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Why oil production growth captures Halcon’s focus

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Halcon Resources is still fixated with oil

In the previous parts of this series, we have discussed Halcon Resources’ (HK) production portfolio that is spread throughout some of the most prolific liquids-rich basins in the US. The company has continuously focused on increasing oil-based production and re-adjusted its asset portfolio to gain from increasing crude oil prices. However, the recent fall in crude price may cause the company to re-think its strategy.

In this article and the next, we’ll try to find out the oil-to-gas-to-NGL (or natural gas liquids) split in the company’s production and revenue.

Oil

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Crude oil production

From 2011 to 2013, Halcon Resources’ (HK) oil production has increased more than 10 times from 884 thousand barrels to 10.1 million barrels. The growth has continued in 2014. In September 2014, the company produced ~11.1 million barrels, 31% higher than its September 2013 production.

The spurt in oil production has resulted from increased drilling and higher volumes from properties HK acquired in 2012 in the Bakken / Three Forks, Woodbine, and the Eagle Ford formation in East Texas.

Most of its acquisitions are assets with oil-heavy wells or formations. Other energy companies that are participating in this trend of boosting crude oil and liquids production include Exxon Mobil (XOM), Hess Corporation (HES), Marathon Oil Corporation (MRO), and Occidental Petroleum (CXO). Most of these companies are components of the Energy Select Sector SPDR ETF (XLE).

You can read Market Realist’s articles on Exxon’s 3Q14 earnings in A key guide to ExxonMobil’s 3Q14 earnings.

Has the oil volume increase translated into higher revenues for HK? How much has oil price realization affected the company’s revenues? Read the following section to find out.

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