Halcon Reduces Rig Count

U.S. independent oil company Halcón Resources Corporation has decided to reduce its rig count in July due to "significant" decline in its oil price realizations Halcón Resources Corporation, Kallanish Energy reports. The firm said on Tuesday it will reduce its operated rig next month from four to three because of lower near-term realized oil prices in the Midland market. CEO Floyd Wilson said the company will decrease its cash flow outspend and still be able to generate substantial near-term production growth with three rigs running. “With widening MidCush differentials, we have seen our recent oil price realizations decline significantly,” he said. “We expect to have a substantial portion of our oil on pipe to the Gulf Coast by the second half of 2019 which should result in our receiving a premium to WTI based on current forward prices, net of transport fees.” Halcón has started hedging Gulf Coast pricing differentials to ensure the company receives a premium to WTI pricing once it begins sending oil to the Gulf Coast. It’s currently in “advanced negotiations” to secure 25,000 barrels per day (BPD) of firm capacity on an undisclosed pipeline to the Gulf Coast, to be in service by H2 2019. “The agreement isn’t expected to include any minimum volume commitments or similar obligations,” the firm added. Through current MidCush hedges, which include April hedge monetization proceeds, Halcón will receive a $3.90/Bbl discount to WTI on 8,000 BPD of production for the second half of 2018, and a $0.03/Bbl premium to WTI on 12,000 BPD for the first half of 2019. The firm is also hedging based on Maggelan East Houston and WAHA prices. “Between now and when we get our oil to the Gulf Coast, we have a good portion of our projected oil production hedged with MidCush basis hedges,” noted Wilson. “We continue to evaluate options to potentially monetize some or all of our Halcón Field Services infrastructure assets and will comment further on this process as appropriate.” The Delaware Basin-focused producer expects its second-quarter production to be in the range of 13,000-14,000 BPD as per guidance. The impact of the reduced rig activity will be disclosed in the company’s next earnings release. Joseph F. Barone ShaleDirectories.com 610.764.1232 jbarone@shaledirectories.com www.shaledirectories.com

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