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TheStreet Open House

Halcon Resources Announces Third Quarter 2013 Financial Results And Provides 2014 Outlook

Stocks in this article: HK

The Company recently closed on two of the three previously disclosed divestitures of certain non-core conventional assets. Halcón anticipates closing on the third divestiture by the end of 2013. In aggregate, as of December 31, 2012, estimated proved reserves associated with these non-core conventional assets were approximately 19.9 million barrels of oil equivalent, 67% of which was proved developed. Proved reserves were approximately 82% oil and NGLs, and these assets produced an average of approximately 4,300 Boe/d in the third quarter of 2013. As previously disclosed, total consideration for the divestment of these non-core conventional assets is estimated to be approximately $300 million, prior to closing adjustments.

The Company is reiterating previously issued 2013 production guidance of 30,000 to 34,000 Boe/d; despite the impact to fourth quarter production from the divestiture of certain non-core conventional assets. On a pro forma basis, adjusting for the impact of Halcón's 2013 acquisition and divestiture activity, previously issued 2013 production guidance would be reduced by approximately 4,000 Boe/d.

The borrowing base on the Company's revolving credit facility was recently increased to $850 million from $710 million in conjunction with Halcón's regular fall redetermination. The borrowing base will be reduced to $800 million upon closing of the third non-core conventional asset divestiture. The Company anticipates it will continue to strategically divest non-core assets in 2014.

Pro forma for the borrowing base redetermination and non-core conventional asset sales, Halcón's liquidity as of September 30, 2013 was $869.2 million, which consisted of cash on hand plus undrawn capacity on its senior secured revolving credit facility.

On October 31, 2013, the Company'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 from September 1, 2013 through November 30, 2013. Halcón will pay the dividend on December 2, 2013 to holders of record on November 15, 2013. The dividend payments on all of the outstanding Series A Cumulative Perpetual Preferred Stock will total approximately $5.0 million, and will be paid in shares of common stock having a fair market value (as determined under the certificate of designation governing such preferred stock) equal to the aggregate dividend amount. The Company will pay cash in lieu of issuing any fractional shares.

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