Halcón Resources Announces the Sale of its Operated Williston Basin Assets for $1.4 Billion
July 11 2017 - 7:30AM
Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”)
today announced it has entered into an agreement to sell its
operated assets in the Williston Basin to an affiliate of Bruin
E&P Partners, a portfolio company of Arclight Capital Partners,
for $1.4 billion in cash. The effective date of the
transaction is June 1, 2017 and is expected to close within 60
days. The purchase price is subject to certain adjustments
for title and environmental defects and other customary
adjustments. The Company will retain its non-operated
Williston Basin assets; though it may monetize those assets in the
future.
Current production associated with the assets
being sold is approximately 29,000 boe/d, net. Pro forma for
the asset sale, Halcón’s current production is approximately 7,500
boe/d, net. The Company plans to continue to run 2 rigs in
the Delaware Basin for the remainder of 2017 and currently expects
to exit 2017 with production in excess of 13,000 boe/d,
net.
Floyd Wilson, Halcón’s Chairman, CEO, and
President, commented, “The sale of our Williston Basin operated
assets transforms Halcón into a single-basin company focused on the
Delaware Basin where we have more than 41,000 net acres in Ward and
Pecos Counties representing decades of highly economic drilling
inventory. The cash proceeds from this transaction and
related debt reduction provide us with a strong balance sheet and
liquidity to execute our growth plans.”
The sale is conditioned upon the receipt of
consent (the “Consent”) from greater than 50.0% of the holders of
the Company’s 6.75% unsecured notes due 2025 (the “6.75% Notes”) to
amend certain provisions of the indenture governing the 6.75%
Notes. On July 10, 2017 Halcón obtained commitments to
provide the Consent from greater than 50% of the 6.75% Note
holders. Further details regarding the Consent and related
indenture amendments can be found on a Form 8-K which will be filed
with the SEC on July 11, 2017. The sale is also conditioned
upon the receipt of shareholder approval of the asset sale prior to
closing. On July 11, 2017, Halcón received commitments to
support the asset sale from holders of greater than 50% of its
common stock.
The Company will use a portion of the asset sale
proceeds to make an offer to purchase up to 50.0% of its 6.75%
Notes at 103% of par upon closing. Halcón will also use a
portion of the asset sale proceeds to redeem all outstanding 12.0%
Second Lien Notes due 2022, including related prepayment
premiums. The table below illustrates the Company’s
capitalization and estimated pro forma liquidity for the
contemplated transactions and debt repurchases, assuming a
borrowing base on the Company’s senior secured revolving credit
facility of $125 million.
|
|
|
|
|
|
Adjusted HK
for |
|
50% of |
Adjusted HK
for |
|
Ward County Option
& |
Williston
Basin |
HY Debt
& |
Williston
Basin |
Face Value |
Pecos County Acquisition |
(Operated Assets) |
100% of 2L Notes |
(Operated Assets) |
Capitalization ($MM) |
3/31/2017 (1) |
Sale (2) |
Repayment (2)(3) |
3/31/2017 |
|
|
|
|
|
Cash & Cash
Equivalents |
$ |
- |
|
$ |
1,400 |
|
$ |
(789 |
) |
$ |
611 |
|
|
|
|
|
|
Senior Secured
Revolving Credit Facility |
|
197 |
|
|
|
(197 |
) |
|
- |
|
12.000% Senior Secured
Second Lien Notes due 2022 |
|
113 |
|
|
|
(113 |
) |
|
- |
|
6.75% Senior Unsecured
Notes due 2025 |
|
850 |
|
|
|
(425 |
) |
|
425 |
|
Total Debt |
$ |
1,160 |
|
|
|
$ |
425 |
|
|
|
|
|
|
Total Net Debt / (Cash) |
$ |
1,160 |
|
|
|
$ |
(186 |
) |
|
|
|
|
|
Stockholders'
Equity |
|
699 |
|
|
547 |
|
|
(68 |
) |
|
1,178 |
|
Total Capitalization |
$ |
1,858 |
|
|
|
$ |
1,603 |
|
|
|
|
|
|
Borrowing Base (4) |
$ |
650 |
|
$ |
(525 |
) |
|
$ |
125 |
|
Less: Borrowings |
|
(197 |
) |
|
|
|
- |
|
Less: Letters of
Credit |
|
(6 |
) |
|
|
|
(6 |
) |
Plus: Cash |
|
- |
|
|
|
|
611 |
|
Total Liquidity |
$ |
447 |
|
|
|
$ |
730 |
|
|
|
|
Note: $547 MM adjustment to Stockholders' Equity reflects
estimated gain on sale of Williston Basin operated assets. |
|
(1)
Includes impact of exercising the full Ward County option acreage
at $170 MM as well as the impact of the acquisition of $88 MM of
acreage in Pecos County in June 2017. |
(2) Impact
of legal fees, advisory fees, and cash taxes are not included in
table. |
(3)
Assumes 50% of 6.75% Senior Unsecured Notes outstanding are
redeemed at 103% pursuant to the terms of the amended
indenture. |
Assumes 100% of 12.0% Senior Secured Second Lien Notes
outstanding are redeemed, including related prepayment
premiums. |
(4)
Borrowing base adjustment based on preliminary HK estimate and is
subject to change. |
|
Conference Call
The Company will host a conference call to
discuss the Williston Basin sale on Tuesday, July 11, 2017 at 11:00
a.m. EDT (10:00 a.m. CDT). Investors may participate in the
conference call via telephone by dialing (877) 810-3368 for
domestic callers or (914) 495-8561 for international callers, in
both cases using conference ID 53261742, and asking for the Halcón
call a few minutes prior to the start time.
Advisors
RBC Richardson Barr advised Halcón on the sale
of its operated Williston Basin properties. Intrepid Partners, LLC
advised the Company on the Consent process.
About Halcón Resources
Halcón Resources Corporation is an independent
energy company engaged in the acquisition, production, exploration
and development of onshore oil and natural gas properties in the
United States.
For more information contact Quentin Hicks,
Senior Vice President of Finance & Investor Relations, at
832-538-0557 or qhicks@halconresources.com.
Forward-Looking Statements
This release may contain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Statements that are not strictly
historical statements constitute forward-looking statements
and may often, but not always, be identified by the use
of such words such as "expects", "believes", "intends",
"anticipates", "plans", "estimates", "potential",
"possible", or "probable" or statements that certain
actions, events or results "may", "will", "should", or "could" be
taken, occur or be achieved. Forward-looking statements are
based on current beliefs and expectations and
involve certain assumptions or estimates that
involve various risks and uncertainties that could cause
actual results to differ materially from those reflected in the
statements. These risks include, but are not limited to, those set
forth in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2016 and other filings submitted by the
Company to the U.S. Securities and Exchange Commission
(SEC), copies of which may be obtained from the SEC's website
at www.sec.gov or through the Company's website
at www.halconresources.com. Readers should not place
undue reliance on any such forward-looking statements, which are
made only as of the date hereof. The Company has no duty,
and assumes no obligation, to update forward-looking
statements as a result of new information, future events
or changes in the Company's expectations.
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