Halcón Resources Provides Update on El Halcón Drilling Plans and Preliminary 2017 Guidance
December 20 2016 - 4:15PM
Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”)
today announced its plans to recommence drilling in its El Halcón
area of the East Texas Eagle Ford in early 2017. The Company
also provided an update on fourth quarter 2016 production in
addition to preliminary production and capex guidance for 2017.
East Texas Eagle Ford
Update
Due to low commodity prices, the Company has not
operated a rig on its El Halcón acreage in nearly a year.
Halcón’s decision to resume drilling in this area is driven by the
recent improvement in oil prices, in addition to the Company’s
technical review of recent offset operator activity in the
play. Based on a review of 18 recent offset operator wells,
the Company believes it can significantly improve EURs and well
economics in the El Halcón area by applying an enhanced completion
utilizing slickwater fracs and high intensity proppant loading to
improve near wellbore fracturing of the target zone.
Halcón currently has approximately 80,000 net
acres prospective for the Eagle Ford formation in East Texas,
approximately 82% of which is held by production. The Company
has approximately 500 remaining gross operated locations with an
average working interest of ~80% based on 1,000 foot spacing.
Halcón believes the enhanced completion technique may reduce well
spacing to 500 feet and therefore increase the number of remaining
locations to more than 1,000.
The table and chart below illustrate the
Company’s preliminary type curve expectations for wells completed
with the enhanced completion technique.
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Projected El Halcón Type Curve Data Based on
Enhanced Completions (Preliminary) |
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Avg. |
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Lateral |
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Fluid |
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Proppant |
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D&C |
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Estimated EUR |
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IRR at |
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PV-10 at |
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Length (Ft) |
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Stages |
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Type |
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Amount |
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Cost ($MM)(1) |
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(Mboe)(2) |
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Strip(3) |
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Strip(2)(3) ($MM) |
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7,500 |
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50 |
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Slickwater |
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3000 -
3500 lbs/ft |
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$ |
8.0 |
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706 |
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39 |
% |
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$ |
4.8 |
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(1)
Includes all costs associated with drilling and completing a well
(i.e. location, title, facilities, artificial lift, etc.). |
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(2) See
"Forward Looking Statements" for important disclosures about EURs
and PV-10. |
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(3) Based
on NYMEX strip oil and gas prices as of 12/2/16 (oil at $54.29/bbl
in 2017, $54.82/bbl in 2018 and $54.89/bbl in 2019). |
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A photo of the chart accompanying this release is available
here http://www.globenewswire.com/NewsRoom/AttachmentNg/07184df4-9568-4b08-afa5-eb99aa9c1ce0
Q4 2016 Production Update and
Preliminary 2017 Guidance
The Company is currently running one operated
rig in the Fort Berthold Indian Reservation (“FBIR”) area of the
Williston Basin and plans to continue to keep this rig in the FBIR
area through 2017. As mentioned above, Halcón plans to drill
and complete 5 wells in its El Halcón area in the first half of
2017. Additionally, the Company plans to add a second
operated rig in the Williston Basin area in the second quarter of
2017, which is expected to drill a 5 well pad in Williams County
before moving to the FBIR area in late 2017.
Halcón expects fourth quarter 2016 production to
average between 38,000 and 39,000 boe/d. Fourth quarter 2016
production has been negatively impacted by inclement weather in the
Williston Basin.
For 2017, the Company expects to spend
approximately $200 MM on drilling and completion costs and generate
39,000 to 41,000 boe/d of production (78% oil, 12% gas and 10%
NGL). The midpoint of this production range represents an 8%
year over year growth rate versus 2016. Halcón expects to be
cash flow neutral in 2017 based on this capital program and current
strip prices for oil and gas.
Forward-Looking Statements
This release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Statements that are not strictly historical
statements constitute forward-looking statements and may
often, but not always, be identified by the use of such
words such as "expects", "believes", "intends", "anticipates",
"plans", "estimates", "potential", "possible", or "probable"
or statements that certain actions, events or results "may",
"will", "should", or "could" be taken, occur or be achieved.
Forward looking statements include gross drilling locations,
estimated drilling and completion costs, EURs, IRR and PV-10 for
enhanced completion techniques, among others. This release
uses the term “EUR” to describe estimates of potentially
recoverable hydrocarbons that the SEC rules prohibit from being
included in filings with the SEC. These are based on the Company’s
internal estimates of hydrocarbon quantities that may be
potentially discovered through exploratory drilling or recovered
with additional drilling or recovery techniques. These quantities
do not constitute “reserves” within the meaning of the Society of
Petroleum Engineer’s Petroleum Resource Management System or SEC
rules and are subject to substantially greater uncertainties
relating to recovery than reserves. “EUR,” or Estimated Ultimate
Recovery, refers to our management’s internal estimates based on
per well hydrocarbon quantities that may be potentially recovered
from a hypothetical future well completed as a producer in the
area. For areas where the Company has no or very limited operating
history, EURs are based on publicly available information relating
to operations of producers operating in such areas. For areas
where the Company has sufficient operating data to make its own
estimates, EURs are based on internal estimates by the Company’s
management and reserve engineers. Forward-looking statements are
based on current beliefs and expectations and
involve certain assumptions or estimates that
involve various risks and uncertainties that could cause
actual results to differ materially from those reflected in the
statements. These risks include, but are not limited to, effects on
market price of the Company's common stock and on the Company's
ability to access the capital markets, and the risks set forth in
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2015 and other filings submitted by the Company
to the SEC, copies of which may be obtained from the
SEC's website at www.sec.gov or through the Company's
website at www.halconresources.com. Readers should not
place undue reliance on any such forward-looking statements, which
are made only as of the date hereof. The Company has no
duty, and assumes no obligation, to update forward-looking
statements as a result of new information, future events
or changes in the Company's expectations.
The disclosure in this press release of PV-10
value at strip prices of enhanced completions may also be
considered a non-GAAP financial measure, which differs from the
GAAP standardized measure of discounted future net cash flows. The
standardized measure is calculated based estimates of year-end
proved reserves using average first day of the month prices for the
preceding twelve month period, reduced by estimated costs based on
year-end economic conditions and estimated future income tax
expenses. Because of these differences, there is no corresponding
GAAP measure for the PV-10 value disclosed in this press release.
Accordingly, it is not practicable for us to reconcile the PV-10
value disclosed herein to the GAAP standardized measure of
discounted future net cash flows. PV-10 value is an important
measure used by investors and independent oil and gas producers for
evaluating relative significance of oil and natural gas
properties.
Contact:
Quentin Hicks
SVP, Finance & Investor Relations
Halcón Resources
(832) 538-0557
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