Halcon Resources (HK) Misses Q4 EPS by 2c, Revenues Miss; Board to Engage Advisors to 'Review Financial and Strategic Options'

Halcon Resources (NYSE: HK) reported Q4 EPS of ($0.09), $0.02 worse than the analyst estimate of ($0.07). Revenue for the quarter came in at $60.3 million versus the consensus estimate of $64.37 million.

Chairman Commentary

Jim Christmas, Halcón’s Chairman of the Board commented “Although there have been significant recent changes in the executive leadership at Halcón, the Board is confident in the capabilities of the Halcón team going forward. Halcón’s operations group is fully intact under the leadership of Jon Wright, Halcón’s Chief Operating Officer, and focused more than ever on delivering strong well results in a cost-efficient manner.

Going forward Halcón is laser-focused on cost control and capital efficiency. The Company will continue to look for ways to improve profitability across all areas of the organization with an emphasis on ensuring we maximize returns while growing production.

The Board of Directors believes there is significant value in Halcón’s assets which is not being recognized by the market. The Board plans to engage advisors to assist in a review of the Company’s financial and strategic options.

This engagement will include an assessment of value under various go-forward scenarios including a potential sale of select assets, M&A options and a scenario in which Halcón continues to develop and delineate its assets in the most capital efficient manner possible. It will also include a review of alternative financing options to ensure Halcón has sufficient liquidity and financial flexibility going forward. The engagement of advisors is an effort to ensure we fully investigate every possible option available to maximize value for our shareholders’ benefit. We are excited about Halcón’s future prospects and look forward to executing on our efforts to improve shareholder value.”

Management Commentary

Jon C. Wright, Halcón’s Executive Vice President and COO commented “In 2017 and 2018, Halcón was focused on delineating and de-risking its acreage positions by drilling primarily single well pads and doing extensive R&D (i.e. shuttle logs, micro-seismic, etc.). Our focus going forward is on maximizing well-level economics and corporate-level profitability. We will only drill in what we believe are our best areas in an effort to maximize capital efficiency. We have seen real improvement on recent drilling costs in Monument Draw where our most recent wells came in well below 2018 levels. We expect West Quito well costs will also improve as we continue our development of that asset.

Unexpected high levels of H2S on Monument Draw wells resulted in our deferring drilling activity in that area for about six months, incurring very high gas treating costs and incurring additional capex to build out our H2S gathering and treating infrastructure. Once our sour gas treating plant is operational later in March we will return to developing this premier acreage position. The completion of this treating plant will further increase the value of our already valuable oil and gas infrastructure assets.

We are excited by the early production results of our initial wells drilled in West Quito Draw. With the five put online recently in West Quito Draw and five more wells expected to be put online in Monument Draw in the near-term, we expect significant production growth in the second quarter of 2019.”

For earnings history and earnings-related data on Halcon Resources (HK) click here.

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