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Halcon Resources Announces First Quarter 2013 Financial Results And Provides Operational Update

Stocks in this article: HK

For more information contact Scott Zuehlke, Vice President of Investor Relations, at 832-538-0314 or szuehlke@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. 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, 2012, Form 10-Q for the quarter ended March 31, 2013 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
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share and per share amounts)
     
     
  Three Months Ended March 31,
  2013 2012
Operating revenues:    
Oil, natural gas and natural gas liquids sales:    
Oil   $ 180,780  $ 22,997
Natural gas  5,539  1,668
Natural gas liquids  3,808  2,169
Total oil, natural gas and natural gas liquids sales  190,127  26,834
Other  530  36
Total operating revenues  190,657  26,870
     
Operating expenses:    
Production:    
Lease operating  25,440  7,501
Workover and other  1,624  833
Taxes other than income  17,436  1,926
Restructuring  671  104
General and administrative  31,597  20,312
Depletion, depreciation and accretion  81,858  5,979
Total operating expenses  158,626  36,655
Income (loss) from operations  32,031  (9,785)
Other income (expenses):    
Interest expense and other, net  (4,850)  (12,997)
Net gain (loss) on derivative contracts  (18,422)  (4,945)
 Total other income (expenses)   (23,272)  (17,942)
Income (loss) before income taxes  8,759  (27,727)
Income tax benefit (provision)   (3,294)  (5,595)
Net income (loss)  5,465  (33,322)
Non-cash preferred dividend  --   (1,102)
Net income (loss) available to common stockholders  $ 5,465  $ (34,424)
     
Net income (loss) per share of common stock:    
Basic  $ 0.02  $ (0.50)
Diluted  $ 0.01  $ (0.50)
     
Weighted average common shares outstanding:    
Basic  346,139  68,816
Diluted  383,565  68,816
 
HALCÓN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
     
  March 31, December 31,
  2013 2012
Current assets:    
Cash  $ 802  $ 2,506
Accounts receivable  323,672  262,809
Receivables from derivative contracts  2,156  7,428
Current portion of deferred income taxes  8,214  5,307
Inventory  4,150  3,116
Prepaids and other  3,056  6,691
Total current assets  342,050  287,857
Oil and natural gas properties (full cost method):    
Evaluated  3,031,073  2,669,245
Unevaluated  2,478,181  2,326,598
Gross oil and natural gas properties  5,509,254  4,995,843
Less - accumulated depletion  (668,098)  (588,207)
Net oil and natural gas properties  4,841,156  4,407,636
Other operating property and equipment:    
Gas gathering and other operating assets  102,122  59,748
Less - accumulated depreciation  (9,087)  (8,119)
Net other operating property and equipment  93,035  51,629
Other noncurrent assets:    
Goodwill   229,221  227,762
Receivables from derivative contracts  1,515  371
Debt issuance costs, net of amortization  61,201  51,609
Equity in oil and natural gas partnerships  10,948  11,137
Funds in escrow  847  2,090
Other  882  934
Total assets  $ 5,580,855  $ 5,041,025
Current liabilities:    
Accounts payable and accrued liabilities  $ 706,558  $ 590,551
Liabilities from derivative contracts  22,297  10,429
Asset retirement obligations  2,424  2,319
Promissory notes  6,924  74,669
Total current liabilities  738,203  677,968
Long-term debt  2,501,038  2,034,498
Other noncurrent liabilities:    
Liabilities from derivative contracts  2,536  2,461
Asset retirement obligations  75,116  72,813
Deferred income taxes  161,963  160,055
Other  10  10
Commitments and contingencies    
Mezzanine equity:    
Preferred stock: 1,000,000 shares of $0.0001 par value authorized; none and 10,880 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively  --   695,238
Stockholders' equity:    
 Common stock: 670,000,000 and 336,666,666 shares of $0.0001 par value authorized; 369,754,373 and 259,802,37 shares issued; 369,754,373 and 258,152,468 outstanding at March 31, 2013 and December 31, 2012, respectively   37  26
Additional paid-in capital  2,370,950  1,681,717
Treasury stock: none and 1,649,909 shares at March 31, 2013 and     
 December 31, 2012, respectively, at cost  --   (9,298)
Accumulated deficit  (268,998)  (274,463)
Total stockholders' equity  2,101,989  1,397,982
Total liabilities and stockholders' equity  $ 5,580,855  $ 5,041,025
 
HALCÓN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
     
  Three Months Ended March 31,
  2013 2012
Cash flows from operating activities:    
Net income (loss)  $ 5,465  $ (33,322)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depletion, depreciation and accretion  81,858  5,979
Deferred income tax provision (benefit)  (999)  5,522
Share-based compensation, net  2,335  1,935
Unrealized loss (gain) on derivative contracts  16,071  4,851
Amortization and write-off of deferred loan costs  265  6,087
Non-cash interest and amortization of discount and premium  866  4,065
Other income  (1,013)  (12)
Cash flow from operations before changes in working capital  104,848  (4,895)
Changes in working capital, net of acquisitions  (49,569)  (4,304)
Net cash provided by (used in) operating activities  55,279  (9,199)
     
Cash flows from investing activities:    
Oil and natural gas capital expenditures  (389,543)  (23,986)
Other operating property and equipment capital expenditures  (36,483)  (629)
Acquisition of Williston Basin Assets  (29,895)  --
Funds held in escrow and other  1,328  (3,763)
Net cash provided by (used in) investing activities  (454,593)  (28,378)
     
Cash flows from financing activities:    
Proceeds from borrowings  844,000  237,410
Repayments of borrowings  (434,476)  (208,000)
Debt issuance costs  (11,483)  (4,495)
Offering costs  (431)  (18,056)
Common stock repurchased  --  (2,139)
Preferred stock issued  --  311,556
Preferred beneficial conversion feature  --  88,445
Common stock issued  --  275,000
Warrants issued  --  43,590
Net cash provided by (used in) financing activities  397,610  723,311
     
Net increase (decrease) in cash   (1,704)  685,734
     
Cash at beginning of period  2,506  49
Cash at end of period  $ 802  $ 685,783
 
HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA
(Unaudited)
     
  Three Months Ended March 31,
  2013 2012
     
Production volumes:    
Oil (MBbls) 1,931 226
Natural gas (Mmcf) 1,811 615
Natural gas liquids (MBbls) 109 40
Total (MBoe) 2,342 369
Average daily production (Boe) 26,022 4,055
     
Average prices:    
Oil (per Bbl)  $ 93.62  $ 101.76
Natural gas (per Mcf)  3.06  2.71
Natural gas liquids (per Bbl)  34.94  54.23
Total per Boe  81.18  72.72
     
Cash effect of derivative contracts:    
Oil (per Bbl)  $ (1.48)  $ (0.62)
Natural gas (per Mcf)  0.28  1.16
Natural gas liquids (per Bbl)  --   -- 
Total per Boe  (1.00)  1.56
     
Average prices computed after cash effect of settlement of derivative contracts:    
Oil (per Bbl)  $ 92.14  $ 101.14
Natural gas (per Mcf)  3.34  3.87
Natural gas liquids (per Bbl)  34.94  54.23
Total per Boe  80.18  74.28
     
Average cost per Boe:    
Production:    
Lease operating  $ 10.86  $ 20.33
Workover and other  0.69  2.26
Taxes other than income  7.44  5.22
General and administrative, as adjusted (1)  11.72  19.41
Restructuring costs  0.29  0.28
Depletion  34.11  14.53
     
(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:    
     
General and administrative:    
General and administrative, as reported  $ 13.49  $ 55.05
Share-based compensation:    
Cash   --   (4.89)
Non-cash  (1.00)  (6.74)
Recapitalization and change in control:    
Cash   --   -- 
Non-cash  --   (24.01)
Acquisition and merger transaction costs:    
Cash   (0.77)  -- 
General and administrative, as adjusted  $ 11.72  $ 19.41
     
Total operating costs, as reported  $ 32.48  $ 82.86
 Total adjusting items  (1.77)  (35.64)
Total operating costs, as adjusted (2)  $ 30.71  $ 47.22
     
(2) Represents lease operating, workover and other expense, taxes other than income, 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 March 31,
  2013 2012
     
Unrealized loss (gain) on derivatives contracts: (1)    
 Crude oil  $ 13,644  $ 5,574
 Natural gas   3,155  (112)
 Interest rate  --   (518)
Total mark-to-market non-cash charge  16,799  4,944
Recapitalization expenditures (2)  --   21,467
Restructuring (3)  671  104
Acquisition and merger transaction costs and other (4)   1,810  -- 
Selected items, before income taxes and preferred dividend  19,280  26,515
Income tax effect of selected items (5)  (7,247)  4,083
Selected items, net of tax and before preferred dividend  12,033  30,598
Non-cash preferred dividend (6)  --   1,102
Selected items, net of tax  12,033  31,700
Net income (loss) available to common stockholders, as reported  5,465  (34,424)
Net income (loss) available to common stockholders, excluding selected items  $ 17,498  $ (2,724)
     
     
Basic net income (loss) per common share, as reported  $ 0.02  $ (0.50)
Impact of selected items  0.03  0.46
Basic net income (loss) per common share, excluding selected items  $ 0.05  $ (0.04)
     
Diluted net income (loss) per common share, as reported  $ 0.01  $ (0.50)
Impact of selected items  0.04  0.46
Diluted net income (loss) per common share, excluding selected items  $ 0.05  $ (0.04)
     
     
Cash flow from operations before changes in working capital  $ 104,848  $ (4,895)
Cash components of selected items  2,481  13,257
Income tax effect of selected items (5)  (933)  (2,041)
Cash flow from operations before changes in working capital, adjusted for selected items  $ 106,396  $ 6,321
     
Cash flow from operations before changes in working capital per diluted share  $ 0.27  $ (0.07)
Impact of selected items  0.01  0.16
Cash flow from operations before changes in working capital per diluted share, adjusted for selected items  $ 0.28  $ 0.09
     
(1) Represents the non-cash unrealized (gain) loss associated with the mark-to-market valuation of outstanding derivative contracts.
(2) Represents costs related to the recapitalization, change in control and credit facility refinancing.
(3) Represents costs related to relocating key administrative functions to corporate headquarters.
(4) Represents costs primarily related to acquisitions of producing properties and mergers.
(5) Represents tax impact using an estimated tax rate of 37.6%
(6) Represents amortization of the non-cash preferred dividend as a result of the beneficial conversion feature of convertible preferred stock.
CONTACT: Scott Zuehlke
         Vice President of Investor Relations
         832-538-0314
         szuehlke@halconresources.com

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