Business Context and Reporting Period
This Form 8-K is filed by Halcón Resources Corporation (not Battalion Oil Corp) for the reporting period ending February 28, 2017. The filing reports the completion of a significant asset acquisition and related financing activities.
Key Financial Metrics and Transaction Details
- Acquisition Cost: $705.0 million (subject to customary post-closing adjustments).
- Assets Acquired: 20,901 net acres and related assets in the Southern Delaware Basin (Pecos and Reeves Counties, Texas) from Samson Exploration, LLC.
- Financing: Partially funded by net proceeds from the sale of approximately 5,518 shares of 8% automatically convertible preferred stock, which closed on February 27, 2017.
- Historical Performance: Audited statements of revenues and direct operating expenses for the acquired properties for 2015 and 2016 are included in Exhibit 99.1, though specific dollar amounts are not detailed in the main text.
Material Changes and Pro Forma Adjustments
The filing includes Unaudited Pro Forma Condensed Combined Financial Information (Exhibit 99.2) as of December 31, 2016. This information reflects:
- The acquisition of the Delaware Basin properties.
- The related preferred stock offering.
- Fresh-start accounting adjustments resulting from emerging from Chapter 11 bankruptcy.
- The divestiture of HK TMS LLC (Tuscaloosa Marine Shale assets).
Exclusion: The pro forma information does not yet reflect the pending disposition of East Texas Eagle Ford assets, announced on January 24, 2017.
Outlook, Risks, and Management Commentary
- Future Filings: The Company expects to file updated pro forma financial information reflecting the disposition of East Texas Eagle Ford assets within four business days after the transaction closes, expected on or about March 9, 2017.
- Accounting Status: The company has emerged from Chapter 11 bankruptcy, necessitating fresh-start accounting adjustments.
Investor Verification Checklist
- Verify the specific revenue and operating expense figures for the acquired properties in Exhibit 99.1.
- Review the Unaudited Pro Forma Condensed Combined Financial Information in Exhibit 99.2 to assess the combined entity's financial position.
- Monitor the closing of the East Texas Eagle Ford asset disposition and the subsequent filing of updated pro forma data.
- Confirm the final purchase price after customary post-closing adjustments.