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Halcon (HK) to Divest Williston Assets Worth $104 Million

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In a bid to transform itself into a Delaware Basin pure play U.S.-based upstream company Halcón Resources Corporation (HK - Free Report) recently inked a deal to offload non-operated assets in Williston Basin to a private player. These assets have a production capacity of 1,891 barrels of oil, 1,931 thousand cubic feet of gas and 65 barrels of natural gas liquids per day. Subject to regulatory approvals and satisfactory closing conditions, the deal will entitle a payment of up to $104 million to Halcón.  Halcón plans to use the proceeds from the sale for reducing debt.This will strengthen the company’s balance sheet and provide it with increased liquidity to execute drilling projects.

Halcón Eyes Delaware Basin

Halcón acquired several acreages in Eagle Ford, Tuscaloosa Marine, Utica, and Bakken plays. The CEO Floyd Wilson was of the opinion that these buyouts will be profitable for the company. However, with the industry’s downturn all his hopes were crushed. The company, being one of the big sufferers of the weak crude environment, filed for bankruptcy in July 2016. In September, it completed financial restructuring and emerged from bankruptcy. Since then, the company has been divesting assets in most of its basins to concentrate on the prolific Delaware play. In less than nine months, Halcón divested around 2,000 wellbores across its obsolete and non-core assets for more than $2 billion cash proceeds. In July, the company sold around 104, 000 acres in Williston Basin for $1.04 billion. In August, it closed another $6 million deal to sell the non-operating assets in Williston Basin.

Since the beginning of 2017, the company has been strengthening its foothold in the Delaware Basin through acquisitions. This has enabled Halcón to increase its acreage in the region at a reasonable price and has poised it for growth. In the Delaware Basin, the company currently owns over 41,500 net acres in Ward and Pecos counties. In January, Halcón acquired over 21,000 acres in Pecos for $705 million, while divesting the El Halcón assets in the East Texas Eagle Ford for $500 million. Halcón also aimed to purchase an additional 15,040 net acres in Ward. The company bought around 594 acres in Pecos in March with a production capacity of 160 Boe/d. In June, the company further increased its acreage by over 3,600 acres in Pecos. The company also expects to acquire an additional 8,320 net acres in the northern part of Ward, by Dec 31.

The deal marks Halcón’s transformation into a single-basin company, focused on the Delaware Basin portion of the Permian Basin — one of the most active and economic plays in North America. With the deal, the company will be joining the likes of Lilis Energy Inc (LLEX - Free Report) , Jagged Peak Energy Inc. (JAG - Free Report) and Centennial Resource Development (CDEV - Free Report) which are well established Delaware Pure plays.

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