John M. White, analyst with ROTH Capital Partners, commented in a July 11 company update on Halcón Resources Corp.'s (HK:NASDAQ) sale of its operated Williston Basin assets for $1.4 billion to Bruin E&P Partners and on its plans to reduce its debt by $1.2 billion.
White noted that current production associated with the assets being sold is about "29,000 BOE per day. The sale is conditioned upon the receipt of consent from greater than 50.0% of the holders of HK's 6.75% unsecured notes due 2025 to amend certain provisions of the indenture governing the 6.75% Notes. On July 10, 2017 HK obtained commitments to provide the Consent from greater than 50% of the 6.75% Noteholders."
White also noted that the sale requires shareholder approval and on July 11, "HK received commitments to support the asset sale from holders of greater than 50% of its common stock."
Part of the proceeds will be used to purchase up to 50% of Halcon's 6.5% notes at 103% of par. White also stated that Halcón will use part of the proceeds to "redeem all outstanding 12.0% Second Lien Notes due 2022."
According to White, Halcón plans to "run two rigs in the Delaware Basin for the remainder of 2017 and currently expects to exit 2017 with production in excess of 13,000 BOE per day."
ROTH's valuation of Halcón is currently $14/share. The company is trading at around $6.75/share.
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ROTH Capital Partners, Halcón Resources Corp., Flash Note, July 11, 2017
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Halcón Resources Corporation and as such, buys and sells from customers on a principal basis.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.