Quarterly / Earnings Reports | Second Quarter (2Q) Update

Halcon Gives Q2 Update Amidst Restructuring

Share Print Bookmark    |    Thursday,August 08,2019

Halcón Resources Corp. announced its second quarter 2019 results and provided an update on operations and other matters.

Production

Net production for the three months ended June 30, 2019 averaged 18,055 barrels of oil equivalent per day (Boe/d).  Production was comprised of 57% oil, 17% natural gas liquids (NGLs) and 26% natural gas for the quarter.

Restructuring Update

As previously announced, the Company entered into a restructuring support agreement (the "RSA") on August 2, 2019 and filed a pre-packaged bankruptcy plan on August 7, 2019.  Halcón will continue to operate as usual during the bankruptcy and will continue pay its vendors, employees and other operating partners in the normal course of business.  Pursuant to the restructuring plan, Halcón will launch a $165 million equity rights offering of which $150 million is backstopped by certain bondhonders.  The Company expects this offering to close and fund concurrent with its emergence from bankruptcy in late September or early October of 2019.  Halcón also received a commitment for a new senior secured revolving credit facility with an expected $275 million borrowing base which will go effective upon emergence from bankruptcy.  The Company expects its liquidity to be in excess of $150 million upon emergence from bankruptcy with a leverage profile of less than 1.5x (net debt/LTM EBITDA).

Financials

Halcón generated total revenues of $56.4 million for the second quarter of 2019.  The Company reported a net loss available to common stockholders of $(640.8) million or net loss per basic and diluted share of $(4.03) for the second quarter of 2019.  Adjusted EBITDA (see EBITDA Reconciliation table for additional information) totaled $27.4 million during the second quarter of 2019 compared to $21.9 million in the first quarter. 

Excluding the impact of hedges, Halcón realized 95% of the average NYMEX oil price, 25% of the average NYMEX oil price for NGLs and -25% of the average NYMEX natural gas price (see Selected Operating Data table for additional information) during the second quarter of 2019.  Realized hedge gains totaled approximately $6.2 million during the second quarter. 

Total operating costs per unit, after adjusting for selected items (see Selected Operating Data table for additional information), were $21.45 per Boe for the second quarter of 2019, compared to $21.73 per Boe for the first quarter of 2019. 

Liquidity and Capital Spending

As of June 30, 2019, Halcón's liquidity was $37 million consisting of $2 million in cash on hand plus $37 million available under the revolving credit facility less $2 million in letters of credit outstanding. 

During the second quarter of 2019, Halcón incurred capital costs of approximately $29 million on drilling and completions and $35 million on infrastructure, seismic and other. 

Hedging Update

As of August 8, 2019, Halcón had ~8,500 barrels per day (Bbl/d) of oil hedged for the last six months of 2019 at an average price of $55.73 per barrel.  For 2020, the Company had ~5,000 Bbl/d of oil hedged at an average price of $58.85 per barrel.  Halcón also had Magellen East Houston vs. Cushing basis swaps in place for ~5,000 Bbl/d in the fourth quarter of 2019 at +$3.72 per barrel and ~9,000 Bbl/d in 2020 at +$2.95 per barrel.

As of August 8, 2019, Halcón had 22,342 MMBtu/d of natural gas hedged for the last six months of 2019 at an average price of $2.81 per MMBtu.  The Company had WAHA vs. NYMEX basis differential swaps in place for 25,500 MMBtu/d for last six months of 2019 at an average swap price of -$1.18 per MMBtu/d.

As of August 8, 2019, Halcón had ~3,500 barrels per day of natural gas liquids hedged for the last six months of 2019 at $29.21 per barrel.