Halcon Resources (NYSE: HK) Acquires Bakken Assets

Written By Brianna Panzica

Posted October 22, 2012

Halcón Resources (NYSE: HK) is a young company. The oil and gas exploration and development firm has only been in operation since November 2011, though it was previously operating as RAM Energy Resources, Inc.

But despite its short existence, it’s already managed to build up assets across shale deposits in the U.S.

The company has 45,000 net acres in the Mississippian Lime region. It boasts an expanding acreage in the Utica and Point Pleasant formations, and it has 55,000 net acres in the Bakken and Three Forks formations.

In addition, it holds assets in the Tuscaloosa Marine Shale formations, the Eagle Ford shale, the Midway and Navarro formations, and the Wilcox shale.

But today it announced a large expansion of these resources, focused on one of the most popular of all the formations: the Bakken.

Halcón Resources is purchasing 81,000 net acres of undeveloped oil and gas assets in the Williston Basin from Petro-Hunt LLC for $1.45 billion.

The bid is made up of $700 million in cash and $750 in equity. The equity will be in preferred shares that will later convert to common stock at $7.45.

The acreage is located mainly in North Dakota’s Williams, Mountrail, McKenzie, and Dunn Counties, providing assets in the Bakken and Three Forks formations.

Production from the five drilling rigs currently operating on these assets is 10,500 barrels of oil equivalent per day, though third party estimates show there could be as much as 42.4 million barrels of oil equivalent, with 88% oil.

Canada Pension Plan Investment Board (CPP) will help the company out with this purchase. CPP announced today it will purchase a 1.4 percent stake in Halcón Resources for $300 million, with common stock valued at $7.16 per share, contingent on the successful closure of the acquisition.

From the press release:

Bruce W. Hunt, President of Petro-Hunt, L.L.C., commented, “We are pleased to become a significant Halcón shareholder through this transaction. The track record of Halcón’s management team speaks for itself and we are confident they will do a great job of developing these solid assets. Petro-Hunt has a long history of operating oil and gas properties in the Williston Basin. We will continue to operate production of approximately 24,000 Boe/d and develop our 600,000 plus acres of oil and gas leasehold in the Williston Basin with the full attention of our existing staff.”

Halcón’s CEO and chairman Floyd C. Wilson said that the new acquisition would increase the company’s proved reserves by more than 58%, with liquids accounting for 79% of the total reserves.

The acquisition was unanimously approved by Halcón’s board of directors, and the transaction is slated for completion by December.

Halcón was up 0.57% on Monday afternoon to $7.11.

That’s all for now,

Brianna Panzica

follow basic@brianna_panzica on Twitter

Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.

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