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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