Halcón to issue shares, receives Stifel ‘Hold’ rating

Halcón Resources Corporation (NYSE: HK) announced Jan. 17 that its stockholders have approved the issuance of approximately 108.8 million shares of Halcón common stock upon the conversion of the convertible preferred stock issued to Petro-Hunt Holdings LLC, and an affiliated entity in connection with Halcón’s previously announced acquisition of two entities owning producing and undeveloped oil and gas assets in the Williston Basin.

Halcón’s stockholders have also approved the amendment of the company’s certificate of incorporation to increase its authorized common stock by approximately 333.3 million shares for a total of 670.0 million authorized shares of common stock.

Also on Jan. 17, Stifel initiated coverage of Halcón with a Hold rating and fair value range of $8.50-$9.50/share, stating that, while Halcón is positioned well to deliver over 90% organic growth in 2013, Stifel believes this growth is already factored into valuation, especially once dilutive in-the-money securities, which could convert in early 2014, are included.

Floyd Wilson, Halcon Resources

Halcón, which is led by chairman and CEO Floyd C. Wilson, is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

Stifel acknowledged that Halcón has been very aggressive on the acquisition front, announcing deals for GeoResources (6.9 mboe/d) on April 25, 2012, East Texas assets (2.8 mboe/d) on June 5, 2012, and Williston Basin Assets (10.5 mboe/d) on October 22, 2012.

These acquisitions caused production to grow from 11.2 mboe/d in the third quarter of 2012 to an estimated 29.9 mboe/d in the first quarter of 2013. Production growth should continue and is expected to average 40-45 mboe/d in 2013 based on guidance, Stifel said.


Stifel reported that, in 2013, Halcón is developing its three core areas: Bakken/Three Forks, Woodbine, and Utica/Point Pleasant, with 90% of total capex being directed to these plays.

Stifel noted that, while the Bakken/Three Forks has meaningful production history, the Woodbine area shows variability, especially in the Eastern and Southeast extension of the play, and, in the Utica, drilling is not in the proven part of the play with no current production history. Key upcoming events include the expected release of Halcón’s first TMS well (1H13), first production in the Utica (late 1Q13/early 2Q13), and potential Eagle Ford disposition (1H13).

Stifel said that, while Halcón only provides production guidance at a corporate level, in its view, the agency believes that there is more downside risk than upside surprise potential in stated guidance range based on capital efficiency metrics and the fact that of the three core areas, only the Bakken has a good track record/visibility, while the Woodbine exhibits variability, and the Utica is still in its testing phase.

In addition, Stifel stated that Halcón is fairly in line with the group based on the agency’s 2014E EBITDA valuation (5.0x), with downside risk to 2014 consensus in its view. Bottom line, Stifel said, given the limited upside potential to the 2013 fair value range and 2014 fair valuation and the risks in Halcón delivering on the strong growth guidance, Stifel is initiating coverage with a Hold rating.

 

 

Related Articles

Lucas Energy appoints new board chairman

11/15/2013

Lucas Energy reports that Ken Daraie has been appointed as chairman of the company’s board of directors. 

Dale resigns as Lucas Energy CFO

10/02/2013

William J. Dale, CFO of independent oil and gas company Lucas Energy Inc. (NYSE MKT: LEI), has left the company to pursue other interests.

Lucas Energy has agreement with Ironman for energy capital

09/05/2013 Lucas Energy Inc., an independent oil and gas company with its main operations in Texas, has entered into an agreement with Ironman Capital Management LLC for two of its energy sector funds to purc...

ZaZa CEO buys shares to fund Eagle Ford acquisitions

08/26/2013 ZaZa Energy CEO Todd Brooks has acquired 1.5 million shares worth $1.38 million in a private placement of common stock. The money will be used to fund acreage acquisitions in the company’s eastern ...

ZaZa Energy announces new agreement for Moulton assets

07/04/2013 ZaZa Energy LLC, a wholly owned subsidiary of ZaZa Energy Corp. (NASDAQ: ZAZA) has entered into a new purchase and sale agreement with an independent third party to sell approximately 10,300 net ac...

More Oil & Gas Financial Articles

Lucas Energy appoints new board chairman

Fri, Nov 15, 2013

Lucas Energy reports that Ken Daraie has been appointed as chairman of the company’s board of directors. 

Dale resigns as Lucas Energy CFO

Wed, Oct 2, 2013

William J. Dale, CFO of independent oil and gas company Lucas Energy Inc. (NYSE MKT: LEI), has left the company to pursue other interests.

Lucas Energy has agreement with Ironman for energy capital

Thu, Sep 5, 2013

Lucas Energy Inc., an independent oil and gas company with its main operations in Texas, has entered into an agreement with Ironman Capital Management LLC for two of its energy sector funds to purchase a total of approximately $3.33 million of the company's common stock.

ZaZa CEO buys shares to fund Eagle Ford acquisitions

Mon, Aug 26, 2013

ZaZa Energy CEO Todd Brooks has acquired 1.5 million shares worth $1.38 million in a private placement of common stock. The money will be used to fund acreage acquisitions in the company’s eastern Eagle Ford and Eaglebine regions.

ZaZa Energy announces new agreement for Moulton assets

Thu, Jul 4, 2013

ZaZa Energy LLC, a wholly owned subsidiary of ZaZa Energy Corp. (NASDAQ: ZAZA) has entered into a new purchase and sale agreement with an independent third party to sell approximately 10,300 net acres of its properties in Fayette, Gonzalez and Lavaca counties, Texas, which ZaZa refers to as its Moulton properties in the Eagle Ford shale play.

Most Popular

Oil & Gas Jobs

Search More Job Listings >>
Subscribe to OGFJ