Houston-based Halcón Resources Corp. is taking a “more tempered approach” to spending in 2016, the producer said in a news statement Dec. 18.
It’s preliminary drilling and completing (D&C) spending is planned between $180 million and $210 million, which represents a 40 percent reduction year-over-year compared to 2015 guidance. Halcón intends to reduce its D&C in the Willison Basin and the El Halcón acreage in East Texas, which the company said will flatten production or diminish it by about 5 percent relative to 2015.
Analysts at Wells Fargo Securities have a negative outlook on the company. In a flash comment to investors Dec. 18, they noted that nothing has been said about drilling in the TMS-Apollo agreement, which requires drilling 6.5 wells each of the next five years. The company hasn’t actually drilled a well there since the deal was struck in June, and those assets haven’t been incorporated the budget. Halcón said it will disclose more information related to its fourth quarter and full year 2015 results in February.
However, Halcón does have a bright spot in its hedge book for 2016, which contracts oil at $80.59 per barrel for the year. Plus, other hedges that won’t roll off until 2017, and Halcón has close to $800 million in current liquidity.
But even those positives haven’t helped the company’s stock, which has dropped dramatically. From $7.65 per share April 1, 2013, Halcón (NYSE: HK) prices have tumbled, closing trading Dec. 17 at a record low of 24 cents per share. Shares had dived from the day before, when the company lost 25 percent in market cap on a 1 to 5 reverse stock split, likely designed to add some liquidity to its balance sheet. But the move also triggers more scrutiny from the New York Stock Exchange, which has put Halcón – and many others oil and gas companies – on notice because they are missing the exchange requirement of not trading at less than $1 for 30 days in a row.
By late Friday morning, shares inching back up more than 7 percent to 26 cents each.
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