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CST: 13/12/2019 07:56:26   

Halcón Resources Announces Third Quarter 2019 Results

30 Days ago

HOUSTON, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Halcón Resources Corporation (“Halcón” or the “Company”) today announced its third quarter 2019 results.

Average daily net production for the quarter ended September 30, 2019 was 16,489 Boe/d, of which 57% was oil. The Company earned $50.8 million of total revenue for the third quarter of 2019, of which 91% was from oil sales. Excluding the realized gain on derivative contracts of $1.9 million, the Company realized 95% of NYMEX WTI during the third quarter of 2019.

The Company reported a net loss to common stockholders of $63.3 million or net loss per basic and diluted share of $0.40 for the third quarter of 2019 and reported adjusted EBITDA of $18.8 million (see EBITDA Reconciliation table for additional information).

During the third quarter of 2019, the Company incurred capital expenditures of $36.8 million on drilling and completions, $12.1 million on infrastructure and $3.8 million in other costs. 

The Company’s prepackaged plan of reorganization under chapter 11 of the Bankruptcy Code was confirmed and the Company emerged from bankruptcy on September 24, 2019 and October 8, 2019, respectively. At emergence, the Company had $147 million in liquidity.

Richard Little, the Company’s Chief Executive Officer commented, “I’m pleased with what we have accomplished in bringing on a new board, new management team and new vision for the Company post emergence. The changes implemented to build a culture of capital discipline are already demonstrating efficiencies and cost savings throughout the organization. I am proud of the team’s focus, execution and performance through the third quarter.”

Mr. Little further commented, “We are in the process of listing our shares on a national exchange and expect to resume hosting recurring earnings calls soon. I am excited about re-engaging with the investor community and providing deeper insight into our operations and performance.”

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, liquidity, capital spending, drilling and completion plans, and forward guidance. 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, 2018 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.

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.

Contact
John-Davis Rutkauskas
Director, Finance & Investor Relations
(832) 538-0551

HALCÓN RESOURCES CORPORATION (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
                     
        Three Months Ended   Nine Months Ended
        September 30,   September 30,
          2019       2018       2019       2018  
  Operating revenues:
               
  Oil, natural gas and natural gas liquids sales:                
    Oil   $ 46,275     $ 53,918     $ 145,024     $ 145,743  
    Natural gas     301       1,407       107       5,286  
    Natural gas liquids     3,987       5,920       13,229       14,623  
    Total oil, natural gas and natural gas liquids sales     50,563       61,245       158,360       165,652  
  Other     246       350       743       613  
    Total operating revenues     50,809       61,595       159,103       166,265  
                     
  Operating expenses:
               
  Production:                
    Lease operating     11,958       5,275       39,617       15,504  
    Workover and other     1,566       1,478       5,580       4,795  
    Taxes other than income     3,012       3,557       9,213       9,812  
  Gathering and other     10,147       18,404       36,057       30,782  
  Restructuring     3,223       -       15,148       128  
  General and administrative     19,423       19,731       36,550       49,196  
  Depletion, depreciation and accretion     20,512       20,310       90,912       52,397  
  Full cost ceiling impairment     45,568       -       985,190       -  
  (Gain) loss on sale of oil and natural gas properties     -       1,331       -       7,235  
  (Gain) loss on sale of Water Assets     (164 )     -       3,618       -  
    Total operating expenses     115,245       70,086       1,221,885       169,849  
  Income (loss) from operations
    (64,436 )     (8,491 )     (1,062,782 )     (3,584 )
  Other income (expenses):
               
  Net gain (loss) on derivative contracts     13,457       (60,406 )     (34,332 )     (66,603 )
  Interest expense and other     (10,547 )     (12,940 )     (37,606 )     (30,522 )
  Reorganization items     (1,758 )     -       (1,758 )     -  
    Total other income (expenses)     1,152       (73,346 )     (73,696 )     (97,125 )
  Income (loss) before income taxes     (63,284 )     (81,837 )     (1,136,478 )     (100,709 )
  Income tax benefit (provision)     -       -       95,791       -  
  Net income (loss)
  $ (63,284 )   $ (81,837 )   $ (1,040,687 )   $ (100,709 )
                     
  Net income (loss) per share of common stock:
               
    Basic   $ (0.40 )   $ (0.52 )   $ (6.55 )   $ (0.64 )
    Diluted   $ (0.40 )   $ (0.52 )   $ (6.55 )   $ (0.64 )
  Weighted average common shares outstanding:
               
    Basic     159,143       158,011       158,916       156,628  
    Diluted     159,143       158,011       158,916       156,628  
                     


HALCÓN RESOURCES CORPORATION (DEBTOR-IN-POSSESSION)  
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  
(In thousands, except share and per share amounts)  
           
    September 30, 2019   December 31, 2018  
Current assets:        
  Cash and cash equivalents $ 17,009     $ 46,866    
  Accounts receivable   37,826       35,718    
  Receivables from derivative contracts   15,310       57,280    
  Prepaids and other   14,642       4,788    
  Total current assets   84,787       144,652    
Oil and natural gas properties (full cost method):        
  Evaluated   2,155,288       1,470,509    
  Unevaluated   438,365       971,918    
  Gross oil and natural gas properties   2,593,653       2,442,427    
  Less - accumulated depletion   (1,709,719 )     (639,951 )  
  Net oil and natural gas properties   883,934       1,802,476    
Other operating property and equipment:        
  Other operating property and equipment   203,373       130,251    
  Less - accumulated depreciation   (14,416 )     (8,388 )  
  Net other operating property and equipment   188,957       121,863    
Other noncurrent assets:        
  Receivables from derivative contracts   4,120       12,437    
  Operating lease right of use assets   3,694       -    
  Funds in escrow and other   1,138       2,181    
Total assets $ 1,166,630     $ 2,083,609    
           
Current liabilities:        
  Accounts payable and accrued liabilities $ 112,578     $ 157,848    
  Liabilities from derivative contracts   6,829       3,768    
  Current portion of long-term debt   258,234       -    
  Operating lease liabilities   1,337       -    
  Asset retirement obligations   -       126    
  Total current liabilities   378,978       161,742    
Long-term debt, net   -       613,105    
Liabilities subject to compromise   625,005       -    
Other noncurrent liabilities:        
  Liabilities from derivative contracts   1,625       9,139    
  Asset retirement obligations   10,153       6,788    
  Operating lease liabilities   2,438       -    
  Deferred income taxes   -       95,791    
Commitments and contingencies        
Stockholders' equity:        
  Common stock: 1,000,000,000 shares of $0.0001 par value authorized;        
  162,217,095 and 160,612,852 shares issued and outstanding as of        
  September 30, 2019 and December 31, 2018, respectively   16       16    
  Additional paid-in capital   1,087,441       1,095,367    
  Retained earnings (accumulated deficit)   (939,026 )     101,661    
  Total stockholders' equity   148,431       1,197,044    
Total liabilities and stockholders' equity $ 1,166,630     $ 2,083,609    
                   


HALCÓN RESOURCES CORPORATION (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                     
        Three Months Ended   Nine Months Ended
        September 30,   September 30,
          2019       2018       2019       2018  
Cash flows from operating activities:                
Net income (loss)   $ (63,284 )   $ (81,837 )   $ (1,040,687 )   $ (100,709 )
Adjustments to reconcile net income (loss) to net cash                
provided by (used in) operating activities:                
  Depletion, depreciation and accretion     20,512       20,310       90,912       52,397  
  Full cost ceiling impairment     45,568       -       985,190       -  
  (Gain) loss on sale of oil and natural gas properties     -       1,331       -       7,235  
  (Gain) loss on sale of Water Assets     (164 )     -       3,618       -  
  Deferred income tax provision (benefit)     -       -       (95,791 )     -  
  Stock-based compensation, net     (2,278 )     4,423       (8,035 )     12,241  
  Unrealized loss (gain) on derivative contracts     (11,571 )     50,763       45,834       77,524  
  Amortization and write-off of deferred loan costs     882       371       1,859       1,022  
  Amortization of discount and premium     23       52       134       235  
  Reorganization items     (283 )     -       (283 )     -  
  Other income (expense)     570       1,205       535       1,314  
Cash flows from operations before changes in working capital     (10,025 )     (3,382 )     (16,714 )     51,259  
Changes in working capital     3,690       (3,487 )     (16,519 )     (14,550 )
Net cash provided by (used in) operating activities     (6,335 )     (6,869 )     (33,233 )     36,709  
                     
Cash flows from investing activities:                
  Oil and natural gas capital expenditures     (28,075 )     (117,343 )     (167,235 )     (369,304 )
  Proceeds received from sale of oil and natural gas properties     -       (132 )     1,247       1,647  
  Acquisition of oil and natural gas properties     -       (569 )     (2,809 )     (333,470 )
  Other operating property and equipment capital expenditures       (21,037 )       (26,147 )       (85,613 )       (79,389 )
  Proceeds received from sale of other operating property and equipment     -       337       -       2,236  
  Funds held in escrow and other     (2 )     (2 )     (7 )     153  
Net cash provided by (used in) investing activities     (49,114 )     (143,856 )     (254,417 )     (778,127 )
                     
Cash flows from financing activities:                
  Proceeds from borrowings     71,234       87,000       315,234       293,000  
  Repayments of borrowings     (1,000 )     (32,000 )     (57,000 )     (32,000 )
  Debt issuance costs     -       (8 )     -       (4,013 )
  Common stock issued     -       -       -       63,480  
  Offering costs and other     (14 )     -       (441 )     (2,983 )
Net cash provided by (used in) financing activities     70,220       54,992       257,793       317,484  
                     
Net increase (decrease) in cash and cash equivalents     14,771       (95,733 )     (29,857 )     (423,934 )
                     
Cash and cash equivalents at beginning of period     2,238       95,870       46,866       424,071  
Cash and cash equivalents at end of period   $ 17,009     $ 137     $ 17,009     $ 137  
                     


HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA
(Unaudited)
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
      2019       2018       2019       2018  
                 
Production volumes:                
Crude oil (MBbls)     863       980       2,723       2,468  
Natural gas (MMcf)     1,924       1,040       6,381       3,009  
Natural gas liquids (MBbls)     333       190       911       523  
Total (MBoe)     1,517       1,344       4,698       3,493  
Average daily production (Boe/d)     16,489       14,609       17,209       12,795  
                 
Average prices:                
Crude oil (per Bbl)   $ 53.62     $ 55.02     $ 53.26     $ 59.05  
Natural gas (per Mcf), as adjusted (1)     0.16       1.35       0.03       1.76  
Natural gas liquids (per Bbl)     11.97       31.16       14.52       27.96  
Total per Boe     33.33       45.57       33.71       47.42  
                 
Cash effect of derivative contracts:                
Crude oil (per Bbl)   $ (3.04 )   $ (10.05 )   $ (0.93 )   $ 4.25  
Natural gas (per Mcf)     0.78       0.20       0.94       0.14  
Natural gas liquids (per Bbl)     10.48       -       9.38       -  
Total per Boe     1.56       (7.17 )     2.55       3.13  
                 
Average prices computed after cash effect of settlement of derivative contracts:                
Crude oil (per Bbl)   $ 50.58     $ 44.97     $ 52.33     $ 63.30  
Natural gas (per Mcf)     0.94       1.55       0.97       1.90  
Natural gas liquids (per Bbl)     22.45       31.16       23.90       27.96  
Total per Boe     34.89       38.40       36.26       50.55  
                 
Average cost per Boe:                
Production:                
Lease operating   $ 7.88     $ 3.92     $ 8.43     $ 4.44  
Workover and other     1.03       1.10       1.19       1.37  
Taxes other than income     1.99       2.65       1.96       2.81  
Gathering and other, as adjusted(1)     6.58       3.77       4.97       4.59  
Restructuring     2.12       -       3.22       0.04  
General and administrative, as adjusted (1)     4.92       6.76       5.29       8.70  
Depletion     11.89       13.52       18.00       13.43  
                 
(1) Represents natural gas average prices per Mcf, gathering and other and general and administrative costs per Boe, adjusted for items noted in the reconciliation below:    
                 
Natural gas, as reported   $ 0.16     $ 1.35     $ 0.02     $ 1.76  
Gas treating fees     -       -       0.01       -  
Natural gas, as adjusted(2)   $ 0.16     $ 1.35     $ 0.03     $ 1.76  
                 
General and administrative:                
General and administrative, as reported   $ 12.81     $ 14.68     $ 7.78     $ 14.08  
Stock-based compensation:                
Non-cash     1.50       (3.29 )     1.71       (3.50 )
Transaction costs and other:                
Cash     (9.39 )     (4.63 )     (4.20 )     (1.88 )
General and administrative, as adjusted(3)   $ 4.92     $ 6.76     $ 5.29     $ 8.70  
                 
Gathering and other, as reported   $ 6.69     $ 13.69     $ 7.67     $ 8.81  
Gas treating fees, rig stacking charges, and other     (0.11 )     (9.92 )     (2.70 )     (4.22 )
Gathering and other, as adjusted(4)   $ 6.58     $ 3.77     $ 4.97     $ 4.59  
                 
Total operating costs, as reported   $ 30.40     $ 36.04     $ 27.03     $ 31.51  
Total adjusting items     (8.00 )     (17.84 )     (5.19 )     (9.60 )
Total operating costs, as adjusted(5)   $ 22.40     $ 18.20     $ 21.84     $ 21.91  
                 
(2) Natural gas, as adjusted, is a non-GAAP measure that excludes gas treating fees to remove hydrogen sulfide from natural gas produced from our Monument Draw properties.  
The Company believes that it is useful to understand the effects that these charges have on natural gas sales and that exclusion of such charges is useful for comparison to prior periods.
(3) 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.
(4) 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.
(5) 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 the 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,
      2019       2018       2019       2018  
As Reported:                
Net income (loss), as reported   $ (63,284 )   $ (81,837 )   $ (1,040,687 )   $ (100,709 )
                 
Impact of Selected Items:                
Unrealized loss (gain) on derivatives contracts:                
Crude oil   $ (14,873 )   $ 39,426     $ 35,967     $ 67,136  
Natural gas     1,269       883       3,753       (669 )
Natural gas liquids     2,033       10,454       6,114       11,057  
Total mark-to-market non-cash charge     (11,571 )     50,763       45,834       77,524  
Full cost ceiling impairment     45,568       -       985,190       -  
(Gain) loss on sale of oil and natural gas properties     -       1,331       -       7,235  
(Gain) loss on sale of Water Assets     (164 )     -       3,618       -  
Reorganization items     1,758       -       1,758       -  
Restructuring     3,223       -       15,148       128  
Gas treating fees, rig stacking charges, transaction costs and non-recurring prepetition professional fees related to reorganization     15,105       20,778       33,612       22,384  
Selected items, before income taxes     53,919       72,872       1,085,160       107,271  
Income tax effect of selected items (1)     -       -       (94,054 )     -  
Selected items, net of tax     53,919       72,872       991,106       107,271  
                 
As Adjusted:                
Net income (loss), excluding selected items (2)(3)   $ (9,365 )   $ (8,965 )   $ (49,581 )   $ 6,562  
                 
Basic net income (loss) per common share, as reported   $ (0.40 )   $ (0.52 )   $ (6.55 )   $ (0.64 )
Impact of selected items     0.34       0.46       6.24       0.68  
Basic net income (loss) per common share, excluding selected items (2)   $ (0.06 )   $ (0.06 )   $ (0.31 )   $ 0.04  
                 
                 
Diluted net income (loss) per common share, as reported   $ (0.40 )   $ (0.52 )   $ (6.55 )   $ (0.64 )
Impact of selected items     0.34       0.46       6.24       0.68  
Diluted net income (loss) per common share, excluding selected items (2)(4)   $ (0.06 )   $ (0.06 )   $ (0.31 )   $ 0.04  
                 
                 
Net cash provided by (used in) operating activities   $ (6,335 )   $ (6,869 )   $ (33,233 )   $ 36,709  
Changes in working capital     (3,690 )     3,487       16,519       14,550  
Cash flows from operations before changes in working capital     (10,025 )     (3,382 )     (16,714 )     51,259  
Cash components of selected items     19,795       19,074       50,541       19,368  
Income tax effect of selected items (1)     -       -       (10,614 )     -  
Cash flows from operations before changes in working capital, adjusted for selected items (2)(3) $ 9,770     $ 15,692     $ 23,213     $ 70,627  
                 
(1)  For the nine months ended September 30, 2019, this represents the tax impact using an estimated tax rate of 21.0% and includes a  $133.8 million adjustment
  for the net change in valuation allowance.
                 
(2) 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.
                 
(3)  For the nine months ended September 30, 2019, net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working
  capital include approximately $7.8 million, respectively, of proceeds related to hedge monetizations that occurred in 2019.        
  For the nine months ended Septemer 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.
                 
(4) The impact of selected items for the three months ended September 30, 2019 and 2018 was calculated based upon weighted average diluted shares of 159.1 million and 158.0 million,
  respectively, due to the net income (loss) available to common stockholders, excluding selected  items.
  The impact of selected items for the nine months ended September 30, 2019 and 2018 was calculated based upon weighted average diluted shares of 158.9 million and 156.9 million,
  respectively, due to the net income (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,
      2019       2018       2019       2018  
                 
Net income (loss), as reported   $   (63,284 )   $   (81,837 )   $   (1,040,687 )   $   (100,709 )
Impact of adjusting items:                
Interest expense       9,911         11,759         36,265         32,595  
Depletion, depreciation and accretion       20,512         20,310         90,912         52,397  
Full cost ceiling impairment       45,568         -          985,190         -   
Income tax provision (benefit)       -          -          (95,791 )       -   
Stock-based compensation       (2,278 )       4,423         (8,035 )       12,241  
Interest income       (13 )       (142 )       (91 )       (1,914 )
Reorganization items       1,758         -          1,758         -   
Restructuring       3,223         -          15,148         128  
(Gain) loss on sale of other assets       2         103         418         (1,231 )
(Gain) loss on sale of oil and natural gas properties       -          1,331         -          7,235  
(Gain) loss on sale of Water Assets       (164 )       -          3,618         -   
Unrealized loss (gain) on derivatives contracts       (11,571 )       50,763         45,834         77,524  
Gas treating fees, rig stacking charges, transaction costs and non-recurring prepetition professional fees related to reorganization       15,105         20,778         33,612         22,384  
Adjusted EBITDA(1)(2)(3)   $   18,769     $   27,488     $   68,151     $   100,650  
                 
(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, 2019 includes approximately $7.8 million, respectively, of proceeds related to hedge monetizations that occurred in 2019. 
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 nine months ended September 30, 2019 excludes approximately $10.9 million, respectively, of costs to remove hydrogen sulfide    
from natural gas produced from the Company's Monument Draw properties.   
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.   

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