Company Reduces 2015 D&C Budget to ~$325 Million
Well Economics Continue to Improve in Company’s Core Plays
HOUSTON, July 30, 2015 (GLOBE NEWSWIRE) — Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”) today announced its second quarter 2015 results.
The Company produced an average of 41,297 barrels of oil equivalent per day (Boe/d) during the period. Second quarter 2015 production was 80% oil, 9% natural gas liquids (NGLs) and 11% natural gas.
Halcón generated revenues of $168.0 million for the three months ended June 30, 2015. In addition, the Company realized a net gain on settled derivative contracts of $88.1 million during the quarter.
Including the impact of hedges, Halcón realized 140% of the average NYMEX oil price, 20% of the average NYMEX oil price for NGLs and 113% of the average NYMEX natural gas price during the period.
Total operating costs per unit, after adjusting for selected items (see Selected Operating Data table for additional information), decreased by 28% to $17.51 per Boe in the second quarter of 2015, compared to the second quarter of 2014.
After adjusting for selected items primarily related to a non-cash pre-tax full cost ceiling impairment charge (see Selected Item Review and Reconciliation table for additional information), net income available to common stockholders was $8.9 million, or $0.02 per diluted share, for the three months ended June 30, 2015. The Company reported a net loss available to common stockholders of $1.1 billion, or $2.03 per diluted share for the quarter.
Floyd C. Wilson, Chairman and Chief Executive Officer, commented, “We completed several initiatives towards strengthening our balance sheet in the past few months. As a result we have no near-term debt maturities, and we have the liquidity necessary to execute our business plan and service our debt for the next several years. Moreover, we continue to search for ways to improve our leverage profile. The combination of lower completed well costs, improved results and increased efficiencies has led to well economics that compare favorably to what they were in the summer of 2014 when oil prices were significantly higher.”
[expand title=”Read More”]Recent Developments
On July 30, 2015, Halcón’s Board of Directors declared a quarterly dividend on shares of its 5.75% Series A Cumulative Perpetual Convertible Preferred Stock equal to accrued dividends for the three months ending August 31, 2015, payable on September 1, 2015 to holders of record on August 14, 2015. The dividend payments totaling approximately $4.9 million will be paid in cash.
Liquidity and Capital Spending
The Company’s liquidity as of June 30, 2015 was approximately $902 million, which consisted of cash on hand plus undrawn capacity on its senior secured revolving credit facility.
During the second quarter of 2015, Halcón incurred capital costs of $75.1 million on drilling and completions, $1.8 million on infrastructure/seismic, $2.5 million for leasehold, offset by A&D proceeds of $0.5 million. In addition, the Company incurred $32.9 million for capitalized interest, G&A and other.
Operational Update
Halcón is currently operating three rigs across its holdings and has 14 wells being completed or waiting on completion. Year-to-date, completed well costs have come down significantly in the Company’s core plays and Halcón expects this trend to continue.
Bakken/Three Forks
The Company operated an average of two rigs in the Williston Basin during the quarter. Halcón spudded 9 wells in Fort Berthold and put 13 wells (8 in Fort Berthold/5 in Williams County) online during the period. The Company also participated in nine non-operated wells with an average working interest of approximately 3% during the quarter.
On average, Halcón-operated wells put online in the Williston Basin year-to-date are outperforming the Company’s 801 MBoe and 477 MBoe type curves for the Fort Berthold and Williams County areas, respectively.
Halcón has made significant progress negotiating lower costs with its service providers and continues to modify its drilling and completion techniques in an effort to improve recoveries and further reduce costs. The Company’s current estimated completed well cost for wells drilled on its acreage in the Fort Berthold area is approximately $7.2 million.
Halcón has also reduced lease operating costs on a per well basis by approximately 30% as compared to 2014.
The Company continues to increase gas capture in the Williston Basin and expects to have greater than 90% of its gas production flowing to sales by year-end 2015.
Halcón is the operator of 194 producing Bakken wells and 58 Three Forks wells. The Company currently has 6 Bakken wells and 2 Three Forks wells being completed or waiting on completion on its operated acreage.
“El Halcón” – East Texas Eagle Ford
Halcón operated one rig in El Halcón during the second quarter. The Company spudded four wells and put eight wells online during the three months ended June 30, 2015. On average, wells put online year-to-date are performing in line with Halcón’s 452 MBoe type curve for the area on a per lateral foot basis.
As a result of several cost reduction initiatives, the current estimated completed well cost in lease capture mode (one well per unit/pad) is averaging approximately $6.75 million for a three-string well in this play.
The Company expects completed well costs to decrease by up to an additional $1 million per well in the near-term as it begins the transition into development mode (multiple wells per unit/pad). The capital that will be saved on a per well basis by transitioning into development mode will more than offset any capital spend necessary to extend or renew expiring leases.
There are currently 98 Halcón-operated East Texas Eagle Ford wells producing and 3 Company-operated wells being completed or waiting on completion.
2015 Guidance Update
Halcón reduced its drilling and completion budget by an additional $25 million to approximately $325 million to account for lower service costs.
The Company expects to produce an average of 39.5 – 41.5 Mboe/d during the third quarter of 2015, which accounts for approximately 700 Boe/d of non-operated production in the Williston Basin that continues to be shut-in and approximately 1,100 Boe/d of non-operated production in the Williston Basin that continues to be deferred.
Hedging Update
The Company continues to target a hedge portfolio in which approximately 80% of expected production is hedged for the next 24 months. Halcón has 30,500 barrels per day of oil hedged from July 1, 2015 to December 31, 2015 at an average price of $90.21 per barrel. For 2016, the Company has 25,497 barrels per day of oil hedged at an average price of $80.59 per barrel, and for 2017, Halcón has 3,750 barrels per day of oil hedged at an average price of $65.75 per barrel. The Company plans to layer in additional hedges to attain targeted levels, as appropriate. Halcón estimates the pre-tax mark-to-market value of its hedge portfolio to be approximately $447 million as of July 29, 2015.
Conference Call and Webcast Information
Halcón Resources Corporation (NYSE:HK) has scheduled a conference call for Friday, July 31, 2015, at 10:00 a.m. EDT (9:00 a.m. CDT). 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 Halcón Resources conference ID 79637432. The conference call will also be webcast live over the Internet on Halcón 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 and will be accessible through August 7, 2015. To access the replay, dial (855) 859-2056 for domestic callers or (404) 537-3406 for international callers, in both cases referencing conference ID 79637432.
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.
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. Additionally, initial production rates, average 30 day production rates and improvements mentioned herein are not necessarily indicative of future production rates or performance. 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, 2014 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (“SEC”), copies of which may be obtained from the SEC’s website at www.sec.gov or through the Company’s website at www.halconresources.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company’s expectations.
| HALCÓN RESOURCES CORPORATION | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| Operating revenues: | |||||||||||||||||||
| Oil, natural gas and natural gas liquids sales: | |||||||||||||||||||
| Oil | $ | 158,110 | $ | 304,212 | $ | 282,523 | $ | 560,241 | |||||||||||
| Natural gas | 5,578 | 10,308 | 12,537 | 19,717 | |||||||||||||||
| Natural gas liquids | 3,889 | 9,364 | 7,957 | 18,123 | |||||||||||||||
| Total oil, natural gas and natural gas liquids sales | 167,577 | 323,884 | 303,017 | 598,081 | |||||||||||||||
| Other | 447 | 3,260 | 1,201 | 4,212 | |||||||||||||||
| Total operating revenues | 168,024 | 327,144 | 304,218 | 602,293 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Production: | |||||||||||||||||||
| Lease operating | 25,233 | 30,968 | 59,018 | 67,606 | |||||||||||||||
| Workover and other | 3,731 | 3,988 | 6,845 | 6,777 | |||||||||||||||
| Taxes other than income | 12,903 | 30,310 | 25,144 | 54,470 | |||||||||||||||
| Gathering and other | 7,746 | 5,898 | 21,492 | 10,659 | |||||||||||||||
| Restructuring | 309 | – | 2,230 | 987 | |||||||||||||||
| General and administrative | 22,662 | 27,743 | 47,071 | 60,541 | |||||||||||||||
| Depletion, depreciation and accretion | 101,194 | 133,470 | 220,338 | 253,378 | |||||||||||||||
| Full cost ceiling impairment | 948,633 | – | 1,502,636 | 61,165 | |||||||||||||||
| Other operating property and equipment impairment | – | 3,477 | – | 3,789 | |||||||||||||||
| Total operating expenses | 1,122,411 | 235,854 | 1,884,774 | 519,372 | |||||||||||||||
| Income (loss) from operations | (954,387 | ) | 91,290 | (1,580,556 | ) | 82,921 | |||||||||||||
| Other income (expenses): | |||||||||||||||||||
| Net gain (loss) on derivative contracts | (87,564 | ) | (121,042 | ) | 12,184 | (154,698 | ) | ||||||||||||
| Interest expense and other, net | (60,922 | ) | (37,725 | ) | (122,229 | ) | (68,664 | ) | |||||||||||
| Gain (loss) on extinguishment of debt | 22,766 | – | 22,766 | – | |||||||||||||||
| Gain (loss) on extinguishment of Convertible Note and modification of February 2012 Warrants | (8,219 | ) | – | (8,219 | ) | – | |||||||||||||
| Total other income (expenses) | (133,939 | ) | (158,767 | ) | (95,498 | ) | (223,362 | ) | |||||||||||
| Income (loss) before income taxes | (1,088,326 | ) | (67,477 | ) | (1,676,054 | ) | (140,441 | ) | |||||||||||
| Income tax benefit (provision) | (286 | ) | – | (199 | ) | – | |||||||||||||
| Net income (loss) | (1,088,612 | ) | (67,477 | ) | (1,676,253 | ) | (140,441 | ) | |||||||||||
| Series A preferred dividends | (4,902 | ) | (4,960 | ) | (9,803 | ) | (9,919 | ) | |||||||||||
| Preferred dividends and accretion on redeemable noncontrolling interest | (11,067 | ) | (896 | ) | (19,718 | ) | (896 | ) | |||||||||||
| Net income (loss) available to common stockholders | $ | (1,104,581 | ) | $ | (73,333 | ) | $ | (1,705,774 | ) | $ | (151,256 | ) | |||||||
| Net income (loss) per share of common stock: | |||||||||||||||||||
| Basic | $ | (2.03 | ) | $ | (0.18 | ) | $ | (3.53 | ) | $ | (0.37 | ) | |||||||
| Diluted | $ | (2.03 | ) | $ | (0.18 | ) | $ | (3.53 | ) | $ | (0.37 | ) | |||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 545,313 | 414,722 | 482,843 | 414,125 | |||||||||||||||
| Diluted | 545,313 | 414,722 | 482,843 | 414,125 | |||||||||||||||
| HALCÓN RESOURCES CORPORATION | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||
| (In thousands, except share and per share amounts) | |||||||||
| June 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Current assets: | |||||||||
| Cash | $ | 9,973 | $ | 43,713 | |||||
| Accounts receivable | 214,517 | 276,559 | |||||||
| Receivables from derivative contracts | 235,869 | 352,530 | |||||||
| Restricted cash | 16,483 | 16,131 | |||||||
| Inventory | 3,848 | 4,693 | |||||||
| Prepaids and other | 8,042 | 9,079 | |||||||
| Total current assets | 488,732 | 702,705 | |||||||
| Oil and natural gas properties (full cost method): | |||||||||
| Evaluated | 6,674,162 | 6,390,820 | |||||||
| Unevaluated | 1,801,135 | 1,829,786 | |||||||
| Gross oil and natural gas properties | 8,475,297 | 8,220,606 | |||||||
| Less – accumulated depletion | (4,670,982 | ) | (2,953,038 | ) | |||||
| Net oil and natural gas properties | 3,804,315 | 5,267,568 | |||||||
| Other operating property and equipment: | |||||||||
| Gas gathering and other operating assets | 127,685 | 126,804 | |||||||
| Less – accumulated depreciation | (18,531 | ) | (14,798 | ) | |||||
| Net other operating property and equipment | 109,154 | 112,006 | |||||||
| Other noncurrent assets: | |||||||||
| Receivables from derivative contracts | 77,605 | 151,324 | |||||||
| Debt issuance costs, net | 63,222 | 55,904 | |||||||
| Deferred income taxes | 93,026 | 136,826 | |||||||
| Equity in oil and natural gas partnership | 4,076 | 4,309 | |||||||
| Funds in escrow and other | 1,920 | 3,833 | |||||||
| Total assets | $ | 4,642,050 | $ | 6,434,475 | |||||
| Current liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ | 365,398 | $ | 607,750 | |||||
| Asset retirement obligations | 143 | 106 | |||||||
| Current portion of deferred income taxes | 93,026 | 136,826 | |||||||
| Total current liabilities | 458,567 | 744,682 | |||||||
| Long-term debt | 3,650,625 | 3,746,736 | |||||||
| Other noncurrent liabilities: | |||||||||
| Liabilities from derivative contracts | 2,720 | 9,387 | |||||||
| Asset retirement obligations | 40,966 | 38,371 | |||||||
| Other | 6,480 | 5,964 | |||||||
| Commitments and contingencies | |||||||||
| Mezzanine equity: | |||||||||
| Redeemable noncontrolling interest | 136,884 | 117,166 | |||||||
| Stockholders’ equity: | |||||||||
| Preferred stock: 1,000,000 shares of $0.0001 par value authorized; 340,960 and 345,000 | |||||||||
| shares of 5.75% Cumulative Perpetual Convertible Series A, issued and outstanding | |||||||||
| at June 30, 2015 and December 31, 2014, respectively | – | – | |||||||
| Common stock: 1,340,000,000 shares of $0.0001 par value authorized; | |||||||||
| 590,274,311 and 427,808,306 shares issued and outstanding | |||||||||
| at June 30, 2015 and December 31, 2014, respectively | 59 | 42 | |||||||
| Additional paid-in capital | 3,274,798 | 2,995,402 | |||||||
| Accumulated deficit | (2,929,049 | ) | (1,223,275 | ) | |||||
| Total stockholders’ equity | 345,808 | 1,772,169 | |||||||
| Total liabilities and stockholders’ equity | $ | 4,642,050 | $ | 6,434,475 | |||||
| HALCÓN RESOURCES CORPORATION | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||||||||||
| (In thousands) | |||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||
| Net income (loss) | $ | (1,088,612 | ) | $ | (67,477 | ) | $ | (1,676,253 | ) | $ | (140,441 | ) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||||
| Depletion, depreciation and accretion | 101,194 | 133,470 | 220,338 | 253,378 | |||||||||||||||
| Full cost ceiling impairment | 948,633 | – | 1,502,636 | 61,165 | |||||||||||||||
| Other operating property and equipment impairment | – | 3,477 | – | 3,789 | |||||||||||||||
| Share-based compensation, net | 3,438 | 4,914 | 8,210 | 9,246 | |||||||||||||||
| Unrealized loss (gain) on derivative contracts | 175,712 | 105,032 | 183,713 | 131,053 | |||||||||||||||
| Amortization and write-off of deferred loan costs | 2,533 | 1,319 | 4,092 | 2,161 | |||||||||||||||
| Non-cash interest and amortization of discount and premium | 602 | 678 | 1,709 | 1,232 | |||||||||||||||
| Loss (gain) on extinguishment of debt | (22,766 | ) | – | (22,766 | ) | – | |||||||||||||
| Loss (gain) on extinguishment of Convertible Note and modification of February 2012 Warrants | 8,219 | – | 8,219 | – | |||||||||||||||
| Accrued settlements on derivative contracts | 10,811 | – | (26,781 | ) | – | ||||||||||||||
| Other income (expense) | 2,467 | 1,188 | 5,008 | 1,230 | |||||||||||||||
| Cash flow from operations before changes in working capital | 142,231 | 182,601 | 208,125 | 322,813 | |||||||||||||||
| Changes in working capital, net of acquisitions | (18,636 | ) | 68,841 | 9,405 | 88,129 | ||||||||||||||
| Net cash provided by (used in) operating activities | 123,595 | 251,442 | 217,530 | 410,942 | |||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Oil and natural gas capital expenditures | (143,125 | ) | (420,955 | ) | (407,751 | ) | (853,738 | ) | |||||||||||
| Proceeds received from sale of oil and natural gas assets | 147 | 463,919 | 1,111 | 465,452 | |||||||||||||||
| Advance on carried interest | – | (126,942 | ) | – | (189,442 | ) | |||||||||||||
| Other operating property and equipment capital expenditures | (3,133 | ) | (13,489 | ) | (7,478 | ) | (29,525 | ) | |||||||||||
| Funds held in escrow and other | 1,906 | (595 | ) | 1,901 | (307 | ) | |||||||||||||
| Net cash provided by (used in) investing activities | (144,205 | ) | (98,062 | ) | (412,217 | ) | (607,560 | ) | |||||||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Proceeds from borrowings | 935,000 | 672,000 | 1,296,000 | 1,286,000 | |||||||||||||||
| Repayments of borrowings | (912,000 | ) | (761,000 | ) | (1,129,000 | ) | (1,027,000 | ) | |||||||||||
| Debt issuance costs | (18,612 | ) | 49 | (18,612 | ) | (77 | ) | ||||||||||||
| Common stock issued | 9,335 | – | 15,354 | – | |||||||||||||||
| HK TMS, LLC preferred stock issued | – | 110,051 | – | 110,051 | |||||||||||||||
| HK TMS, LLC tranche rights | – | 4,516 | – | 4,516 | |||||||||||||||
| Preferred dividends on redeemable noncontrolling interest | – | (493 | ) | – | (493 | ) | |||||||||||||
| Restricted cash | (161 | ) | (16,000 | ) | (352 | ) | (16,000 | ) | |||||||||||
| Offering costs and other | (1,590 | ) | (1,597 | ) | (2,443 | ) | (1,941 | ) | |||||||||||
| Net cash provided by (used in) financing activities | 11,972 | 7,526 | 160,947 | 355,056 | |||||||||||||||
| Net increase (decrease) in cash | (8,638 | ) | 160,906 | (33,740 | ) | 158,438 | |||||||||||||
| Cash at beginning of period | 18,611 | 366 | 43,713 | 2,834 | |||||||||||||||
| Cash at end of period | $ | 9,973 | $ | 161,272 | $ | 9,973 | $ | 161,272 | |||||||||||
| Disclosure of non-cash investing and financing activities: | |||||||||||||||||||
| Accrued capitalized interest | $ | 5,656 | $ | 3,695 | $ | (2,614 | ) | $ | (1,068 | ) | |||||||||
| Asset retirement obligations | 634 | (3,720 | ) | 1,754 | (4,450 | ) | |||||||||||||
| Series A preferred dividends paid in common stock | 4,902 | 4,960 | 9,803 | 9,919 | |||||||||||||||
| Preferred dividends on redeemable noncontrolling interest paid-in-kind | 3,112 | – | 6,131 | – | |||||||||||||||
| Accretion of redeemable noncontrolling interest | 7,310 | 403 | 12,942 | 403 | |||||||||||||||
| Change in fair value of redeemable noncontrolling interest | 645 | – | 645 | – | |||||||||||||||
| Common stock issued on conversion of senior notes | 231,383 | – | 231,383 | – | |||||||||||||||
| Common stock issued | (2,182 | ) | – | – | – | ||||||||||||||
| Offering costs | 78 | – | – | – | |||||||||||||||
| HALCÓN RESOURCES CORPORATION | |||||||||||||||||
| SELECTED OPERATING DATA | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Production volumes: | |||||||||||||||||
| Crude oil (MBbls) | 3,007 | 3,236 | 6,103 | 6,042 | |||||||||||||
| Natural gas (MMcf) | 2,509 | 2,002 | 5,144 | 3,794 | |||||||||||||
| Natural gas liquids (MBbls) | 333 | 258 | 675 | 449 | |||||||||||||
| Total (MBoe) | 3,758 | 3,827 | 7,635 | 7,123 | |||||||||||||
| Average daily production (Boe/d) | 41,297 | 42,055 | 42,182 | 39,354 | |||||||||||||
| Average prices: | |||||||||||||||||
| Crude oil (per Bbl) | $ | 52.58 | $ | 94.01 | $ | 46.29 | $ | 92.72 | |||||||||
| Natural gas (per Mcf) | 2.22 | 5.15 | 2.44 | 5.20 | |||||||||||||
| Natural gas liquids (per Bbl) | 11.68 | 36.29 | 11.79 | 40.36 | |||||||||||||
| Total per Boe | 44.59 | 84.63 | 39.69 | 83.96 | |||||||||||||
| Cash effect of derivative contracts: | |||||||||||||||||
| Crude oil (per Bbl) | $ | 28.60 | $ | (4.79 | ) | $ | 31.48 | $ | (3.66 | ) | |||||||
| Natural gas (per Mcf) | 0.85 | (0.25 | ) | 0.73 | (0.41 | ) | |||||||||||
| Natural gas liquids (per Bbl) | – | – | – | – | |||||||||||||
| Total per Boe | 23.46 | (4.18 | ) | 25.66 | (3.32 | ) | |||||||||||
| Average prices computed after cash effect of settlement of derivative contracts: | |||||||||||||||||
| Crude oil (per Bbl) | $ | 81.18 | $ | 89.22 | $ | 77.77 | $ | 89.06 | |||||||||
| Natural gas (per Mcf) | 3.07 | 4.90 | 3.17 | 4.79 | |||||||||||||
| Natural gas liquids (per Bbl) | 11.68 | 36.29 | 11.79 | 40.36 | |||||||||||||
| Total per Boe | 68.05 | 80.45 | 65.35 | 80.64 | |||||||||||||
| Average cost per Boe: | |||||||||||||||||
| Production: | |||||||||||||||||
| Lease operating | $ | 6.71 | $ | 8.09 | $ | 7.73 | $ | 9.49 | |||||||||
| Workover and other | 0.99 | 1.04 | 0.90 | 0.95 | |||||||||||||
| Taxes other than income | 3.43 | 7.92 | 3.29 | 7.65 | |||||||||||||
| Gathering and other, as adjusted (1) | 1.78 | 1.54 | 1.89 | 1.50 | |||||||||||||
| Restructuring | 0.08 | – | 0.29 | 0.14 | |||||||||||||
| General and administrative, as adjusted (1) | 4.60 | 5.86 | 4.77 | 6.64 | |||||||||||||
| Depletion | 26.26 | 34.21 | 28.20 | 34.84 | |||||||||||||
| (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 | $ | 6.03 | $ | 7.25 | $ | 6.17 | $ | 8.50 | |||||||||
| Share-based compensation: | |||||||||||||||||
| Non-cash | (0.91 | ) | (1.28 | ) | (1.08 | ) | (1.30 | ) | |||||||||
| Acquisition and merger transaction costs and other: | |||||||||||||||||
| Cash | (0.52 | ) | (0.11 | ) | (0.32 | ) | (0.56 | ) | |||||||||
| General and administrative, as adjusted | $ | 4.60 | $ | 5.86 | $ | 4.77 | $ | 6.64 | |||||||||
| Gathering and other, as reported | $ | 2.06 | $ | 1.54 | $ | 2.81 | $ | 1.50 | |||||||||
| Rig termination / stacking charges | (0.28 | ) | – | (0.92 | ) | – | |||||||||||
| Gathering and other, as adjusted | $ | 1.78 | $ | 1.54 | $ | 1.89 | $ | 1.50 | |||||||||
| Total operating costs, as reported | $ | 19.22 | $ | 25.84 | $ | 20.90 | $ | 28.09 | |||||||||
| Total adjusting items | (1.71 | ) | (1.39 | ) | (2.32 | ) | (1.86 | ) | |||||||||
| Total operating costs, as adjusted(2) | $ | 17.51 | $ | 24.45 | $ | 18.58 | $ | 26.23 | |||||||||
| (2) Represents lease operating, workover and other expense, taxes other than income, gathering and other expense and general and administrative costs per Boe, adjusted for items noted in Reconciliation above. | |||||||||||||||||
| HALCÓN RESOURCES CORPORATION | |||||||||||||||||
| SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited) | |||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| As Reported: | |||||||||||||||||
| Net income (loss) available to common stockholders, as reported | $ | (1,104,581 | ) | $ | (73,333 | ) | $ | (1,705,774 | ) | $ | (151,256 | ) | |||||
| Series A preferred dividends | 4,902 | 4,960 | 9,803 | 9,919 | |||||||||||||
| Preferred dividends and accretion on redeemable noncontrolling interest | 11,067 | 896 | 19,718 | 896 | |||||||||||||
| Net income (loss) | (1,088,612 | ) | (67,477 | ) | (1,676,253 | ) | (140,441 | ) | |||||||||
| Impact of Selected Items: | |||||||||||||||||
| Unrealized loss (gain) on derivatives contracts: | |||||||||||||||||
| Crude oil | $ | 173,329 | $ | 106,402 | $ | 180,910 | $ | 131,749 | |||||||||
| Natural gas | 2,383 | (505 | ) | 2,803 | 1,064 | ||||||||||||
| Total mark-to-market non-cash charge | 175,712 | 105,897 | 183,713 | 132,813 | |||||||||||||
| Full cost ceiling impairment | 948,633 | – | 1,502,636 | 61,165 | |||||||||||||
| Other operating property and equipment impairment | – | 3,477 | – | 3,789 | |||||||||||||
| Loss (gain) on extinguishment of debt | (22,766 | ) | – | (22,766 | ) | – | |||||||||||
| Loss (gain) on extinguishment of Convertible Note and modification of February 2012 Warrants | 8,219 | – | 8,219 | – | |||||||||||||
| Deferred financing costs expensed, net | 879 | 499 | 879 | 499 | |||||||||||||
| Restructuring | 309 | – | 2,230 | 987 | |||||||||||||
| Rig termination / stacking charges and other | 5,349 | 417 | 16,897 | 3,962 | |||||||||||||
| Selected items, before income taxes | 1,116,335 | 110,290 | 1,691,808 | 203,215 | |||||||||||||
| Income tax effect of selected items(1) | (18,819 | ) | (14,160 | ) | (22,675 | ) | (22,205 | ) | |||||||||
| Selected items, net of tax | 1,097,516 | 96,130 | 1,669,133 | 181,010 | |||||||||||||
| As Adjusted: | |||||||||||||||||
| Net income (loss) available to common stockholders, excluding selected items | $ | 8,904 | $ | 28,653 | $ | (7,120 | ) | $ | 40,569 | ||||||||
| Net income (loss) from assumed conversions | – | 3,799 | – | – | |||||||||||||
| Net income (loss) available to common stockholders after assumed conversions, excluding selected items(2) | $ | 8,904 | $ | 32,452 | $ | (7,120 | ) | $ | 40,569 | ||||||||
| Basic net income (loss) per common share, as reported | $ | (2.03 | ) | $ | (0.18 | ) | $ | (3.53 | ) | $ | (0.37 | ) | |||||
| Impact of selected items | 2.05 | 0.25 | 3.52 | 0.47 | |||||||||||||
| Basic net income (loss) per common share, excluding selected items(2) | $ | 0.02 | $ | 0.07 | $ | (0.01 | ) | $ | 0.10 | ||||||||
| Diluted net income (loss) per common share, as reported | $ | (2.03 | ) | $ | (0.18 | ) | $ | (3.53 | ) | $ | (0.37 | ) | |||||
| Impact of selected items | 2.05 | 0.25 | 3.52 | 0.47 | |||||||||||||
| Diluted net income (loss) per common share, excluding selected items(2)(3) | $ | 0.02 | $ | 0.07 | $ | (0.01 | ) | $ | 0.10 | ||||||||
| Net cash provided by (used in) operating activities | $ | 123,595 | $ | 251,442 | $ | 217,530 | $ | 410,942 | |||||||||
| Changes in working capital, net of acquisitions | 18,636 | (68,841 | ) | (9,405 | ) | (88,129 | ) | ||||||||||
| Cash flow from operations before changes in working capital | 142,231 | 182,601 | 208,125 | 322,813 | |||||||||||||
| Cash components of selected items | (7,511 | ) | 417 | 41,019 | 4,796 | ||||||||||||
| Income tax effect of selected items | 2,782 | (151 | ) | (5,274 | ) | (1,734 | ) | ||||||||||
| Cash flow from operations before changes in working capital, adjusted for selected items(2) | $ | 137,502 | $ | 182,867 | $ | 243,870 | $ | 325,875 | |||||||||
| (1) For the 2015 columns this represents tax impact using an estimated tax rate of 37.04%. These columns also include an adjustment for the change in valuation allowance of $394.7 million and $604.0 million for the three and six months ended June 30, 2015, respectively. | |||||||||||||||||
| For the 2014 columns this represents tax impact using an estimated tax rate of 36.16%. These columns also include an adjustment for the change in valuation allowance of $25.7 million and $51.3 million for the three and six months ended June 30, 2014, respectively. | |||||||||||||||||
| (2) 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. | |||||||||||||||||
| 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 net income, earnings per share and cash flow from operations, as defined by GAAP. These financial measures may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Halcón’s performance. | |||||||||||||||||
| (3) The impact of selected items for the three months ended June 30, 2015 and 2014 was calculated based upon weighted average diluted shares of 546.1 million and 491.0 million, respectively, due to the net income available to common stockholders, excluding selected items. | |||||||||||||||||
| The impact of selected items for the six months ended June 30, 2014 was calculated based upon weighted average diluted shares of 420.1 million due to the net income available to common stockholders, excluding selected items. | |||||||||||||||||
CONTACT: For more information contact Scott Zuehlke, Vice President of Investor Relations, at 832-538-0314 or szuehlke@halconresources.com.
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