NEW YORK (TheStreet) -- Halcon Resources (HK) was falling -2.5% to $6.24 Monday on news that Apollo Global Management (APO) will invest up to $400 million in a subsidiary that will hold all of its 314,000 acres in the Tuscaloosa Marine Shale in Louisiana and Mississippi.
Apollo will contribute $150 million for 150,000 preferred shares of the subsidiary with an option to buy an additional 250,000 additional shares. Apollo will receive up to 4% overriding royalty interest from 75 wells that will be drilled in the area.
Halcon said the Horeshoe Hill 11-22-H-1 well had an initial daily production rate of 1,208 bbl of oil and 1.1 million cf of natural gas. The company plans to start drilling 10 to 12 wells in the Tuscaloosa Marine Shale, and expects to participate in 15 to 20 non-operated wells.
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TheStreet Ratings team rates HALCON RESOURCES CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HALCON RESOURCES CORP (HK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."