Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”)
today announced its second quarter 2018 financial and operating
results, provided an operational update and issued revised 2018
guidance.
Net production for the three months ended June
30, 2018 averaged 12,769 barrels of oil equivalent per day (Boe/d),
representing a 16% increase from the first quarter of 2018 net
production of 10,967 Boe/d. Production for the second quarter
was comprised of 68% oil, 16% natural gas liquids (NGLs) and 16%
natural gas. Second quarter production was negatively
impacted by downtime primarily related to unexpected power
reliability issues and inclement weather. The Company
estimates that without this excess downtime, second quarter average
daily production would have been ~13,300 Boe/d.
Halcón generated total revenues of $55.4 million
for the second quarter of 2018. The Company reported a net
loss available to common stockholders of $(16.3) million or a net
loss per basic and diluted share of $(0.10) for the same
period. After adjusting for selected items (see Selected Item
Review and Reconciliation table for additional information), the
Company generated net income of $24.2 million, or $0.15 per diluted
share for the second quarter of 2018. Adjusted EBITDA (see
EBITDA Reconciliation table for additional information) totaled
$55.1 million for the second quarter of 2018 as compared to $18.1
million for the first quarter of 2018. The second quarter
adjusted EBITDA included approximately $30.8 million of proceeds
related to a monetization of MidCush hedges that occurred in the
quarter.
Excluding the impact of hedges, Halcón realized
90% of the average NYMEX oil price, 39% of the average NYMEX oil
price for NGLs and 52% of the average NYMEX natural gas price
during the second quarter of 2018. Excluding the impact of
the MidCush hedge monetizations, the Company realized hedge losses
of approximately $5.0 million during the second quarter.
Liquidity and Capital
Spending
As of June 30, 2018, Halcón had liquidity of
approximately $294 million consisting of $96 million of cash on
hand plus an undrawn revolver borrowing base of $200 million less
$2 million of letters of credit outstanding.
During the second quarter of 2018, the Company
incurred capital costs of approximately $132 million on drilling
and completions, $214 million on acquisitions and divestitures
(including the $200 million acquisition of its West Quito Draw
properties) and $29 million on infrastructure, seismic and
other.
Hedging Update
As of August 1, 2018, Halcón had 11,500 barrels
per day (Bbl/d) of oil hedged for the last six months of 2018 at an
average WTI NYMEX price of $53.03 per barrel (Bbl). For 2019,
the Company has 15,504 Bbl/d of oil hedged at an average WTI NYMEX
price of $56.27/Bbl. For 2020, Halcón has 1,500 Bbl/d of oil
hedged at an average WTI NYMEX price of $60.00/Bbl.
Additionally, the Company has 8,000 Bbl/d of MidCush vs. NYMEX WTI
basis differential swaps in place for the second half of 2018 at
-$11.69/Bbl, 12,000 Bbl/d in place for the first half of 2019 at
-$3.02/Bbl and 4,000 Bbl/d in place for the second half of 2019 at
-$3.95/Bbl. Halcón also has 6,000 Bbl/d of Magellan East
Houston vs. NYMEX WTI basis differential swaps in place for 2020 at
$2.56/Bbl.
As of August 1, 2018, the Company had 7,500
MMBtu/d of natural gas hedged for the last six months of 2018 at an
average price of $3.16/MMBtu. For 2019, Halcón has 20,000
MMBtu/d of gas hedged at an average price of $2.80/MMBtu. The
Company also has 15,000 MMBtu/d of WAHA vs. NYMEX gas basis
differential swaps in place for the second half of 2018 at
-$1.10/MMBtu in addition to 25,500 MMBtu/d in place for the full
year 2019 at -$1.18/MMBtu.
As of August 1, 2018, Halcón had 2,500 Bbl/d of
NGL swaps in place for 2019 at an average price of
$29.09/Bbl.
Operations Update
The Company is currently producing in excess of
13,750 Boe/d net and running three operated rigs in the Delaware
Basin. The Company expects to maintain this rig level through
the remainder of 2018 in addition to running one full-time frac
crew.
Halcón currently holds 21,987 net acres in its
Monument Draw area. The Company has eight horizontal Wolfcamp
wells currently producing, two of which began producing in
mid-July. Additionally, Halcón has one well flowing back
after completion, one well being completed and four wells waiting
on completion. Halcón expects to have all of these wells
online by the end of the third quarter of 2018, bringing its total
producing horizontal wells to 14, with no additional wells planned
to be put online in Monument Draw until early 2019.
Halcón currently holds 10,834 net acres in its
West Quito Draw area. The Company recently spud its first two
operated horizontal Wolfcamp wells which are scheduled to be
completed early in the fourth quarter of 2018. In addition to
these two wells, the Company expects three more wells to be put
online in West Quito Draw around year end 2018.
Halcón currently holds 26,859 net acres in its
Hackberry Draw area. The Company has drilled and completed 15
horizontal wells (13 Wolfcamp, one 2nd Bone Spring and one 3rd Bone
Spring). Halcón has one well flowing back after frac and two
wells currently being drilled. Including the well currently
flowing back after frac, the Company expects to put five additional
wells online in Hackberry Draw before year end 2018.
Recent Well Results
Within its Monument Draw area in Ward County,
Halcón’s Sealy Ranch 6401H well began producing oil in late
June. This Wolfcamp well was drilled in the central portion
of Monument Draw and completed with a 9,591’ effective lateral
length. The well reached a 2-stream peak 24 hour IP rate of
2,219 Boe/d (89% oil) on a 38/64” choke. The current 30-day
average rate on this well is 1,756 Boe/d (86% oil) and continues to
increase. The Company also recently began flowing back its
Sealy Ranch 7701H and 7702H wells with average lateral length of
9,952’. These wells were completed “wine rack style” in the
lower and upper Wolfcamp zones 330’ apart horizontally and 250’
apart vertically. The daily rates on these wells continue to
increase with the latest 2-stream peak 24 hour IP rate for each
well reaching 1,500 and 1,300 boe/d, respectively.
Within its Hackberry Draw area in Pecos County,
Halcón recently put the Bobby West 1H well on production. The
Bobby West 1H, located in the northeast portion of Hackberry Draw,
was completed with a 9,755’ effective lateral length and had a
2-stream peak 24 hour IP rate of 1,352 Boe/d (89% oil) on a 34/64”
choke in addition to a 30 day peak 2-stream IP rate of 1,085 Boe/d
(87% oil).
Long-Term Oil and Gas Takeaway
Agreements
Halcón recently signed a 15-year agreement with
an affiliate of Salt Creek Midstream, LLC (“SCM”) that provides a
comprehensive takeaway solution for the Company’s oil production in
Monument Draw and West Quito Draw. Under the terms of the
agreement, SCM will construct oil lines to Halcón’s central
production facilities in both the Monument Draw and West Quito Draw
areas. The oil lines will run to a terminal in Wink, Texas
which will then have multiple outlets to various in-basin and
long-haul pipelines. The agreement also guarantees 25,000
Bbl/d of firm capacity on a long-haul pipeline to Corpus Christi,
Texas, which is expected to be operational in the second half of
2019. Halcón’s 25,000 Bbl/d of capacity can be increased on
an annual basis. The Company previously signed a 15-year gas
takeaway and processing agreement with SCM whereby its Monument
Draw and West Quito Draw gas will be taken to SCM’s newly
constructed processing plant located near Pecos, Texas. The
agreements with SCM provide the Company with flow assurance for all
of its expected near-term oil and gas production in both Monument
Draw and West Quito Draw as well as premium coastal pricing for its
oil when the long-haul pipeline is operational in 2019. There
are no minimum volume commitments or other similar arrangements
associated with these agreements. In Hackberry Draw,
Halcón has an oil agreement in place through August 2019 and a gas
agreement through 2027 providing flow assurance to the Midland
market for its oil and the WAHA market for gas (firm
capacity). The Company is evaluating oil takeaway options for
its anticipated Hackberry Draw production after August 2019.
Potential Sale of Halcón Field
Services
Halcón has engaged Scotiabank and BMO Capital
Markets as its financial advisors for a potential partial or full
sale of its Halcón Field Services infrastructure assets. The
assets include water gathering, recycling, disposal and sourcing
facilities, as well as gas gathering and treating infrastructure,
power transmission and crude gathering systems across the Company’s
operating areas in the Delaware Basin.
Revised 2018 Guidance
The guidance illustrated in the table below has
been updated from our previously issued 2018 guidance to reflect
three rigs running from late July 2018 through year-end
2018.
|
3Q 2018 |
4Q 2018 |
Full Year 2018 |
Production (Boe/d) |
|
|
|
Total |
14,500 – 15,500 |
19,000 - 21,000 |
14,000 – 16,000 |
% Oil |
|
|
66% - 70% |
% Gas |
|
|
15% - 17% |
% NGL |
|
|
15% - 17% |
|
|
|
|
Capex ($MM) |
|
|
|
D&C Capex (1) |
|
|
$390 - $440 |
Infrastructure, Seismic and Other Capex |
|
|
$90 - $110 |
|
|
|
|
Operating Costs and Expenses |
|
|
|
Lease Operating & Workover ($/Boe) |
|
|
$4.50 – $5.50 |
Gathering, Transportation & Other ($/Boe) |
|
|
$4.50 – $5.50 |
Cash G&A ($MM) |
|
|
$40 - $44 |
Production Taxes (% of Revenue) |
|
|
6% – 7% |
|
|
|
|
(1)
Excludes capitalized G&A. |
|
|
|
|
|
|
|
Floyd C. Wilson, Halcón’s Chairman and CEO
commented: “While greater than expected downtime during the quarter
resulted in production coming in slightly lower than guidance,
current low net crude realizations in the Delaware Basin dictate
that now is not the time to press for higher production
rates. Having said this, we expect improved power reliability
and less downtime going forward with the construction of a new
substation within our Hackberry Draw acreage to be completed in
August 2018. Our four most recently completed wells in
Monument Draw and Hackberry Draw are exceeding expectations.
The Sealy Ranch 6401H may be our best well drilled to date in the
Delaware Basin. With six additional wells planned to be put
online in this area over the next few months, we will have proven
up the Wolfcamp across the vast majority our acreage position in
Monument Draw. We recently began drilling our first two-well
pad at West Quito Draw and look forward to putting these wells
online later this year. Finally, our recent agreement with
Salt Creek Midstream is very important to us as it will allow us to
get a majority of our oil production to premium Gulf Coast markets
in the second half of 2019. We have an attractive multi-year
business plan that provides for the continued delineation of our
acreage while simultaneously building scale and improving our
balance sheet. While our business plan includes a significant
amount of outspend over the near-term, we have several options
available to fund this outspend excluding the issuance of
equity. These options include an HFS divestiture, joint
ventures and other options. We are more confident than ever
in the quality of our acreage given recent well results and
technical findings. As we execute on our business plan we
will create a very valuable enterprise over the next few
years.”
Conference Call and Webcast
Information
Halcón Resources Corporation (NYSE:HK) has
scheduled a conference call for Thursday, August 2, 2018, at 11:00
a.m. EDT (10:00 a.m. CDT). To participate in the conference
call, dial (866) 548-4713 for domestic callers, and (323) 794-2093
for international callers a few minutes before the call begins and
reference Halcón Resources conference ID 4068519. The
conference call will also be webcast live over the Internet on
Halcón’s website at http://www.halconresources.com in the Investors
section under Events and Presentations.
About Halcón Resources
Halcón Resources Corporation is an independent
energy company focused on the acquisition, production, exploration
and development of liquids-rich onshore oil and natural gas assets
in the United States.
For more information contact Quentin Hicks,
Executive Vice President of Finance, Capital Markets & Investor
Relations, at 303-802-5541 or qhicks@halconresources.com.
Forward-Looking Statements
This release contains 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.
Forward-looking statements include, among others, statements about
anticipated production, divestitures, liquidity, capital spending
and drilling and completion plans. Forward-looking
statements may often, but not always, be identified by
the use of such words such as "expects", "believes",
"intends", "anticipates", "plans", "estimates", “projects”,
"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, 2017 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.
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) |
(In thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Operating revenues: |
|
|
|
|
|
|
|
|
|
Oil, natural gas and natural gas liquids sales: |
|
|
|
|
|
|
|
|
|
|
Oil |
|
$ |
48,756 |
|
|
$ |
108,695 |
|
|
$ |
91,825 |
|
|
$ |
231,216 |
|
|
|
Natural
gas |
|
|
1,560 |
|
|
|
5,946 |
|
|
|
3,879 |
|
|
|
12,165 |
|
|
|
Natural
gas liquids |
|
|
4,991 |
|
|
|
5,306 |
|
|
|
8,703 |
|
|
|
11,331 |
|
|
|
Total oil, natural gas and natural gas liquids
sales |
|
|
55,307 |
|
|
|
119,947 |
|
|
|
104,407 |
|
|
|
254,712 |
|
|
Other |
|
|
108 |
|
|
|
190 |
|
|
|
263 |
|
|
|
1,023 |
|
|
|
Total
operating revenues |
|
|
55,415 |
|
|
|
120,137 |
|
|
|
104,670 |
|
|
|
255,735 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Production: |
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
5,314 |
|
|
|
20,380 |
|
|
|
10,229 |
|
|
|
41,024 |
|
|
|
Workover and other |
|
|
1,956 |
|
|
|
7,128 |
|
|
|
3,317 |
|
|
|
18,569 |
|
|
|
Taxes other than
income |
|
|
3,226 |
|
|
|
10,727 |
|
|
|
6,255 |
|
|
|
22,303 |
|
|
Gathering
and other |
|
|
5,956 |
|
|
|
11,812 |
|
|
|
12,378 |
|
|
|
23,754 |
|
|
Restructuring |
|
|
27 |
|
|
|
50 |
|
|
|
128 |
|
|
|
805 |
|
|
General and
administrative |
|
|
14,255 |
|
|
|
26,922 |
|
|
|
29,465 |
|
|
|
47,771 |
|
|
Depletion,
depreciation and accretion |
|
|
16,096 |
|
|
|
31,962 |
|
|
|
32,087 |
|
|
|
64,848 |
|
|
(Gain) loss
on sale of oil and natural gas properties |
|
|
2,225 |
|
|
|
(4,500 |
) |
|
|
5,904 |
|
|
|
(235,690 |
) |
|
|
Total
operating expenses |
|
|
49,055 |
|
|
|
104,481 |
|
|
|
99,763 |
|
|
|
(16,616 |
) |
Income (loss) from operations |
|
|
6,360 |
|
|
|
15,656 |
|
|
|
4,907 |
|
|
|
272,351 |
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
Net gain (loss) on derivative contracts |
|
|
(12,100 |
) |
|
|
24,156 |
|
|
|
(6,197 |
) |
|
|
50,554 |
|
|
Interest expense and other |
|
|
(10,534 |
) |
|
|
(19,635 |
) |
|
|
(17,582 |
) |
|
|
(44,478 |
) |
|
Gain (loss) on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(56,898 |
) |
|
|
Total
other income (expenses) |
|
|
(22,634 |
) |
|
|
4,521 |
|
|
|
(23,779 |
) |
|
|
(50,822 |
) |
Income (loss) before income taxes |
|
|
(16,274 |
) |
|
|
20,177 |
|
|
|
(18,872 |
) |
|
|
221,529 |
|
Income tax benefit (provision) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(12,000 |
) |
Net income (loss) |
|
|
(16,274 |
) |
|
|
20,177 |
|
|
|
(18,872 |
) |
|
|
209,529 |
|
Non-cash preferred dividend |
|
|
- |
|
|
|
(47,206 |
) |
|
|
- |
|
|
|
(48,007 |
) |
Net income (loss) available to common
stockholders |
|
$ |
(16,274 |
) |
|
$ |
(27,029 |
) |
|
$ |
(18,872 |
) |
|
$ |
161,522 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share of common
stock: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.10 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
$ |
1.37 |
|
|
|
Diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
$ |
1.37 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
157,943 |
|
|
|
143,545 |
|
|
|
155,925 |
|
|
|
117,554 |
|
|
|
Diluted |
|
|
157,943 |
|
|
|
143,545 |
|
|
|
155,925 |
|
|
|
118,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(In thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
June 30, 2018 |
|
December 31, 2017 |
Current assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
95,870 |
|
|
$ |
424,071 |
|
|
Accounts
receivable |
|
36,882 |
|
|
|
36,416 |
|
|
Receivables from derivative contracts |
|
19,391 |
|
|
|
677 |
|
|
Prepaids
and other |
|
12,240 |
|
|
|
10,628 |
|
|
Total
current assets |
|
164,383 |
|
|
|
471,792 |
|
Oil
and natural gas properties (full cost method): |
|
|
|
|
Evaluated |
|
1,163,297 |
|
|
|
877,316 |
|
|
Unevaluated |
|
1,073,595 |
|
|
|
765,786 |
|
|
Gross oil
and natural gas properties |
|
2,236,892 |
|
|
|
1,643,102 |
|
|
Less - accumulated
depletion |
|
(598,905 |
) |
|
|
(570,155 |
) |
|
Net oil
and natural gas properties |
|
1,637,987 |
|
|
|
1,072,947 |
|
Other operating property and equipment: |
|
|
|
|
Other operating
property and equipment |
|
153,123 |
|
|
|
101,282 |
|
|
Less - accumulated
depreciation |
|
(7,093 |
) |
|
|
(4,092 |
) |
|
Net other
operating property and equipment |
|
146,030 |
|
|
|
97,190 |
|
Other noncurrent assets: |
|
|
|
|
Receivables from
derivative contracts |
|
1,446 |
|
|
|
- |
|
|
Funds in escrow and
other |
|
1,963 |
|
|
|
1,691 |
|
Total assets |
$ |
1,951,809 |
|
|
$ |
1,643,620 |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and
accrued liabilities |
$ |
135,541 |
|
|
$ |
131,087 |
|
|
Liabilities from
derivative contracts |
|
53,513 |
|
|
|
19,248 |
|
|
Total
current liabilities |
|
189,054 |
|
|
|
150,335 |
|
Long-term debt, net |
|
612,353 |
|
|
|
409,168 |
|
Other noncurrent liabilities: |
|
|
|
|
Liabilities from
derivative contracts |
|
20,973 |
|
|
|
7,751 |
|
|
Asset retirement
obligations |
|
6,546 |
|
|
|
4,368 |
|
Commitments and contingencies |
|
|
|
Stockholders' equity: |
|
|
|
|
Common
stock: 1,000,000,000 shares of $0.0001 par value
authorized; |
|
|
|
|
160,599,853 and 149,379,491 shares issued and outstanding as
of |
|
|
|
|
June 30,
2018 and December 31, 2017, respectively |
|
16 |
|
|
|
15 |
|
|
Additional paid-in capital |
|
1,086,037 |
|
|
|
1,016,281 |
|
|
Retained
earnings (accumulated deficit) |
|
36,830 |
|
|
|
55,702 |
|
|
Total
stockholders' equity |
|
1,122,883 |
|
|
|
1,071,998 |
|
Total liabilities and stockholders' equity |
$ |
1,951,809 |
|
|
$ |
1,643,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
(16,274 |
) |
|
$ |
20,177 |
|
|
$ |
(18,872 |
) |
|
$ |
209,529 |
|
Adjustments
to reconcile net income (loss) to net cash |
|
|
|
|
|
|
|
|
provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
|
Depletion,
depreciation and accretion |
|
|
16,096 |
|
|
|
31,962 |
|
|
|
32,087 |
|
|
|
64,848 |
|
|
(Gain) loss
on sale of oil and natural gas properties |
|
|
2,225 |
|
|
|
(4,500 |
) |
|
|
5,904 |
|
|
|
(235,690 |
) |
|
Stock-based
compensation, net |
|
|
4,237 |
|
|
|
12,943 |
|
|
|
7,818 |
|
|
|
21,290 |
|
|
Unrealized
loss (gain) on derivative contracts |
|
|
37,874 |
|
|
|
(18,005 |
) |
|
|
26,761 |
|
|
|
(42,219 |
) |
|
Amortization of deferred loan costs |
|
|
359 |
|
|
|
711 |
|
|
|
651 |
|
|
|
896 |
|
|
Amortization of discount and premium |
|
|
51 |
|
|
|
243 |
|
|
|
183 |
|
|
|
1,887 |
|
|
Loss (gain)
on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56,898 |
|
|
Accrued
settlements on derivative contracts |
|
|
96 |
|
|
|
(2,255 |
) |
|
|
1,588 |
|
|
|
(3,520 |
) |
|
Other
income (expense) |
|
|
(93 |
) |
|
|
(121 |
) |
|
|
(1,479 |
) |
|
|
(1,004 |
) |
Cash flow
from operations before changes in working capital |
|
|
44,571 |
|
|
|
41,155 |
|
|
|
54,641 |
|
|
|
72,915 |
|
Changes in
working capital |
|
|
11,589 |
|
|
|
35,928 |
|
|
|
(11,063 |
) |
|
|
49,728 |
|
Net cash
provided by (used in) operating activities |
|
|
56,160 |
|
|
|
77,083 |
|
|
|
43,578 |
|
|
|
122,643 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Oil and
natural gas capital expenditures |
|
|
(124,076 |
) |
|
|
(77,407 |
) |
|
|
(251,961 |
) |
|
|
(121,210 |
) |
|
Proceeds
received from sale of oil and natural gas properties |
|
|
5,813 |
|
|
|
- |
|
|
|
1,779 |
|
|
|
477,306 |
|
|
Acquisition
of oil and natural gas properties |
|
|
(200,437 |
) |
|
|
(200,183 |
) |
|
|
(332,901 |
) |
|
|
(907,487 |
) |
|
Acquisition
of other operating property and equipment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(25,538 |
) |
|
Other
operating property and equipment capital expenditures |
|
|
(22,521 |
) |
|
|
(13,233 |
) |
|
|
(53,242 |
) |
|
|
(13,735 |
) |
|
Proceeds
received from sale of other operating property and equipment |
|
|
- |
|
|
|
66 |
|
|
|
1,899 |
|
|
|
10,352 |
|
|
Funds held
in escrow and other |
|
|
(2 |
) |
|
|
285 |
|
|
|
155 |
|
|
|
285 |
|
Net cash
provided by (used in) investing activities |
|
|
(341,223 |
) |
|
|
(290,472 |
) |
|
|
(634,271 |
) |
|
|
(580,027 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds
from borrowings |
|
|
- |
|
|
|
206,000 |
|
|
|
206,000 |
|
|
|
1,235,000 |
|
|
Repayments
of borrowings |
|
|
- |
|
|
|
(53,000 |
) |
|
|
- |
|
|
|
(1,118,000 |
) |
|
Cash
payments to Noteholders |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(30,917 |
) |
|
Debt
issuance costs |
|
|
(634 |
) |
|
|
(1,315 |
) |
|
|
(4,005 |
) |
|
|
(16,823 |
) |
|
Preferred
stock issued |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
400,055 |
|
|
Common
stock issued |
|
|
- |
|
|
|
- |
|
|
|
63,480 |
|
|
|
- |
|
|
Offering
costs and other |
|
|
(508 |
) |
|
|
(432 |
) |
|
|
(2,983 |
) |
|
|
(11,934 |
) |
Net cash
provided by (used in) financing activities |
|
|
(1,142 |
) |
|
|
151,253 |
|
|
|
262,492 |
|
|
|
457,381 |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents |
|
|
(286,205 |
) |
|
|
(62,136 |
) |
|
|
(328,201 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents at beginning of period |
|
|
382,075 |
|
|
|
62,157 |
|
|
|
424,071 |
|
|
|
24 |
|
Cash and
cash equivalents at end of period |
|
$ |
95,870 |
|
|
$ |
21 |
|
|
$ |
95,870 |
|
|
$ |
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
SELECTED OPERATING DATA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Production volumes: |
|
|
|
|
|
|
|
|
Crude oil (MBbls) |
|
|
795 |
|
|
|
2,470 |
|
|
|
1,488 |
|
|
|
5,101 |
|
Natural gas (MMcf) |
|
|
1,083 |
|
|
|
2,579 |
|
|
|
1,969 |
|
|
|
5,018 |
|
Natural gas liquids (MBbls) |
|
|
187 |
|
|
|
405 |
|
|
|
333 |
|
|
|
830 |
|
Total (MBoe) |
|
|
1,162 |
|
|
|
3,304 |
|
|
|
2,149 |
|
|
|
6,767 |
|
Average daily production (Boe/d) |
|
|
12,769 |
|
|
|
36,308 |
|
|
|
11,873 |
|
|
|
37,387 |
|
|
|
|
|
|
|
|
|
|
Average prices: |
|
|
|
|
|
|
|
|
Crude oil (per Bbl) |
|
$ |
61.33 |
|
|
$ |
44.01 |
|
|
$ |
61.71 |
|
|
$ |
45.33 |
|
Natural gas (per Mcf) |
|
|
1.44 |
|
|
|
2.31 |
|
|
|
1.97 |
|
|
|
2.42 |
|
Natural gas liquids (per Bbl) |
|
|
26.69 |
|
|
|
13.10 |
|
|
|
26.14 |
|
|
|
13.65 |
|
Total per Boe |
|
|
47.60 |
|
|
|
36.30 |
|
|
|
48.58 |
|
|
|
37.64 |
|
|
|
|
|
|
|
|
|
|
Cash effect of derivative contracts: |
|
|
|
|
|
|
|
|
Crude oil (per Bbl) |
|
$ |
32.24 |
|
|
$ |
2.46 |
|
|
$ |
13.67 |
|
|
$ |
1.60 |
|
Natural gas (per Mcf) |
|
|
0.13 |
|
|
|
0.02 |
|
|
|
0.11 |
|
|
|
0.03 |
|
Natural gas liquids (per Bbl) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total per Boe |
|
|
22.18 |
|
|
|
1.86 |
|
|
|
9.57 |
|
|
|
1.23 |
|
|
|
|
|
|
|
|
|
|
Average prices computed after cash effect of
settlement of derivative contracts: |
Crude oil (per Bbl) |
|
$ |
93.57 |
|
|
$ |
46.47 |
|
|
$ |
75.38 |
|
|
$ |
46.93 |
|
Natural gas (per Mcf) |
|
|
1.57 |
|
|
|
2.33 |
|
|
|
2.08 |
|
|
|
2.45 |
|
Natural gas liquids (per Bbl) |
|
|
26.69 |
|
|
|
13.10 |
|
|
|
26.14 |
|
|
|
13.65 |
|
Total per Boe |
|
|
69.78 |
|
|
|
38.16 |
|
|
|
58.15 |
|
|
|
38.87 |
|
|
|
|
|
|
|
|
|
|
Average cost per Boe: |
|
|
|
|
|
|
|
|
Production: |
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
4.57 |
|
|
$ |
6.17 |
|
|
$ |
4.76 |
|
|
$ |
6.06 |
|
Workover and other |
|
|
1.68 |
|
|
|
2.16 |
|
|
|
1.54 |
|
|
|
2.74 |
|
Taxes other than income |
|
|
2.78 |
|
|
|
3.25 |
|
|
|
2.91 |
|
|
|
3.30 |
|
Gathering and other, as adjusted (1) |
|
|
4.73 |
|
|
|
3.02 |
|
|
|
5.11 |
|
|
|
2.83 |
|
Restructuring |
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.06 |
|
|
|
0.12 |
|
General and administrative, as adjusted (1) |
|
8.68 |
|
|
|
3.98 |
|
|
|
9.91 |
|
|
|
3.70 |
|
Depletion |
|
12.30 |
|
|
|
9.20 |
|
|
|
13.38 |
|
|
|
9.13 |
|
|
|
|
|
|
|
|
|
|
(1)
Represents gathering and other and general and administrative costs
per Boe, adjusted for items noted in the reconciliation
below: |
|
|
|
|
|
|
|
|
|
General and
administrative: |
|
|
|
|
|
|
|
|
General
and administrative, as reported |
|
$ |
12.27 |
|
|
$ |
8.15 |
|
|
$ |
13.71 |
|
|
$ |
7.06 |
|
Stock-based compensation: |
|
|
|
|
|
|
|
|
Non-cash |
|
|
(3.65 |
) |
|
|
(3.92 |
) |
|
|
(3.64 |
) |
|
|
(3.15 |
) |
Transaction costs and other: |
|
|
|
|
|
|
|
|
Cash |
|
|
0.06 |
|
|
|
(0.25 |
) |
|
|
(0.16 |
) |
|
|
(0.21 |
) |
General
and administrative, as adjusted(2) |
|
$ |
8.68 |
|
|
$ |
3.98 |
|
|
$ |
9.91 |
|
|
$ |
3.70 |
|
|
|
|
|
|
|
|
|
|
Gathering
and other, as reported |
$ |
5.13 |
|
|
$ |
3.58 |
|
|
$ |
5.76 |
|
|
$ |
3.51 |
|
Rig
stacking charges and other |
|
(0.40 |
) |
|
|
(0.56 |
) |
|
|
(0.65 |
) |
|
|
(0.68 |
) |
Gathering
and other, as adjusted(3) |
$ |
4.73 |
|
|
$ |
3.02 |
|
|
$ |
5.11 |
|
|
$ |
2.83 |
|
|
|
|
|
|
|
|
|
|
Total operating costs,
as reported |
|
$ |
26.43 |
|
|
$ |
23.31 |
|
|
$ |
28.68 |
|
|
$ |
22.67 |
|
Total adjusting
items |
|
|
(3.99 |
) |
|
|
(4.73 |
) |
|
|
(4.45 |
) |
|
|
(4.04 |
) |
Total operating costs,
as adjusted(4) |
|
$ |
22.44 |
|
|
$ |
18.58 |
|
|
$ |
24.23 |
|
|
$ |
18.63 |
|
|
|
|
|
|
|
|
|
|
(2) General and administrative, as adjusted, is a non-GAAP
measure that excludes non-cash stock-based compensation charges
relating to equity awards under our incentive stock plans, as well
as other cash charges associated with certain transactions. The
Company believes that it is useful to understand the effects that
these charges have on general and administrative expenses and total
operating costs and that exclusion of such charges is useful for
comparison to prior periods. |
(3) Gathering and other, as adjusted, is a non-GAAP measure
that excludes rig stacking charges incurred as a result of
reductions in our drilling activities due to a dramatic decline in
oil and natural gas prices beginning in 2014. The Company believes
that it is useful to understand the effects that these charges have
on gathering and other expense and total operating costs and that
exclusion of such charges is useful for comparison to prior
periods. |
(4) Represents lease operating, workover and other expense,
taxes other than income, gathering and other expense and general
and administrative costs per Boe, adjusted for items noted in
reconciliation above. |
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
|
SELECTED ITEM REVIEW AND RECONCILIATION
(Unaudited) |
|
(In thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
As
Reported: |
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders, as reported |
|
$ |
(16,274 |
) |
|
$ |
(27,029 |
) |
|
$ |
(18,872 |
) |
|
$ |
161,522 |
|
Non-cash preferred
dividend |
|
|
- |
|
|
|
47,206 |
|
|
|
- |
|
|
|
48,007 |
|
Net income (loss), as
reported |
|
|
(16,274 |
) |
|
|
20,177 |
|
|
|
(18,872 |
) |
|
|
209,529 |
|
|
|
|
|
|
|
|
|
|
Impact of
Selected Items: |
|
|
|
|
|
|
|
|
Unrealized loss (gain)
on derivatives contracts: |
|
|
|
|
|
|
|
|
Crude
oil |
|
$ |
37,835 |
|
|
$ |
(17,176 |
) |
|
$ |
27,710 |
|
|
$ |
(40,736 |
) |
Natural
gas |
|
|
(564 |
) |
|
|
(829 |
) |
|
|
(1,552 |
) |
|
|
(1,483 |
) |
Natural
gas liquids |
|
|
603 |
|
|
|
- |
|
|
|
603 |
|
|
|
- |
|
Total
mark-to-market non-cash charge |
|
|
37,874 |
|
|
|
(18,005 |
) |
|
|
26,761 |
|
|
|
(42,219 |
) |
(Gain) loss on sale of
oil and natural gas properties |
|
|
2,225 |
|
|
|
(4,500 |
) |
|
|
5,904 |
|
|
|
(235,690 |
) |
Loss (gain) on
extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56,898 |
|
Deferred financing
costs expensed (1) |
|
|
- |
|
|
|
305 |
|
|
|
- |
|
|
|
305 |
|
Restructuring |
|
|
27 |
|
|
|
50 |
|
|
|
128 |
|
|
|
805 |
|
Rig stacking charges,
transaction costs and other |
|
|
387 |
|
|
|
2,679 |
|
|
|
1,606 |
|
|
|
6,009 |
|
Selected items, before
income taxes |
|
|
40,513 |
|
|
|
(19,471 |
) |
|
|
34,399 |
|
|
|
(213,892 |
) |
Income tax effect of
selected items (2) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,000 |
|
Selected items, net of
tax |
|
|
40,513 |
|
|
|
(19,471 |
) |
|
|
34,399 |
|
|
|
(201,892 |
) |
|
|
|
|
|
|
|
|
|
As
Adjusted: |
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders, excluding selected items
(3)(4) |
|
$ |
24,239 |
|
|
$ |
706 |
|
|
$ |
15,527 |
|
|
$ |
7,637 |
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per common share, as reported |
|
$ |
(0.10 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
$ |
1.37 |
|
Impact of selected
items |
|
|
0.25 |
|
|
|
0.19 |
|
|
|
0.22 |
|
|
|
(1.31 |
) |
Basic net income (loss)
per common share, excluding selected items (3) |
|
$ |
0.15 |
|
|
$ |
- |
|
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per common share, as reported |
|
$ |
(0.10 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.12 |
) |
|
$ |
1.37 |
|
Impact of selected
items |
|
|
0.25 |
|
|
|
0.19 |
|
|
|
0.22 |
|
|
|
(1.31 |
) |
Diluted net income
(loss) per common share, excluding selected items (3)(5) |
|
$ |
0.15 |
|
|
$ |
- |
|
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities |
|
$ |
56,160 |
|
|
$ |
77,083 |
|
|
$ |
43,578 |
|
|
$ |
122,643 |
|
Changes in working
capital |
|
|
(11,589 |
) |
|
|
(35,928 |
) |
|
|
11,063 |
|
|
|
(49,728 |
) |
Cash flow from
operations before changes in working capital |
|
|
44,571 |
|
|
|
41,155 |
|
|
|
54,641 |
|
|
|
72,915 |
|
Cash components of
selected items |
|
|
318 |
|
|
|
4,984 |
|
|
|
294 |
|
|
|
10,255 |
|
Income tax effect of
selected items (2) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,000 |
|
Cash flow from
operations before changes in working capital, adjusted for selected
items (3)(4) |
|
$ |
44,889 |
|
|
$ |
46,139 |
|
|
$ |
54,935 |
|
|
$ |
95,170 |
|
|
|
|
|
|
|
|
|
|
(1) For
the 2017 columns, this represents non-recurring charges in
connection with the redetermination of the Company's
borrowing base under its senior revolving credit facility. |
|
|
|
|
|
|
|
|
|
(2) For
the 2017 column, this represents the tax impact from the estimated
alternative minimum tax generated primarily by the gain from the
sale of the El Halcón Assets. |
|
|
|
|
|
|
|
|
|
|
|
(3) Net
income (loss) and earnings per share excluding selected items and
cash flow from operations before changes in working capital
adjusted for selected items are non-GAAP measures presented based
on management's belief that they will enable a user of the
financial information to understand the impact of these items on
reported results. Additionally, this presentation provides a
beneficial comparison to similarly adjusted measurements of prior
periods. These financial measures are not measures of financial
performance under GAAP and should not be considered as an
alternative to net income, earnings per share and cash flow from
operations, as defined by GAAP. These financial measures may not be
comparable to similarly named non-GAAP financial measures that
other companies may use and may not be useful in comparing the
performance of those companies to Halcón's performance. |
|
|
|
|
|
|
|
|
|
(4)
For the three and six months ended June 30, 2018, net income (loss)
and earnings per share excluding selected items and cash flow from
operations before changes in working capital include
approximately $30.8 million of proceeds related to a monetization
of MidCush hedges that occurred in the second quarter of 2018. |
|
|
|
|
|
|
|
|
|
(5) The
impact of selected items for the three months ended June 30, 2018
and 2017 was calculated based upon weighted average diluted shares
of 158.1 million and 144.3 million, respectively, due to the net
income available to common stockholders, excluding selected items.
The impact of selected items for the six months ended June 30, 2018
and 2017 was calculated based upon weighted average diluted shares
of 156.2 million and 118.2 million, respectively, due to the net
income available to common stockholders, excluding selected
items. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
ADJUSTED EBITDA RECONCILIATION
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Net income
(loss), as reported |
$ |
(16,274 |
) |
|
$ |
20,177 |
|
|
$ |
(18,872 |
) |
|
$ |
209,529 |
|
Impact of
adjusting items: |
|
|
|
|
|
|
Interest expense |
|
11,234 |
|
|
|
19,557 |
|
|
|
20,836 |
|
|
|
44,747 |
|
Depletion, depreciation and accretion |
|
16,096 |
|
|
|
31,962 |
|
|
|
32,087 |
|
|
|
64,848 |
|
Income tax provision (benefit) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,000 |
|
Stock-based compensation |
|
4,237 |
|
|
|
12,943 |
|
|
|
7,818 |
|
|
|
21,290 |
|
Interest income |
|
(607 |
) |
|
|
(59 |
) |
|
|
(1,772 |
) |
|
|
(158 |
) |
(Gain) loss on sale of other assets |
|
(93 |
) |
|
|
(65 |
) |
|
|
(1,334 |
) |
|
|
3 |
|
Restructuring |
|
27 |
|
|
|
50 |
|
|
|
128 |
|
|
|
805 |
|
Loss (gain) on extinguishment of debt |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56,898 |
|
(Gain) loss on sale of oil and natural gas properties |
|
2,225 |
|
|
|
(4,500 |
) |
|
|
5,904 |
|
|
|
(235,690 |
) |
Unrealized loss (gain) on derivatives contracts |
|
37,874 |
|
|
|
(18,005 |
) |
|
|
26,761 |
|
|
|
(42,219 |
) |
Deferred financing costs expensed |
|
- |
|
|
|
305 |
|
|
|
- |
|
|
|
305 |
|
Rig stacking charges |
|
147 |
|
|
|
1,860 |
|
|
|
1,092 |
|
|
|
4,603 |
|
Transaction costs and other |
|
240 |
|
|
|
819 |
|
|
|
514 |
|
|
|
1,406 |
|
Adjusted
EBITDA(1)(2) |
$ |
55,106 |
|
|
$ |
65,044 |
|
|
$ |
73,162 |
|
|
$ |
138,367 |
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted EBITDA is a non-gaap measure, which is presented based on
management's belief that it will enable a user of the financial
information to understand the impact of these items on
reported results. Additionally, this presentation provides a
beneficial comparison to similarly adjusted measurements of prior
periods. This financial measure is not a measure of financial
performance under GAAP and should not be considered as an
alternative to GAAP. This financial measure may not be comparable
to similarly named non-GAAP financial measures that other
companies may use and may not be useful in comparing the
performance of those companies to Halcón's performance. |
|
|
|
|
|
|
|
|
|
(2)
Adjusted EBITDA for the three and six months ended June 30, 2018
includes approximately $30.8 million of proceeds related to a
monetization of MidCush hedges that occurred in the second
quarter of 2018. |
|
|
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