Halcón Resources Announces Third Quarter 2019 Results

11/12/2019, 10:15 PM (Source: GlobeNewswire)

HOUSTON, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Halcón Resources Corporation (“Halcón” or the “Company”) today announced its third quarter 2019 results.

Average daily net production for the quarter ended September 30, 2019 was 16,489 Boe/d, of which 57% was oil. The Company earned $50.8 million of total revenue for the third quarter of 2019, of which 91% was from oil sales. Excluding the realized gain on derivative contracts of $1.9 million, the Company realized 95% of NYMEX WTI during the third quarter of 2019.

The Company reported a net loss to common stockholders of $63.3 million or net loss per basic and diluted share of $0.40 for the third quarter of 2019 and reported adjusted EBITDA of $18.8 million (see EBITDA Reconciliation table for additional information).

During the third quarter of 2019, the Company incurred capital expenditures of $36.8 million on drilling and completions, $12.1 million on infrastructure and $3.8 million in other costs. 

The Company’s prepackaged plan of reorganization under chapter 11 of the Bankruptcy Code was confirmed and the Company emerged from bankruptcy on September 24, 2019 and October 8, 2019, respectively. At emergence, the Company had $147 million in liquidity.

Richard Little, the Company’s Chief Executive Officer commented, “I’m pleased with what we have accomplished in bringing on a new board, new management team and new vision for the Company post emergence. The changes implemented to build a culture of capital discipline are already demonstrating efficiencies and cost savings throughout the organization. I am proud of the team’s focus, execution and performance through the third quarter.”

Mr. Little further commented, “We are in the process of listing our shares on a national exchange and expect to resume hosting recurring earnings calls soon. I am excited about re-engaging with the investor community and providing deeper insight into our operations and performance.”

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, liquidity, capital spending, drilling and completion plans, and forward guidance. Forward-looking statements may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", “projects”, "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, 2018 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.

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.

Contact
John-Davis Rutkauskas
Director, Finance & Investor Relations
(832) 538-0551

HALCÓN RESOURCES CORPORATION (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
           
    Three Months Ended  Nine Months Ended
    September 30, September 30,
     2019   2018   2019   2018 
 Operating revenues:
        
 Oil, natural gas and natural gas liquids sales:        
  Oil $46,275  $53,918  $145,024  $145,743 
  Natural gas  301   1,407   107   5,286 
  Natural gas liquids  3,987   5,920   13,229   14,623 
  Total oil, natural gas and natural gas liquids sales  50,563   61,245   158,360   165,652 
 Other  246   350   743   613 
  Total operating revenues  50,809   61,595   159,103   166,265 
           
 Operating expenses:
        
 Production:        
  Lease operating  11,958   5,275   39,617   15,504 
  Workover and other  1,566   1,478   5,580   4,795 
  Taxes other than income  3,012   3,557   9,213   9,812 
 Gathering and other  10,147   18,404   36,057   30,782 
 Restructuring  3,223   -   15,148   128 
 General and administrative  19,423   19,731   36,550   49,196 
 Depletion, depreciation and accretion  20,512   20,310   90,912   52,397 
 Full cost ceiling impairment  45,568   -   985,190   - 
 (Gain) loss on sale of oil and natural gas properties  -   1,331   -   7,235 
 (Gain) loss on sale of Water Assets  (164)  -   3,618   - 
  Total operating expenses  115,245   70,086   1,221,885   169,849 
 Income (loss) from operations
  (64,436)  (8,491)  (1,062,782)  (3,584)
 Other income (expenses):
        
 Net gain (loss) on derivative contracts  13,457   (60,406)  (34,332)  (66,603)
 Interest expense and other  (10,547)  (12,940)  (37,606)  (30,522)
 Reorganization items  (1,758)  -   (1,758)  - 
  Total other income (expenses)  1,152   (73,346)  (73,696)  (97,125)
 Income (loss) before income taxes  (63,284)  (81,837)  (1,136,478)  (100,709)
 Income tax benefit (provision)  -   -   95,791   - 
 Net income (loss)
 $(63,284) $(81,837) $(1,040,687) $(100,709)
           
 Net income (loss) per share of common stock:
        
  Basic $(0.40) $(0.52) $(6.55) $(0.64)
  Diluted $(0.40) $(0.52) $(6.55) $(0.64)
 Weighted average common shares outstanding:
        
  Basic  159,143   158,011   158,916   156,628 
  Diluted  159,143   158,011   158,916   156,628 
           


HALCÓN RESOURCES CORPORATION (DEBTOR-IN-POSSESSION) 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) 
(In thousands, except share and per share amounts) 
      
  September 30, 2019 December 31, 2018 
Current assets:    
 Cash and cash equivalents$17,009  $46,866  
 Accounts receivable 37,826   35,718  
 Receivables from derivative contracts 15,310   57,280  
 Prepaids and other 14,642   4,788  
 Total current assets 84,787   144,652  
Oil and natural gas properties (full cost method):    
 Evaluated 2,155,288   1,470,509  
 Unevaluated 438,365   971,918  
 Gross oil and natural gas properties 2,593,653   2,442,427  
 Less - accumulated depletion (1,709,719)  (639,951) 
 Net oil and natural gas properties 883,934   1,802,476  
Other operating property and equipment:    
 Other operating property and equipment 203,373   130,251  
 Less - accumulated depreciation (14,416)  (8,388) 
 Net other operating property and equipment 188,957   121,863  
Other noncurrent assets:    
 Receivables from derivative contracts 4,120   12,437  
 Operating lease right of use assets 3,694   -  
 Funds in escrow and other 1,138   2,181  
Total assets$1,166,630  $2,083,609  
      
Current liabilities:    
 Accounts payable and accrued liabilities$112,578  $157,848  
 Liabilities from derivative contracts 6,829   3,768  
 Current portion of long-term debt 258,234   -  
 Operating lease liabilities 1,337   -  
 Asset retirement obligations -   126  
 Total current liabilities 378,978   161,742  
Long-term debt, net -   613,105  
Liabilities subject to compromise 625,005   -  
Other noncurrent liabilities:    
 Liabilities from derivative contracts 1,625   9,139  
 Asset retirement obligations 10,153   6,788  
 Operating lease liabilities 2,438   -  
 Deferred income taxes -   95,791  
Commitments and contingencies    
Stockholders' equity:    
 Common stock: 1,000,000,000 shares of $0.0001 par value authorized;    
 162,217,095 and 160,612,852 shares issued and outstanding as of    
 September 30, 2019 and December 31, 2018, respectively 16   16  
 Additional paid-in capital 1,087,441   1,095,367  
 Retained earnings (accumulated deficit) (939,026)  101,661  
 Total stockholders' equity 148,431   1,197,044  
Total liabilities and stockholders' equity$1,166,630  $2,083,609  
          


HALCÓN RESOURCES CORPORATION (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
           
    Three Months Ended  Nine Months Ended
    September 30, September 30,
     2019   2018   2019   2018 
Cash flows from operating activities:        
Net income (loss) $(63,284) $(81,837) $(1,040,687) $(100,709)
Adjustments to reconcile net income (loss) to net cash        
provided by (used in) operating activities:        
 Depletion, depreciation and accretion  20,512   20,310   90,912   52,397 
 Full cost ceiling impairment  45,568   -   985,190   - 
 (Gain) loss on sale of oil and natural gas properties  -   1,331   -   7,235 
 (Gain) loss on sale of Water Assets  (164)  -   3,618   - 
 Deferred income tax provision (benefit)  -   -   (95,791)  - 
 Stock-based compensation, net  (2,278)  4,423   (8,035)  12,241 
 Unrealized loss (gain) on derivative contracts  (11,571)  50,763   45,834   77,524 
 Amortization and write-off of deferred loan costs  882   371   1,859   1,022 
 Amortization of discount and premium  23   52   134   235 
 Reorganization items  (283)  -   (283)  - 
 Other income (expense)  570   1,205   535   1,314 
Cash flows from operations before changes in working capital  (10,025)  (3,382)  (16,714)  51,259 
Changes in working capital  3,690   (3,487)  (16,519)  (14,550)
Net cash provided by (used in) operating activities  (6,335)  (6,869)  (33,233)  36,709 
           
Cash flows from investing activities:        
 Oil and natural gas capital expenditures  (28,075)  (117,343)  (167,235)  (369,304)
 Proceeds received from sale of oil and natural gas properties  -   (132)  1,247   1,647 
 Acquisition of oil and natural gas properties  -   (569)  (2,809)  (333,470)
 Other operating property and equipment capital expenditures    (21,037)    (26,147)    (85,613)    (79,389)
 Proceeds received from sale of other operating property and equipment  -   337   -   2,236 
 Funds held in escrow and other  (2)  (2)  (7)  153 
Net cash provided by (used in) investing activities  (49,114)  (143,856)  (254,417)  (778,127)
           
Cash flows from financing activities:        
 Proceeds from borrowings  71,234   87,000   315,234   293,000 
 Repayments of borrowings  (1,000)  (32,000)  (57,000)  (32,000)
 Debt issuance costs  -   (8)  -   (4,013)
 Common stock issued  -   -   -   63,480 
 Offering costs and other  (14)  -   (441)  (2,983)
Net cash provided by (used in) financing activities  70,220   54,992   257,793   317,484 
           
Net increase (decrease) in cash and cash equivalents  14,771   (95,733)  (29,857)  (423,934)
           
Cash and cash equivalents at beginning of period  2,238   95,870   46,866   424,071 
Cash and cash equivalents at end of period $17,009  $137  $17,009  $137 
           


HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA
(Unaudited)
         
  Three Months Ended September 30, Nine Months Ended September 30,
   2019   2018   2019   2018 
         
Production volumes:        
Crude oil (MBbls)  863   980   2,723   2,468 
Natural gas (MMcf)  1,924   1,040   6,381   3,009 
Natural gas liquids (MBbls)  333   190   911   523 
Total (MBoe)  1,517   1,344   4,698   3,493 
Average daily production (Boe/d)  16,489   14,609   17,209   12,795 
         
Average prices:        
Crude oil (per Bbl) $53.62  $55.02  $53.26  $59.05 
Natural gas (per Mcf), as adjusted (1)  0.16   1.35   0.03   1.76 
Natural gas liquids (per Bbl)  11.97   31.16   14.52   27.96 
Total per Boe  33.33   45.57   33.71   47.42 
         
Cash effect of derivative contracts:        
Crude oil (per Bbl) $(3.04) $(10.05) $(0.93) $4.25 
Natural gas (per Mcf)  0.78   0.20   0.94   0.14 
Natural gas liquids (per Bbl)  10.48   -   9.38   - 
Total per Boe  1.56   (7.17)  2.55   3.13 
         
Average prices computed after cash effect of settlement of derivative contracts:        
Crude oil (per Bbl) $50.58  $44.97  $52.33  $63.30 
Natural gas (per Mcf)  0.94   1.55   0.97   1.90 
Natural gas liquids (per Bbl)  22.45   31.16   23.90   27.96 
Total per Boe  34.89   38.40   36.26   50.55 
         
Average cost per Boe:        
Production:        
Lease operating $7.88  $3.92  $8.43  $4.44 
Workover and other  1.03   1.10   1.19   1.37 
Taxes other than income  1.99   2.65   1.96   2.81 
Gathering and other, as adjusted (1)  6.58   3.77   4.97   4.59 
Restructuring  2.12   -   3.22   0.04 
General and administrative, as adjusted (1)  4.92   6.76   5.29   8.70 
Depletion  11.89   13.52   18.00   13.43 
         
(1) Represents natural gas average prices per Mcf, gathering and other and general and administrative costs per Boe, adjusted for items noted in the reconciliation below:  
         
Natural gas, as reported $0.16  $1.35  $0.02  $1.76 
Gas treating fees  -   -   0.01   - 
Natural gas, as adjusted(2) $0.16  $1.35  $0.03  $1.76 
         
General and administrative:        
General and administrative, as reported $12.81  $14.68  $7.78  $14.08 
Stock-based compensation:        
Non-cash  1.50   (3.29)  1.71   (3.50)
Transaction costs and other:        
Cash  (9.39)  (4.63)  (4.20)  (1.88)
General and administrative, as adjusted(3) $4.92  $6.76  $5.29  $8.70 
         
Gathering and other, as reported $6.69  $13.69  $7.67  $8.81 
Gas treating fees, rig stacking charges, and other  (0.11)  (9.92)  (2.70)  (4.22)
Gathering and other, as adjusted(4) $6.58  $3.77  $4.97  $4.59 
         
Total operating costs, as reported $30.40  $36.04  $27.03  $31.51 
Total adjusting items  (8.00)  (17.84)  (5.19)  (9.60)
Total operating costs, as adjusted(5) $22.40  $18.20  $21.84  $21.91 
         
(2) Natural gas, as adjusted, is a non-GAAP measure that excludes gas treating fees to remove hydrogen sulfide from natural gas produced from our Monument Draw properties. 
The Company believes that it is useful to understand the effects that these charges have on natural gas sales and that exclusion of such charges is useful for comparison to prior periods.
(3) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash stock-based compensation charges relating to equity awards under our incentive stock plans,
as well as other cash charges associated with certain transactions. 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.
(4) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig stacking charges, certain gas treating fees to remove hydrogen sulfide from natural gas produced from our
Monument Draw properties and other costs.  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.
(5) 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 the reconciliation above. 


HALCÓN RESOURCES CORPORATION 
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited) 
(In thousands, except per share amounts) 
         
  Three Months Ended September 30, Nine Months Ended September 30,
   2019   2018   2019   2018 
As Reported:        
Net income (loss), as reported $(63,284) $(81,837) $(1,040,687) $(100,709)
         
Impact of Selected Items:        
Unrealized loss (gain) on derivatives contracts:        
Crude oil $(14,873) $39,426  $35,967  $67,136 
Natural gas  1,269   883   3,753   (669)
Natural gas liquids  2,033   10,454   6,114   11,057 
Total mark-to-market non-cash charge  (11,571)  50,763   45,834   77,524 
Full cost ceiling impairment  45,568   -   985,190   - 
(Gain) loss on sale of oil and natural gas properties  -   1,331   -   7,235 
(Gain) loss on sale of Water Assets  (164)  -   3,618   - 
Reorganization items  1,758   -   1,758   - 
Restructuring  3,223   -   15,148   128 
Gas treating fees, rig stacking charges, transaction costs and non-recurring prepetition professional fees related to reorganization  15,105   20,778   33,612   22,384 
Selected items, before income taxes  53,919   72,872   1,085,160   107,271 
Income tax effect of selected items (1)  -   -   (94,054)  - 
Selected items, net of tax  53,919   72,872   991,106   107,271 
         
As Adjusted:        
Net income (loss), excluding selected items (2)(3) $(9,365) $(8,965) $(49,581) $6,562 
         
Basic net income (loss) per common share, as reported $(0.40) $(0.52) $(6.55) $(0.64)
Impact of selected items  0.34   0.46   6.24   0.68 
Basic net income (loss) per common share, excluding selected items (2) $(0.06) $(0.06) $(0.31) $0.04 
         
         
Diluted net income (loss) per common share, as reported $(0.40) $(0.52) $(6.55) $(0.64)
Impact of selected items  0.34   0.46   6.24   0.68 
Diluted net income (loss) per common share, excluding selected items (2)(4) $(0.06) $(0.06) $(0.31) $0.04 
         
         
Net cash provided by (used in) operating activities $(6,335) $(6,869) $(33,233) $36,709 
Changes in working capital  (3,690)  3,487   16,519   14,550 
Cash flows from operations before changes in working capital  (10,025)  (3,382)  (16,714)  51,259 
Cash components of selected items  19,795   19,074   50,541   19,368 
Income tax effect of selected items (1)  -   -   (10,614)  - 
Cash flows from operations before changes in working capital, adjusted for selected items (2)(3)$9,770  $15,692  $23,213  $70,627 
         
(1)  For the nine months ended September 30, 2019, this represents the tax impact using an estimated tax rate of 21.0% and includes a  $133.8 million adjustment
  for the net change in valuation allowance.
         
(2) Net income (loss) and earnings per share excluding selected items and cash flows 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 flows 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.
         
(3)  For the nine months ended September 30, 2019, net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working
  capital include approximately $7.8 million, respectively, of proceeds related to hedge monetizations that occurred in 2019.    
  For the nine months ended Septemer 30, 2018, net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital
  include approximately $30.8 million of proceeds related to a monetization of MidCush hedges that occurred in the second quarter of 2018.
         
(4) The impact of selected items for the three months ended September 30, 2019 and 2018 was calculated based upon weighted average diluted shares of 159.1 million and 158.0 million,
  respectively, due to the net income (loss) available to common stockholders, excluding selected  items.
  The impact of selected items for the nine months ended September 30, 2019 and 2018 was calculated based upon weighted average diluted shares of 158.9 million and 156.9 million,
  respectively, due to the net income (loss) 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,
   2019   2018   2019   2018 
         
Net income (loss), as reported $  (63,284) $  (81,837) $  (1,040,687) $  (100,709)
Impact of adjusting items:        
Interest expense    9,911     11,759     36,265     32,595 
Depletion, depreciation and accretion    20,512     20,310     90,912     52,397 
Full cost ceiling impairment    45,568     -      985,190     -  
Income tax provision (benefit)    -      -      (95,791)    -  
Stock-based compensation    (2,278)    4,423     (8,035)    12,241 
Interest income    (13)    (142)    (91)    (1,914)
Reorganization items    1,758     -      1,758     -  
Restructuring    3,223     -      15,148     128 
(Gain) loss on sale of other assets    2     103     418     (1,231)
(Gain) loss on sale of oil and natural gas properties    -      1,331     -      7,235 
(Gain) loss on sale of Water Assets    (164)    -      3,618     -  
Unrealized loss (gain) on derivatives contracts    (11,571)    50,763     45,834     77,524 
Gas treating fees, rig stacking charges, transaction costs and non-recurring prepetition professional fees related to reorganization    15,105     20,778     33,612     22,384 
Adjusted EBITDA(1)(2)(3) $  18,769  $  27,488  $  68,151  $  100,650 
         
(1)  Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it 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. This financial 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 financial measures that
other companies may use and may not be useful in comparing the performance of those companies to Halcón's performance.
         
(2)  Adjusted EBITDA for the nine months ended September 30, 2019 includes approximately $7.8 million, respectively, of proceeds related to hedge monetizations that occurred in 2019. 
Adjusted EBITDA for the nine months ended September 30, 2018 includes approximately $30.8 million of proceeds related to a monetization of MidCush hedges that  occurred in
the second quarter of 2018.         
         
(3)  Adjusted EBITDA for the nine months ended September 30, 2019 excludes approximately $10.9 million, respectively, of costs to remove hydrogen sulfide  
from natural gas produced from the Company's Monument Draw properties.   
Adjusted EBITDA for the three and nine months ended September 30, 2018 excludes approximately $13.7 million and $14.0 million, respectively, of costs to remove hydrogen sulfide
from natural gas produced from the Company's Monument Draw properties.   

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