HOUSTON, July 28, 2016 (GLOBE NEWSWIRE) -- Halcón Resources Corporation (NYSE:HK) ("Halcón" or the "Company") today announced its second quarter 2016 results.

Production for the three months ended June 30, 2016 averaged 35,879 barrels of oil equivalent per day (Boe/d).  Production was comprised of 77% oil, 11% natural gas liquids (NGLs) and 12% natural gas for the quarter.  The Company shut-in approximately 5,000 Boe/d of net production during the second quarter due to low commodity prices. 

Halcón generated total revenues of $106.1 million for the second quarter of 2016.  In addition, Halcón realized a net gain on settled derivative contracts of $80.8 million during the quarter. 

Excluding the impact of hedges, Halcón realized 87% of the average NYMEX oil price, 20% of the average NYMEX oil price for NGLs and 70% of the average NYMEX natural gas price during the second quarter of 2016. 

Total operating costs per unit were $21.40 per Boe during the second quarter.  After adjusting for selected items, total operating costs per unit (see Selected Operating Data table for additional information), were $17.43 per Boe and $17.02 per Boe for the three and six months ended June 30, 2016, respectively, an 8% decline from the six month period ended a year earlier. 

Halcón reported a net loss available to common stockholders of $382.4 million, or $3.17 per diluted share for the second quarter.  After adjusting for selected items primarily related to a non-cash, pre-tax full cost ceiling impairment charge and a non-cash, pre-tax unrealized loss on derivative contracts (see Selected Item Review and Reconciliation table for additional information), net income was $37.7 million, or $0.26 per diluted share for the second quarter of 2016. 

Restructuring Update

As previously announced, the Company has filed for an accelerated pre-packaged bankruptcy under Chapter 11 of the bankruptcy code to affect a comprehensive balance sheet restructuring.  Halcón anticipates emerging from bankruptcy 45 to 60 days from the date of filing.  The Company expects its common shares to continue to be listed on the NYSE during bankruptcy although no assurance can be made that this will be the case.  Halcón plans to operate as usual during the restructuring process and will continue to pay all royalty owners, suppliers and vendors in full consistent with normal terms.

Liquidity and Capital Spending

As of June 30, 2016 Halcón's liquidity was approximately $373 million, which consisted of $450 million of revolver availability less $101 million drawn on the revolver plus $24 million in cash and cash equivalents.  The Company agreed to limit the availability under its revolving credit facility from $700 million to $450 million as part of the waiver agreement it executed with its bank group on May 26, 2016.  The Company has a commitment from its bank group, led by JP Morgan and Wells Fargo, for a $600 million debtor in possession credit facility (the "DIP") with $500 million of availability once the interim order approving the DIP is received from the bankruptcy court.  The DIP will convert to a reserve-based revolving credit facility with $600 million in availability upon its exit from bankruptcy. 

During the second quarter of 2016, the Company incurred capital costs of $43 million on drilling and completions, and $1 million on infrastructure, seismic and leasehold acquisitions.  In addition, Halcón incurred $24 million for capitalized interest, G&A and other in the second quarter.   

Hedging Update

Halcón has 22,000 barrels per day of oil hedged for the last six months of 2016 at an average price of $81.44 per barrel.  For 2017, the Company has 3,750 barrels per day of oil hedged at an average price of $65.75 per barrel.  Halcón estimates the pre-tax mark-to-market value of its hedge portfolio to be approximately $162 million as of July 27, 2016.

Operations Update

The Company is currently running 1 operated rig in the Fort Berthold area of the Williston Basin and plans to keep this rig running through the remainder of 2016.  Halcón has no other operated rigs running and the Company does not plan additional rigs until oil prices improve.  The Company currently has 12 wells in the Bakken being completed or waiting on completion. Halcon also recently commenced completion operations on two wells in its Tuscaloosa Marine Shale area that were drilled in 2015. 

Bakken/Three Forks

The Company operated an average of 1 rig in the Williston Basin during the second quarter of 2016.

Halcón spudded 4 wells and put 13 wells online in the Fort Berthold area of the Williston Basin during the three months ended June 30, 2016. The Company did not participate in any non-operated wells during the quarter.  Production averaged 25,633 Boe/d during the second quarter of 2016 in the Williston Basin.

Halcón currently has working interests in approximately 119,000 net acres prospective for the Bakken and Three Forks formations in the Williston Basin, substantially all of which is held by production (HBP). With one operated rig running, the Company plans to spud 10 to 15 gross operated wells over the remaining six months of 2016 with an average working interest of approximately 68%. Halcón also expects to participate in 15 to 20 gross non-operated wells over the last six months of 2016 with an average working interest of approximately 5%.  Halcón expects operated wells put online over the remainder of 2016 to have an average EUR of approximately 900 MBoe.  Current operated drilling and completion costs are $6.2 million in FBIR and $5.7 million in Williams County.

The Company is currently the operator of 214 producing Bakken wells and 68 Three Forks wells.

"El Halcón" - East Texas Eagle Ford

The Company did not run an operated rig in El Halcón during the second quarter of 2016.

Halcón put 3 wells online in the El Halcón area during the second quarter.  Production averaged 7,900 Boe/d during the second quarter of 2016 in El Halcón.

Halcón currently has working interests in approximately 83,000 net acres prospective for the Eagle Ford formation in East Texas, approximately 79% of which is HBP. The Company currently operates 112 El Halcón wells.  Halcón anticipates adding a rig back to this area when oil prices improve. 

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.

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, the ability to confirm and consummate a plan of reorganization in accordance with the terms of the restructuring support agreement; risks attendant to the bankruptcy process, including the effects thereof on the Company's business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization, potential adverse effects on the Company's liquidity or results of operations; increased costs to execute the reorganization, effects on market price of the Company's common stock and on the Company's ability to access the capital markets, and the risks set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and other filings submitted by the Company to the 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,
          2016       2015       2016       2015  
Operating revenues:                
  Oil, natural gas and natural gas liquids sales:                
    Oil   $ 99,095     $ 158,110     $ 174,062     $ 282,523  
    Natural gas     3,159       5,578       6,901       12,537  
    Natural gas liquids     3,504       3,889       5,441       7,957  
    Total oil, natural gas and natural gas liquids sales     105,758       167,577       186,404       303,017  
  Other     389       447       1,092       1,201  
    Total operating revenues     106,147       168,024       187,496       304,218  
                     
Operating expenses:                
  Production:                
    Lease operating     16,981       25,233       37,559       59,018  
    Workover and other     7,915       3,731       15,706       6,845  
    Taxes other than income     9,753       12,903       17,011       25,144  
  Gathering and other     10,519       7,746       21,903       21,492  
  Restructuring     189       309       5,073       2,230  
  General and administrative     24,708       22,662       66,324       47,071  
  Depletion, depreciation and accretion     39,671       101,194       94,937       220,338  
  Full cost ceiling impairment     257,869       948,633       754,769       1,502,636  
  Other operating property and equipment impairment     -       -       28,056       -  
    Total operating expenses     367,605       1,122,411       1,041,338       1,884,774  
                     
Income (loss) from operations     (261,458 )     (954,387 )     (853,842 )     (1,580,556 )
                     
Other income (expenses):                
  Net gain (loss) on derivative contracts     (54,523 )     (87,564 )     (35,781 )     12,184  
  Interest expense and other, net     (58,322 )     (60,922 )     (106,113 )     (122,229 )
  Gain (loss) on extinguishment of debt     -       22,766       81,434       22,766  
  Gain (loss) on extinguishment of Convertible Note and                                
  modification of February 2012 Warrants     -       (8,219 )     -       (8,219 )
    Total other income (expenses)     (112,845 )     (133,939 )     (60,460 )     (95,498 )
Income (loss) before income taxes     (374,303 )     (1,088,326 )     (914,302 )     (1,676,054 )
Income tax benefit (provision)     -       (286 )     -       (199 )
Net income (loss)     (374,303 )     (1,088,612 )     (914,302 )     (1,676,253 )
Series A preferred dividends     (3,198 )     (4,902 )     (6,396 )     (9,803 )
Preferred dividends and accretion on redeemable noncontrolling interest   (4,852 )     (11,067 )     (28,517 )     (19,718 )
Net income (loss) available to common stockholders   $ (382,353 )   $ (1,104,581 )   $ (949,215 )   $ (1,705,774 )
                     
Net income (loss) per share of common stock:                
    Basic   $ (3.17 )   $ (10.13 )   $ (7.89 )   $ (17.66 )
    Diluted   $ (3.17 )   $ (10.13 )   $ (7.89 )   $ (17.66 )
Weighted average common shares outstanding:                
    Basic     120,708       109,063       120,360       96,569  
    Diluted     120,708       109,063       120,360       96,569  
                     

HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
         
    June 30,   December 31,
      2016       2015  
Current assets:      
  Cash $ 7,173     $ 8,026  
  Accounts receivable   112,855       173,624  
  Receivables from derivative contracts   135,455       348,861  
  Restricted cash   17,164       16,812  
  Inventory   1,498       4,635  
  Debt issuance costs, net   5,557       -  
  Prepaids and other   8,694       4,635  
  Total current assets   288,396       556,593  
Oil and natural gas properties (full cost method):      
  Evaluated   7,679,917       7,060,721  
  Unevaluated   1,180,148       1,641,356  
  Gross oil and natural gas properties   8,860,065       8,702,077  
  Less - accumulated depletion   (6,779,116 )     (5,933,688 )
  Net oil and natural gas properties   2,080,949       2,768,389  
Other operating property and equipment:      
  Gas gathering and other operating assets   100,355       130,090  
  Less - accumulated depreciation   (23,155 )     (22,435 )
  Net other operating property and equipment   77,200       107,655  
Other noncurrent assets:      
  Receivables from derivative contracts   5,642       16,614  
  Debt issuance costs, net   -       7,633  
  Equity in oil and natural gas partnership   11       209  
  Funds in escrow and other   1,613       1,599  
Total assets $ 2,453,811     $ 3,458,692  
         
Current liabilities:      
  Accounts payable and accrued liabilities $ 242,189     $ 295,085  
  Asset retirement obligations   412       163  
  Current portion of long-term debt, net   2,825,807       -  
  Total current liabilities   3,068,408       295,248  
Long-term debt, net   -       2,873,637  
Other noncurrent liabilities:      
  Liabilities from derivative contracts   194       290  
  Asset retirement obligations   48,554       46,853  
  Other   9,283       6,264  
Commitments and contingencies      
Mezzanine equity:      
  Redeemable noncontrolling interest   212,503       183,986  
Stockholders' equity (deficit):      
  Preferred stock: 1,000,000 shares of $0.0001 par value authorized; 222,454 and 244,724      
  shares of 5.75% Cumulative Perpetual Convertible Series A, issued and outstanding      
  at June 30, 2016 and December 31, 2015, respectively   -       -  
  Common stock: 1,340,000,000 shares of $0.0001 par value authorized;      
  122,647,511 and 122,523,559 shares issued and outstanding      
  at June 30, 2016 and December 31, 2015, respectively   12       12  
  Additional paid-in capital   3,288,371       3,283,097  
  Accumulated deficit   (4,173,514 )     (3,230,695 )
  Total stockholders' equity (deficit)   (885,131 )     52,414  
Total liabilities and stockholders' equity (deficit) $ 2,453,811     $ 3,458,692  
                 

HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                     
        Three Months Ended June 30,   Six Months Ended June 30,
          2016       2015       2016       2015  
Cash flows from operating activities:                
Net income (loss)   $ (374,303 )   $ (1,088,612 )   $ (914,302 )   $ (1,676,253 )
Adjustments to reconcile net income (loss) to net cash                
provided by (used in) operating activities:                
  Depletion, depreciation and accretion     39,671       101,194       94,937       220,338  
  Full cost ceiling impairment     257,869       948,633       754,769       1,502,636  
  Other operating property and equipment impairment     -       -       28,056       -  
  Share-based compensation, net     1,507       3,438       3,652       8,210  
  Unrealized loss (gain) on derivative contracts     135,303       175,712       224,281       183,713  
  Amortization and write-off of deferred loan costs     1,278       2,533       3,024       4,092  
  Non-cash interest and amortization of discount and premium     718       602       1,269       1,709  
  Loss (gain) on extinguishment of debt     -       (22,766 )     (81,434 )     (22,766 )
  Loss (gain) on extinguishment of Convertible Note and modification                
    of February 2012 Warrants     -       8,219       -       8,219  
  Accrued settlements on derivative contracts     9,810       10,811       (23,072 )     (26,781 )
  Other income (expense)     2,048       2,467       3,973       5,008  
Cash flow from operations before changes in working capital     73,901       142,231       95,153       208,125  
Changes in working capital     34,468       (18,636 )     47,590       9,405  
Net cash provided by (used in) operating activities     108,369       123,595       142,743       217,530  
                     
Cash flows from investing activities:                
  Oil and natural gas capital expenditures     (53,499 )     (143,125 )     (170,258 )     (407,751 )
  Other operating property and equipment capital expenditures     (240 )     (3,133 )     (886 )     (7,478 )
  Funds held in escrow and other     118       2,053       (233 )     3,012  
Net cash provided by (used in) investing activities     (53,621 )     (144,205 )     (171,377 )     (412,217 )
                     
Cash flows from financing activities:                
  Proceeds from borrowings     139,000       935,000       425,000       1,296,000  
  Repayments of borrowings     (195,000 )     (912,000 )     (395,648 )     (1,129,000 )
  Debt issuance costs     (1 )     (18,612 )     (1,186 )     (18,612 )
  Common stock issued     -       9,335       -       15,354  
  Restricted cash     (174 )     (161 )     (325 )     (352 )
  Offering costs and other     (3 )     (1,590 )     (60 )     (2,443 )
Net cash provided by (used in) financing activities     (56,178 )     11,972       27,781       160,947  
                     
Net increase (decrease) in cash       (1,430 )     (8,638 )     (853 )     (33,740 )
                     
Cash at beginning of period     8,603       18,611       8,026       43,713  
Cash at end of period   $ 7,173     $ 9,973     $ 7,173     $ 9,973  
                     

HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA (Unaudited)
                 
    Three Months Ended June 30,   Six Months Ended June 30,
      2016       2015       2016       2015  
                 
Production volumes:                
Crude oil (MBbls)     2,498       3,007       5,274       6,103  
Natural gas (MMcf)     2,322       2,509       4,842       5,144  
Natural gas liquids (MBbls)     380       333       781       675  
Total (MBoe)     3,265       3,758       6,862       7,635  
Average daily production (Boe/d)     35,879       41,297       37,703       42,182  
                 
Average prices:                
Crude oil (per Bbl)   $ 39.67     $ 52.58     $ 33.00     $ 46.29  
Natural gas (per Mcf)     1.36       2.22       1.43       2.44  
Natural gas liquids (per Bbl)     9.22       11.68       6.97       11.79  
Total per Boe     32.39       44.59       27.16       39.69  
                 
Cash effect of derivative contracts:                
Crude oil (per Bbl)   $ 32.19     $ 28.60     $ 35.60     $ 31.48  
Natural gas (per Mcf)     0.16       0.85       0.15       0.73  
Natural gas liquids (per Bbl)     -       -       -       -  
Total per Boe     24.74       23.46       27.47       25.66  
                 
Average prices computed after cash effect of settlement of derivative contracts:              
Crude oil (per Bbl)   $ 71.86     $ 81.18     $ 68.60     $ 77.77  
Natural gas (per Mcf)     1.52       3.07       1.58       3.17  
Natural gas liquids (per Bbl)     9.22       11.68       6.97       11.79  
Total per Boe     57.13       68.05       54.63       65.35  
                 
Average cost per Boe:                
Production:                
Lease operating   $ 5.20     $ 6.71     $ 5.47     $ 7.73  
Workover and other     2.42       0.99       2.29       0.90  
Taxes other than income     2.99       3.43       2.48       3.29  
Gathering and other, as adjusted (1)     2.27       1.78       2.25       1.89  
Restructuring     0.06       0.08       0.74       0.29  
General and administrative, as adjusted (1)     4.55       4.60       4.53       4.77  
Depletion     11.55       26.26       13.21       28.20  
                 
(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   $ 7.57     $ 6.03     $ 9.66     $ 6.17  
Share-based compensation:                
Non-cash     (0.46 )     (0.91 )     (0.53 )     (1.08 )
Transaction costs, key employee retention agreements and other:                
Cash     (2.56 )     (0.52 )     (4.60 )     (0.32 )
General and administrative, as adjusted   $ 4.55     $ 4.60     $ 4.53     $ 4.77  
                 
Gathering and other, as reported   $ 3.22     $ 2.06     $ 3.19     $ 2.81  
Rig termination / stacking charges     (0.95 )     (0.28 )     (0.94 )     (0.92 )
Gathering and other, as adjusted   $ 2.27     $ 1.78     $ 2.25     $ 1.89  
                 
Total operating costs, as reported   $ 21.40     $ 19.22     $ 23.09     $ 20.90  
Total adjusting items     (3.97 )     (1.71 )     (6.07 )     (2.32 )
Total operating costs, as adjusted (2)   $ 17.43     $ 17.51     $ 17.02     $ 18.58  
                 
(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,
      2016       2015       2016       2015  
As Reported:                
Net income (loss) available to common stockholders, as reported   $ (382,353 )   $ (1,104,581 )   $ (949,215 )   $ (1,705,774 )
Series A preferred dividends     3,198       4,902       6,396       9,803  
Preferred dividends and accretion on redeemable noncontrolling interest     4,852       11,067       28,517       19,718  
Net income (loss), as reported     (374,303 )     (1,088,612 )     (914,302 )     (1,676,253 )
                 
Impact of Selected Items:                
Unrealized loss (gain) on derivatives contracts:                
Crude oil   $ 134,701     $ 173,329     $ 223,542     $ 180,910  
Natural gas     602       2,383       739       2,803  
Total mark-to-market non-cash charge     135,303       175,712       224,281       183,713  
Full cost ceiling impairment     257,869       948,633       754,769       1,502,636  
Other operating property and equipment impairment     -       -       28,056       -  
Loss (gain) on extinguishment of debt     -       (22,766 )     (81,434 )     (22,766 )
Loss (gain) on extinguishment of Convertible Note and modification of February 2012 Warrants     -       8,219       -       8,219  
Deferred financing costs expensed, net (1)     -       879       665       879  
Restructuring     189       309       5,073       2,230  
Rig termination / stacking charges, key employee retention agreements and other     13,498       5,349       41,022       16,897  
Selected items, before income taxes     406,859       1,116,335       972,432       1,691,808  
Income tax effect of selected items (2)     -       (18,819 )     -       (22,675 )
Selected items, net of tax     406,859       1,097,516       972,432       1,669,133  
                 
As Adjusted:                
Net income (loss) available to common stockholders, excluding selected items   $ 32,556     $ 8,904     $ 58,130     $ (7,120 )
Interest on Convertible Note, net     5,115       -       9,255       -  
Net income (loss) available to common stockholders after assumed conversions, excluding selected items (3)   $ 37,671     $ 8,904     $ 67,385     $ (7,120 )
                 
Basic net income (loss) per common share, as reported   $ (3.17 )   $ (10.13 )   $ (7.89 )   $ (17.66 )
Impact of selected items     3.44       10.21       8.37       17.59  
Basic net income (loss) per common share, excluding selected items (3)   $ 0.27     $ 0.08     $ 0.48     $ (0.07 )
                 
Diluted net income (loss) per common share, as reported   $ (3.17 )   $ (10.13 )   $ (7.89 )   $ (17.66 )
Impact of selected items     3.43       10.21       8.36       17.59  
Diluted net income (loss) per common share, excluding selected items (3)(4)   $ 0.26     $ 0.08     $ 0.47     $ (0.07 )
                 
                 
Net cash provided by (used in) operating activities   $ 108,369     $ 123,595     $ 142,743     $ 217,530  
Changes in working capital     (34,468 )     18,636       (47,590 )     (9,405 )
Cash flow from operations before changes in working capital     73,901       142,231       95,153       208,125  
Cash components of selected items     1,831       (7,511 )     65,286       41,019  
Income tax effect of selected items (2)     -       2,782       -       (5,274 )
Cash flow from operations before changes in working capital, adjusted for selected items (4)   $ 75,732     $ 137,502     $ 160,439     $ 243,870  
                 
                 
(1) Represents charges related to the write-off of debt issuance costs associated with decreases in the Company's borrowing base under its senior revolving credit facility.
(2) For the 2016 columns this represents tax impact using an estimated tax rate of 0.0% due to the Company maintaining a full valuation allowance.
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.
(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. 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.
(4) The impact of selected items for the three months ended June 30, 2016 and 2015 was calculated based upon weighted average diluted shares of 144.5 million and 109.2 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, 2016 was calculated based upon weighted average diluted shares of 144.1 million due to the net income available to common  stockholders, excluding selected items.
                 

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