Halcón Swoops Down On $381 Million In Delaware Basin Deals

Halcón Resources Corp. (NYSE: HK) laid out an impressive collection of A&D trophies Feb. 6—acquisitions or attractive purchase agreements that add a potential 51% more leasehold for the company’s Delaware Basin position.

Halcón said it has purchased, agreed to buy or has an option for 22,617 net acres in Ward County, Texas for about $381 million. The company said in October it held about 44,000 net acres in Ward, Pecos and Winkler counties, Texas.

The company will retain about $385 million in liquidity after additional purchases. Halcón said the assets produce about 1,325 barrels of oil equivalent per day (boe/d), putting its purchase price at about $14,674 per acre. The price assumes $35,000 per flowing boe/d.

Including its outstanding acquisitions and options, Halcón said it stands to build a 67,000-net-acre position in the basin at an average cost of $17,800 per acre. Its peers, Halcón said, have averaged about $32,000 per acre in their transactions.

In its largest acquisition, Halcón said Feb. 6 that it purchased 10,524 net acres in central and western Ward in an area Halcón refers to as the West Quito Draw. The deal is expected to close by April.

The West Quito Draw is in an actively developed area of the Delaware and, Halcón said, adds 251 additional gross operated drilling locations in the Wolfcamp and 3rd Bone Spring Sand zones. Estimated average lateral lengths are now about 7,300 ft, but Halcón said it plans for near-term drilling to target 10,000-ft laterals.

In the Wolfcamp, the company estimates wells will generate EURs of at least 1.1 million barrels of oil (bbl) and a total EUR of oil and gas of about 2.2 MMboe. Halcón projects that by adding in additional landing zones such as the Bone Springs and Avalon, gives it 383 potential operated horizontal locations within the position.

The asset is about 47% HBP, 91% operated with an average working interest of 72%. Halcón said it will consider bringing an operated rig to the area second-quarter 2018.

In early January 2018, the company also exercised a previously disclosed option to acquire 8,946 net acres in the northern area of Monument Draw for $108 million, or about $13,000 per acre.

Halcón additionally closed a deal to acquire 4,413 net acres contiguous to its existing Monument Draw area. This acquisition increases the company's Monument Draw base case location inventory by 48 operated locations with average lateral lengths of 10,833 ft.

In its Monument Draw area, Halcón said it also has an option agreement to purchase 7,680 net acres on the eastern side of its acreage. The company has until March 31 to exercise the option at $10,000 per acre. The Monument Draw East option would increase its base case inventory by 72 operated locations, all with lateral lengths of 10,000 ft.

Halcón estimates there are more than 144 potential operated horizontal locations on this acreage if other potential landing zones are included. Well results and type curves on this acreage are expected to be consistent with Monument Draw acreage the company already includes. EURs of oil and gas produce about 1.9 MMboe, with 80% of production oil.

The property is 100% operated with an average working interest of 100%.

Halcón intends to finance the acquisitions through more than $255 million in debt and public equity proceeds.

Darren Barbee can be reached at dbarbee@hartenergy.com.