Key Takeaways From Halcon Resources Corporation (NYSE:HK)’s 4Q Report and More

Halcon Resources Corporation (NYSE:HK)

Halcon Resources Corporation (NYSE:HK) reported Q4 2016 earnings results on February 28 after market close, posting adjusted earnings and revenue that expanded from a comparable quarter a year earlier. The company’s shares surged on the upbeat earnings report.

Earnings figures at a glance

Adjusted EPS of $0.66 was up from $0.41 in the same quarter a year ago. Analysts on the average were expecting earnings of $0.50, so Halcon topped earnings expectations. Revenue came in at $130.3 million, indicating an increase of 12.2% year-over-year.

Cost controls

Halcon Resources Corporation (NYSE:HK) touted its success in cost controls, saying it has been able to significantly transform its financial setting over just a few months. As a result, the management said that the company has $100 million in cash and $600 million also remains undrawn under its revolver credit. Some of the measures Halcon has taken to reset its financials with the view of enhancing financial flexibility include pushing back maturities of some of its debts.

Production impact

Halcon shared details of its production targets for 2017 and beyond. For instance, the company said it expects to exit 2017 with an output level that is more than 42,000 BOE per day. However, that will require the company to steadily increase production at its various projects because the sale of El Halcon assets will take out a significant portion of the company’s production. El Halcon produces 5,500 BOE per day. Halcon expects to close the sale of El Halcon assets this month.

To make for the loss of El Halcon, Halcon intends to boost output at its Delaware and Williston basins beginning 2H2017 if weather conditions are favorable.

Hedging arrangements

In what appears to be an effort to reduce the impact of oil price volatility on its earnings, Halcon Resources Corporation (NYSE:HK) has already hedged a significant proportion of its daily production. For 2017, the company said 18,750 oil barrels per day have been hedged at an average price that is more than $55 a barrel. The company has also inked 2018 hedging deal for 4,000 barrels per day at an average price of $55.25 a barrel. Halcon intends to continue monitoring the market to guide its future hedging decisions.

Stock movements

Shares of Halcon Resources Corporation (NYSE:HK) rose 3.5% to $8.38 in the regular session on Wednesday, and gained a further 0.78% in extended trading on the day. The stock is down more than 10% in 2017 and has declined more than 22% since a year ago.

Ticker Symbol HK
Last Price a/o, 4:02PM EST  $                            8.38
Average Volume (mlns) 1.34
Market Cap (mlns)  $                  802.39
Sales (mlns) $406.10
Shares Outstanding (mlns) 95.75
Share Float (mlns) 89.45
Shortable Yes
Optionable Yes
Inside Ownership 2.80%
Short Float 6.30%
Short Interest Ratio 4.2
Quarterly Return -11.51%
YTD Return -10.28%
Year Return 1423.64%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

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Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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