March 5, 2012

Halcón Resources Announces Fourth Quarter and Full Year 2011 Financial Results

HOUSTON, TEXAS, March 5, 2012 (GLOBE NEWSWIRE) -- Halcón Resources Corporation ("Halcón Resources" or the "Company") (Nasdaq:HK) today announced its fourth quarter and full year 2011 financial results and provided guidance on its production, unit cost and capital expenditure outlook for 2012.

Fourth Quarter and Full Year 2011 Financial Results

Halcón Resources generated oil and natural gas sales of $25.5 million for the quarter ended December 31, 2011 and oil and natural gas sales of $103.5 million for the full year 2011. Cash flows from operations before changes in working capital (a non-GAAP measure) were $4.7 million or $0.18 per basic and diluted share for the quarter, and $33.0 million, or $1.26 per basic and diluted share, for the year.

The Company reported a net loss for the quarter of $12.2 million, or $0.46 per basic and diluted share and a net loss of $1.4 million, or $0.05 per basic and diluted share for the full year 2011. Results for the three months ended December 31, 2011 included $13.3 million in unrealized derivative losses.

Halcón Resources produced an average of 4,087 and 4,121 barrels of oil equivalent per day (Boe/d) during the three months and full year ended December 31, 2011, respectively, 70% of which was oil and natural gas liquids (NGLs).

Before the effect of derivatives, the Company realized an average price of $93.35 per barrel (Bbl) of oil, $57.45 per Bbl of NGLs and $3.58 per million cubic feet (Mcf) of natural gas during the fourth quarter of 2011. For the full year 2011, Halcón Resources realized an average price of $93.86 per Bbl of oil, $56.14 per Bbl of NGLs and $4.01 per Mcf of natural gas. Taking into account the effect of hedges, the Company realized an average price of $90.35 per Bbl of oil, $56.14 per Bbl of NGLs and $4.77 per Mcf of natural gas for the full year 2011.

During the fourth quarter, per unit lease operating expense was $24.69 per barrel of oil equivalent (Boe). Lease operating expense for the year was $33.3 million, or $22.16 per Boe. Total per unit cash operating expense (including lease operating, taxes other than income and general and administrative) was $45.23 per Boe for the fourth quarter of 2011 and $37.40 per Boe for the full year 2011.

Proved Reserves

As of December 31, 2011, Halcón Resources' estimated proved oil and natural gas reserves of 21.1 million barrels of oil equivalent (MMBoe) are composed of 12.4 million barrels of oil, 2.0 million barrels of NGLs and 40.1 billion cubic feet of natural gas. The present value of the Company's estimated future oil and gas revenues, net of estimated expenses, discounted at an annual rate of 10% is $391.8 million. Proved developed reserves account for 64% of total estimated proved reserves and the properties have a 13.7 year reserve-to-production ratio. Halcón Resources' proved reserves are 68% oil and NGLs.

Recent Developments

On February 8, 2012, Halcón Resources, LLC, a newly-formed company led by Floyd C. Wilson, former Chairman and Chief Executive Officer of Petrohawk Energy Corporation, recapitalized RAM Energy Resources, Inc. ("RAM") with a $550.0 million investment structured as the purchase of $275.0 million in new common stock, a $275.0 million five-year 8% convertible note and warrants for the purchase of an additional 36,666,666 shares of our common stock at an exercise price of $4.50 per share. At closing, Floyd C. Wilson was appointed as Chairman, President and Chief Executive Officer and RAM's name was changed to Halcón Resources Corporation.  Additionally, on February 9, 2012, the Company's ticker symbol was changed to "HK". Halcón Resources' common stock currently trades on the NASDAQ Global Market.

Following the recapitalization, the Company's primary focus is to expand its leasehold position in areas it has determined are prospective for oil or liquids-rich resource plays. Halcón Resources has identified several target resource plays for potential leasehold acquisition, including the Utica Shale/Point Pleasant formations in Ohio and Pennsylvania, the Mississippian Lime formation in Northern Oklahoma and Southern Kansas, the Wilcox formation in Southwest Louisiana and the Woodbine/Eagle Ford formations in East Texas. In addition to ongoing lease acquisition efforts in its targeted resource plays, the Company has identified several new exploratory areas it believes are prospective for oil and liquids-rich hydrocarbons.

2012 Guidance

Production for the full year 2012 is estimated to be between 2,255 — 2,295 MMBoe, 70% of which is expected to be oil and NGLs. The Company expects 2012 production to come from existing Halcón Resources properties, targeted resource plays and liquids-rich exploratory areas. The capital expenditure budget for 2012 is approximately $1.1 billion (65% leasehold acquisitions, 25% drilling and completions, 7% infrastructure and 3% seismic) and is subject to revision based on various factors.

Additional guidance for the full year 2012 is as follows:

Lease Operating Expense ($/Boe): $10.00 - $11.00

Production (Ad Valorem and Severance) Taxes ($/Boe): $4.00 - $5.00

General and Administrative ($/Boe): $7.00 - $8.00

Forward-Looking Statements

This press release contains forward-looking information regarding Halcón Resources that is intended to be covered by the safe harbor "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995, based on Halcón Resources' current expectations and includes statements regarding acquisitions and divestitures, estimates of future production, future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as "expects", "anticipates", "plans", "estimates", "potential", "possible", "probable", or "intends", or stating that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved). Statements concerning oil and gas reserves also may be deemed to be forward-looking statements in that they reflect estimates based on certain assumptions including that the resources involved can be economically exploited. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to: the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; risks associated with the timing of and potential proceeds from divestitures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather such as hurricanes and other natural disasters); uncertainties as to the availability and cost of financing; fluctuations in oil and gas prices; risks associated with derivative positions; inability to realize expected value from acquisitions, inability of our management team to execute its plans to meet its goals, shortages of drilling equipment, oil field personnel and services, unavailability of gathering systems, pipelines and storage and processing facilities and the possibility that government policies may change or governmental approvals may be delayed or withheld. Additional information on these and other factors which could affect Halcón Resources' operations or financial results are included in Halcón Resources' reports on file with the SEC. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Halcón Resources does not assume any obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

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.

The Halcón Resources logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11256

Halcón Resources Corporation
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
     
  As of December 31,
  2011 2010
ASSETS    
CURRENT ASSETS:    
 Cash and cash equivalents  $ 49  $ 37
 Accounts receivable:    
 Oil and natural gas sales, net of allowance of $0 ($50 at December 31, 2010)  9,519  9,797
 Joint interest operations, net of allowance of $280 ($479 at December 31, 2010)  597  631
 Other, net of allowance of $14 ($48 at December 31, 2010)  172  155
 Derivative assets  260  1,340
 Prepaid expenses  936  1,657
 Deferred tax asset  2,601  3,526
 Inventory  4,310  3,382
 Other current assets  1,793  4
Total current assets  20,237  20,529
PROPERTIES AND EQUIPMENT, AT COST:    
 Proved oil and natural gas properties and equipment, using full cost accounting  715,666  689,472
 Other property and equipment  9,979  10,072
   725,645  699,544
 Less accumulated depreciation, amortization and impairment  (509,126)  (489,634)
Total properties and equipment  216,519  209,910
OTHER ASSETS:    
 Deferred tax asset  24,102  31,001
 Deferred loan costs, net of accumulated amortization of $1,053 ($5,012 at December 31, 2010)  5,966  2,609
 Other  978  952
Total assets  $ 267,802  $ 265,001
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES:    
 Accounts payable:    
 Trade  $ 12,890  $ 17,149
 Oil and natural gas proceeds due others  8,564  9,414
 Other  359  452
 Accrued liabilities:    
 Compensation  1,600  1,948
 Interest  464  2,448
 Income taxes  406  699
 Other  778  10
Derivative liabilities  265  -- 
Asset retirement obligations  1,010  639
Long-term debt due within one year  --  127
Total current liabilities  26,336  32,886
DERIVATIVE LIABILITIES  805  203
LONG-TERM DEBT  202,000  196,965
ASSET RETIREMENT OBLIGATIONS  32,703  30,770
OTHER LONG-TERM LIABILITIES  10  10
COMMITMENTS AND CONTINGENCIES    
STOCKHOLDERS' EQUITY:    
 Common stock, $0.0001 par value, 33,333,333 shares authorized, 27,694,583 and 27,532,610 shares issued,     
 26,244,452 and 26,128,995 shares outstanding at December 31, 2011 and 2010, respectively  3  3
 Additional paid-in capital  229,414  226,047
 Treasury stock - 1,450,131 shares (1,403,615 shares at December 31, 2010) at cost  (7,159)  (6,976)
 Accumulated deficit  (216,310)  (214,907)
 Stockholders' equity  5,948  4,167
Total liabilities and stockholders' equity  $ 267,802  $ 265,001
 
 
Halcón Resources Corporation
Consolidated Statements of Operations
 (in thousands, except share and per share amounts)
         
  Three months ended December 31, Years ended December 31,
  2011 2010 2011 2010
  (Unaudited) (Unaudited)    
REVENUES AND OTHER OPERATING INCOME:        
 Oil and natural gas sales        
 Oil  $ 20,818  $ 19,665  $ 82,968  $ 76,563
 Natural gas  2,421  4,095  10,673  20,265
 NGLs  2,298  3,695  9,880  14,156
Total oil and natural gas sales  25,537  27,455  103,521  110,984
 Realized gains (losses) on derivatives  108  (2,375)  (1,078)  (5,193)
 Unrealized gains (losses) on derivatives  (13,250)  250  5,269  6,386
 Other  44  32  168  157
Total revenues and other operating income  12,439  25,362  107,880  112,334
         
OPERATING EXPENSES:        
 Oil and natural gas production taxes  1,460  1,498  5,740  6,063
 Oil and natural gas production expenses  9,282  8,738  33,330  33,891
 Depreciation and amortization  5,691  6,838  21,345  27,225
 Accretion expense  418  239  1,641  1,527
 Share-based compensation  1,357  826  3,584  3,110
 Restructuring costs  1,071  --  1,071  --
 General and administrative, overhead and other expenses,        
 net of operator's overhead fees  6,266  4,105  17,179  14,799
Total operating expenses  25,545  22,244  83,890  86,615
Operating income (loss)  (13,106)  3,118  23,990  25,719
         
OTHER INCOME (EXPENSE):        
 Interest expense  (3,623)  (5,539)  (17,373)  (22,655)
 Interest income  1  3  5  27
 Loss on interest rate derivatives  (14)  --  (712)  --
 Other income (expense)  61  28  (511)  321
INCOME (LOSS) BEFORE INCOME TAXES  (16,681)  (2,390)  5,399  3,412
INCOME TAX PROVISION (BENEFIT)  (4,477)  1,904  6,802  995
Net income (loss)  $ (12,204)  $ (4,294)  $ (1,403)  $ 2,417
         
BASIC INCOME (LOSS) PER SHARE  $ (0.46)  $ (0.16)  $ (0.05)  $ 0.09
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING  26,269,992  26,206,234  26,258,230  26,142,060
         
DILUTED INCOME (LOSS) PER SHARE  $ (0.46)  $ (0.16)  $ (0.05)  $ 0.09
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING  26,269,992  26,206,234  26,258,230  26,142,060
 
Halcón Resources Corporation
Consolidated Statements of Cash Flows
 (in thousands)
         
   Three months ended December 31,   Years ended December 31, 
  2011 2010 2011 2010
  (Unaudited) (Unaudited)    
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss)  $ (12,204)  $ (4,294)  $ (1,403)  $ 2,417
Adjustments to reconcile net income (loss) to net cash provided by operating activities--        
 Depreciation and amortization  5,691  6,838  21,345  27,225
 Amortization of deferred loan costs  338  522  3,663  2,088
 Non-cash interest  --  750  362  3,086
 Accretion expense  418  239  1,641  1,527
 Unrealized (gain) loss on derivatives, net of premium amortization  13,487  2,361  (3,460)  (1,498)
 Unrealized loss on interest rate derivatives  (50)  --  506  -- 
 Deferred income tax provision (benefit)  (4,580)  1,510  6,549  577
 Other expense (income)  193  --  193  (574)
 Share-based compensation  1,357  826  3,584  3,110
 Restructuring costs  90  --  90  -- 
 Loss (gain) on disposal of other property, equipment and subsidiary  (38)  --  (60)  (38)
 Cash flow from operations before changes in working capital  4,702  8,752  33,010  37,920
 Changes in working capital --        
 Accounts receivable  (998)  681  295  3,704
 Prepaid expenses, inventory and other assets  (280)  259  (231)  1,857
 Derivative premiums  --  (730)  4,889  (4,468)
 Accounts payable and proceeds due others  2,462  (1,060)  (5,219)  543
 Accrued liabilities and other  64  190  (2,322)  (1,527)
 Income taxes payable  87  517  (294)  44
 Asset retirement obligations  (15)  (37)  (293)  (198)
 Total changes in working capital  1,320  (180)  (3,175)  (45)
 Net cash provided by operating activities  6,022  8,572  29,835  37,875
CASH FLOWS FROM INVESTING ACTIVITIES:        
Payments for oil and natural gas properties and equipment  (5,614)  (6,059)  (25,214)  (33,535)
Proceeds from sales of oil and natural gas properties  --  48,888  462  49,366
Payments for other property and equipment  (169)  (144)  (672)  (865)
Proceeds from sales of other property and equipment  37  --  48  4
 Net cash provided by (used in) investing activities  (5,746)  42,685  (25,376)  14,970
CASH FLOWS FROM FINANCING ACTIVITIES:        
Payments on long-term debt  (10,399)  (60,872)  (245,621)  (98,490)
Proceeds from borrowings on long-term debt  12,001  10,079  250,167  46,340
Payments for deferred loan costs  (822)  --  (7,825)  -- 
Payments for equity issuance costs  (985)  --  (985)  -- 
Stock repurchased   (66)  (456)  (183)  (787)
 Net cash used in financing activities  (271)  (51,249)  (4,447)  (52,937)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  5  8  12  (92)
CASH AND CASH EQUIVALENTS, beginning of year  44  29  37  129
CASH AND CASH EQUIVALENTS, end of year  $ 49  $ 37  $ 49  $ 37
         
SUPPLEMENTAL CASH FLOW INFORMATION:        
 Cash paid for income taxes  $ 23  $ (236)  $ 554  $ 380
 Cash paid for interest  $ 3,290  $ 4,470  $ 15,326  $ 17,988
DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES:        
 Asset retirement obligations  $ 979  $ 2,859  $ 956  $ 3,006
 
 
Halcón Resources Corporation
Production by Area
(Unaudited)
           
   Texas   Oklahoma   Louisiana   Other   Total 
Three Months Ended December 31, 2011        
Aggregate Net Production          
Oil (MBbls)  130  73  14  6  223
NGLs (MBbls)  31  6  --   3  40
Natural Gas (MMcf)  343  124  181  29  677
MBoe  218  100  44  14  376
           
           
Three Months Ended December 31, 2010        
Aggregate Net Production          
Oil (MBbls)  134  78  17  9  238
NGLs (MBbls)  79  3  --   2  84
Natural Gas (MMcf)  688  205  175  34  1,102
MBoe  327  115  46  17  505
           
Change in MBoe  (109)  (15)  (2)  (3)  (129)
Percentage change in MBoe -33.3% -13.0% -4.4% -17.7% -25.5%
           
   Texas   Oklahoma   Louisiana   Other   Total 
Year Ended December 31, 2011          
Aggregate Net Production          
Oil (MBbls)  499  297  60  28  884
NGLs (MBbls)  147  16  --   13  176
Natural Gas (MMcf)  1,562  410  558  132  2,662
MBoe  906  382  153  63  1,504
           
           
Year Ended December 31, 2010          
Aggregate Net Production          
Oil (MBbls)  559  322  79  35  995
NGLs (MBbls)  341  10  --   13  364
Natural Gas (MMcf)  3,128  849  689  150  4,816
MBoe  1,421  473  194  73  2,161
           
Change in MBoe  (515)  (91)  (41)  (10)  (657)
Percentage Change in MBoe -36.2% -19.2% -21.1% -13.7% -30.4%
 
Halcón Resources Corporation
Selected Operating Data
(Unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2011 2010 2011 2010
         
Production volumes:        
Oil (MBbls)  223  238  884  995
NGL (MBbls)  40  84  176  364
Natural gas (MMcf)  677  1,102  2,662  4,816
 Total (Mboe)  376  505  1,504  2,161
         
Average sale prices received:        
Oil (per Bbl)  $ 93.35  $ 82.63  $ 93.86  $ 76.95
NGL (per Bbl) 57.45 43.99 56.14 38.89
Natural gas (per Mcf) 3.58 3.72 4.01 4.21
 Total per Boe  $ 67.92  $ 54.37  $ 68.83  $ 51.36
         
Cash effect of derivative contracts:        
Oil (per Bbl)  $ (0.26)  $ (12.70)  $ (3.51)  $ (6.14)
NGL (per Bbl)  --   --   --   -- 
Natural gas (per Mcf) 0.25 0.59 0.76 0.19
 Total per Boe  $ 0.29  $ (4.70)  $ (0.72)  $ (2.40)
         
Average prices computed after cash effect        
 of settlement of derivative contracts:        
Oil (per Bbl)  $ 93.09  $ 69.93  $ 90.35  $ 70.81
NGL (per Bbl) 57.45 43.99 56.14 38.89
Natural gas (per Mcf) 3.83 4.31 4.77 4.40
 Total per Boe  $ 68.21  $ 49.67  $ 68.11  $ 48.96
         
Expenses (per Boe):        
 Oil and natural gas production taxes  $ 3.88  $ 2.97  $ 3.82  $ 2.81
 Oil and natural gas production expenses 24.69 17.30 22.16 15.68
 General and administrative 16.66 8.13 11.42 6.85
 Total per Boe  $ 45.23  $ 28.40  $ 37.40  $ 25.34
         
Cash flow from operations (a)  $ 4,702  $ 8,752  $ 33,010  $ 37,920
Cash flow from operations (per basic and diluted share)  $ 0.18  $ 0.33  $ 1.26  $ 1.45
         
(a) Represents cash flow from operations before changes in working capital. See the Consolidated Statement of Cash Flows for a reconciliation from this non-GAAP financial measure to the most comparable GAAP financial measure.
Halcón Resources Corporation
2011 Proved Oil and Natural Gas Reserves
(Unaudited)
           
           
  Oil MBbl Gas MMcf NGL MBbl MBoe Reserve %
Proved developed          
 producing 8,342 16,697 1,158 12,283 58%
           
Proved developed          
 nonproducing 301 4,300 80 1,098 5%
           
Proved undeveloped 3,728 19,057 772 7,676 37%
           
Total proved 12,371 40,054 2,010 21,057 100%
           
Developed 8,643 20,997 1,238 13,381  
           
% Developed 70% 52% 62% 64%  
           
The Company's total proved reserve reconciliation is as follows:          
           
           
  Oil MBbl Gas MMcf NGL MBbl MBoe  
As of December 31, 2010 13,086 53,608 2,375 24,396  
           
Extensions, discoveries and additions (a) 339 20 1 343  
           
Purchases 5 -- -- 5  
           
Production (884) (2,662) (176) (1,504)  
           
Revisions of previous estimates (b) (175) (10,912) (190) (2,183)  
           
As of December 31, 2011 12,371 40,054 2,010 21,057  
           
(a) The Company added 0.3 MMBoe in proved reserve extensions, discoveries and additions in 2011 primarily as a result of development drilling in the Electra/Burkburnett field in North Texas and in the La Copita field in South Texas. A significant portion of these reserves is a result of drilling locations in the Electra/Burkburnett, Northeast Fitts and Allen fields that were not booked as proved locations at year-end 2010.
(b) Total revisions of previous reserve estimates decreased proved reserves by 2.2 MMBoe or approximately 9% of reserves at the beginning of the year. The revisions included a positive increase of 0.9 MMBoe or 4% of the beginning of the year proved reserves caused by higher crude oil and natural gas prices. This positive revision was offset by the downward revision of 1.4 MMBoe caused by the transfer of proved reserves to unproved categories as a result of updated geological and engineering evaluations and changes to the Company development plans during 2011, and 1.7 MMBoe of downward revisions were mostly due to changes in well performance.
CONTACT: Scott M. Zuehlke

         Director of Investor Relations

         Halcon Resources

         (832) 538-0314

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Source: Halcon Resources

 

 

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