Halcon Resources Corp (NYSE:HK) announced its first quarter 2016 results.
Production for the three months ended March 31, 2016 averaged 39,527 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.
Halcón generated total revenues of $81.3 million for the first quarter of 2016. In addition, Halcón realized a net gain on settled derivative contracts of$107.7 million during the quarter.
Excluding the impact of hedges, Halcón realized 80% of the average NYMEX oil price, 14% of the average NYMEX oil price for NGLs and 75% of the average NYMEX natural gas price during the first quarter of 2016.
Total operating costs per unit, after adjusting for selected items (see Selected Operating Data table for additional information), decreased by 15% to$16.66 per Boe during the three months ended March 31, 2016, compared to the same period of 2015.
After adjusting for selected items primarily related to a non-cash, pre-tax full cost ceiling impairment charge (see Selected Item Review and Reconciliation table for additional information), net income was $29.7 million, or $0.21 per diluted share for the first quarter of 2016. Halcón reported a net loss available to common stockholders of $566.9 million, or $4.72 per diluted share for the first quarter.
Liquidity and Capital Spending
As of March 31, 2016 Halcón’s liquidity was approximately $564 million, which consisted of cash on hand plus undrawn capacity on the Company’s senior secured revolving credit facility with a $700 million borrowing base. The Company’s next scheduled borrowing base redetermination date isSeptember 1, 2016.
During the first quarter of 2016, the Company incurred capital costs of $52 million on drilling and completions, and approximately $2 million on infrastructure, seismic and leasehold acquisitions. In addition, Halcón incurred $36 million for capitalized interest, G&A and other.
Halcón has 25,331 barrels per day of oil hedged for the last nine months of 2016 at an average price of $80.50 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 $220 million as of May 5, 2016.
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 14 wells in the Bakken being completed or waiting on completion and none in the Eagle Ford.
The Company operated an average of 2 rigs in the Williston Basin during the first quarter of 2016.
Halcón spudded 4 wells and put 5 wells online in the Fort Berthold area of the Williston Basin during the three months ended March 31, 2016. The Company also participated in 3 non-operated wells during the quarter across the basin with an average working interest of approximately 6.75%. Production averaged 28,606 Boe/d during the first quarter of 2016 in the Williston Basin.
Halcón currently has working interests in approximately 123,000 net acres prospective for the Bakken and Three Forks formations in the Williston Basin, substantially all of which are held by production (HBP). With one operated rig running, the Company plans to spud 15 gross operated wells over the remaining nine months of 2016 with an average working interest of approximately 64%. Halcón also expects to participate in 15-20 gross non-operated wells over the last nine months of 2016 with an average working interest of approximately 0.5%. Halcón expects operated wells put online over the remainder of 2016 to have an average EUR of approximately 900 MBoe. Current estimated 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 211 producing Bakken wells and 66 Three Forks wells.
“El Halcón” – East Texas Eagle Ford
The Company operated 1 rig in El Halcón during the first quarter of 2016. Halcón spudded 2 wells and put 4 wells online in the play during the three months ended March 31, 2016. Production averaged 8,380 Boe/d during the first quarter of 2016 in El Halcón.
Halcón currently has working interests in approximately 88,000 net acres prospective for the Eagle Ford formation in East Texas, approximately 76% of which is HBP. The Company currently operates 113 El Halcón wells. Halcón anticipates adding a rig back to this area when oil prices improve. (Original Source)
Shares of Halcon Resources are up 6% to $0.99 in pre-market trading. HK has a 1-year high of $6.95 and a 1-year low of $0.20. The stock’s 50-day moving average is $1.08 and its 200-day moving average is $1.51.
On the ratings front, Wunderlich Securities analyst Irene Haas downgraded HK to Hold, with a price target of $1, in a report issued on January 28. The current price target represents a potential upside of 7.5% from where the stock is currently trading. According to TipRanks.com, Haas has a yearly average return of -7.5%, a 39.7% success rate, and is ranked #3653 out of 3828 analysts.
HalcÃ³n Resources Corp. is an independent energy company engages in the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the U.S. The company operates through one segment which focuses on oil and natural gas acquisition, production, exploration and development. HalcÃ³n Resources was founded in 1987 and is headquartered in Houston, TX.