 10-Q filed on August 13, 2004)




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##### Table of Contents



ExhibitNumber
    
    Description4.1
    
    Form of Warrant Agreement covering warrants issued to
employees as employment inducements (Incorporated by
reference to Exhibit 4.1 of Beta Oil & Gas, Inc.s Annual
Report on Form 10-K for the year ended December 31, 2003
filed on March 26, 2004)4.2
    
    Warrant Agreement between Beta Oil & Gas, Inc. and
Brookstreet Securities dated July 30, 1999 (Incorporated by
reference to Exhibit 4.2 of Beta Oil & Gas, Inc.s Annual
Report for the year ended December 31, 2003 Form 10K filed
on March 26, 2004)4.3
    
    Form of Warrant Agreement with suppliers, service
providers and other third parties (Incorporated by reference
to Exhibit 4.3 of Beta Oil & Gas, Inc.s Annual Report for
the year ended December 31, 2003 Form 10K filed on
March 26, 2004)4.4
    
    Certificate of Designation of Beta Oil & Gas, Inc.s 8%
Cumulative Convertible Preferred Stock (Incorporated by
reference to Exhibit 3.1 of Betas Form 8-K filed on
July 3, 2001)4.5
    
    Certificate of Designation, Preferences, Rights and
Limitations of Series B 8% Automatically Convertible
Preferred Stock of Petrohawk Energy Corporation
(Incorporated by reference to Exhibit 10.4 of our Current
Report on Form 8-K filed on November 24, 2004)4.6
    
    Warrant Agreement between Beta Oil & Gas, Inc. and its
preferred shareholders, including Warrant Certificates A and
B (Incorporated by reference to Exhibit 4.1 of Beta Oil &
Gas, Inc.s Form 8-K filed on July 3, 2001)4.7
    
    Registration Rights Agreement dated April 1, 2005 among
Petrohawk Energy Corporation and the certain parties set
forth on Exhibit A of the Registration Rights Agreement
(Incorporated by reference to Exhibit 4.6 of our First
Quarter 2005 Form 10-Q filed on May 12, 2005)4.8
    
    Registration Rights Agreement dated November 23, 2004,
among Petrohawk Energy Corporation and Friedman, Billings,
Ramsey & Co., Inc. (Incorporated by reference to Exhibit
10.5 of our Current Report on Form 8-K filed on November 24, 2004)4.9
    
    Registration Rights Agreement, dated May 25, 2004,
between Beta and PHAWK, LLC (Incorporated by reference to
Exhibit 4.11 to our Registration Statement No. 333-120881
on Form S-3 filed December 1, 2004)10.1
    
    The Petrohawk Energy Corporation Amended and Restated
1999 Incentive and Nonstatutory Stock Option Plan
(Incorporated by reference to Exhibit 99.3 of our Current
Report on Form 8-K filed on August 18, 2004)10.2
    
    The Petrohawk Energy Corporation Second Amended and
Restated 2004 Non-Employee Director Incentive Plan
(Incorporated by reference to Exhibit 4.1 to our
Registration Statement No. 333-117733 on Form S-8 filed
July 29, 2005)10.3
    
    Form of Stock Option Agreement for the Second Amended
and Restated 2004 Non-Employee Director Incentive Plan.
(Second Quarter 2005 Form 10-Q)10.4
    
    Form of Restricted Stock Agreement for the Second
Amended and Restated 2004 Non-Employee Director Incentive
Plan. (Second Quarter 2005 Form 10-Q)10.5
    
    Form of Incentive Stock Agreement for the Second
Amended and Restated 2004 Non-Employee Director Incentive
Plan (Second Quarter 2005 Form 10-Q)10.6
    
    The Petrohawk Energy Corporation Second Amended and
Restated 2004 Employee Incentive Plan, (Incorporated by
reference to Exhibit 4.2 to our Registration Statement No.
333-117733 on Form S-8 filed July 29, 2005)10.7
    
    Form of Stock Option Agreement for the Second Amended
and Restated 2004 Employee Incentive Plan. (Second Quarter
2005 Form 10-Q)10.8
    
    Form of Restricted Stock Agreement for the Second
Amended and Restated 2004 Employee Incentive Plan (Second
Quarter 2005 Form 10-Q)




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##### Table of Contents



ExhibitNumber
    
    Description10.9
    
    Form of Incentive Stock Agreement for the Second
Amended and Restated 2004 Employee Incentive Plan (Second
Quarter 2005 Form 10-Q)10.10
    
    Mission Resources Corporation 1994 Stock Incentive Plan
(Incorporated by reference to Exhibit 10.9 of Mission
Resources Corporations Registration Statement No.
33-76570 filed on March 17, 1994) (File No. 000-9498)10.11
    
    Mission Resources Corporation 1996 Stock Incentive Plan
(Incorporated by reference to Exhibit A of Mission
Resources Corporations Proxy Statement on Schedule 14A
filed on October 21, 1996) (File No. 000-9498)10.12
    
    Mission Resources Corporation 2004 Incentive Plan
(Incorporated by reference to Appendix C to Mission
Resources Corporations Proxy Statement on Schedule 14A
filed on March 30, 2004) (File No. 000-9498)10.13
    
    Nonstatutory Stock Option Grant Agreement dated as of
November 1, 2004, between Mission Resources Corporation
and Thomas C. Langford (Incorporated by reference to
Exhibit 10.1 to Mission Resources Corporations Current
Report on Form 8-K filed on November 2, 2004) (File No.
000-9498)10.14
    
    Nonstatutory Stock Option Grant Agreement dated as of
March 14, 2005, between Mission Resources Corporation and
William R. Picquet (Incorporated by reference to Exhibit
10.2 to Mission Resources Corporations Current Report on
Form 8-K filed on March 16, 2005) (File No. 000-9498)10.15
    
    Form of Director and Officer Indemnity Agreement
(Incorporated by reference to Exhibit 10.11 of our Annual
Report on Form 10-K filed on March 31, 2005)10.16
    
    Securities Purchase Agreement dated December 12, 2003
between Beta Oil & Gas, Inc. and Petrohawk Energy, LLC
(Incorporated by reference to Appendix A to Betas
Preliminary Proxy Statement filed on Schedule 14A on
January 9, 2004)10.17
    
    Amended and Restated Senior Revolving Credit
Agreement dated July 28, 2005, among Petrohawk Energy
Corporation, each of the Lenders from time to time party
thereto, BNP Paribas as administrative agent for the
Lenders, Bank of America, N.A., as syndication agent for
the Lenders, and JPMorgan Chase Bank, N.A. and Wells Fargo
Bank, N.A., as co-documentation agents for the Lenders
(Incorporated by reference to Exhibit 10.1 of our Current
Report on Form 8-K filed on August 3, 2005)10.18
    
    Amended and Restated Second Lien Term Loan Agreement
dated July 28, 2005, among Petrohawk Energy Corporation,
as Borrower, and BNP Paribas, as Administrative Agent, and
the lenders party thereto (Incorporated by reference to
Exhibit 10.2 of our Current Report on Form 8-K filed on
August 3, 2005)10.19
    
    Amended and Restated Guarantee and Collateral
Agreement dated July 28, 2005, made by Petrohawk Energy
Corporation and each of its subsidiaries, as Grantors, in
favor of BNP Paribas, as Administrative Agent
(Incorporated by reference to Exhibit 10.3 to our Current
Report on Form 8-K filed on August 3, 2005)10.20
    
    Amended and Restated Second Lien Term Loan Agreement
Amended and Restated Guarantee and Collateral Agreement
dated July 28, 2005, made by Petrohawk Energy Corporation
and each of its subsidiaries, as Grantors, in favor of BNP
Paribas, as Administrative Agent (Incorporated by
reference to Exhibit 10.4 to our Current Report on Form
8-K filed on August 3, 2005)10.21
    
    Convertible Promissory Note dated May 25, 2004
between PHAWK, LLC f/k/a Petrohawk Energy, LLC and the
Company (Incorporated by reference to Exhibit 10.16 of our
Annual Report on Form 10-K filed on March 31, 2005)10.22
    
    Agreement to Amend Note dated June 30, 2005 between
Petrohawk Energy Corporation and PHAWK, LLC (Incorporated
by reference to Exhibit 11 of Schedule 13D/A filed by
PHAWK, LLC on July 19, 2005)10.23
    
    Purchase and Sale Agreement executed January 14,
2005, by and between Wynn-Crosby 1994, Ltd., et al and
Noble Royalties, Inc. d/b/a Brown Drake Royalties
(Incorporated by reference to Exhibit 2.1 to our Current
Form 8-K filed on March 3, 2005)




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##### Table of Contents



ExhibitNumber
    
    Description10.24
    
    Amendment to Purchase and Sale Agreement executed on
February 15, 2005, by and between Wynn-Crosby 1994, Ltd.,
et al and Noble Royalty, Inc. d/b/a Brown Drake Royalties
(Incorporated by reference to Exhibit 2.2 to our Current
Form 8-K filed on March 3, 2005)10.25
    
    Stock Purchase Agreement dated February 4, 2005 by
and among the Company and Proton Oil & Gas Corporation, et
al (Incorporated by reference to Exhibit 2.3 to our
Current Form 8-K filed on March 3, 2005)10.26
    
    Agreement of Sale and Purchase dated August 11, 2004, by
and between the Company and PHAWK, LLC (Incorporated by
reference to Exhibit 10.20 of our Annual Report on Form
10-K filed on March 31, 2005)10.27
    
    Indenture dated as of April 8, 2004, among Mission
Resources Corporation, the Guarantors named therein and
The Bank of New York, as Trustee, relating to the
Companys 97/8% Senior Notes due 2011 (Incorporated by
reference to Exhibit 4.1 to Mission Resources
Corporations Current Report on Form 8-K/A filed on April
15, 2004)10.28
    
    First Supplemental Indenture dated as of July 28, 2005,
among Petrohawk Energy Corporation, the successor by way
of merger to Mission Resources Corporation, the parties
named therein as Existing Subsidiary Guarantors, the
parties named therein as Additional Subsidiary Guarantors,
and The Bank of New York Trust Company, N.A., as successor
trustee to The Bank of New York (Incorporated by reference
to Exhibit 4.2 to our Current Report on Form 8-K filed on
August 3, 2005)31.1
    
    Certificate of Chief Executive Officer under Section
302 of the Sarbanes-Oxley Act of 2002 (Second Quarter 2005
Form 10-Q)31.2
    
    Certificate of Chief Financial Officer under Section
302 of Sarbanes-Oxley Act of 2002 (Second Quarter 2005
Form 10-Q)32.1
    
    Certificate of Chief Executive Officer and Chief
Financial Officer under Section 906 of the Sarbanes-Oxley
Act of 2002 (Second Quarter 2005 Form 10-Q)