HKRS - Halcón Resources Announces Third Quarter 2019 Results

November, 12 2019 04:15 PM Halcon Resources Corp New

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.

Company Name:	Halcon Resources Corp New
Stock Symbol:	HKRS
Market:	OTC

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