Halcon Resources’ Normalized Free Cash Flow Fell in 2017

For 2017, Halcon Resources (HK) had a negative normalized FCF (free cash flow) of -236%—the third-lowest FCF among the upstream producers in the US. To learn more about our normalized FCF methodology and filtering criteria, read Part 1. In this part, we’ll discuss Halcon Resources’ FCF and normalized FCF trends.

For fiscal 2017, Halcon Resources reported a negative FCF of -$270 million, which is much higher than its negative FCF of -$11 million in 2016. In 2017, Halcon Resources’ quarterly FCF deteriorated in 1Q17, 2Q17, and 3Q17. The company’s quarterly FCF improved slightly in 4Q17, although it was still deeply in the negative territory.

Halcon Resources’ normalized FCF deteriorated to -236% in 2017 from -4% in 2016. The deterioration in Halcon Resources’ normalized FCF in 2017 could be due to the increase in its capital expenditures and the steep decrease in its OCF (operating cash flow).

Halcon Resources’ OCF decreased 59% to $115 million in 2017 from $278 million in 2016. In contrast to the OCF, Halcon Resources’ capital expenditures increased 33% to $384 million in 2017 from $290 million in 2016.

Year-to-date in 2018, Halcon Resources stock has fallen 33.7%. The Energy Select Sector SPDR Fund (XLE), which represents an index of stocks across the energy sector, decreased 6.1%.

Next, we’ll discuss Chesapeake Energy’s (CHK) FCF trends.