Why Halcon Resources’ production is increasing rapidly

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Halcon Resources’ production and reserves

In the previous parts of this series, we saw how Halcon Resources (HK) improved revenues and earnings in the first nine months of 2014 over the corresponding period in 2013. Rising production was the primary reason for the improved performance, which we’ll discuss in detail in this article.

In 2013, Halcon Resources’ production average surged ~254% to an average of 33,329 barrels of oil equivalent per day (or boe/d) compared to 9,404 boe/d in 2012. The surge has continued during the first nine months of 2014 when production averaged 40,769 boe/d, up 31%, compared to average daily production of 31,007 boe/d during the corresponding period a year ago.Reserves and Production chart

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Halcon’s liquids-rich play

High oil and liquids-rich natural gas content characterize Halcon’s core resource plays. In 2013, the company had ~136 MMboe (or million barrels of oil equivalent) of estimated proved reserves, which is 25% higher than the 2012 reserves level. In 2012, HK’s reserves increased five times over the 2011 level.

The impressive growth was a result of HK’s aggressive pursuit to increase presence in some of the most prolific liquid-rich areas, and re-balancing its asset portfolio.

Other key operators

The company operates primarily in the Bakken/Three Forks shale in the Williston Basin in North Dakota, the Eagle Ford shale in Texas, and the Tuscaloosa Marine Shale. Other energy upstream companies active in these regions include Devon Energy (DVN), EOG Resources Inc. (EOG), Pioneer Natural Resources (PXD), and Marathon Oil Corporation (MRO). Most of these are components of the Energy Sector Select SPDR ETF (XLE).

See the next part of this series to see how HK’s assets are split across regions.

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