Halcón Resources Corporation (NYSE:HK) will soon acquire 20,748 net acres in the Southern Delaware Basin for $705 million with November 1, 2016, being the effective date. This came about following definitive agreements between HK and institutional investors to sell an estimated 5,518 shares with an automatic conversion of preferred stock. Another option agreement is the purchase of an additional 15,040 net acres in Ward County from a private operator, which will cost $11,000/acre.
This is not enough as far as HK is concerned because it is also exploring a purchase and sale agreement of its East Texas Eagle Ford assets, which currently produces about 6,000 net boe/d. The sale will be at a cost of $500 million.
Halcón is seeking for the most attractive North American oil basins
Halcón’s Chairman, CEO, and President, Floyd Wilson explained, “These transactions represent a strategic pivot for us into the Delaware Basin. After the consummation of these transactions, we will have core operating areas in two of the most attractive North American oil basins with decades of highly economic development drilling ahead of us.”
Financing of the transactions
It is obvious that these transactions will demand large amounts of capital. Halcón intends to use the $400 million that will be obtained from the private placement. The company is also looking at the divestiture of its El Halcón assets for $500 million. All these will be sufficient funds to acquire the Delaware assets with some extras that will be put into funding drilling capital to increase the asset base. HK is optimistic that its borrowing base will remain at $600 million.
Meanwhile, the company has vowed to do anything possible to improve its leverage profile thus much more should be expected in the next several years.