Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”) today announced it has entered into an agreement to sell its operated assets in the Williston Basin to an affiliate of Bruin E&P Partners, a portfolio company of Arclight Capital Partners, for $1.4 billion in cash. The effective date of the transaction is June 1, 2017 and is expected to close within 60 days. The purchase price is subject to certain adjustments for title and environmental defects and other customary adjustments. The Company will retain its non-operated Williston Basin assets; though it may monetize those assets in the future.
Current production associated with the assets being sold is approximately 29,000 boe/d, net. Pro forma for the asset sale, Halcón’s current production is approximately 7,500 boe/d, net. The Company plans to continue to run 2 rigs in the Delaware Basin for the remainder of 2017 and currently expects to exit 2017 with production in excess of 13,000 boe/d, net.
Floyd Wilson, Halcón’s Chairman, CEO, and President, commented, “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.”
The sale is conditioned upon the receipt of consent (the “Consent”) from greater than 50.0% of the holders of the Company’s 6.75% unsecured notes due 2025 (the “6.75% Notes”) to amend certain provisions of the indenture governing the 6.75% Notes. On July 10, 2017 Halcón obtained commitments to provide the Consent from greater than 50% of the 6.75% Note holders. Further details regarding the Consent and related indenture amendments can be found on a Form 8-K which will be filed with the SEC on July 11, 2017. The sale is also conditioned upon the receipt of shareholder approval of the asset sale prior to closing. On July 11, 2017, Halcón received commitments to support the asset sale from holders of greater than 50% of its common stock.
The Company will use a portion of the asset sale proceeds to make an offer to purchase up to 50.0% of its 6.75% Notes at 103% of par upon closing. Halcón will also use a portion of the asset sale proceeds to redeem all outstanding 12.0% Second Lien Notes due 2022, including related prepayment premiums. The table below illustrates the Company’s capitalization and estimated pro forma liquidity for the contemplated transactions and debt repurchases, assuming a borrowing base on the Company’s senior secured revolving credit facility of $125 million.