HOUSTON, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Halcón Resources Corporation (NYSE:HK) ("Halcón" or the "Company") today announced its third quarter 2017 results, provided an update on recent well results and operations and provided financial guidance for 2018.

Production for the three months ended September 30, 2017 averaged 28,859 barrels of oil equivalent per day (Boe/d).  Production was comprised of 76% oil, 12% natural gas liquids (NGLs) and 12% natural gas for the quarter. 

Halcón generated total revenues of $97.0 million for the third quarter of 2017.  The Company reported net income available to common stockholders of $419.3 million for the quarter.  Halcón also reported net income per basic and diluted share of $2.85 and $2.82, respectively, for the third quarter of 2017.  After adjusting for selected items (see Selected Item Review and Reconciliation table for additional information), the Company generated a net loss of $9.0 million, or $(0.06) per diluted share for the third quarter of 2017.  Adjusted EBITDA (see EBITDA Reconciliation table for additional information) totaled $54.5 million for the third quarter of 2017. 

Excluding the impact of hedges, Halcón realized 91% of the average NYMEX oil price, 34% of the average NYMEX oil price for NGLs and 51% of the average NYMEX natural gas price during the third quarter of 2017.  Realized hedge proceeds totaled approximately $8.8 million for the third quarter. 

Total operating costs per unit, after adjusting for selected items (see Selected Operating Data table for additional information), were $19.30 per Boe during the three months ended September 30, 2017, compared to $17.33 per Boe for the same period in 2016.  This increase in per unit total operating costs was primarily driven by the loss of economies of scale related to reduced year over year production driven by the Company's divestiture of both its Williston Basin operated assets and its El Halcón assets. 

Asset Sales

As previously announced, the Company closed on the sale of its operated Williston Basin assets for $1.4 billion in cash on September 7, 2017.  Halcón also closed on the previously announced sale of its non-operated Williston Basin asset for ~$105 million on November 9, 2017.  UBS Investment Bank advised the Company on this asset divestiture.  After these divestitures, Halcón's remaining assets in the Delaware Basin are currently producing approximately 5,500 Boe/d. 

Liquidity and Capital Spending 

As of September 30, 2017, Halcón's liquidity was $646 million pro forma for the sale of the remaining non-operated Williston Basin assets, the closing of the redemption of 50% of its outstanding 6.75% unsecured notes and the exercise of an option to acquire 8,320 net acres in its Northern Monument Draw area.  This liquidity consists of $549 million of cash on hand plus an undrawn senior secured revolving credit facility with a borrowing base of $100 million less letters of credit outstanding. 

During the third quarter of 2017, Halcón incurred capital costs of approximately $103 million on drilling and completions, $11 million on infrastructure and seismic and $15 million on acquisitions and leasing.      

Hedging Update

As of November 9, 2017, Halcón had 5,413 barrels per day (bbl/d) of oil hedged for the last three months of 2017 at an average price of $59.02 per barrel.  For 2018, the Company has 9,510 bbl/d of oil hedged at an average price of $52.65 per barrel.  For 2019, the Company has 3,247 bbl/d of oil hedged at an average price of $52.31 per barrel.  Halcón also has Midland vs. Cushing basis differential swaps in place for 10,526 bbl/d in 2018 at an average swap price of -$1.23 per barrel and 12,000 bbl/d in 2019 at an average swap price of -$1.02 per barrel.

As of November 9, 2017, Halcón had 5,000 million British thermal units per day (MMBtu/d) of natural gas hedged for the last three months of 2017 at an average price of $3.51 per MMBtu.  The Company also had 7,500 MMBtu/d of natural gas hedged in 2018 at an average price of $3.16 per MMBtu. 

Operations Update

Halcón's Hackberry Draw area in Pecos County consists of 26,453 net acres and 24 producing horizontal wells (22 Wolfcamp A and 2 Wolfcamp B).  The Company's  Monument Draw area in Ward and Winkler Counties consists of 17,266 net acres and one producing upper Wolfcamp horizontal well.

Halcón currently has three operated rigs running, one dedicated frac fleet and one spot frac fleet completing wells in both its Hackberry Draw and Monument Draw areas.  The Company plans to keep three operated rigs and one dedicated frac fleet running across its two operating areas for the remainder of 2017 and into 2018.  Halcón also plans to bring a spot frac fleet to complete wells from time to time throughout 2018. 

Halcón is currently drilling a Third Bone Spring well and two Wolfcamp A wells.  The Company is flowing back two Wolfcamp B wells after completion, is currently completing one Wolfcamp A and one Wolfcamp B well and has five additional wells waiting on completion (one Wolfcamp B and four Wolfcamp A).  Halcón expects to spud an additional seven wells through year-end 2017 (six Wolfcamp A and one Wolfcamp B).  The Company plans to complete and put online three additional horizontal wells before year-end (one Wolfcamp B and two Wolfcamp A) for a total of eight Halcón operated horizontal wells put online and producing by year end 2017.

The Company recently completed two ~10,000 foot lateral wells in Hackberry Draw, the Ethel Jesper East 1H (Wolfcamp A) and the Berkley State East 2H (Wolfcamp B). After being put online in early October, the Ethel Jesper East 1H reached a peak 24-hour IP rate of 1,344 boe/d. The most recent 20-day rate on this well is 780 boe/d and this rate continues to increase (81% oil on a 2-stream basis). This well's early performance is better than the offsetting Faye West Unit 1H (Wolfcamp A) which was put online in early 2016 and has an estimated EUR of 1.2 million boe (Mmboe). The Berkley State East 2H well is still cleaning up after frac. Halcón's first operated well in Hackberry Draw, the Balbo Adrianna 1H well, which was also the first Wolfcamp B well drilled on the Company's acreage, has been online for more than three months and continues to produce in excess of 1,000 boe/d and is estimated to have an EUR in excess of 1.3 Mmboe. 

In the Monument Draw area, the Company is currently completing the Sealy Ranch 9301 1H well (~10,000 foot lateral upper Wolfcamp) on Halcon's  Northern Option acreage.  The Northern Option acreage consists of 8,320 net acres held under an option contract while 6,720 net acres in the southern portion of Monument Draw are owned outright by Halcón.  The Company expects to have production data on the Sealy Ranch 9301 1H well in the coming weeks and plans to exercise the option on the northern acreage by December 31, 2017 at a cost of approximately $108 million. 

Floyd C. Wilson, Halcón's Chairman, Chief Executive Officer and President commented, "Our 2017 acquisition, divestment and financing activities have set us up to deliver strong, responsible growth over the next several years.  Our 2018 guidance assumes a three rig program and results in year over year pro forma production growth of 280%.  If we were to keep three rigs running through 2019, we would expect to achieve cash flow neutrality by the end of 2019 while generating significant growth with production of around 35,000 boe/d by year end 2019.  Higher oil prices would shorten the time to our achieving cash flow neutrality.  All of this can be accomplished without the need for additional capital while keeping our leverage levels very low.  We continue to like the performance we are seeing in our wells in addition to the wells of offset operators near our acreage positions.  Our drilling plans over the next year include a combination of development drilling, spacing tests, some delineation drilling in Monument Draw and a bit of drilling to hold acreage in Hackberry Draw.  In addition, we plan to test the Bone Spring in both areas over the next 6 months.  2018 will be an exciting year for Halcón as we focus on execution."

2018 Guidance

The table below outlines Halcón's guidance for the full year 2018.  
   
  Full Year 2018
Production (Boe/d)  
Total 15,000 - 19,000
% Oil 72% - 78%
% Gas 10% - 13%
% NGL 12% - 15%
   
Differentials (% Before Fees)  
% Oil 95% - 99%
% Gas 78% - 82%
% NGL 40% - 45%
   
Capex ($MM)  
D&C Capex (1) $280 - $320
Infrastructure, Seismic and Other Capex $30 - $40
   
Operating Costs and Expenses ($/Boe)  
Lease Operating & Workover $3.00 - $4.00
Production Taxes 6% - 7%
Cash G&A $6.50 - $8.50
Gathering, Transportation & Other $2.00 - $3.00
   
(1) Excludes capitalized G&A.  
   

Conference Call and Webcast Information

Halcón Resources Corporation (NYSE:HK) has scheduled a conference call for Friday, November 10, 2017, at 11:00 a.m. EST (10:00 a.m. CST). 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 98615131.  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.    

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 contains 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.  Forward-looking statements include, among others, statements about anticipated production, divestitures, liquidity, capital spending, drilling and completion plans, and option exercises.  Forward-looking statements 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, those set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 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.

"EUR," or Estimated Ultimate Recovery, refers to our management's internal estimates based on per well hydrocarbon quantities that may be potentially recovered from a hypothetical future well completed as a producer in the area.  These quantities do not constitute "reserves" within the meaning of the Society of Petroleum Engineer's Petroleum Resource Management System or SEC rules and are subject to substantially greater uncertainties relating to recovery than reserves.  For areas where the Company has no or very limited operating history, EURs are based on publicly available information relating to operations of producers operating in such areas.  For areas where the Company has sufficient operating data to make its own estimates, EURs are based on internal estimates by the Company's management and reserve engineers.
               
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
 
    Successor     Predecessor
        Period from     Period from
    Three Months   September 10, 2016     July 1, 2016
    Ended   through     through
    September 30, 2017   September 30, 2016     September 9, 2016
Operating revenues:              
Oil, natural gas and natural gas liquids sales:              
Oil   $ 88,256     $ 21,260       $ 74,002  
Natural gas     2,886       823         2,610  
Natural gas liquids     5,448       798         2,488  
Total oil, natural gas and natural gas liquids sales     96,590       22,881         79,100  
Other     363       226         247  
Total operating revenues     96,953       23,107         79,347  
               
Operating expenses:              
Production:              
Lease operating     17,798       3,791         12,473  
Workover and other     3,644       1,565         6,801  
Taxes other than income     6,846       2,173         7,442  
Gathering and other     10,886       2,637         7,376  
Restructuring     1,275       -         95  
General and administrative     39,195       16,681         17,317  
Depletion, depreciation and accretion     35,940       9,051         25,618  
Full cost ceiling impairment     -       420,934         -  
(Gain) loss on sale of oil and natural gas properties     (491,830 )     -         -  
Total operating expenses     (376,246 )     456,832         77,122  
Income (los s) from operations     473,199       (433,725 )       2,225  
Other inco me (expenses):              
Net gain (loss) on derivative contracts     (22,415 )     (7,575 )       17,783  
Interest expense and other, net     (19,330 )     (5,479 )       (16,136 )
Reorganization items     -       (556 )       913,722  
Gain (loss) on extinguishment of debt     (29,167 )     -         -  
Total other income (expenses)     (70,912 )     (13,610 )       915,369  
Income (loss) before income taxes     402,287       (447,335 )       917,594  
Income tax benefit (provision)     17,000       (3,357 )       8,666  
Net income (loss)     419,287       (450,692 )       926,260  
Series A preferred dividends     -       -         (2,451 )
Preferred dividends and accretion on redeemable noncontrolling interest     -       (791 )       (7,388 )
Net income (loss) available to common stockholders   $ 419,287     $ (451,483 )     $ 916,421  
               
Net income (loss) per share of common stock:              
Basic   $ 2.85     $ (4.96 )     $ 7.58  
Diluted   $ 2.82     $ (4.96 )     $ 6.06  
Weighted a verage common shares outstanding:              
Basic     146,944       91,071         120,905  
Diluted     148,490       91,071         151,876  
               

               
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Continued)
(In thousands, except per share amounts)
 
    Successor     Predecessor
        Period from     Period from
    Nine Months   September 10, 2016     January 1, 2016
    Ended   through     through
    September 30, 2017   September 30, 2016     September 9, 2016
Operating revenues:              
Oil, natural gas and natural gas liquids sales:              
Oil   $ 319,472     $ 21,260       $ 248,064  
Natural gas     15,051       823         9,511  
Natural gas liquids     16,779       798         7,929  
Total oil, natural gas and natural gas liquids sales     351,302       22,881         265,504  
Other     1,386       226         1,339  
Total operating revenues     352,688       23,107         266,843  
               
Operating expenses:              
Production:              
Lease operating     58,822       3,791         50,032  
Workover and other     22,213       1,565         22,507  
Taxes other than income     29,149       2,173         24,453  
Gathering and other     34,640       2,637         29,279  
Restructuring     2,080       -         5,168  
General and administrative     86,966       16,681         83,641  
Depletion, depreciation and accretion     100,788       9,051         120,555  
Full cost ceiling impairment     -       420,934         754,769  
(Gain) loss on sale of oil and natural gas properties     (727,520 )     -         -  
Other operating property and equipment impairment     -       -         28,056  
Total operating expenses     (392,862 )     456,832         1,118,460  
Income (los s) from operations     745,550       (433,725 )       (851,617 )
Other inco me (expenses):              
Net gain (loss) on derivative contracts     28,139       (7,575 )       (17,998 )
Interest expense and other, net     (63,808 )     (5,479 )       (122,249 )
Reorganization items     -       (556 )       913,722  
Gain (loss) on extinguishment of debt     (86,065 )     -         81,434  
Total other income (expenses)      (121,734 )     (13,610 )       854,909  
Income (loss) before income taxes     623,816       (447,335 )       3,292  
Income tax benefit (provision)     5,000       (3,357 )       8,666  
Net income (loss)     628,816       (450,692 )       11,958  
Non-cash preferred dividend     (48,007 )     -         -  
Series A preferred dividends     -       -         (8,847 )
Preferred dividends and accretion on redeemable noncontrolling interest     -       (791 )       (35,905 )
Net income (loss) available to common stockholders   $ 580,809     $ (451,483 )     $ (32,794 )
               
Net income (loss) per share of common stock:              
Basic   $ 4.56     $ (4.96 )     $ (0.27 )
Diluted   $ 4.52     $ (4.96 )     $ (0.27 )
Weighted a verage common shares outstanding:              
Basic     127,458       91,071         120,513  
Diluted     128,410       91,071         120,513  
               

 
       
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
       
  Successor
  September 30, 2017   December 31, 2016
Current assets:      
Cash $ 989,347     $ 24  
Accounts receivable   108,753       147,762  
Receivables from derivative contracts   5,166       5,923  
Prepaids and other   12,171       6,940  
Total current assets   1,115,437       160,649  
Oil and natural gas properties (full cost method):      
Evaluated   782,695       1,269,034  
Unevaluated   757,401       316,439  
Gross oil and natural gas properties   1,540,096       1,585,473  
Less - accumulated depletion   (561,989 )     (465,849 )
Net oil and natural gas properties   978,107       1,119,624  
Other operating property and equipment:      
Other operating property and equipment   68,195       38,617  
Less - accumulated depreciation   (2,967 )     (1,107 )
Net other operating property and equipment   65,228       37,510  
Other noncurrent assets:      
Receivables from derivative contracts   1,444       -  
Funds in escrow and other   2,408       1,887  
Total assets $ 2,162,624     $ 1,319,670  
       
Current liabilities:      
Accounts payable and accrued liabilities $ 172,012     $ 186,184  
Liabilities from derivative contracts   3,279       16,434  
Current portion of long-term debt, net   408,879       -  
Other   8       4,935  
Total current liabilities   584,178       207,553  
Long-term debt, net   408,879       964,653  
Other noncurrent liabilities:      
Liabilities from derivative contracts   2,175       486  
Asset retirement obligations   5,116       31,985  
Other   288       2,305  
Commitments and contingencies      
Stockholders' equity:      
Common stock: 1,000,000,000 shares of $0.0001 par value authorized; 149,665,527 and 92,991,183 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively   15       9  
Additional paid-in capital   1,013,141       592,663  
Retained earnings (accumulated deficit)   148,832       (479,984 )
Total stockholders' equity   1,161,988       112,688  
Total liabilities and stockholders' equity $ 2,162,624     $ 1,319,670  
   

             
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
             
  Successor     Predecessor
      Period from     Period from
  Three Months   September 10, 2016     July 1, 2016
  Ended   through     through
  September 30, 2017   September 30, 2016     September 9, 2016
Cash flows from operating activities:            
Net income (loss) $ 419,287     $ (450,692 )     $ 926,260  
Adjustments to reconcile net income (loss) to net cash            
provided by (used in) operating activities:            
Depletion, depreciation and accretion   35,940       9,051         25,618  
Full cost ceiling impairment   -       420,934         -  
(Gain) loss on sale of oil and natural gas properties   (491,830 )     -         -  
Share-based compensation, net   12,258       13,196         1,224  
Unrealized loss (gain) on derivative contracts   31,209       30,338         39,451  
Amortization and write-off of deferred loan costs   410       -         3,347  
Amortization of discount and premium   471       377         246  
Reorganization items   -       560         (929,084 )
Loss (gain) on extinguishment of debt   29,167       -         -  
Accrued settlements on derivative contracts   2,847       (22,695 )       23,072  
Other income (expense)   (3,128 )     (94 )       (8,206 )
Cash flow from operations before changes in working capital   36,631       975         81,928  
Changes in working capital   (57,052 )     11,347         (49,323 )
Net cash provided by (used in) operating activities   (20,421 )     12,322         32,605  
             
Cash flows from investing activities:            
Oil and natural gas capital expenditures   (97,670 )     (10,289 )       (56,325 )
Proceeds received from sale of oil and natural gas properties   1,424,272       -         -  
Acquisition of oil and natural gas properties   (9,189 )     -         (34 )
Other operating property and equipment capital expenditures   (11,739 )     (231 )       (64 )
Proceeds received from sale of other operating property and equipment   10,939       -         23  
Funds held in escrow and other   1,174       (1,721 )       3  
Net cash provided by (used in) investing activities   1,317,787       (12,241 )       (56,397 )
             
Cash flows from financing activities:            
Proceeds from borrowings   114,000       30,000         461,000  
Repayments of borrowings   (379,826 )     (32,000 )       (332,000 )
Cash payments to Noteholders and Preferred Holders   (39,986 )     (10,013 )       (97,521 )
Debt issuance costs   (397 )     -         (791 )
Offering costs and other   (1,831 )     -         (126 )
Net cash provided by (used in) financing activities   (308,040 )     (12,013 )       30,562  
             
Net increase (decrease) in cash     989,326       (11,932 )       6,770  
             
Cash at beginning of period   21       13,943         7,173  
Cash at end of period $ 989,347     $ 2,011       $ 13,943  
             

             
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)
(In thousands)
             
  Successor     Predecessor
      Period from     Period from
  Nine Months   September 10, 2016     January 1, 2016
  Ended   through     through
  September 30, 2017   September 30, 2016     September 9, 2016
Cash flows from operating activities:            
Net income (loss) $ 628,816     $ (450,692 )     $ 11,958  
Adjustments to reconcile net income (loss) to net cash            
provided by (used in) operating activities:            
Depletion, depreciation and accretion   100,788       9,051         120,555  
Full cost ceiling impairment   -       420,934         754,769  
(Gain) loss on sale of oil and natural gas properties   (727,520 )     -         -  
Other operating property and equipment impairment   -       -         28,056  
Share-based compensation, net   33,548       13,196         4,876  
Unrealized loss (gain) on derivative contracts   (11,010 )     30,338         263,732  
Amortization and write-off of deferred loan costs   1,306       -         6,371  
Amortization of discount and premium   2,358       377         1,515  
Reorganization items   (739 )     560         (929,084 )
Loss (gain) on extinguishment of debt   86,065       -         (81,434 )
Accrued settlements on derivative contracts   (673 )     (22,695 )       -  
Other income (expense)   (3,393 )     (94 )       (4,233 )
Cash flow from operations before changes in working capital   109,546       975         177,081  
Changes in working capital   (7,324 )     11,347         (1,733 )
Net cash provided by (used in) operating activities   102,222       12,322         175,348  
             
Cash flows from investing activities:            
Oil and natural gas capital expenditures   (218,880 )     (10,289 )       (226,741 )
Proceeds received from sale of oil and natural gas properties   1,901,578       -         (407 )
Acquisition of oil and natural gas properties   (916,676 )     -         124  
Acquisition of other operating property and equipment   (25,538 )     -         -  
Other operating property and equipment capital expenditures   (25,474 )     (231 )       (950 )
Proceeds received from sale of other operating property and equipment   21,291       -         138  
Funds held in escrow and other   1,459       (1,721 )       62  
Net cash provided by (used in) investing activities   737,760       (12,241 )       (227,774 )
             
Cash flows from financing activities:            
Proceeds from borrowings   1,349,000       30,000         886,000  
Repayments of borrowings   (1,497,826 )     (32,000 )       (727,648 )
Cash payments to Noteholders and Preferred Holders   (70,903 )     (10,013 )       (97,521 )
Debt issuance costs   (17,220 )     -         (1,977 )
Preferred stock issued   400,055       -         -  
Offering costs and other   (13,765 )     -         (511 )
Net cash provided by (used in) financing activities   149,341       (12,013 )       58,343  
             
Net increase (decrease) in cash     989,323       (11,932 )       5,917  
             
Cash at beginning of period   24       13,943         8,026  
Cash at end of period $ 989,347     $ 2,011       $ 13,943  
             

                 
HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA
(Unaudited)
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
      2017     2016 (5)     2017     2016 (5)
                 
Production volumes:                
Crude oil (MBbls)     2,007       2,377       7,108       7,651  
Natural gas (MMcf)     1,874       2,239       6,892       7,081  
Natural gas liquids (MBbls)     335       395       1,165       1,176  
Total (MBoe)     2,655       3,145       9,422       10,007  
Average daily production (Boe/d)     28,859       34,185       34,513       36,522  
                 
Average prices:                
Crude oil (per Bbl)   $ 43.97     $ 40.08     $ 44.95     $ 35.20  
Natural gas (per Mcf)     1.54       1.53       2.18       1.46  
Natural gas liquids (per Bbl)     16.26       8.32       14.40       7.42  
Total per Boe     36.38       32.43       37.29       28.82  
                 
Cash effect of derivative contracts:                
Crude oil (per Bbl)   $ 4.14     $ 33.56     $ 2.32     $ 34.97  
Natural gas (per Mcf)     0.26       0.10       0.10       0.13  
Natural gas liquids (per Bbl)     -       -       -       -  
Total per Boe     3.31       25.44       1.82       26.83  
                 
Average prices computed after cash effect of settlement of derivative contracts:              
Crude oil (per Bbl)   $ 48.11     $ 73.64     $ 47.27     $ 70.17  
Natural gas (per Mcf)     1.80       1.63       2.28       1.59  
Natural gas liquids (per Bbl)     16.26       8.32       14.40       7.42  
Total per Boe     39.69       57.87       39.11       55.65  
                 
Average cost per Boe:                
Production:                
Lease operating   $ 6.70     $ 5.17     $ 6.24     $ 5.38  
Workover and other     1.37       2.66       2.36       2.41  
Taxes other than income     2.58       3.06       3.09       2.66  
Gathering and other, as adjusted (1)     3.63       2.23       3.06       2.24  
Restructuring     0.48       0.03       0.22       0.52  
General and administrative, as adjusted (1)   5.02       4.21       4.08       4.43  
                 
(1) Represe nts 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   $ 14.77     $ 10.82     $ 9.23     $ 10.03  
Share-based compensation:                
Non-cash     (4.62 )     (4.59 )     (3.56 )     (1.81 )
Transaction costs, key employee retention agreements and other:                
Cash     (5.13 )     (2.02 )     (1.59 )     (3.79 )
General and administrative, as adjusted (2)   $ 5.02     $ 4.21     $ 4.08     $ 4.43  
                 
Gathering and other, as reported $ 4.10     $ 3.18     $ 3.68     $ 3.19  
  Rig termination / stacking charges   (0.47 )     (0.95 )     (0.62 )     (0.95 )
Gathering and other, as adjusted (3) $ 3.63     $ 2.23     $ 3.06     $ 2.24  
                 
Total operating costs, as reported   $ 29.52     $ 24.89     $ 24.60     $ 23.67  
  Total adjusting items     (10.22 )     (7.56 )     (5.77 )     (6.55 )
Total operating costs, as adjusted (4)   $ 19.30     $ 17.33     $ 18.83     $ 17.12  
                                 
(2) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash share-based compensation charges relating to equity awards under our incentive stock plans, as well as cash charges associated with transactions, key employee retention agreements and other costs incurred in connection with our restructuring. The Company believes that it is useful to understand the effects that these charges have on general and administrative expenses and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(3) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig termination and stacking charges incurred as a result of reductions in our drilling activities due to a dramatic decline in oil and natural gas prices beginning in 2014. The Company believes that it is useful to understand the effects that these charges have on gathering and other expense and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(4) 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.
(5) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three and nine-month periods ended September 30, 2016. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor may not be comparable to those of the Predecessor. The financial information preceding the table above provides the Successor and the Predecessor GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provide meaningful information about, for instance, production, revenues and costs, that assist a reader in understanding the Company's financial results for the applicable periods.               
 

                               
HALCÓN RESOURCES CORPORATION  
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)  
(In thousands, except per share amounts)  
                               
    Successor     Predecessor   Successor     Predecessor  
        Period from     Period from July 1, 2016       Period from     Period from January 1, 2016  
    Three Months   September 10, 2016       Nine Months   September 10, 2016      
    Ended   through     through   Ended   through     through  
    September 30, 2017   September 30, 2016     September 9, 2016   September 30, 2017   September 30, 2016     September 9, 2016  
As Reporte d:                              
Net income (loss) available to common stockholders, as reported   $ 419,287     $ (451,483 )     $ 916,421     $ 580,809     $ (451,483 )     $ (32,794 )  
Non-cash preferred dividend     -       -         -       48,007       -         -    
Series A preferred dividends     -       -         2,451       -       -         8,847    
Preferred dividends and accretion on redeemable noncontrolling interest     -       791         7,388       -       791         35,905    
Net income (loss), as reported   419,287       (450,692 )       926,260       628,816       (450,692 )       11,958    
                                                       
Impact of S elected Items:                              
Unrealized loss (gain) on derivatives contracts:                              
Crude oil   $ 30,632     $ 30,323       $ 39,271     $ (10,104 )   $ 30,323       $ 262,813    
Natural gas     577       15         180       (906 )     15         919    
Total mark-to-market non-cash charge     31,209       30,338         39,451       (11,010 )     30,338         263,732    
Full cost ceiling impairment     -       420,934         -       -       420,934         754,769    
(Gain) loss on sale of oil and natural gas properties     (491,830 )     -         -       (727,520 )     -         -    
Other operating property and equipment impairment     -       -         -       -       -         28,056    
Loss (gain) on extinguishment of debt     29,167       -         -       86,065       -         (81,434 )  
Deferred financing costs expensed, net (1)     -       -         2,917       305       -         3,582    
Reorganization items     -       556         (913,722 )     -       556         (913,722 )  
Restructuring     1,275       -         95       2,080       -         5,168    
Rig termination / stacking charges, key employee retention agreements, transaction costs and other     13,865       924         (333 )     19,874       924         40,689    
Selected items, before income taxes     (416,314 )     452,752         (871,592 )     (630,206 )     452,752         100,840    
Income tax effect of selected items (2)     (12,000 )     -         -       -       -         -    
Selected items, net of tax     (428,314 )     452,752         (871,592 )     (630,206 )     452,752         100,840    
                                                       
As Adjuste d:                              
Net income (loss) available to common stockholders, excluding selected items   $ (9,027 )   $ 2,060       $ 54,668     $ (1,390 )   $ 2,060       $ 112,798    
Interest on convertible debt, net     -       -         1,523       -       -         10,778    
Net income (loss) available to common stockholders after assumed conversions, excluding selected items (3)   $ (9,027 )   $ 2,060       $ 56,191     $ (1,390 )   $ 2,060       $ 123,576    
                               
Basic net income (loss) per common share, as reported   $ 2.85     $ (4.96 )     $ 7.58     $ 4.56     $ (4.96 )     $ (0.27 )  
Impact of selected items     (2.91 )     4.98         (7.13 )     (4.57 )     4.98         1.21    
Basic net income (loss) per common share, excluding selected items (3)   $ (0.06 )   $ 0.02       $ 0.45     $ (0.01 )   $ 0.02       $ 0.94    
                               
Diluted net income (loss) per common share, as reported   $ 2.82     $ (4.96 )     $ 6.06     $ 4.52     $ (4.96 )     $ (0.27 )  
Impact of selected items     (2.88 )     4.98         (5.69 )     (4.53 )     4.98         1.13    
Diluted net income (loss) per common share, excluding selected items (3)(4)   $ (0.06 )   $ 0.02       $ 0.37     $ (0.01 )   $ 0.02       $ 0.86    
                               
                               
Net cash provided by (used in) operating activities   $ (20,421 )   $ 12,322       $ 32,605     $ 102,222     $ 12,322       $ 175,348    
Changes in working capital     57,052       (11,347 )       49,323       7,324       (11,347 )       1,733    
Cash flow from operations before changes in working capital     36,631       975         81,928       109,546       975         177,081    
Cash components of selected items     13,299       23,615         806       23,554       23,615         66,092    
Income tax effect of selected items (2)     (12,000 )     -         -       -       -         -    
Cash flow from operations before changes in working capital, adjusted for selected items (3)   $ 37,930     $ 24,590       $ 82,734     $ 133,100     $ 24,590       $ 243,173    
                               
(1) For the 2017 (Successor) columns, this represents non-recurring charges in connection with   the redetermination of the Company's borrowing base under its senior revolving credit facility.   For the 2016 (Predecessor) columns, this represents charges related to the write-off of debt issuance costs associated with the Predecessor Credit Agreement.
(2) For the 2017 (Successor) columns, this represents the reversal of the $12.0 million alternative minimum tax generated primarily by the sale of the El Halcón Assets.   For the 2016 (Successor) and (Predecessor) columns, this represents tax impact using an estimated tax rate of 0.0% due to the Company maintaining a full valuation allowance.
(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 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 September 30, 2017 (Successor) was calculated based upon weighted average diluted shares of 146.9 million due to the net loss available to common stockholders, excluding selected   items.   The impact of selected items for the period from September 10, 2016 through September 30, 2016 (Successor) and the period from July 1, 2016 through September 9, 2016 (Predecessor) was calculated based upon weighted average diluted shares of 91.1 million and 151.9 million, respectively, due to the net income available to common stockholders, excluding selected   items. The impact of selected items for the nine months ended September 30, 2017 (Successor) was calculated based upon weighted average diluted shares of 127.5 million due to the net loss available to common stockholders, excluding selected items. The impact of selected items for the period from September 10, 2016 through September 30, 2016 (Successor) and the period from January 1, 2016 through September 9, 2016 (Predecessor) was calculated based upon weighted average diluted shares of 91.1 million and 144.3 million, respectively, due to the net income available to common stockholders, excluding selected   items.    
 

                 
HALCÓN RESOURCES CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)  
(In thousands)
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
      2017     2016 (2)     2017     2016 (2)
                 
Net income (loss), as reported $ 419,287     $ 475,568     $ 628,816     $ (438,734 )
Impact of adjusting items:            
Interest expense   21,394       26,863       66,141       129,351  
Depletion, depreciation and accretion   35,940       34,669       100,788       129,606  
Full cost ceiling impairment   -       420,934       -       1,175,703  
Other operating property and equipment impairment   -       -       -       28,056  
Income tax provision (benefit)   (17,000 )     (5,309 )     (5,000 )     (5,309 )
Share-based compensation   12,258       14,420       33,548       18,072  
Interest income   (693 )     (13 )     (851 )     (33 )
(Gain) loss on sale of other assets   (358 )     592       (355 )     430  
Restructuring   1,275       95       2,080       5,168  
Reorganization items   -       (913,166 )     -       (913,166 )
Loss (gain) on extinguishment of debt   29,167       -       86,065       (81,434 )
(Gain) loss on sale of oil and natural gas properties   (491,830 )     -       (727,520 )     -  
Loss (gain) on mark-to-market of embedded derivative and tranche rights   -       (8,754 )     -       (5,734 )
Unrealized loss (gain) on derivatives contracts   31,209       69,789       (11,010 )     294,070  
Write-off of deferred loan costs   -       2,917       305       3,582  
Rig termination / stacking charges   1,256       3,003       5,859       9,464  
Transaction costs, key employee retention agreements and other   12,609       6,342       14,015       37,883  
Adjusted EBITDA (1) $ 54,514     $ 127,950     $ 192,881     $ 386,975  
                 
(1)   Adjusted EBITDA is a non-gaap measure, which is presented based on management's belief that it will enable a user of t he 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. This fi nancial measure is not a measure of financial performance under GAAP and should  not be considered as an alternative to GAAP. This financial measure may not be comparable to similarly named non-GAAP fi nancial measures that other companies may use and may not be useful in comparing the performance of those companies to Halcón's performance.  
 
(2) For illu strative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three and nine-month periods ended September 30 2016. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including a sset valuation adjustments and liability adjustments, the results of operations for the Successor may not be comparable to those of the Predecessor. The financial information preceding the table above provides th e Successor and the Predecessor GAAP results for the applicable periods. The Company believes that subject to consideration or the impact of fresh-start reporting, combining the results of  the Predec essor and Successor provide meaningful information about, for instance, production, revenues and costs, that assist a reader in understanding the Company's financial results for the applicable periods.