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The Inside Details of Halcón Resources’ Mounting Debt

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Halcón Resources’ debt

As of March 31, 2016, Halcón Resources’ (HK) total debt stood at ~$2.88 billion. With only ~$9 million in cash and cash equivalents, Halcón Resources’ net debt was ~$2.87 billion at the end of 1Q16, including:

  • $157 million in senior secured revolving credit facility
  • $688 million in 8.625% senior secured second lien notes (2L Notes) due 2020
  • $111 million in 12.0% senior secured second lien notes (2L Notes)   due 2020
  • $1.01 billion in 13.0% senior secured third lien notes (3L Notes) due 2022

The Inside Details of Halcón Resources' Mounting Debt

Thus, Halcón Resources total debt consists of more than $1.97 billion in secured debt. Halcón Resources’ total debt also contains unsecured notes and convertible notes, including:

  • $312 million in 9.750% senior notes due 2020
  • $296 million in 8.875% senior notes due 2021
  • $37 million in 9.250% senior notes due 2022
  • $268 million in 8.000% senior convertible notes due 2020

By comparison, S&P 500 (SPY) upstream companies Southwestern Energy (SWN), EOG Resources (EOG), Murphy Oil (MUR) and Chesapeake Energy (CHK) had net debts of ~$4.8 billion, ~$6.3 billion, ~$2.9 billion, and ~$10.4 billion, respectively, as of the same day.

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Debt restructuring benefits

Under the Restructuring Plan, Halcón Resources will eliminate ~$1.8 billion or ~63% of its total debt, and ~$222 million of Preferred Equity. This will also result in reducing in HK’s annual interest burden by more than $200 million. In 1Q16, Halcón Resources paid ~$41 million in interest and ~$26 million in preferred dividends.

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