August 1, 2018 - 4:15 PM EDT
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Halcón Resources Announces Second Quarter 2018 Results, Provides an Operational Update and Revised 2018 Guidance

DENVER, Aug. 01, 2018 (GLOBE NEWSWIRE) -- Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”) today announced its second quarter 2018 financial and operating results, provided an operational update and issued revised 2018 guidance.

Net production for the three months ended June 30, 2018 averaged 12,769 barrels of oil equivalent per day (Boe/d), representing a 16% increase from the first quarter of 2018 net production of 10,967 Boe/d.  Production for the second quarter was comprised of 68% oil, 16% natural gas liquids (NGLs) and 16% natural gas.  Second quarter production was negatively impacted by downtime primarily related to unexpected power reliability issues and inclement weather.  The Company estimates that without this excess downtime, second quarter average daily production would have been ~13,300 Boe/d. 

Halcón generated total revenues of $55.4 million for the second quarter of 2018.  The Company reported a net loss available to common stockholders of $(16.3) million or a net loss per basic and diluted share of $(0.10) for the same period.  After adjusting for selected items (see Selected Item Review and Reconciliation table for additional information), the Company generated net income of $24.2 million, or $0.15 per diluted share for the second quarter of 2018.  Adjusted EBITDA (see EBITDA Reconciliation table for additional information) totaled $55.1 million for the second quarter of 2018 as compared to $18.1 million for the first quarter of 2018.  The second quarter adjusted EBITDA included approximately $30.8 million of proceeds related to a monetization of MidCush hedges that occurred in the quarter. 

Excluding the impact of hedges, Halcón realized 90% of the average NYMEX oil price, 39% of the average NYMEX oil price for NGLs and 52% of the average NYMEX natural gas price during the second quarter of 2018.  Excluding the impact of the MidCush hedge monetizations, the Company realized hedge losses of approximately $5.0 million during the second quarter. 

Liquidity and Capital Spending

As of June 30, 2018, Halcón had liquidity of approximately $294 million consisting of $96 million of cash on hand plus an undrawn revolver borrowing base of $200 million less $2 million of letters of credit outstanding. 

During the second quarter of 2018, the Company incurred capital costs of approximately $132 million on drilling and completions, $214 million on acquisitions and divestitures (including the $200 million acquisition of its West Quito Draw properties) and $29 million on infrastructure, seismic and other. 

Hedging Update

As of August 1, 2018, Halcón had 11,500 barrels per day (Bbl/d) of oil hedged for the last six months of 2018 at an average WTI NYMEX price of $53.03 per barrel (Bbl).  For 2019, the Company has 15,504 Bbl/d of oil hedged at an average WTI NYMEX price of $56.27/Bbl.  For 2020, Halcón has 1,500 Bbl/d of oil hedged at an average WTI NYMEX price of $60.00/Bbl.  Additionally, the Company has 8,000 Bbl/d of MidCush vs. NYMEX WTI basis differential swaps in place for the second half of 2018 at -$11.69/Bbl, 12,000 Bbl/d in place for the first half of 2019 at -$3.02/Bbl and 4,000 Bbl/d in place for the second half of 2019 at -$3.95/Bbl.  Halcón also has 6,000 Bbl/d of Magellan East Houston vs. NYMEX WTI basis differential swaps in place for 2020 at $2.56/Bbl. 

As of August 1, 2018, the Company had 7,500 MMBtu/d of natural gas hedged for the last six months of 2018 at an average price of $3.16/MMBtu.  For 2019, Halcón has 20,000 MMBtu/d of gas hedged at an average price of $2.80/MMBtu.  The Company also has 15,000 MMBtu/d of WAHA vs. NYMEX gas basis differential swaps in place for the second half of 2018 at -$1.10/MMBtu in addition to 25,500 MMBtu/d in place for the full year 2019 at -$1.18/MMBtu.

As of August 1, 2018, Halcón had 2,500 Bbl/d of NGL swaps in place for 2019 at an average price of $29.09/Bbl. 

Operations Update

The Company is currently producing in excess of 13,750 Boe/d net and running three operated rigs in the Delaware Basin.  The Company expects to maintain this rig level through the remainder of 2018 in addition to running one full-time frac crew.

Halcón currently holds 21,987 net acres in its Monument Draw area.  The Company has eight horizontal Wolfcamp wells currently producing, two of which began producing in mid-July.  Additionally, Halcón has one well flowing back after completion, one well being completed and four wells waiting on completion.  Halcón expects to have all of these wells online by the end of the third quarter of 2018, bringing its total producing horizontal wells to 14, with no additional wells planned to be put online in Monument Draw until early 2019. 

Halcón currently holds 10,834 net acres in its West Quito Draw area.  The Company recently spud its first two operated horizontal Wolfcamp wells which are scheduled to be completed early in the fourth quarter of 2018.  In addition to these two wells, the Company expects three more wells to be put online in West Quito Draw around year end 2018. 

Halcón currently holds 26,859 net acres in its Hackberry Draw area.  The Company has drilled and completed 15 horizontal wells (13 Wolfcamp, one 2nd Bone Spring and one 3rd Bone Spring).  Halcón has one well flowing back after frac and two wells currently being drilled.  Including the well currently flowing back after frac, the Company expects to put five additional wells online in Hackberry Draw before year end 2018.

Recent Well Results

Within its Monument Draw area in Ward County, Halcón’s Sealy Ranch 6401H well began producing oil in late June.  This Wolfcamp well was drilled in the central portion of Monument Draw and completed with a 9,591’ effective lateral length.  The well reached a 2-stream peak 24 hour IP rate of 2,219 Boe/d (89% oil) on a 38/64” choke.  The current 30-day average rate on this well is 1,756 Boe/d (86% oil) and continues to increase.  The Company also recently began flowing back its Sealy Ranch 7701H and 7702H wells with average lateral length of 9,952’.  These wells were completed “wine rack style” in the lower and upper Wolfcamp zones 330’ apart horizontally and 250’ apart vertically.  The daily rates on these wells continue to increase with the latest 2-stream peak 24 hour IP rate for each well reaching 1,500 and 1,300 boe/d, respectively. 

Within its Hackberry Draw area in Pecos County, Halcón recently put the Bobby West 1H well on production.  The Bobby West 1H, located in the northeast portion of Hackberry Draw, was completed with a 9,755’ effective lateral length and had a 2-stream peak 24 hour IP rate of 1,352 Boe/d (89% oil) on a 34/64” choke in addition to a 30 day peak 2-stream IP rate of 1,085 Boe/d (87% oil). 

Long-Term Oil and Gas Takeaway Agreements

Halcón recently signed a 15-year agreement with an affiliate of Salt Creek Midstream, LLC (“SCM”) that provides a comprehensive takeaway solution for the Company’s oil production in Monument Draw and West Quito Draw.  Under the terms of the agreement, SCM will construct oil lines to Halcón’s central production facilities in both the Monument Draw and West Quito Draw areas.  The oil lines will run to a terminal in Wink, Texas which will then have multiple outlets to various in-basin and long-haul pipelines.  The agreement also guarantees 25,000 Bbl/d of firm capacity on a long-haul pipeline to Corpus Christi, Texas, which is expected to be operational in the second half of 2019.  Halcón’s 25,000 Bbl/d of capacity can be increased on an annual basis.  The Company previously signed a 15-year gas takeaway and processing agreement with SCM whereby its Monument Draw and West Quito Draw gas will be taken to SCM’s newly constructed processing plant located near Pecos, Texas.  The agreements with SCM provide the Company with flow assurance for all of its expected near-term oil and gas production in both Monument Draw and West Quito Draw as well as premium coastal pricing for its oil when the long-haul pipeline is operational in 2019.  There are no minimum volume commitments or other similar arrangements associated with these agreements.   In Hackberry Draw, Halcón has an oil agreement in place through August 2019 and a gas agreement through 2027 providing flow assurance to the Midland market for its oil and the WAHA market for gas (firm capacity).  The Company is evaluating oil takeaway options for its anticipated Hackberry Draw production after August 2019.

Potential Sale of Halcón Field Services

Halcón has engaged Scotiabank and BMO Capital Markets as its financial advisors for a potential partial or full sale of its Halcón Field Services infrastructure assets.  The assets include water gathering, recycling, disposal and sourcing facilities, as well as gas gathering and treating infrastructure, power transmission and crude gathering systems across the Company’s operating areas in the Delaware Basin. 

Revised 2018 Guidance

The guidance illustrated in the table below has been updated from our previously issued 2018 guidance to reflect three rigs running from late July 2018 through year-end 2018. 

 3Q 20184Q 2018Full Year
2018
Production (Boe/d)   
Total14,500 – 15,50019,000 - 21,00014,000 – 16,000
% Oil  66% - 70%
% Gas  15% - 17%
% NGL  15% - 17%
    
Capex ($MM)   
D&C Capex (1)  $390 - $440
Infrastructure, Seismic and Other Capex  $90 - $110
    
Operating Costs and Expenses   
Lease Operating & Workover ($/Boe)  $4.50 – $5.50
Gathering, Transportation & Other ($/Boe)  $4.50 – $5.50
Cash G&A ($MM)  $40 - $44
Production Taxes (% of Revenue)  6% – 7%
    
(1) Excludes capitalized G&A.   
    

Floyd C. Wilson, Halcón’s Chairman and CEO commented: “While greater than expected downtime during the quarter resulted in production coming in slightly lower than guidance, current low net crude realizations in the Delaware Basin dictate that now is not the time to press for higher production rates.  Having said this, we expect improved power reliability and less downtime going forward with the construction of a new substation within our Hackberry Draw acreage to be completed in August 2018.  Our four most recently completed wells in Monument Draw and Hackberry Draw are exceeding expectations.  The Sealy Ranch 6401H may be our best well drilled to date in the Delaware Basin.  With six additional wells planned to be put online in this area over the next few months, we will have proven up the Wolfcamp across the vast majority our acreage position in Monument Draw.  We recently began drilling our first two-well pad at West Quito Draw and look forward to putting these wells online later this year.  Finally, our recent agreement with Salt Creek Midstream is very important to us as it will allow us to get a majority of our oil production to premium Gulf Coast markets in the second half of 2019.  We have an attractive multi-year business plan that provides for the continued delineation of our acreage while simultaneously building scale and improving our balance sheet.  While our business plan includes a significant amount of outspend over the near-term, we have several options available to fund this outspend excluding the issuance of equity.  These options include an HFS divestiture, joint ventures and other options.  We are more confident than ever in the quality of our acreage given recent well results and technical findings.  As we execute on our business plan we will create a very valuable enterprise over the next few years.”

Conference Call and Webcast Information

Halcón Resources Corporation (NYSE:HK) has scheduled a conference call for Thursday, August 2, 2018, at 11:00 a.m. EDT (10:00 a.m. CDT).  To participate in the conference call, dial (866) 548-4713 for domestic callers, and (323) 794-2093 for international callers a few minutes before the call begins and reference Halcón Resources conference ID 4068519.  The conference call will also be webcast live over the Internet on Halcón’s website at http://www.halconresources.com in the Investors section under Events and Presentations.    

About Halcón Resources

Halcón Resources Corporation is an independent energy company focused on the acquisition, production, exploration and development of liquids-rich onshore oil and natural gas assets in the United States.

For more information contact Quentin Hicks, Executive Vice President of Finance, Capital Markets & Investor Relations, at 303-802-5541 or [email protected]

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.  Forward-looking statements include, among others, statements about anticipated production, divestitures, liquidity, capital spending and drilling and completion plans.  Forward-looking statements may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", “projects”, "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 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, those set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (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.

           
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
           
    Three Months Ended  Six Months Ended 
    June 30, June 30,
     2018   2017   2018   2017 
Operating revenues:        
 Oil, natural gas and natural gas liquids sales:        
  Oil  $  48,756  $  108,695  $  91,825  $  231,216 
  Natural gas    1,560     5,946     3,879     12,165 
  Natural gas liquids    4,991     5,306     8,703     11,331 
   Total oil, natural gas and natural gas liquids sales     55,307     119,947     104,407     254,712 
 Other    108     190     263     1,023 
  Total operating revenues    55,415     120,137     104,670     255,735 
           
Operating expenses:        
 Production:        
  Lease operating    5,314     20,380     10,229     41,024 
  Workover and other    1,956     7,128     3,317     18,569 
  Taxes other than income    3,226     10,727     6,255     22,303 
 Gathering and other    5,956     11,812     12,378     23,754 
 Restructuring    27     50     128     805 
 General and administrative    14,255     26,922     29,465     47,771 
 Depletion, depreciation and accretion    16,096     31,962     32,087     64,848 
 (Gain) loss on sale of oil and natural gas properties    2,225     (4,500)    5,904     (235,690)
  Total operating expenses    49,055     104,481     99,763     (16,616)
Income (loss) from operations    6,360     15,656     4,907     272,351 
Other income (expenses):        
 Net gain (loss) on derivative contracts    (12,100)    24,156     (6,197)    50,554 
 Interest expense and other    (10,534)    (19,635)    (17,582)    (44,478)
 Gain (loss) on extinguishment of debt    -      -      -     (56,898)
  Total other income (expenses)    (22,634)    4,521     (23,779)    (50,822)
Income (loss) before income taxes    (16,274)    20,177     (18,872)    221,529 
Income tax benefit (provision)     -      -      -     (12,000)
Net income (loss)    (16,274)    20,177     (18,872)    209,529 
Non-cash preferred dividend    -      (47,206)    -     (48,007)
Net income (loss) available to common stockholders $  (16,274) $  (27,029) $  (18,872) $  161,522 
           
Net income (loss) per share of common stock:        
  Basic $  (0.10) $  (0.19) $  (0.12) $  1.37 
  Diluted $  (0.10) $  (0.19) $  (0.12) $  1.37 
Weighted average common shares outstanding:        
  Basic    157,943     143,545     155,925     117,554 
  Diluted    157,943     143,545     155,925     118,209 
           


     
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
     
  June 30, 2018 December 31, 2017
Current assets:   
 Cash and cash equivalents$  95,870  $  424,071 
 Accounts receivable   36,882     36,416 
 Receivables from derivative contracts   19,391     677 
 Prepaids and other   12,240     10,628 
 Total current assets   164,383     471,792 
Oil and natural gas properties (full cost method):   
 Evaluated   1,163,297     877,316 
 Unevaluated   1,073,595     765,786 
 Gross oil and natural gas properties   2,236,892     1,643,102 
 Less - accumulated depletion   (598,905)    (570,155)
 Net oil and natural gas properties   1,637,987     1,072,947 
Other operating property and equipment:   
 Other operating property and equipment   153,123     101,282 
 Less - accumulated depreciation   (7,093)    (4,092)
 Net other operating property and equipment   146,030     97,190 
Other noncurrent assets:   
 Receivables from derivative contracts   1,446     - 
 Funds in escrow and other   1,963     1,691 
Total assets$  1,951,809  $  1,643,620 
     
Current liabilities:   
 Accounts payable and accrued liabilities$  135,541  $  131,087 
 Liabilities from derivative contracts   53,513     19,248 
 Total current liabilities   189,054     150,335 
Long-term debt, net   612,353     409,168 
Other noncurrent liabilities:   
 Liabilities from derivative contracts   20,973     7,751 
 Asset retirement obligations   6,546     4,368 
Commitments and contingencies   
Stockholders' equity:   
 Common stock: 1,000,000,000 shares of $0.0001 par value authorized;    
 160,599,853 and 149,379,491 shares issued and outstanding as of    
 June 30, 2018 and December 31, 2017, respectively   16     15 
 Additional paid-in capital   1,086,037     1,016,281 
 Retained earnings (accumulated deficit)   36,830     55,702 
 Total stockholders' equity   1,122,883     1,071,998 
Total liabilities and stockholders' equity$  1,951,809  $  1,643,620 
   


           
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
           
    Three Months Ended  Six Months Ended 
    June 30, June 30,
     2018   2017   2018   2017 
Cash flows from operating activities:        
Net income (loss) $  (16,274) $  20,177  $  (18,872) $  209,529 
Adjustments to reconcile net income (loss) to net cash        
provided by (used in) operating activities:        
 Depletion, depreciation and accretion    16,096     31,962     32,087     64,848 
 (Gain) loss on sale of oil and natural gas properties    2,225     (4,500)    5,904     (235,690)
 Stock-based compensation, net    4,237     12,943     7,818     21,290 
 Unrealized loss (gain) on derivative contracts    37,874     (18,005)    26,761     (42,219)
 Amortization of deferred loan costs    359     711     651     896 
 Amortization of discount and premium    51     243     183     1,887 
 Loss (gain) on extinguishment of debt    -     -     -     56,898 
 Accrued settlements on derivative contracts    96     (2,255)    1,588     (3,520)
 Other income (expense)    (93)    (121)    (1,479)    (1,004)
Cash flow from operations before changes in working capital    44,571     41,155     54,641     72,915 
Changes in working capital    11,589     35,928     (11,063)    49,728 
Net cash provided by (used in) operating activities    56,160     77,083     43,578     122,643 
           
Cash flows from investing activities:        
 Oil and natural gas capital expenditures    (124,076)    (77,407)    (251,961)    (121,210)
 Proceeds received from sale of oil and natural gas properties    5,813     -     1,779     477,306 
 Acquisition of oil and natural gas properties    (200,437)    (200,183)    (332,901)    (907,487)
 Acquisition of other operating property and equipment    -     -     -     (25,538)
 Other operating property and equipment capital expenditures    (22,521)    (13,233)    (53,242)    (13,735)
 Proceeds received from sale of other operating property and equipment    -     66     1,899     10,352 
 Funds held in escrow and other    (2)    285     155     285 
Net cash provided by (used in) investing activities    (341,223)    (290,472)    (634,271)    (580,027)
           
Cash flows from financing activities:        
 Proceeds from borrowings    -     206,000     206,000     1,235,000 
 Repayments of borrowings    -     (53,000)    -     (1,118,000)
 Cash payments to Noteholders    -     -     -     (30,917)
 Debt issuance costs    (634)    (1,315)    (4,005)    (16,823)
 Preferred stock issued    -     -     -     400,055 
 Common stock issued    -     -     63,480     - 
 Offering costs and other    (508)    (432)    (2,983)    (11,934)
Net cash provided by (used in) financing activities    (1,142)    151,253     262,492     457,381 
           
Net increase (decrease) in cash and cash equivalents    (286,205)    (62,136)    (328,201)    (3)
           
Cash and cash equivalents at beginning of period    382,075     62,157     424,071     24 
Cash and cash equivalents at end of period $  95,870  $  21  $  95,870  $  21 
           


         
HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA
(Unaudited)
         
  Three Months Ended June 30, Six Months Ended June 30,
   2018   2017   2018   2017 
         
Production volumes:        
Crude oil (MBbls)    795     2,470     1,488     5,101 
Natural gas (MMcf)    1,083     2,579     1,969     5,018 
Natural gas liquids (MBbls)    187     405     333     830 
Total (MBoe)    1,162     3,304     2,149     6,767 
Average daily production (Boe/d)    12,769     36,308     11,873     37,387 
         
Average prices:        
Crude oil (per Bbl) $  61.33  $  44.01  $  61.71  $  45.33 
Natural gas (per Mcf)    1.44     2.31     1.97     2.42 
Natural gas liquids (per Bbl)    26.69     13.10     26.14     13.65 
Total per Boe    47.60     36.30     48.58     37.64 
         
Cash effect of derivative contracts:        
Crude oil (per Bbl) $  32.24  $  2.46  $  13.67  $  1.60 
Natural gas (per Mcf)    0.13     0.02     0.11     0.03 
Natural gas liquids (per Bbl)    -      -      -      -  
Total per Boe    22.18     1.86     9.57     1.23 
         
Average prices computed after cash effect of settlement of derivative contracts: 
Crude oil (per Bbl) $  93.57  $  46.47  $  75.38  $  46.93 
Natural gas (per Mcf)    1.57     2.33     2.08     2.45 
Natural gas liquids (per Bbl)    26.69     13.10     26.14     13.65 
Total per Boe    69.78     38.16     58.15     38.87 
         
Average cost per Boe:        
Production:        
Lease operating $  4.57  $  6.17  $  4.76  $  6.06 
Workover and other    1.68     2.16     1.54     2.74 
Taxes other than income    2.78     3.25     2.91     3.30 
Gathering and other, as adjusted (1)    4.73     3.02     5.11     2.83 
Restructuring    0.02     0.02     0.06     0.12 
General and administrative, as adjusted (1)   8.68     3.98     9.91     3.70 
Depletion   12.30     9.20     13.38     9.13 
         
(1) Represents gathering and other and general and administrative costs per Boe, adjusted for items noted in the reconciliation below: 
         
General and administrative:        
General and administrative, as reported $  12.27  $  8.15  $  13.71  $  7.06 
Stock-based compensation:        
Non-cash    (3.65)    (3.92)    (3.64)    (3.15)
Transaction costs and other:        
Cash     0.06     (0.25)    (0.16)    (0.21)
General and administrative, as adjusted(2) $  8.68  $  3.98  $  9.91  $  3.70 
         
Gathering and other, as reported$  5.13  $  3.58  $  5.76  $  3.51 
  Rig stacking charges and other    (0.40)    (0.56)    (0.65)    (0.68)
Gathering and other, as adjusted(3)$  4.73  $  3.02  $  5.11  $  2.83 
         
Total operating costs, as reported $  26.43  $  23.31  $  28.68  $  22.67 
  Total adjusting items    (3.99)    (4.73)    (4.45)    (4.04)
Total operating costs, as adjusted(4) $  22.44  $  18.58  $  24.23  $  18.63 
         
(2) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash stock-based compensation charges relating to equity awards under our incentive stock plans, as well as other cash charges associated with certain transactions. The Company believes that it is useful to understand the effects that these charges have on general and administrative expenses and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(3) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig stacking charges incurred as a result of reductions in our drilling activities due to a dramatic decline in oil and natural gas prices beginning in 2014. The Company believes that it is useful to understand the effects that these charges have on gathering and other expense and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(4) Represents lease operating, workover and other expense, taxes other than income, gathering and other expense and general and administrative costs per Boe, adjusted for items noted in reconciliation above.


         
HALCÓN RESOURCES CORPORATION 
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited) 
(In thousands, except per share amounts) 
         
  Three Months Ended June 30, Six Months Ended June 30,
   2018   2017   2018   2017 
As Reported:        
Net income (loss) available to common stockholders, as reported $  (16,274) $  (27,029) $  (18,872) $  161,522 
Non-cash preferred dividend    -      47,206     -      48,007 
Net income (loss), as reported    (16,274)    20,177     (18,872)    209,529 
         
Impact of Selected Items:        
Unrealized loss (gain) on derivatives contracts:        
Crude oil $  37,835  $  (17,176) $  27,710  $  (40,736)
Natural gas     (564)    (829)    (1,552)    (1,483)
Natural gas liquids    603     -      603     -  
Total mark-to-market non-cash charge    37,874     (18,005)    26,761     (42,219)
(Gain) loss on sale of oil and natural gas properties    2,225     (4,500)    5,904     (235,690)
Loss (gain) on extinguishment of debt    -      -      -      56,898 
Deferred financing costs expensed (1)    -      305     -      305 
Restructuring    27     50     128     805 
Rig stacking charges, transaction costs and other    387     2,679     1,606     6,009 
Selected items, before income taxes    40,513     (19,471)    34,399     (213,892)
Income tax effect of selected items (2)     -      -      -      12,000 
Selected items, net of tax    40,513     (19,471)    34,399     (201,892)
         
As Adjusted:        
Net income (loss) available to common stockholders, excluding selected items (3)(4) $  24,239  $  706  $  15,527  $  7,637 
         
Basic net income (loss) per common share, as reported $  (0.10) $  (0.19) $  (0.12) $  1.37 
Impact of selected items    0.25     0.19     0.22     (1.31)
Basic net income (loss) per common share, excluding selected items (3) $  0.15  $  -   $  0.10  $  0.06 
         
         
Diluted net income (loss) per common share, as reported $  (0.10) $  (0.19) $  (0.12) $  1.37 
Impact of selected items    0.25     0.19     0.22     (1.31)
Diluted net income (loss) per common share, excluding selected items (3)(5) $  0.15  $  -   $  0.10  $  0.06 
         
         
Net cash provided by (used in) operating activities $  56,160  $  77,083  $  43,578  $  122,643 
Changes in working capital    (11,589)    (35,928)    11,063     (49,728)
Cash flow from operations before changes in working capital    44,571     41,155     54,641     72,915 
Cash components of selected items    318     4,984     294     10,255 
Income tax effect of selected items (2)    -      -      -      12,000 
Cash flow from operations before changes in working capital, adjusted for selected items (3)(4) $  44,889  $  46,139  $  54,935  $  95,170 
         
(1) For the 2017 columns, this represents non-recurring charges in connection with  the redetermination of the Company's borrowing base under its senior revolving credit facility.
         
(2) For the 2017 column, this represents the tax impact from the estimated alternative minimum tax generated primarily by the gain from the sale of the El Halcón Assets.  
         
(3) Net income (loss) and earnings per share excluding selected items and cash flow from operations before changes in working capital adjusted for selected items are non-GAAP measures presented based on management's belief that they will enable a user of the financial information to understand the impact of these items on reported results. Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. These financial measures are not measures of financial performance under GAAP and should not be considered as an alternative to net income, earnings per share and cash flow from operations, as defined by GAAP. These financial measures may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Halcón's performance.
         
(4)  For the three and six months ended June 30, 2018, net income (loss) and earnings per share excluding selected items and cash flow from operations before changes in working capital include approximately $30.8 million of proceeds related to a monetization of MidCush hedges that occurred in the second quarter of 2018.
         
(5) The impact of selected items for the three months ended June 30, 2018 and 2017 was calculated based upon weighted average diluted shares of 158.1 million and 144.3 million, respectively, due to the net income available to common stockholders, excluding selected items. The impact of selected items for the six months ended June 30, 2018 and 2017 was calculated based upon weighted average diluted shares of 156.2 million and 118.2 million, respectively, due to the net income available to common stockholders, excluding selected items.
         


         
HALCÓN RESOURCES CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited) 
(In thousands)
         
  Three Months Ended June 30, Six Months Ended June 30,
   2018   2017   2018   2017 
         
Net income (loss), as reported$  (16,274) $  20,177  $  (18,872) $  209,529 
Impact of adjusting items:      
Interest expense    11,234     19,557     20,836     44,747 
Depletion, depreciation and accretion   16,096     31,962     32,087     64,848 
Income tax provision (benefit)   -      -      -      12,000 
Stock-based compensation   4,237     12,943     7,818     21,290 
Interest income   (607)    (59)    (1,772)    (158)
(Gain) loss on sale of other assets   (93)    (65)    (1,334)    3 
Restructuring    27     50     128     805 
Loss (gain) on extinguishment of debt   -      -      -      56,898 
(Gain) loss on sale of oil and natural gas properties   2,225     (4,500)    5,904     (235,690)
Unrealized loss (gain) on derivatives contracts   37,874     (18,005)    26,761     (42,219)
Deferred financing costs expensed   -      305     -      305 
Rig stacking charges   147     1,860     1,092     4,603 
Transaction costs and other   240     819     514     1,406 
Adjusted EBITDA(1)(2)$  55,106  $  65,044  $  73,162  $  138,367 
         
(1)  Adjusted EBITDA is a non-gaap measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP. This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Halcón's performance.
         
(2)  Adjusted EBITDA for the three and six months ended June 30, 2018 includes approximately $30.8 million of proceeds related to a monetization of MidCush hedges that occurred in the second quarter of 2018. 
  

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Source: GlobeNewswire (August 1, 2018 - 4:15 PM EDT)

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