Record 30 and 60-Day IP Rates on Recent
Monument Draw Wells
Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”)
today announced its third quarter 2018 financial and operating
results and also provided an operational update.
Net production for the three months ended
September 30, 2018 averaged 14,609 barrels of oil equivalent per
day (Boe/d), representing a 14% increase from second quarter
production of 12,769 Boe/d. Production for the third quarter
was comprised of 73% oil, 14% natural gas liquids (NGLs) and 13%
natural gas. Third quarter production was negatively impacted
by excess gas flaring primarily in the Company’s Monument Draw
area. Halcón estimates that without this excess flaring,
third quarter average daily production would have exceeded 15,000
Boe/d.
Halcón generated total revenues of $61.6 million
for the third quarter of 2018. The Company reported a net
loss available to common stockholders of $(81.8) million or a net
loss per basic and diluted share of $(0.52) for the same
period. After adjusting for selected items (see Selected Item
Review and Reconciliation table for additional information), the
Company generated a net loss of $(9.0) million, or $(0.06) per
diluted share for the third quarter of 2018. Adjusted EBITDA
(see adjusted EBITDA Reconciliation table for additional
information) totaled $27.5 million for the third quarter of 2018 as
compared to $55.1 million for the second quarter of 2018. The
second quarter 2018 adjusted EBITDA included approximately $30.8
million of proceeds related to a monetization of MidCush oil
hedges.
Excluding the impact of hedges, for the third
quarter of 2018 Halcón realized 79% of the average NYMEX oil price,
45% of the average NYMEX oil price for NGLs and 47% of the average
NYMEX natural gas price. Additionally, the Company realized
hedge losses of approximately $9.6 million during the third
quarter.
Recent Monument Draw Well
Results
Eight new long-lateral Wolfcamp wells were put
online in the third quarter of 2018 in Halcón’s Monument Draw
area. Five of these wells have reached their 30-day and
60-day peak IP rates which averaged 1,753 and 1,558 Boe/d,
respectively (80% oil). Two of these wells, the Telluride
6201H and the Trinity 6205H, averaged 30-day and 60-day peak IP
rates of 2,087 Boe/d (82% oil) and 1,840 Boe/d (81% oil),
respectively. The Trinity 6205H well produced nearly 55,000
barrels of oil in September, making it one of the top oil producing
Wolfcamp wells drilled in all of Reeves and Ward counties since the
beginning of 2017. After being online for approximately three
months, the Telluride 6201H and the Trinity 6205H wells continue to
flow at very strong rates with a current average production rate in
excess of 1,300 Boe/d (82% oil) per well.
Liquidity and Capital
Spending
Halcón recently completed its fall 2018
borrowing base redetermination for its senior secured revolving
credit facility. The Company received commitments to increase
its borrowing base from $200 million to $275 million upon the
closing of the Company’s water infrastructure asset sale in
December. As of September 30, 2018, and pro forma for the
recently announced water infrastructure asset sale and the
increased borrowing base, Halcón had liquidity of approximately
$418 million consisting of $145 million of cash on hand plus an
undrawn commitment under its revolver borrowing base of $275
million less $2 million of letters of credit outstanding. The
Company expects this liquidity to fully fund its capital spending
program beyond 2019.
During the third quarter of 2018, the Company
incurred capital costs of approximately $96 million on drilling and
completions and $39 million on infrastructure, seismic and
other. Halcón’s year-to-date drilling and completion capital
spending through the third quarter of 2018 of $344 million includes
$27 million related to science (i.e. shuttle logs, pilot wells,
etc.) and presetting surface and intermediate casing for wells to
be drilled and completed in 2019 and beyond.
Operations Update
Halcón is currently producing approximately
17,500 Boe/d net and is running three operated rigs in the Delaware
Basin. The Company expects to maintain this rig level through
the remainder of 2018 and into early 2019 in addition to running
one full-time frac crew over this same period.
Halcón currently holds 22,110 net acres in its
Monument Draw area. The Company has put online 14 horizontal
Wolfcamp wells in this area since it began drilling here in the
first quarter of 2017. Halcón expects to bring a rig back to
Monument Draw in December 2018.
The Company currently holds 11,008 net acres in
its West Quito Draw area. Halcón recently completed its first
two operated horizontal Wolfcamp wells which are currently flowing
back after frac. In addition to these two wells, the Company
has drilled three more wells that are planned to be put online in
West Quito Draw near year end 2018.
Halcón currently holds 23,816 acres in its
Hackberry Draw area. The Company has drilled and completed 18
horizontal wells in this area (16 Wolfcamp, one 2nd Bone Spring and
one 3rd Bone Spring). Halcón currently has two wells flowing
back after frac and expects to put two additional wells online in
Hackberry Draw before year end 2018.
Hedging Update
As of November 7, 2018, Halcón had 13,000 Bbl/d
of oil hedged for the last three months of 2018 at an average WTI
NYMEX price of $54.76 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 4,000 Bbl/d of oil hedged at
an average WTI NYMEX price of $58.56/Bbl. Additionally, the
Company has 11,000 Bbl/d of MidCush vs. NYMEX WTI basis
differential swaps in place for the fourth quarter of 2018 at
-$10.64/Bbl, 14,000 Bbl/d in place for the first half of 2019 at
-$3.58/Bbl and 5,000 Bbl/d in place for the second half of 2019 at
-$4.54/Bbl. Halcón also has 5,000 Bbl/d of Magellan East
Houston vs. NYMEX WTI basis differential swaps in place for fourth
quarter of 2019 at +$3.72 and 9,000 Bbl/d in place for 2020 at
+$2.95/Bbl.
As of November 7, 2018, the Company had 7,500
MMBtu/d of natural gas hedged for the last three months of 2018 at
an average price of $3.16/MMBtu. For 2019, Halcón has 24,000
MMBtu/d of gas hedged at an average price of $2.81/MMBtu. The
Company also has 15,000 MMBtu/d of WAHA vs. NYMEX gas basis
differential swaps in place for the fourth quarter 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 November 7, 2018, Halcón had 1,000 Bbl/d
of NGL swaps in place for the last three months of 2018 at
$32.50/Bbl and 4,252 Bbl/d in place for 2019 at an average price of
$29.51/Bbl.
Sale of Water Infrastructure
Assets
On October 31, 2018, Halcón entered into a
purchase and sale agreement with a third party midstream water
operator to sell 100% of its water infrastructure assets across all
areas. The agreement provides for upfront cash of $200
million and up to another $125 million of incentive payments
payable if the Company meets certain thresholds for gross wells put
online annually. Halcón expects this transaction
to close by December 31, 2018.
Fourth Quarter 2018
Guidance
Halcón expects fourth quarter 2018 net
production to average between 18,000 and 20,000 Boe/d (63-67%
oil). This guidance range is 1,000 Boe/d lower than the
Company’s previous guidance range primarily as a result of third
party gas infrastructure constraints and the Company’s decision to
shut-in the Sealy Ranch 7506H in mid-October given excessive gas
treating costs on this well. Halcón expects to put this well
back online in the first quarter of 2019 once it completes upgrades
to its gas treating capabilities in Monument Draw. The
Company expects fourth quarter drilling and completion capital
spending to total $75 to $95 million in addition to infrastructure
spend of approximately $20 to $30 million (excluding water
infrastructure spending). Halcón plans to provide 2019
guidance in early 2019.
Floyd C. Wilson, Halcón’s Chairman and CEO
commented: “It was a busy quarter for Halcón, and one in which we
accomplished many goals. As previously announced, we
successfully entered into an agreement to monetize our water
infrastructure assets at a premium value. We also bolstered
our liquidity position further by negotiating an increase in our
borrowing base by $75 million. We believe we have adequate
liquidity in place to fully fund our capital spending in 2019 and
2020 assuming three to four rigs running. We were able to
finalize a firm commitment to get a majority of our oil to the Gulf
Coast, which we expect to be in service during the third quarter of
2019. We also had a very successful quarter with the
drill-bit as we put eight new wells on line in Monument Draw, all
of which are exceeding expectations and a few of which have 30 and
60-day production rates at the top end of all recent wells drilled
in Ward and Reeves counties. We also continued to bring our
recurring per unit operating costs down and kept our capital
spending levels within expectations. We did incur a
significant amount of non-recurring gas treating charges in
Monument Draw during the third quarter related to elevated chemical
treating driven by the unexpected loss of a third party sour gas
sales line. The loss of this line also contributed to higher
than expected gas flaring in the third quarter. We expect
these treating costs to decline significantly over the next couple
of quarters as we build out our in-house gas treating
infrastructure in Monument Draw. Finally, we recently put
online our first two wells in West Quito Draw and we expect these
wells to be strong producers. As we look forward to 2019, we
are focused on continuing to grow our production and gain scale;
but in a cost-efficient manner.”
Conference Call and Webcast
Information
Halcón Resources Corporation (NYSE: HK) has
scheduled a conference call for Thursday, November 8, 2018, at
11:00 a.m. EST (10:00 a.m. CST). To participate in the
conference call, dial (877) 451-6152 for domestic callers, and
(201) 389-0879 for international callers a few minutes before the
call begins and reference Halcón Resources conference ID
13684609. 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 |
|
Nine Months
Ended |
|
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil, natural gas and natural gas liquids sales: |
|
|
|
|
|
|
|
|
|
|
Oil |
|
$ |
53,918 |
|
|
$ |
88,256 |
|
|
$ |
145,743 |
|
|
$ |
319,472 |
|
|
|
Natural
gas |
|
|
1,407 |
|
|
|
2,886 |
|
|
|
5,286 |
|
|
|
15,051 |
|
|
|
Natural
gas liquids |
|
|
5,920 |
|
|
|
5,448 |
|
|
|
14,623 |
|
|
|
16,779 |
|
|
|
Total oil, natural gas and natural gas liquids
sales |
|
|
61,245 |
|
|
|
96,590 |
|
|
|
165,652 |
|
|
|
351,302 |
|
|
Other |
|
|
350 |
|
|
|
363 |
|
|
|
613 |
|
|
|
1,386 |
|
|
|
Total
operating revenues |
|
|
61,595 |
|
|
|
96,953 |
|
|
|
166,265 |
|
|
|
352,688 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Production: |
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
5,275 |
|
|
|
17,798 |
|
|
|
15,504 |
|
|
|
58,822 |
|
|
|
Workover and other |
|
|
1,478 |
|
|
|
3,644 |
|
|
|
4,795 |
|
|
|
22,213 |
|
|
|
Taxes other than
income |
|
|
3,557 |
|
|
|
6,846 |
|
|
|
9,812 |
|
|
|
29,149 |
|
|
Gathering
and other |
|
|
18,404 |
|
|
|
10,886 |
|
|
|
30,782 |
|
|
|
34,640 |
|
|
Restructuring |
|
|
- |
|
|
|
1,275 |
|
|
|
128 |
|
|
|
2,080 |
|
|
General and
administrative |
|
|
19,731 |
|
|
|
39,195 |
|
|
|
49,196 |
|
|
|
86,966 |
|
|
Depletion,
depreciation and accretion |
|
|
20,310 |
|
|
|
35,940 |
|
|
|
52,397 |
|
|
|
100,788 |
|
|
(Gain) loss
on sale of oil and natural gas properties |
|
|
1,331 |
|
|
|
(491,830 |
) |
|
|
7,235 |
|
|
|
(727,520 |
) |
|
|
Total
operating expenses |
|
|
70,086 |
|
|
|
(376,246 |
) |
|
|
169,849 |
|
|
|
(392,862 |
) |
Income (loss) from operations |
|
|
(8,491 |
) |
|
|
473,199 |
|
|
|
(3,584 |
) |
|
|
745,550 |
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
Net gain (loss) on derivative contracts |
|
|
(60,406 |
) |
|
|
(22,415 |
) |
|
|
(66,603 |
) |
|
|
28,139 |
|
|
Interest expense and other |
|
|
(12,940 |
) |
|
|
(19,330 |
) |
|
|
(30,522 |
) |
|
|
(63,808 |
) |
|
Gain (loss) on extinguishment of debt |
|
|
- |
|
|
|
(29,167 |
) |
|
|
- |
|
|
|
(86,065 |
) |
|
|
Total
other income (expenses) |
|
|
(73,346 |
) |
|
|
(70,912 |
) |
|
|
(97,125 |
) |
|
|
(121,734 |
) |
Income (loss) before income taxes |
|
|
(81,837 |
) |
|
|
402,287 |
|
|
|
(100,709 |
) |
|
|
623,816 |
|
Income tax benefit (provision) |
|
|
- |
|
|
|
17,000 |
|
|
|
- |
|
|
|
5,000 |
|
Net income (loss) |
|
|
(81,837 |
) |
|
|
419,287 |
|
|
|
(100,709 |
) |
|
|
628,816 |
|
Non-cash preferred dividend |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(48,007 |
) |
Net income (loss) available to common
stockholders |
|
$ |
(81,837 |
) |
|
$ |
419,287 |
|
|
$ |
(100,709 |
) |
|
$ |
580,809 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share of common
stock: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.52 |
) |
|
$ |
2.85 |
|
|
$ |
(0.64 |
) |
|
$ |
4.56 |
|
|
|
Diluted |
|
$ |
(0.52 |
) |
|
$ |
2.82 |
|
|
$ |
(0.64 |
) |
|
$ |
4.52 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
158,011 |
|
|
|
146,944 |
|
|
|
156,628 |
|
|
|
127,458 |
|
|
|
Diluted |
|
|
158,011 |
|
|
|
148,490 |
|
|
|
156,628 |
|
|
|
128,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(In thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
September 30, 2018 |
|
December 31, 2017 |
Current assets: |
|
|
|
|
Cash and cash
equivalents |
$ |
137 |
|
|
$ |
424,071 |
|
|
Accounts
receivable |
|
46,764 |
|
|
|
36,416 |
|
|
Receivables from derivative contracts |
|
16,553 |
|
|
|
677 |
|
|
Prepaids
and other |
|
10,969 |
|
|
|
10,628 |
|
|
Total
current assets |
|
74,423 |
|
|
|
471,792 |
|
Oil
and natural gas properties (full cost method): |
|
|
|
|
Evaluated |
|
1,362,136 |
|
|
|
877,316 |
|
|
Unevaluated |
|
982,922 |
|
|
|
765,786 |
|
|
Gross oil
and natural gas properties |
|
2,345,058 |
|
|
|
1,643,102 |
|
|
Less - accumulated
depletion |
|
(617,075 |
) |
|
|
(570,155 |
) |
|
Net oil
and natural gas properties |
|
1,727,983 |
|
|
|
1,072,947 |
|
Other operating property and equipment: |
|
|
|
|
Other operating
property and equipment |
|
188,321 |
|
|
|
101,282 |
|
|
Less - accumulated
depreciation |
|
(9,136 |
) |
|
|
(4,092 |
) |
|
Net other
operating property and equipment |
|
179,185 |
|
|
|
97,190 |
|
Other noncurrent assets: |
|
|
|
|
Receivables from
derivative contracts |
|
2,794 |
|
|
|
- |
|
|
Funds in escrow and
other |
|
1,915 |
|
|
|
1,691 |
|
Total assets |
$ |
1,986,300 |
|
|
$ |
1,643,620 |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and
accrued liabilities |
$ |
141,377 |
|
|
$ |
131,087 |
|
|
Liabilities from
derivative contracts |
|
86,176 |
|
|
|
19,248 |
|
|
Current portion of
asset retirement obligation |
|
149 |
|
|
|
- |
|
|
Total
current liabilities |
|
227,702 |
|
|
|
150,335 |
|
Long-term debt, net |
|
667,726 |
|
|
|
409,168 |
|
Other noncurrent liabilities: |
|
|
|
|
Liabilities from
derivative contracts |
|
37,459 |
|
|
|
7,751 |
|
|
Asset retirement
obligations |
|
6,963 |
|
|
|
4,368 |
|
Commitments and contingencies |
|
|
|
Stockholders' equity: |
|
|
|
|
Common
stock: 1,000,000,000 shares of $0.0001 par value authorized; |
|
|
|
|
160,676,356 and 149,379,491 shares issued and outstanding as
of |
|
|
|
|
September 30, 2018 and December 31, 2017, respectively |
|
16 |
|
|
|
15 |
|
|
Additional paid-in capital |
|
1,091,441 |
|
|
|
1,016,281 |
|
|
Retained
earnings (accumulated deficit) |
|
(45,007 |
) |
|
|
55,702 |
|
|
Total
stockholders' equity |
|
1,046,450 |
|
|
|
1,071,998 |
|
Total liabilities and stockholders' equity |
$ |
1,986,300 |
|
|
$ |
1,643,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
(81,837 |
) |
|
$ |
419,287 |
|
|
$ |
(100,709 |
) |
|
$ |
628,816 |
|
Adjustments
to reconcile net income (loss) to net cash |
|
|
|
|
|
|
|
|
provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
|
Depletion, depreciation
and accretion |
|
|
20,310 |
|
|
|
35,940 |
|
|
|
52,397 |
|
|
|
100,788 |
|
|
(Gain) loss on sale of
oil and natural gas properties |
|
|
1,331 |
|
|
|
(491,830 |
) |
|
|
7,235 |
|
|
|
(727,520 |
) |
|
Stock-based
compensation, net |
|
|
4,423 |
|
|
|
12,258 |
|
|
|
12,241 |
|
|
|
33,548 |
|
|
Unrealized loss (gain)
on derivative contracts |
|
|
50,763 |
|
|
|
31,209 |
|
|
|
77,524 |
|
|
|
(11,010 |
) |
|
Amortization of
deferred loan costs |
|
|
371 |
|
|
|
410 |
|
|
|
1,022 |
|
|
|
1,306 |
|
|
Amortization of
discount and premium |
|
|
52 |
|
|
|
471 |
|
|
|
235 |
|
|
|
2,358 |
|
|
Loss (gain) on
extinguishment of debt |
|
|
- |
|
|
|
29,167 |
|
|
|
- |
|
|
|
86,065 |
|
|
Accrued settlements on
derivative contracts |
|
|
1,704 |
|
|
|
2,847 |
|
|
|
3,292 |
|
|
|
(673 |
) |
|
Other income
(expense) |
|
|
(499 |
) |
|
|
(3,128 |
) |
|
|
(1,978 |
) |
|
|
(4,132 |
) |
Cash flows
from operations before changes in working capital |
|
|
(3,382 |
) |
|
|
36,631 |
|
|
|
51,259 |
|
|
|
109,546 |
|
Changes in
working capital |
|
|
(3,487 |
) |
|
|
(57,052 |
) |
|
|
(14,550 |
) |
|
|
(7,324 |
) |
Net cash
provided by (used in) operating activities |
|
|
(6,869 |
) |
|
|
(20,421 |
) |
|
|
36,709 |
|
|
|
102,222 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Oil and natural gas
capital expenditures |
|
|
(117,343 |
) |
|
|
(97,670 |
) |
|
|
(369,304 |
) |
|
|
(218,880 |
) |
|
Proceeds received from
sale of oil and natural gas properties |
|
|
(132 |
) |
|
|
1,424,272 |
|
|
|
1,647 |
|
|
|
1,901,578 |
|
|
Acquisition of oil and
natural gas properties |
|
|
(569 |
) |
|
|
(9,189 |
) |
|
|
(333,470 |
) |
|
|
(916,676 |
) |
|
Acquisition of other
operating property and equipment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(25,538 |
) |
|
Other operating
property and equipment capital expenditures |
|
|
(26,147 |
) |
|
|
(11,739 |
) |
|
|
(79,389 |
) |
|
|
(25,474 |
) |
|
Proceeds received from
sale of other operating property and equipment |
|
|
337 |
|
|
|
10,939 |
|
|
|
2,236 |
|
|
|
21,291 |
|
|
Funds held in escrow
and other |
|
|
(2 |
) |
|
|
1,174 |
|
|
|
153 |
|
|
|
1,459 |
|
Net cash
provided by (used in) investing activities |
|
|
(143,856 |
) |
|
|
1,317,787 |
|
|
|
(778,127 |
) |
|
|
737,760 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from
borrowings |
|
|
87,000 |
|
|
|
114,000 |
|
|
|
293,000 |
|
|
|
1,349,000 |
|
|
Repayments of
borrowings |
|
|
(32,000 |
) |
|
|
(379,826 |
) |
|
|
(32,000 |
) |
|
|
(1,497,826 |
) |
|
Cash payments to
Noteholders |
|
|
- |
|
|
|
(39,986 |
) |
|
|
- |
|
|
|
(70,903 |
) |
|
Debt issuance
costs |
|
|
(8 |
) |
|
|
(397 |
) |
|
|
(4,013 |
) |
|
|
(17,220 |
) |
|
Preferred stock
issued |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
400,055 |
|
|
Common stock
issued |
|
|
- |
|
|
|
- |
|
|
|
63,480 |
|
|
|
- |
|
|
Offering costs and
other |
|
|
- |
|
|
|
(1,831 |
) |
|
|
(2,983 |
) |
|
|
(13,765 |
) |
Net cash
provided by (used in) financing activities |
|
|
54,992 |
|
|
|
(308,040 |
) |
|
|
317,484 |
|
|
|
149,341 |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents |
|
|
(95,733 |
) |
|
|
989,326 |
|
|
|
(423,934 |
) |
|
|
989,323 |
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents at beginning of period |
|
|
95,870 |
|
|
|
21 |
|
|
|
424,071 |
|
|
|
24 |
|
Cash and
cash equivalents at end of period |
|
$ |
137 |
|
|
$ |
989,347 |
|
|
$ |
137 |
|
|
$ |
989,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
SELECTED OPERATING DATA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Production volumes: |
|
|
|
|
|
|
|
|
Crude oil (MBbls) |
|
|
980 |
|
|
|
2,007 |
|
|
|
2,468 |
|
|
|
7,108 |
|
Natural
gas (MMcf) |
|
|
1,040 |
|
|
|
1,874 |
|
|
|
3,009 |
|
|
|
6,892 |
|
Natural
gas liquids (MBbls) |
|
|
190 |
|
|
|
335 |
|
|
|
523 |
|
|
|
1,165 |
|
Total
(MBoe) |
|
|
1,344 |
|
|
|
2,655 |
|
|
|
3,493 |
|
|
|
9,422 |
|
Average
daily production (Boe/d) |
|
|
14,609 |
|
|
|
28,859 |
|
|
|
12,795 |
|
|
|
34,513 |
|
|
|
|
|
|
|
|
|
|
Average
prices: |
|
|
|
|
|
|
|
|
Crude oil
(per Bbl) |
|
$ |
55.02 |
|
|
$ |
43.97 |
|
|
$ |
59.05 |
|
|
$ |
44.95 |
|
Natural
gas (per Mcf) |
|
|
1.35 |
|
|
|
1.54 |
|
|
|
1.76 |
|
|
|
2.18 |
|
Natural
gas liquids (per Bbl) |
|
|
31.16 |
|
|
|
16.26 |
|
|
|
27.96 |
|
|
|
14.40 |
|
Total per
Boe |
|
|
45.57 |
|
|
|
36.38 |
|
|
|
47.42 |
|
|
|
37.29 |
|
|
|
|
|
|
|
|
|
|
Cash
effect of derivative contracts: |
|
|
|
|
|
|
|
|
Crude oil
(per Bbl) |
|
$ |
(10.05 |
) |
|
$ |
4.14 |
|
|
$ |
4.25 |
|
|
$ |
2.32 |
|
Natural
gas (per Mcf) |
|
|
0.20 |
|
|
|
0.26 |
|
|
|
0.14 |
|
|
|
0.10 |
|
Natural
gas liquids (per Bbl) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total per
Boe |
|
|
(7.17 |
) |
|
|
3.31 |
|
|
|
3.13 |
|
|
|
1.82 |
|
|
|
|
|
|
|
|
|
|
Average
prices computed after cash effect of settlement of derivative
contracts: |
|
|
|
|
|
|
|
|
Crude oil
(per Bbl) |
|
$ |
44.97 |
|
|
$ |
48.11 |
|
|
$ |
63.30 |
|
|
$ |
47.27 |
|
Natural
gas (per Mcf) |
|
|
1.55 |
|
|
|
1.80 |
|
|
|
1.90 |
|
|
|
2.28 |
|
Natural
gas liquids (per Bbl) |
|
|
31.16 |
|
|
|
16.26 |
|
|
|
27.96 |
|
|
|
14.40 |
|
Total per
Boe |
|
|
38.40 |
|
|
|
39.69 |
|
|
|
50.55 |
|
|
|
39.11 |
|
|
|
|
|
|
|
|
|
|
Average
cost per Boe: |
|
|
|
|
|
|
|
|
Production: |
|
|
|
|
|
|
|
|
Lease
operating |
|
$ |
3.92 |
|
|
$ |
6.70 |
|
|
$ |
4.44 |
|
|
$ |
6.24 |
|
Workover
and other |
|
|
1.10 |
|
|
|
1.37 |
|
|
|
1.37 |
|
|
|
2.36 |
|
Taxes
other than income |
|
|
2.65 |
|
|
|
2.58 |
|
|
|
2.81 |
|
|
|
3.09 |
|
Gathering
and other, as adjusted (1) |
|
|
3.77 |
|
|
|
3.63 |
|
|
|
4.59 |
|
|
|
3.06 |
|
Restructuring |
|
|
- |
|
|
|
0.48 |
|
|
|
0.04 |
|
|
|
0.22 |
|
General
and administrative, as adjusted (1) |
|
|
6.76 |
|
|
|
5.02 |
|
|
|
8.70 |
|
|
|
4.08 |
|
Depletion |
|
|
13.52 |
|
|
|
12.93 |
|
|
|
13.43 |
|
|
|
10.20 |
|
|
|
|
|
|
|
|
|
|
(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 |
|
$ |
14.68 |
|
|
$ |
14.77 |
|
|
$ |
14.08 |
|
|
$ |
9.23 |
|
Stock-based compensation: |
|
|
|
|
|
|
|
|
Non-cash |
|
|
(3.29 |
) |
|
|
(4.62 |
) |
|
|
(3.50 |
) |
|
|
(3.56 |
) |
Transaction costs and other: |
|
|
|
|
|
|
|
|
Cash |
|
|
(4.63 |
) |
|
|
(5.13 |
) |
|
|
(1.88 |
) |
|
|
(1.59 |
) |
General
and administrative, as adjusted(2) |
|
$ |
6.76 |
|
|
$ |
5.02 |
|
|
$ |
8.70 |
|
|
$ |
4.08 |
|
|
|
|
|
|
|
|
|
|
Gathering and other, as
reported |
|
$ |
13.69 |
|
|
$ |
4.10 |
|
|
$ |
8.81 |
|
|
$ |
3.68 |
|
Rig stacking charges,
gas treating fees and other |
|
|
(9.92 |
) |
|
|
(0.47 |
) |
|
|
(4.22 |
) |
|
|
(0.62 |
) |
Gathering and other, as
adjusted(3) |
|
$ |
3.77 |
|
|
$ |
3.63 |
|
|
$ |
4.59 |
|
|
$ |
3.06 |
|
|
|
|
|
|
|
|
|
|
Total operating costs,
as reported |
|
$ |
36.04 |
|
|
$ |
29.52 |
|
|
$ |
31.51 |
|
|
$ |
24.60 |
|
Total
adjusting items |
|
|
(17.84 |
) |
|
|
(10.22 |
) |
|
|
(9.60 |
) |
|
|
(5.77 |
) |
Total operating costs,
as adjusted(4) |
|
$ |
18.20 |
|
|
$ |
19.30 |
|
|
$ |
21.91 |
|
|
$ |
18.83 |
|
|
|
|
|
|
|
|
|
|
(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, certain gas treating fees to
remove hydrogen sulfide from natural gas produced from our Monument
Draw properties and other costs. 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 September 30, |
|
Nine Months Ended September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
As
Reported: |
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders, as reported |
|
$ |
(81,837 |
) |
|
$ |
419,287 |
|
|
$ |
(100,709 |
) |
|
$ |
580,809 |
|
Non-cash preferred
dividend |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
48,007 |
|
Net income (loss), as
reported |
|
|
(81,837 |
) |
|
|
419,287 |
|
|
|
(100,709 |
) |
|
|
628,816 |
|
|
|
|
|
|
|
|
|
|
Impact of
Selected Items: |
|
|
|
|
|
|
|
|
Unrealized loss (gain)
on derivatives contracts: |
|
|
|
|
|
|
|
|
Crude
oil |
|
$ |
39,426 |
|
|
$ |
30,632 |
|
|
$ |
67,136 |
|
|
$ |
(10,104 |
) |
Natural
gas |
|
|
883 |
|
|
|
577 |
|
|
|
(669 |
) |
|
|
(906 |
) |
Natural
gas liquids |
|
|
10,454 |
|
|
|
- |
|
|
|
11,057 |
|
|
|
- |
|
Total
mark-to-market non-cash charge |
|
|
50,763 |
|
|
|
31,209 |
|
|
|
77,524 |
|
|
|
(11,010 |
) |
(Gain) loss on sale of
oil and natural gas properties |
|
|
1,331 |
|
|
|
(491,830 |
) |
|
|
7,235 |
|
|
|
(727,520 |
) |
Loss (gain) on
extinguishment of debt |
|
|
- |
|
|
|
29,167 |
|
|
|
- |
|
|
|
86,065 |
|
Deferred financing
costs expensed (1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
305 |
|
Restructuring |
|
|
- |
|
|
|
1,275 |
|
|
|
128 |
|
|
|
2,080 |
|
Rig stacking charges,
gas treating fees, transaction costs and other |
|
|
20,778 |
|
|
|
13,865 |
|
|
|
22,384 |
|
|
|
19,874 |
|
Selected items, before
income taxes |
|
|
72,872 |
|
|
|
(416,314 |
) |
|
|
107,271 |
|
|
|
(630,206 |
) |
Income tax effect of
selected items (2) |
|
|
- |
|
|
|
(12,000 |
) |
|
|
- |
|
|
|
- |
|
Selected items, net of
tax |
|
|
72,872 |
|
|
|
(428,314 |
) |
|
|
107,271 |
|
|
|
(630,206 |
) |
|
|
|
|
|
|
|
|
|
As
Adjusted: |
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders, excluding selected items
(3)(4) |
|
$ |
(8,965 |
) |
|
$ |
(9,027 |
) |
|
$ |
6,562 |
|
|
$ |
(1,390 |
) |
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per common share, as reported |
|
$ |
(0.52 |
) |
|
$ |
2.85 |
|
|
$ |
(0.64 |
) |
|
$ |
4.56 |
|
Impact of selected
items |
|
|
0.46 |
|
|
|
(2.91 |
) |
|
|
0.68 |
|
|
|
(4.57 |
) |
Basic net income (loss)
per common share, excluding selected items (3) |
|
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per common share, as reported |
|
$ |
(0.52 |
) |
|
$ |
2.82 |
|
|
$ |
(0.64 |
) |
|
$ |
4.52 |
|
Impact of selected
items |
|
|
0.46 |
|
|
|
(2.88 |
) |
|
|
0.68 |
|
|
|
(4.53 |
) |
Diluted net income
(loss) per common share, excluding selected items (3)(5) |
|
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities |
|
$ |
(6,869 |
) |
|
$ |
(20,421 |
) |
|
$ |
36,709 |
|
|
$ |
102,222 |
|
Changes in working
capital |
|
|
3,487 |
|
|
|
57,052 |
|
|
|
14,550 |
|
|
|
7,324 |
|
Cash flows from
operations before changes in working capital |
|
|
(3,382 |
) |
|
|
36,631 |
|
|
|
51,259 |
|
|
|
109,546 |
|
Cash components of
selected items |
|
|
19,074 |
|
|
|
13,299 |
|
|
|
19,368 |
|
|
|
23,554 |
|
Income tax effect of
selected items (2) |
|
|
- |
|
|
|
(12,000 |
) |
|
|
- |
|
|
|
- |
|
Cash flows from
operations before changes in working capital, adjusted for selected
items (3)(4) |
|
$ |
15,692 |
|
|
$ |
37,930 |
|
|
$ |
70,627 |
|
|
$ |
133,100 |
|
|
|
|
|
|
|
|
|
|
(1) For
the 2017 column, 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 reversal of the $12.0 million
alternative minimum tax generated primarily by the sale of the El
Halcón Assets. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Net
income (loss) and earnings per share excluding selected items and
cash flows 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 flows
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 nine months ended September 30, 2018, net income (loss) and
earnings per share excluding selected items and cash flows 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 September 30,
2018 and 2017 was calculated based upon weighted average diluted
shares of 158.0 million and 146.9 million, respectively, due
to the net loss available to common stockholders, excluding
selected items. |
The impact
of selected items for the nine months ended September 30, 2018 was
calculated based upon weighted average diluted shares of 156.9
million, due to the net income available to common
stockholders, excluding selected items. The impact of selected
items for the nine months ended September 30, 2017 was calculated
based upon weighted average diluted shares of 127.5 million, due to
the net loss available to common stockholders, excluding
selected items. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HALCÓN RESOURCES CORPORATION |
ADJUSTED EBITDA RECONCILIATION
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported |
|
$ |
(81,837 |
) |
|
$ |
419,287 |
|
|
$ |
(100,709 |
) |
|
$ |
628,816 |
|
Impact of adjusting
items: |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
11,759 |
|
|
|
21,394 |
|
|
|
32,595 |
|
|
|
66,141 |
|
Depletion, depreciation and accretion |
|
|
20,310 |
|
|
|
35,940 |
|
|
|
52,397 |
|
|
|
100,788 |
|
Income
tax provision (benefit) |
|
|
- |
|
|
|
(17,000 |
) |
|
|
- |
|
|
|
(5,000 |
) |
Stock-based compensation |
|
|
4,423 |
|
|
|
12,258 |
|
|
|
12,241 |
|
|
|
33,548 |
|
Interest
income |
|
|
(142 |
) |
|
|
(693 |
) |
|
|
(1,914 |
) |
|
|
(851 |
) |
(Gain)
loss on sale of other assets |
|
|
103 |
|
|
|
(358 |
) |
|
|
(1,231 |
) |
|
|
(355 |
) |
Restructuring |
|
|
- |
|
|
|
1,275 |
|
|
|
128 |
|
|
|
2,080 |
|
Loss
(gain) on extinguishment of debt |
|
|
- |
|
|
|
29,167 |
|
|
|
- |
|
|
|
86,065 |
|
(Gain)
loss on sale of oil and natural gas properties |
|
|
1,331 |
|
|
|
(491,830 |
) |
|
|
7,235 |
|
|
|
(727,520 |
) |
Unrealized loss (gain) on derivatives contracts |
|
|
50,763 |
|
|
|
31,209 |
|
|
|
77,524 |
|
|
|
(11,010 |
) |
Deferred
financing costs expensed |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
305 |
|
Rig
stacking charges, gas treating fees, transaction costs and
other |
|
|
20,778 |
|
|
|
13,865 |
|
|
|
22,384 |
|
|
|
19,874 |
|
Adjusted
EBITDA(1)(2)(3) |
|
$ |
27,488 |
|
|
$ |
54,514 |
|
|
$ |
100,650 |
|
|
$ |
192,881 |
|
|
|
|
|
|
|
|
|
|
(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 nine months ended September 30, 2018
includes approximately $30.8 million of proceeds related to a
monetization of MidCush hedges that occurred in the second
quarter of 2018. |
|
|
|
|
|
|
|
|
|
(3)
Adjusted EBITDA for the three and nine months ended September 30,
2018 excludes approximately $13.7 million and $14.0 million,
respectively, of costs to remove hydrogen sulfide from natural
gas produced from the Company's Monument Draw properties as a
consequence of a third party pipeline temporarily going out of
service. The Company is temporarily allowed to exclude
these non-recurring costs for purposes of calculating certain debt
covenants under its Senior Credit Agreement through the first
quarter of 2019. |
|
|
|
|
|
|
|
|
|
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