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 Halcon Resources Announces Fourth Quarter and Full Year 2016 Results
   Tuesday, February 28, 2017 4:46:44 PM ET

Halcon Resources Corporation (HK ) ("Halcon" or the "Company") today announced its fourth quarter and full year 2016 results.

Production for the three months and full year ended December 31, 2016 averaged 38,620 barrels of oil equivalent per day (Boe/d) and 37,049 Boe/d, respectively. Production was comprised of 76% oil, 12% natural gas liquids (NGLs) and 12% natural gas for the quarter and for the full year. Halcon’s fourth quarter production was negatively impacted by approximately 800 Boe/d due to inclement weather in the Williston Basin.

Halcon generated total revenues of $130.3 million for the fourth quarter of 2016 and $420.2 million for the full year. Adjusted EBITDA (see EBITDA Reconciliation table for additional information) totaled $131.6 million and $518.6 million for the fourth quarter and full year 2016, respectively.

Excluding the impact of hedges, Halcon realized 89% of the average NYMEX oil price, 25% of the average NYMEX oil price for NGLs and 80% of the average NYMEX natural gas price during the fourth quarter 2016. For the full year 2016, excluding the impact of hedges, the Company realized 86% of the average NYMEX oil price, 20% of the average NYMEX oil price for NGLs and 70% of the average NYMEX natural gas price. Realized hedge proceeds totaled approximately $62 million in the fourth quarter and $330 million for the full year 2016.

Total operating costs per unit, after adjusting for selected items (see Selected Operating Data table for additional information), decreased by 4% to $17.06 per Boe during the three months ended December 31, 2016, compared to the same period of 2015. Total operating costs per unit for the full year, after adjusting for selected items, were $17.10 per Boe, representing a decrease of 5% compared to the full year 2015.

After adjusting for selected items (see Selected Item Review and Reconciliation table for additional information), net income was $60.6 million, or $0.66 per diluted share for the fourth quarter of 2016. Halcon reported a net loss available to common stockholders of $28.5 million, or $0.31 per diluted share for the fourth quarter of 2016.

Liquidity and Capital Spending

As of December 31, 2016 Halcon’s liquidity pro forma for its recently announced acquisitions, divestitures and capital market activities was approximately $699 million, which consisted of cash on hand plus undrawn capacity on the Company’s senior secured revolving credit facility which has a $600 million borrowing base. Halcon is currently working with its senior lenders on its spring 2017 redetermination and expects the borrowing base to be revised to an amount between $600 million and $650 million.

During the fourth quarter of 2016, the Company incurred capital costs of approximately $44 million on drilling and completions, and $8 million on infrastructure, seismic and leasehold acquisitions. In addition, Halcon incurred less than $2 million for capitalized interest, G&A and other.

The Company incurred capital costs of $175 million on drilling and completions, $2 million on infrastructure/seismic and $12 million on leasehold acquisitions in 2016. In addition, Halcon incurred $79 million for capitalized interest, G&A and other.

Guidance Update

The table below outlines the Company’s financial guidance for the full year 2017. Halcon has revised its D&C capex guidance for 2017 up to $300 million vs. prior guidance of $280 million. This increase is driven primarily by changing the drilling plan in Pecos County to drill more longer lateral wells and adding two new wells to its Ward County asset drilling plan based on the positive initial pilot well results. Halcon expects its first quarter 2017 production to average between 36,000 and 37,000 Boe/d which includes the negative impact of approximately 750 Boe/d from inclement winter weather in the Williston Basin. The Company expects second quarter production to average between 32,000 and 34,000 Boe/d with the second half of 2017 averaging between 40,000 and 42,000 Boe/d. Halcon’s production is back-end weighted in 2017 due to the timing of its El Halcon sale and the acquisition of its Delaware Basin assets in addition to the timing of completions in which very few wells are expected to be put online during the first 5 months of 2017. The first and second quarters are historically light on completion activity in the Williston Basin as the Company tries to plan completions in months where winter weather or the spring thaw is not an issue.

 Guidance
                                                Guidance
 2017 Average Annual Production (MBoe/d)                                   37 - 39
 % Oil                                                                     80.0%
 % Gas                                                                     10.0%
 % NGL                                                                     10.0%
 2017 Total D&C Capex ($MM)                                                $300
 % Bakken                                                                  65%
 % Delaware                                                                35%
 Infrastructure, Seismic and Other Capex ($MM)                             $15
 LOE & Workover ($/Boe)                         $8.00 - $10.00
 Production Taxes ($/Boe)                       $3.50 - $5.50
 Cash G&A ($/Boe)                               $3.00 - $5.00
 GTO ($/Boe)                                    $3.00 - $4.00
 Note: Assumes Pecos County acquisition in Delaware Basin which closed on February 28, 2017 and El Halcon sale closes on March 9, 2017.

Hedging Update

As of February 28, 2017, Halcon had 18,750 barrels per day of oil hedged for 2017 at an average price of $55.07 per barrel. For 2018, the Company had 4,000 barrels per day of oil hedged at an average price of $55.25 per barrel.

Year End 2016 Proved Reserves

The Company’s estimated proved reserves as of December 31, 2016 were approximately 148.6 million barrels of oil equivalent (MMBoe). Year-end 2016 estimated proved reserves were 80% oil, 11% NGLs and 9% natural gas on an equivalent basis. Of total estimated proved reserves, 76% were in the Williston Basin, 24% were in the East Texas Eagle Ford ("El Halcon") and less than 1% were in other areas. Year-end 2016 estimated proved reserves were approximately 95% Company-operated and 58% proved developed.

Halcon’s estimated proved reserves at December 31, 2016 were prepared by the independent reserve engineering firm Netherland, Sewell and Associates, Inc. in accordance with Securities and Exchange Commission guidelines using average West Texas Intermediate (WTI) crude oil spot price of $42.75 per barrel for oil and Henry Hub natural gas spot price of $2.48 per million British Thermal Unit for natural gas, before adjustments for energy content, quality, midstream fees and basis differentials.

Operations Update

Delaware Basin

As previously announced, Halcon closed today on the acquisition of 20,901 net acres and ~2,600 Boe/d of current production in Pecos County, Texas for $705 million in cash consideration. Since the announcement, the Company has agreed to acquire additional interests from a non-operating owner in the acreage for $22.3 million. This incremental acquisition includes 594 additional net acres and ~160 Boe/d of current production and is expected to close in early March.

Halcon has also entered into an option agreement which allows it to purchase up to 15,040 net acres located primarily in Ward County, Texas for a cost of $11,000 per acre. The Company recently completed drilling a vertical "Pilot" well on the southern tract of the acreage. The results from this vertical well indicated oil saturation across 1,000 vertical feet from the base of the third Bone Springs carbonate to the base of the Wolfcamp section. The Company also recently began drilling a horizontal well offsetting the pilot hole in the upper Wolfcamp interval and expects to put this well online in the second quarter of 2017. Halcon is also planning to drill a vertical pilot well followed by a horizontal well on the northern tract of the acreage in the third quarter of 2017.

Halcon expects to add a second operated rig to the Delaware Basin in March 2017. The current plan is to run these two rigs primarily in Pecos County during 2017 with just two horizontal wells planned in Ward County. The Company plans to spud 15 to 25 gross operated wells in the Delaware Basin in 2017 with an average working interest of approximately 67%. Halcon expects to put 10 to 15 gross wells online in 2017 with an average working interest of approximately 76%.

Williston Basin

Halcon currently has working interests in approximately 121,000 net acres prospective for the Bakken and Three Forks formations in the Williston Basin, substantially all of which is held by production (HBP).

The Company operated an average of 1 rig and 1.25 rigs in the Williston Basin during the fourth quarter and full year 2016, respectively.

Halcon spudded 7 wells and put 16 wells online in the Williston Basin during the three months ended December 31, 2016. The Company also participated in 15 non-operated wells during the quarter with an average working interest of approximately 2.4%. Production averaged 30,797 Boe/d during the fourth quarter of 2016 in the Williston Basin.

For the full year 2016, Halcon spudded 21 wells and put 36 wells online in the Williston Basin. The Company also participated in 22 non-operated wells during the year with an average working interest of approximately 3.2%.

Halcon is currently running 1 operated rig and plans to continue to run this rig on its FBIR acreage throughout 2017. The Company expects to add a second operated rig beginning in second quarter of 2017. Halcon plans to drill two pads on FBIR before moving it to Williams County in Q3 of 2017 to drill a five-well pad. The Company’s average estimated D&C costs for its 2017 drilling plans are $5.9 million in FBIR and $5.4 million in Williams County.

The Company plans to operate an average of 1.75 rigs and spud 45 to 50 gross operated wells in the Williston Basin in 2017 with an average working interest of approximately 72%. Halcon expects to put 30 to 35 gross wells online in 2017 with an average working interest of approximately 78%. Halcon also expects to participate in 100 to 120 gross non-operated wells in 2017 with an average working interest of approximately 1.5%.

The Company is currently the operator of 225 producing Bakken wells and 75 Three Forks wells. Halcon currently has 6 Bakken wells and 4 Three Forks wells being completed or waiting on completion on its operated acreage.

"El Halcon" - East Texas Eagle Ford

As previously announced, Halcon has entered into a purchase and sale agreement to divest its El Halcon assets for $500 million in cash consideration. This sale is expected to close in early March 2017.

The Company has had no rigs running in its El Halcon area since the first quarter of 2016. For the full year 2016, Halcon spudded 2 gross wells and put 7 gross wells online. Production averaged 6,092 Boe/d during the fourth quarter of 2016.

Fresh Start Accounting

Halcon adopted fresh-start accounting as of September 9, 2016, the effective date of its emergence from chapter 11 bankruptcy proceedings, resulting in the Company becoming a new entity for financial reporting purposes. Upon the adoption of fresh-start accounting, Halcon’s assets and liabilities were recorded at their fair values as of the fresh-start reporting date, and as a result the Company’s consolidated financial statements subsequent to September 9, 2016 may not be comparable to its financial statements prior to September 9, 2016. Please review Halcon’s Form 10-K for the year ended December 31, 2016 for further details regarding fresh-start accounting and the financial information presented at the end of this release.

Conference Call and Webcast Information

Halcon Resources Corporation (HK ) has scheduled a conference call for Wednesday, March 1, 2017, at 9:00 a.m. EST (8:00 a.m. CST). To participate in the conference call, dial (877) 810-3368 for domestic callers, and (914) 495-8561 for international callers a few minutes before the call begins and reference Halcon Resources conference ID 65262241. The conference call will also be webcast live over the Internet on Halcon Resources’ website at http://www.halconresources.com in the Investor Relations section under Events & Presentations. A telephonic replay of the call will be available approximately two hours after the live broadcast ends. To access the replay, dial (855) 859-2056 for domestic callers or (404) 537-3406 for international callers, in both cases referencing conference ID 65262241.

About Halcon Resources

Halcon Resources Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

For more information contact Quentin Hicks, Senior Vice President of Finance & Investor Relations, at 832-538-0557 or qhicks@halconresources.com.

Forward-Looking Statements

This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", "potential", "possible", or "probable" or statements that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved. Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (SEC), copies of which may be obtained from the SEC’s website at www.sec.gov or through the Company’s website at www.halconresources.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company’s expectations.

HALC?"N RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
                                                                                                           Successor            Predecessor              Successor                Predecessor
                                                                                                                                                         Period from              Period from
                                                                                                           Three Months         Three Months             September 10, 2016       January 1, 2016
                                                                                                           Ended                Ended                    through                  through                   Year Ended
                                                                                                           December 31, 2016    December 31, 2015        December 31, 2016        September 9, 2016         December 31, 2015
Operating revenues:
               Oil, natural gas and natural gas liquids sales:
                                 Oil                                                                       $     118,526             $    107,978             $   139,786              $    248,064         $     512,346
                                 Natural gas                                                                     5,933                    4,914                   6,756                     9,511                 22,509
                                 Natural gas liquids                                                             5,220                    3,052                   6,018                     7,929                 13,624
                                                     Total oil, natural gas and natural gas liquids sales        129,679                  115,944                 152,560                   265,504               548,479
               Other                                                                                             576                      177                     802                       1,339                 1,799
                                                     Total operating revenues                                    130,255                  116,121                 153,362                   266,843               550,278
Operating expenses:
               Production:
                                 Lease operating                                                                 18,591                   22,324                  22,382                    50,032                103,590
                                 Workover and other                                                              8,945                    9,248                   10,510                    22,507                20,862
                                 Taxes other than income                                                         10,191                   11,644                  12,364                    24,453                48,890
               Gathering and other                                                                               12,040                   9,698                   14,677                    29,279                40,281
               Restructuring                                                                                     -                        222                     -                         5,168                 2,886
               General and administrative                                                                        24,714                   19,668                  41,395                    83,641                87,766
               Depletion, depreciation and accretion                                                             37,848                   66,795                  46,899                    120,555               364,204
               Full cost ceiling impairment                                                                      -                        611,787                 420,934                   754,769               2,626,305
               Other operating property and equipment impairment                                                 -                        -                       -                         28,056                -
                                                     Total operating expenses                                    112,329                  751,386                 569,161                   1,118,460             3,294,784
Income (loss) from operations                                                                                    17,926                   (635,265 )              (415,799 )                (851,617  )           (2,744,506 )
Other income (expenses):
               Net gain (loss) on derivative contracts                                                           (20,165 )                93,459                  (27,740  )                (17,998   )           310,264
               Interest expense and other, net                                                                   (23,382 )                (52,672  )              (28,861  )                (122,249  )           (232,878   )
               Reorganization items                                                                              (1,493  )                -                       (2,049   )                913,722               -
               Gain (loss) on extinguishment of debt                                                             -                        203,897                 -                         81,434                761,804
               Gain (loss) on extinguishment of Convertible Note and
                                 modification of February 2012 Warrants                                          -                        -                       -                         -                     (8,219     )
               Total other income (expenses)                                                                     (45,040 )                244,684                 (58,650  )                854,909               830,971
Income (loss) before income taxes                                                                                (27,114 )                (390,581 )              (474,449 )                3,292                 (1,913,535 )
Income tax benefit (provision)                                                                                   (1,387  )                (2,862   )              (4,744   )                8,666                 (9,086     )
Net income (loss)                                                                                                (28,501 )                (393,443 )              (479,193 )                11,958                (1,922,621 )
Series A preferred dividends                                                                                     -                        (3,518   )              -                         (8,847    )           (17,517    )
Preferred dividends and accretion on redeemable noncontrolling interest                                          -                        (27,751  )              (791     )                (35,905   )           (66,820    )
Net income (loss) available to common stockholders                                                         $     (28,501 )           $    (424,712 )          $   (479,984 )           $    (32,794   )     $     (2,006,958 )
Net income (loss) per share of common stock:
                                 Basic                                                                     $     (0.31   )           $    (3.56    )          $   (5.26    )           $    (0.27     )     $     (18.66     )
                                 Diluted                                                                   $     (0.31   )           $    (3.56    )          $   (5.26    )           $    (0.27     )     $     (18.66     )
Weighted average common shares outstanding:
                                 Basic                                                                           91,251                   119,420                 91,228                    120,513               107,531
                                 Diluted                                                                         91,251                   119,420                 91,228                    120,513               107,531
HALC?"N RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
                                                                                                 Successor            Predecessor
                                                                                                 December 31, 2016    December 31, 2015
Current assets:
                 Cash                                                                            $     24             $     8,026
                 Accounts receivable                                                                   147,762              173,624
                 Receivables from derivative contracts                                                 5,923                348,861
                 Restricted cash                                                                       182                  16,812
                 Prepaids and other                                                                    6,758                9,270
                 Total current assets                                                                  160,649              556,593
Oil and natural gas properties (full cost method):
                 Evaluated                                                                             1,269,034            7,060,721
                 Unevaluated                                                                           316,439              1,641,356
                 Gross oil and natural gas properties                                                  1,585,473            8,702,077
                 Less - accumulated depletion                                                          (465,849  )          (5,933,688 )
                 Net oil and natural gas properties                                                    1,119,624            2,768,389
Other operating property and equipment:
                 Gas gathering and other operating assets                                              38,617               130,090
                 Less - accumulated depreciation                                                       (1,107    )          (22,435    )
                 Net other operating property and equipment                                            37,510               107,655
Other noncurrent assets:
                 Receivables from derivative contracts                                                 -                    16,614
                 Debt issuance costs, net                                                              -                    7,633
                 Funds in escrow and other                                                             1,887                1,808
Total assets                                                                                     $     1,319,670      $     3,458,692
Current liabilities:
                 Accounts payable and accrued liabilities                                        $     186,184        $     295,085
                 Liabilities from derivative contracts                                                 16,434               -
                 Other                                                                                 4,935                163
                 Total current liabilities                                                             207,553              295,248
Long-term debt, net                                                                                    964,653              2,873,637
Other noncurrent liabilities:
                 Liabilities from derivative contracts                                                 486                  290
                 Asset retirement obligations                                                          31,985               46,853
                 Other                                                                                 2,305                6,264
Commitments and contingencies
Mezzanine equity:
                 Redeemable noncontrolling interest                                                    -                    183,986
Stockholders’ equity:
                 Predecessor Preferred stock: 1,000,000 shares of $0.0001 par value authorized;
                 244,724 shares of 5.75% Cumulative Perpetual Convertible Series A, issued
                 and outstanding                                                                       -                    -
                 Predecessor Common stock: 1,340,000,000 shares of $0.0001 par value
                 authorized;122,523,559 shares issued and outstanding                                  -                    12
                 Predecessor Additional paid-in capital                                                -                    3,283,097
                 Successor Common stock: 1,000,000,000 shares of $0.0001 par value authorized;
                 92,991,183 shares issued and outstanding                                              9                    -
                 Successor Additional paid-in capital                                                  592,663              -
                 Retained earnings (accumulated deficit)                                               (479,984  )          (3,230,695 )
                 Total stockholders’ equity                                                            112,688              52,414
Total liabilities and stockholders’ equity                                                       $     1,319,670      $     3,458,692
HALC?"N RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                                                                                                Successor            Predecessor        Successor            Predecessor
                                                                                                                                        Period from          Period from
                                                                                                Three Months         Three Months       September 10, 2016   January 1, 2016
                                                                                                Ended                Ended              through              through           Year Ended
                                                                                                December 31, 2016    December 31, 2015  December 31, 2016    September 9, 2016 December 31, 2015
Cash flows from operating activities:
Net income (loss)                                                                               $     (28,501  )     $     (393,443 )   $      (479,193 )    $     11,958      $     (1,922,621 )
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities:
                         Depletion, depreciation and accretion                                        37,848               66,795              46,899              120,555           364,204
                         Full cost ceiling impairment                                                 -                    611,787             420,934             754,769           2,626,305
                         Other operating property and equipment impairment                            -                    -                   -                   28,056            -
                         Share-based compensation, net                                                8,323                3,284               21,519              4,876             14,529
                         Unrealized loss (gain) on derivative contracts                               82,111               35,310              112,449             263,732           129,282
                         Amortization and write-off of deferred loan costs                            -                    1,355               -                   6,371             7,357
                         Non-cash interest and amortization of discount and premium                   2,129                480                 2,506               1,515             2,509
                         Reorganization items                                                         (16,523  )           -                   (15,963  )          (929,084 )        -
                         Loss (gain) on extinguishment of debt                                        -                    (203,897 )          -                   (81,434  )        (761,804   )
                         Loss (gain) on extinguishment of Convertible Note and modification of
                                                            February 2012 Warrants                    -                    -                   -                   -                 8,219
                         Accrued settlements on derivative contracts                                  4,197                (9,208   )          (18,498  )          -                 (47,011    )
                         Other expense (income)                                                       173                  3,129               79                  (4,233   )        8,934
Cash flow from operations before changes in working capital                                           89,757               115,592             90,732              177,081           429,903
Changes in working capital                                                                            1,057                19,213              12,404              (1,733   )        37,096
Net cash provided by (used in) operating activities                                                   90,814               134,805             103,136             175,348           466,999
Cash flows from investing activities:
                         Oil and natural gas capital expenditures                                     (51,170  )           (127,678 )          (61,459  )          (226,617 )        (659,419   )
                         Proceeds received from sales of oil and natural gas assets                   888                  111                 888                 (407     )        1,222
                         Other operating property and equipment capital expenditures                  (519     )           (925     )          (750     )          (950     )        (10,838    )
                         Funds held in escrow and other                                               -                    26                  (1,721   )          200               1,903
Net cash provided by (used in) investing activities                                                   (50,801  )           (128,466 )          (63,042  )          (227,774 )        (667,132   )
Cash flows from financing activities:
                         Proceeds from borrowings                                                     85,000               255,000             115,000             886,000           1,834,000
                         Repayments of borrowings                                                     (127,000 )           (251,804 )          (159,000 )          (727,648 )        (1,643,804 )
                         Cash payments to Noteholders and Preferred Holders                           -                    -                   (10,013  )          (97,521  )        -
                         Debt issuance costs                                                          -                    (3,865   )          -                   (1,977   )        (29,568    )
                         Series A preferred dividends                                                 -                    (3,521   )          -                   -                 (8,177     )
                         Common stock issued                                                          -                    2                   -                   -                 15,356
                         Restricted cash                                                              -                    (133     )          -                   -                 (543       )
                         Offering costs and other                                                     -                    (246     )          -                   (511     )        (2,818     )
Net cash provided by (used in) financing activities                                                   (42,000  )           (4,567   )          (54,013  )          58,343            164,446
Net increase (decrease) in cash                                                                       (1,987   )           1,772               (13,919  )          5,917             (35,687    )
Cash at beginning of period                                                                           2,011                6,254               13,943              8,026             43,713
Cash at end of period                                                                           $     24             $     8,026        $      24            $     13,943      $     8,026
HALC?"N RESOURCES CORPORATION
SELECTED OPERATING DATA (Unaudited)
                                                                                  Three Months Ended December 31, Years Ended December 31,
                                                                                          2016         2015       2016                 2015
Production volumes:
Crude oil (MBbls)                                                                         2,717        2,923              10,368       12,019
Natural gas (MMcf)                                                                        2,490        2,679              9,571        10,123
Natural gas liquids (MBbls)                                                               421          411                1,597        1,457
Total (MBoe)                                                                              3,553        3,780              13,560       15,163
Average daily production (Boe/d)                                                          38,620       41,087             37,049       41,542
Average prices:
Crude oil (per Bbl)                                                               $       43.62      $ 36.94      $       37.41      $ 42.63
Natural gas (per Mcf)                                                                     2.38         1.83               1.70         2.22
Natural gas liquids (per Bbl)                                                             12.40        7.43               8.73         9.35
Total per Boe                                                                             36.50        30.67              30.83        36.17
Cash effect of derivative contracts:
Crude oil (per Bbl)                                                               $       22.73      $ 43.11      $       31.76      $ 35.87
Natural gas (per Mcf)                                                                     0.08         1.03               0.12         0.84
Natural gas liquids (per Bbl)                                                             -            -                  -            -
Total per Boe                                                                             17.43        34.07              24.37        28.99
Average prices computed after cash effect of settlement of derivative contracts:
Crude oil (per Bbl)                                                               $       66.35      $ 80.05      $       69.17      $ 78.50
Natural gas (per Mcf)                                                                     2.46         2.86               1.82         3.06
Natural gas liquids (per Bbl)                                                             12.40        7.43               8.73         9.35
Total per Boe                                                                             53.93        64.74              55.20        65.16
Average cost per Boe:
Production:
Lease operating                                                                   $       5.23       $ 5.91       $       5.34       $ 6.83
Workover and other                                                                        2.52         2.45               2.43         1.38
Taxes other than income                                                                   2.87         3.08               2.72         3.22
Gathering and other, as adjusted                                                          2.54         2.21               2.32         2.00
Restructuring                                                                             -            0.06               0.38         0.19
General and administrative, as adjusted                                                   3.90         4.15               4.29         4.57
Depletion                                                                                 10.27        17.03              11.80        23.37
(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                                           $       6.95       $ 5.20       $       9.22       $ 5.79
Share-based compensation:
Non-cash                                                                                  (2.34   )    (0.87   )          (1.95   )    (0.96   )
Transaction costs, key employee retention agreements and other:
Cash                                                                                      (0.71   )    (0.18   )          (2.98   )    (0.26   )
General and administrative, as adjusted                                           $       3.90       $ 4.15       $       4.29       $ 4.57
Gathering and other, as reported                                                  $       3.39       $ 2.57       $       3.24       $ 2.66
Rig termination / stacking charges                                                        (0.85   )    (0.36   )          (0.92   )    (0.66   )
Gathering and other, as adjusted                                                  $       2.54       $ 2.21       $       2.32       $ 2.00
Total operating costs, as reported                                                $       20.96      $ 19.21      $       22.95      $ 19.88
Total adjusting items                                                                     (3.90   )    (1.41   )          (5.85   )    (1.88   )
Total operating costs, as adjusted                                                $       17.06      $ 17.80      $       17.10      $ 18.00
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.
For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the year ended December 31, 2016.  The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor may not be comparable to those of the Predecessor. The financial information preceding the table above provides the Successor and the Predecessor GAAP results for the applicable periods.  The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provide meaningful information about, for instance, production, revenues and costs, that assist a reader in understanding the Company’s financial results for the applicable periods.
HALC?"N RESOURCES CORPORATION
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)
(In thousands, except per share amounts)
                                                                                                        Successor                                        Predecessor                                                                Successor                                                                    Predecessor
                                                                                                                                                                                                                                    Period from                                                                  Period from
                                                                                                        Three Months                                     Three Months                                                               September 10, 2016                                                           January 1, 2016
                                                                                                        Ended                                            Ended                                                                      through                                                                      through                                                                    Year Ended
                                                                                                        December 31, 2016                                December 31, 2015                                                          December 31, 2016                                                            September 9, 2016                                                          December 31, 2015
As Reported:
Net income (loss) available to common stockholders, as reported                                         $                                   (28,501 )    $                                   (424,712                            )  $                                   (479,984                            )    $                                   (32,794                             )  $                                   (2,006,958                          )
Series A preferred dividends                                                                                                                -                                                3,518                                                                      -                                                                            8,847                                                                      17,517
Preferred dividends and accretion on redeemable noncontrolling interest                                                                     -                                                27,751                                                                     791                                                                          35,905                                                                     66,820
Net income (loss)                                                                                       $                                   (28,501 )    $                                   (393,443                            )  $                                   (479,193                            )    $                                   11,958                                 $                                   (1,922,621                          )
Impact of Selected Items:
Unrealized loss (gain) on derivatives contracts:
Crude oil                                                                                               $                                   81,335       $                                   33,291                                 $                                   111,658                                  $                                   262,813                                $                                   123,441
Natural gas                                                                                                                                 776                                              2,019                                                                      791                                                                          919                                                                        5,841
Total mark-to-market non-cash charge                                                                                                        82,111                                           35,310                                                                     112,449                                                                      263,732                                                                    129,282
Full cost ceiling impairment                                                                                                                -                                                611,787                                                                    420,934                                                                      754,769                                                                    2,626,305
Other operating property and equipment impairment                                                                                           -                                                -                                                                          -                                                                            28,056                                                                     -
Loss (gain) on extinguishment of debt                                                                                                       -                                                (203,897                            )                                      -                                                                            (81,434                             )                                      (761,804                            )
Loss (gain) on extinguishment of Convertible Note and modification of February 2012 Warrants                                                -                                                -                                                                          -                                                                            -                                                                          8,219
Deferred financing costs expensed, net                                                                                                      -                                                128                                                                        -                                                                            3,582                                                                      1,331
Reorganization items                                                                                                                        1,493                                            -                                                                          2,049                                                                        (913,722                            )                                      -
Restructuring                                                                                                                               -                                                222                                                                        -                                                                            5,168                                                                      2,886
Rig termination / stacking charges, key employee retention agreements, transaction costs and other                                          5,519                                            4,915                                                                      6,443                                                                        40,689                                                                     24,998
Selected items, before income taxes                                                                                                         89,123                                           448,465                                                                    541,875                                                                      100,840                                                                    2,031,217
Income tax effect of selected items                                                                                                         -                                                -                                                                          -                                                                            -                                                                          -
Selected items, net of tax                                                                              $                                   89,123       $                                   448,465                                $                                   541,875                                  $                                   100,840                                $                                   2,031,217
As Adjusted:
Net income (loss) available to common stockholders, excluding selected items                            $                                   60,622       $                                   55,022                                 $                                   62,682                                   $                                   112,798                                $                                   108,596
Net income (loss) from assumed conversions                                                                                                                                                   4,245                                                                                                                                                   10,778                                                                     19,799
Net income (loss) available to common stockholders after assumed conversions, excluding selected items  $                                   60,622       $                                   59,267                                 $                                   62,682                                   $                                   123,576                                $                                   128,395
Basic net income (loss) per common share, as reported                                                   $                                   (0.31   )    $                                   (3.56                               )  $                                   (5.26                               )    $                                   (0.27                               )  $                                   (18.66                              )
Impact of selected items                                                                                                                    0.97                                             4.02                                                                       5.95                                                                         1.21                                                                       19.67
Basic net income (loss) per common share, excluding selected items                                      $                                   0.66         $                                   0.46                                   $                                   0.69                                     $                                   0.94                                   $                                   1.01
Diluted net income (loss) per common share, as reported                                                 $                                   (0.31   )    $                                   (3.56                               )  $                                   (5.26                               )    $                                   (0.27                               )  $                                   (18.66                              )
Impact of selected items                                                                                                                    0.97                                             3.97                                                                       5.95                                                                         1.13                                                                       19.63
Diluted net income (loss) per common share, excluding selected items                                    $                                   0.66         $                                   0.41                                   $                                   0.69                                     $                                   0.86                                   $                                   0.97
Net cash provided by (used in) operating activities                                                     $                                   90,814       $                                   134,805                                $                                   103,136                                  $                                   175,348                                $                                   466,999
Changes in working capital, net of acquisitions                                                                                             (1,057  )                                        (19,213                             )                                      (12,404                             )                                        1,733                                                                      (37,096                             )
Cash flow from operations before changes in working capital                                                                                 89,757                                           115,592                                                                    90,732                                                                       177,081                                                                    429,903
Cash components of selected items                                                                                                           19,338                                           11,467                                                                     42,953                                                                       66,092                                                                     66,316
Income tax effect of selected items                                                                                                         -                                                -                                                                          -                                                                            -                                                                          -
Cash flow from operations before changes in working capital, adjusted for selected items                $                                   109,095      $                                   127,059                                $                                   133,685                                  $                                   243,173                                $                                   496,219
(1) Represents charges related to the write-off of debt issuance costs associated with the Predecessor Credit Agreement.
(2) For the 2016 (Successor) and 2015 (Predecessor) columns, this represents tax impact using an estimated tax rate of 0.0% due to the Company maintaining a full valuation allowance.
(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 Halcon’s performance.
(4) The impact of selected items for the three months ended December 31, 2016 (Successor), the period of September 10, 2016 through December 31, 2016 (Successor), and the period of  January 1, 2016 through September 9, 2016 (Predecessor) was calculated based upon weighted average diluted shares of 91.5 million, 91.3 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 three months ended and year ended December 31, 2015 (Predecessor) was calculated based upon weighted average diluted shares of 144.8 million and 131.8 million, respectively, due to the net income available to Predecessor common stockholders excluding selected items.
HALC?"N RESOURCES CORPORATION
EBITDA RECONCILIATION (Unaudited)
(In thousands)
                                                                                              Three Months Ended December 31,        Years Ended December 31,
                                                                                                   2016               2015           2016                   2015
Net income (loss), as reported                                                                $    (28,501 )     $    (393,443 )     $   (467,235  )    $   (1,922,621 )
Interest expense                                                                                   23,126             49,751             152,477            220,588
Depletion, depreciation and accretion                                                              37,848             66,795             167,454            364,204
Full cost ceiling impairment                                                                       -                  611,787            1,175,703          2,626,305
Other operating property and equipment impairment                                                  -                  -                  28,056             -
Income tax provision (benefit)                                                                     1,387              2,862              (3,922    )        9,086
Share-based compensation                                                                           8,323              3,284              26,395             14,529
Interest income                                                                                    (3      )          (5       )         (36       )        (94        )
(Gain) loss on sale of other assets                                                                276                (18      )         706                1,362
EBITDA                                                                                        $    42,456        $    341,013        $   1,079,598      $   1,313,359
Impact of non-recurring items:
Restructuring                                                                                      -                  222                5,168              2,886
Reorganization items                                                                               1,493              -                  (911,673  )        -
Loss (gain) on extinguishment of debt                                                              -                  (203,897 )         (81,434   )        (761,804   )
Loss (gain) on extinguishment of Convertible Note and modification of February 2012 Warrants       -                  -                  -                  8,219
Loss (gain) on mark-to-market of embedded derivative and tranche rights                            -                  (1,042   )         (5,734    )        2,772
Unrealized loss (gain) on derivatives contracts                                                    82,111             35,310             376,181            129,282
Write-off of deferred loan costs                                                                   -                  128                3,582              1,331
Rig termination / stacking charges                                                                 3,003              1,360              12,467             9,945
Transaction costs, key employee retention agreements and other                                     2,516              7,223              40,399             10,832
Adjusted EBITDA                                                                               $    131,579       $    180,317        $   518,554        $   716,822
(1) EBITDA and Adjusted EBITDA are non-gaap measures. These financial measures are 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 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 Halcon’s performance.
(2) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the year ended December 31, 2016. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor may not be comparable to those of the Predecessor. The financial information preceding the table above provides the Successor and the Predecessor GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provide meaningful information about, for instance, production, revenues and costs, that assist a reader in understanding the Company’s financial results for the applicable periods.

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