July 11, 2017 – The oil downturn has been hard on the shale oil producer Halcón Resources Corporation. Last year, the company was forced to file bankruptcy to eliminate $1.8 billion of its $3.12 billion total debt and $200 million in annual interest payments.
The Houston-based Halcón Resources announced today that it has agreed to sell its operated Williston Basin Assets in North Dakota to an affiliate of Bruin E&P Partners, a portfolio company of Arclight Capital Partners. The all cash sell is listed at $1.4 billion.
The move is another attempt by – the chairman, chief executive officer, president, and founder of Halcón Resources – Floyd Wilson, to keep the value of the company high in a bid to sell it in the near future. In 2011, Wilson sold Petrohawk Energy to BHP Billiton for $12.1 billion, which was a 65% premium of the presale share price.
Halcón Resources’ shares rose more than 35% after today’s announcement.
The transaction date is listed as June 1, 2017, and Halcón Resources expects the deal to close within 60 days. If the deal does not go through, then Halcón Resources will pay Bruin E&P Partners $42 million. Halcón Resources says it will keep its non-operated Williston Basin assets, keeping the option open to sell them later.
The asset sale was conditioned upon a 50 percent shareholder approval prior to closing, which Halcón received today. Halcón also filed its Form 8-K with the U.S. Securities and Exchange Commission today.
“The sale of our Williston Basin operated assets transforms Halcón into a single-basin company focused on the Delaware Basin where we have more than 41,000 net acres in Ward and Pecos Counties representing decades of highly economic drilling inventory. The cash proceeds from this transaction and related debt reduction provide us with a strong balance sheet and liquidity to execute our growth plans,” commented Wilson in a press release.
The Williston basin assets currently produce roughly 29,000 barrels per day out of the Bakken shale formation. After the sale, Halcón Resources will only run its two Delaware Basin rigs, which produce approximately 7,500 barrels per day. Halcón plans to up that production to 13,000 barrels per day by the end of the year.
Halcón Resources purchased land in the western Permian Basin – a region known as the Delaware Basin – in January of this year. The company bought the land through several deals, totaling more than $1.2 billion. The first well in the region went online in May.
Halcón Resources is a shale oil producer with no offshore assets. According to the company’s profile, Halcón is Spanish for hawk, which represents the company’s vision and agility. Founder Floyd Wilson has proven that statement to be true over the years, both before the oil price crash and during.
The sale of Halcón Resources’ Williston Basin assets is another example of an American shale producer reassessing and reorganizing in order to remain successful in today’s oil markets.
Article written by HEI contributor Raymond Arrasmith.