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Executives

Floyd Wilson – Chairman and CEO

Mark Mize – EVP, CFO and Treasurer

Steve Herod – President

Analysts

Brian Corales – Howard Weil

Brian Singer – Goldman Sachs

Neal Dingmann – SunTrust

Joseph Almon – JP Morgan

Steve Berman – Canaccord Genuity

Ronald Mills – Johnson Rice

Mike Kelly – Global Hunter

Jason Wangler – Wunderlich Securities

Chad Mabry – KLR Group

Jeff Robertson – Barclays

Halcon Resources Corporation (HK) Q3 2012 Earnings Call November 8, 2012 10:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Halcon Resources Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call maybe recorded.

I would now like to introduce your host for today’s conference, Chairman and CEO, Floyd Wilson. You may begin.

Floyd Wilson

Good morning and thanks for joining. This conference call contains forward-looking statements intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. For a detailed description of our disclaimers see our earnings release issued this morning.

Well, we’ve worked hard over the last several months, transforming a small E&P company with conventional production of about 4,000 barrels of oil equivalent per day into a formidable resource oil company, which will be producing over 25,000 barrels of oil equivalent per day by year-end.

We have amassed solid positions in our three core plays, those being the Woodbine, Eagle Ford, the Bakken, Three Forks and the Utica/Point Pleasant and we are planning on explosive growth in 2013 and beyond. We have 14 operated rigs running in our oily resource plays and we expect to add another six or seven by year-end, which would include the five rigs running on the acreage that we are acquiring in the Williston Basin, the new acreage there.

There are currently 18 wells being completed across our holdings. Going forward, we anticipate new wells coming on line regularly in all three of our core plays. I’ll spend a few minutes this morning discussing the updated outlook for CapEx and production provided in the earnings release issued this morning. That is the updated outlook for 2013.

We recently wrapped up our 2013 planning and budgeting process. That process involves competition for drilling capital within the budget and a steady eye on the balance sheet and liquidity. Important decision we make during this process relates to how and where our capital should be deployed. This topic is revisited often as new information on new properties become available such as the pending Williston Basin assets acquisition.

Our previous guidance for drilling and completion in 2013 was for about $900 million. We have reset our 2013 drilling and completions budget to approximately $1.2 billion. This represents a reallocation of capital to probably three core plays. These three plays will receive more than 90% of our 2013 drilling and completion budget. Very little credit is being given a wildcat drilling. Adds from that category will be upside, if any. And we are looking for ways to shave this budget a bit without changing our outlook for production growth.

It’s important to note that various factors such as resting period after frac jobs in the Utica/Point Pleasant infrastructure challenges in that area and a few others, regulatory or permitting delays and pad drilling all impact the timing of when new production goes online. We are in a very good position now to make a backward forecast of those factors for 2013. With that said, we continue to forecast an industry-leading production growth rate for next year.

Our three core plays are up and running. We’ve accumulated a premier position of more than 200,000 net acres in the Woodbine, Eagle Ford and we are the most active operator in that play. Operating efficiency and a culture that promotes creative thinking is crucial to the success of any oil company focusing on resource oil plays. I believe we have both of those factors. In an effort to become more efficient in Woodbine and Eagle Ford, we have implemented pad drilling already, reduced the size of the intermediate hole from 9.78 down to 8.75 quarters, which has helped us eliminate intermediate case in some areas of the play.

On average, we are experiencing cost savings of approximately $1 million per well in the areas where these drilling efficiencies are applied. When the process of utilizing microseismic on a few of our Woodbine wells to gain a more thorough understanding of what can be done to optimize our frac jobs and we’re using pad drilling everywhere. Super fracs are also being implemented in some parts of the play.

Currently we have 15 horizontal wells producing from the Woodbine in Leon County, six wells being completed and six wells are being drilled across our acreage in Leon, Madison and Grimes Counties. Two of those six wells being drilled will be completed in the Eagle Ford formation all six, two Eagle Ford and four Woodbine should be online by the end of the year.

Moving on to the Bakken, Three Forks, as you’re aware, we announced that we entered into an agreement with Petro-Hunt in another affiliate to acquire approximately 81,000 net acres of producing undeveloped land, perspective for the Bakken and Three Forks formations in North Dakota should close this about mid-December. This will take us up over 135,000 net acres in the play with eight operated rigs running, again, five rigs are currently running on the property that Petro-Hunt that we’re buying from Petro-Hunt. We’re playing direct about 40% of our 2013 drilling and completion budget towards our Williston Basin assets.

Most of which will be spent drilling wells in the prolific Fort Berthold area. By the end of year, we’ll shift two of the rigs from Williams County to that area. Once the Williston Basin acquisition closes in mid-December, we’ll have over 700 gross operated drilling locations perspective for the Bakken and the Three Forks. We’ve identified several operational improvements that can be implemented in relatively short order and we intend to exploit this asset aggressively.

Production from our third core play, the Utica/Point Pleasant is expected to contribute meaningfully in the second half of 2013. We recently spud our first two wells there. We have two rigs running the play. In this area, permitting infrastructure and completion times are all challenges on estimating times. The focus has been on positioning ourselves for continuous drilling program, which we’ve done. We have drilling permits in hand and more in the works. We plan on adding a third operated rig in early ‘13 and a fourth operated rig by mid ‘13.

We spud our first well in the Tuscaloosa Marine Shale during the third quarter. The Broadway 1H, we were able to get over 300 feet of core from the Tuscaloosa Marine Shale prior to kicking off the lateral. Preliminary log – core results are very encouraging and we are now in the process of drilling the 5000, to 7000 foot lateral. We expect to begin completion operations within a month or so. We will drill two more horizontal wells on our acreage before implementing a full scale –large-scale development strategy.

Mark Mize is here and he’ll now go over the financial results for the third quarter.

Mark Mize

Okay. Thanks, Floyd. Before we get started, I’ll point out that the third quarter results of operations represent two full months of activity related to GL Resources and the East Texas since both of those deals did close on August 1. The fourth quarter will be our first quarter to complete the full impact of those two transactions and we expect the fourth quarter to also include about a half month’s worth of the contribution from the Williston Basin asset acquisition that we expect to close on or around December 13.

From a financing perspective, we’ve been busy here recently raising capital to finance the Williston Basin deal as well as fun the company’s capital plans through 2013. I won’t repeat the details that were covered on the call that we had on the 22nd. But in summary, we have agreed to issue $750 million preferred shares to Petro-Hunt that will automatically convert into approximately 100 million shares of common stock, following a shareholder approval. We also entered into a common stock purchase agreement with the Canada Pension Plan Investment Board pursuant to which they have agreed to purchase approximately 42 million common shares of Halcon, which equates to about a $300 million investment in the company.

Also with the support of our top-tier banks, we were able to secure an increase in our borrowing base from $525 million to $850 million. And that does represent a combined reserve look at Halcon standalone plus the Williston Basin assets that the credit line will close in the escrow and then the additional increase will be available to us upon the close of the deal in December. And then, finally, we also closed on a $750 million high-yield bond financing this week and the proceeds of which will also be released from escrow upon the closing of the of the Williston Basin deal.

With regards to equity, we ended the quarter with just under $1 billion of liquidity pro forma for the finance transactions that I just mentioned. And this provides the company with the capital it needs to execute on its growth strategy through 2013, which is now shifted from an acquisition phase to drilling.

For 2012, we reiterate previously published guidance some believe will be within the guidance range just provided with the exception of G&A per BOE, which will be just over the high end of the range. We’ve also updated our production and the capital cost guidance for 2013 to account for the acquisition of the Williston deal as well as a revised drilling program on our existing assets. We increased our production guidance and are now targeting an average daily production rate of 40,000 to 45,000 BOE a day in 2013 and we increased the drilling and completion budget to $1.2 billion.

Both of these figures as we typically have done been in the past, they do not include considering divestitures. From a cost perspective, we’ve increased our seemed LOE per BOE range $5 in 2013. So it’s now $6 to $8 per BOE. And we did the same for the production tax rate. So it’s now $5 to $6 per BOE, but we did keep the G&A cost range unchanged at $4 to $6. The increase in LOE and production taxes is primarily the result of increasing our operations and production mix in the Bakken, Three Forks resulting from the pending Williston deal.

Just a comment on the hedge program. We do continue to target a hedge portfolio of approximately 80% of what we expect to produce over the next 18 to 24 months. We still have a fair amount of additional hedging that will lead to get done to get to those levels, so we’ll continue to layer those in as opportunities present themselves. Right now we have right at 9,000 barrels a day of oil hedged in ‘13 at an average price of just under $90 a barrel. And with the natural gas coming back a little bit, we’ve been keeping our eye on that. And right now, we have about 1.3 million cubic feet a day hedged at an average price of 4.18.

With that, I’ll turn it back over to Floyd.

Floyd Wilson

Thanks, Mark. We are confident in our ability to deliver on our strategy in all respects. I’d like to remind everyone on the cal that this is not our first rodeo. And I say that because we’re down here in Texas. This management team has a pretty decent track record of building companies in a pretty decent history of creating shareholder value.

Operator, we’re ready for questions, if there are any.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question is from Brian Corales of Howard Weil. Your line is open.

Brian Corales – Howard Weil

Hey guys. Question on the oil realizations. I mean, they look pretty strong for the quarter. Is there an asset you’re getting kind of an uplift for oil prices?

Steve Herod

Hey, Brian. This is Steve Herod. We re-bid some of our oil production in the third quarter and we got an uplift both in the Woodbine and in the Eagle Ford and that maybe some of it.

Brian Corales – Howard Weil

Okay. And on that same topic, as you add the additional Bakken properties, where do you see kind of that corporate oil realization going? I mean, if we look out towards ‘13 and beyond?

Mark Mize

Brian, given that guidance, the realization there is slightly less in other areas, so that would have a bit of a muffin effect, I would assume.

Brian Corales – Howard Weil

Okay. And then one on the Woodbine, have you all tested the Polk County acreage yet? Or do you – and if not, do you plan to test over the next couple quarters?

Floyd Wilson

We have not yet, we’re doing extensive research there. We’ve built a great acreage position over there and we think the target is big and broad, but we’re doing some additional research, acquiring some additional lands. And as in several of our plays we’re actually doing some seismic work. So our intentions are at this time to try to get a rig on in the first quarter of next year. Meanwhile, we’ll just continue drilling our wells in the rest of the play and as soon as that location is – a couple locations are ready over there, we’ll move a rig in, but I doubt it will be this year.

Brian Corales – Howard Weil

Okay. And then one final one. You’ve got your kind of three big core areas where most of the capital is going on. Do you expect to buy a fourth 4th area, maybe a little bit more of a proven play or are you going to stick towards more of the exploration side?

Steve Herod

We are hopeful that one of our wildcats will turn into a core area. We never know about that. I don’t really see us buying into a fourth core area (inaudible) it’s not really on our radar screen right now. I think we have enough to do with our three. We have some drilling going on in our wildcats and some analysis going on. So we’re hopeful about those as well.

Brian Corales – Howard Weil

I’ll look forward. Thanks, guys.

Operator

Thank you. Our next question is from. Brian Singer of Goldman Sachs. Your line is open.

Brian Singer – Goldman Sachs

Thanks. Good morning. In the Utica, can you talk about any interpretations you may have from recent industry wells and how that applies to the prospectivity of your acreage. And then as you think about ramping up to four rigs there, is that contingent on the results from your first three wells or is that just going to need an acreage?

Floyd Wilson

Well, anything that we do is contingent on results. So I don’t care where we’re drilling. It’s always that way. Your first – the first part of your question, all the data points that we’ve gathered and we probably have as many or more than anyone else in the play in our research database, have continued to verify the – our research in our mapping, in our view of where the play is going and so we’re highly comfortable of what we’re doing.

Brian Singer – Goldman Sachs

I mean, in the Tuscaloosa, you mentioned after logging the vertical section, you’re seeing encouraging results from that first well. Can you just add some more color on what’s driving that encouragement? And whether it’s just related to the – you’re seeing the costs of the well so far?

Floyd Wilson

Well, things that encourage us are things like oil in the samples and oil in the pits, lot of smell when you get the – your sample is up. When you pull your core out, your core sections out, you can actually see with the naked eye, some of the characters that you’re looking for, and then, of course, the logging. The log gave us the parameters that we were looking for in terms of pricing and whatnot. So that’s the encouraging part.

The rest of the encouraging news is that we feel like over time, we’ll be able to get these costs down under $10 million. These first few wells won’t be there. But the profile of one of these wells is about the same as the Black Hawk well that we used to drill every day in South Texas and in terms of total measured depth, frac stages, horsepower, fluid requirements, carrier fluids requirements. So we’re pretty comfortable that the cost side of this equation for us and others in the industry will improve.

Brian Singer – Goldman Sachs

Thank you.

Operator

Thank you. Our next question is from Neal Dingmann of SunTrust. Your line is open.

Neal Dingmann – SunTrust

Morning. Floyd, just three quick ones. First, Floyd, any idea when you’ll give us a little more specific color on when these undisclosed exploration plays, would it be any time sooner if you’re going to still try to develop those out first?

Floyd Wilson

We’re going to continue to develop our acreage position and those that we drilled well – if we drilled in the early stage reconnaissance wells, we’ll continue to evaluate information that we’ve gotten to those from logging cores. I think that our job is to assess those things quickly and continue to buy land, if we like early results, early research results cheaply. So I don’t think that we’ll be talking about those too much this year. Next year for sure and perhaps early in the year. Our focus, since we added this huge position in the Bakken and 3 Forks play is to create a platform that’s not dependent on new discoveries for growth.

We think we’ve done that. So our 3 core plays will get over 90% of the funding for 2013, and probably about 75% of our thoughts in terms of improvements and more not and that’s a big number, but plus think that’s the answer that part.

Operator

Thank you. Our next question is from Joseph Almon of JP Morgan. Your line is open.

Joseph Almon – JP Morgan

When you look at production for 2013. I think, your core fields are going to grow will some your non-core declining. Could you talk about which deals where were expect pricing declines?

Floyd Wilson

Production declines normally occur just the normal aging process of mature field and we have a little bit of that going on and some of the properties that will divest over the next couple of years and any of these resource plays horizontal drilling. If you cut your rigs you fix yourself for a decline, whether it’s right away or over the next foreseeable time. So what, our objective here is to make sure that we have that right balance between capital outlay and production growth and in the 3 large plays.

And then, we’re really not counting for hardly any – on hardly any component of production from anything else in the company. We do have a nice base of stable mature properties I think, those decline at 20 year 15%, 18%, 20% a year and we are spending a little bit of money on those that don’t require too much.

Joseph Almon – JP Morgan

Okay.

Floyd Wilson

So we’re setting ourselves that the acreage drilling in three core plays. We’ll provide all of our projected growth and certainly not be looking any declines these kind of rig counts for some years in our opinion.

Joseph Almon – JP Morgan

So like if we take the production you bought in the recent Backend acquisition and just added to the base production, you get a number of higher than your than your guidance and that is that because – that I think the capital in the core kind of growth projects. You’re not investing the capital in the non-core projects and those are going to be in decline.

Floyd Wilson

Probably offline we’d have to go through that math with you. I don’t think that you just add our base properties that we reported on last quarter and add the Bakken and come up with quite that number. But this entire process does represent a reallocation of capital. It represents a better understanding several of the plays that some of the delays we’ve had in terms of Utica/Point Pleasant. Early in the year, we expected to have rigs running in August. We got rigs running at the end of October. Now we’re steady there. So I think that as your information and your database grows in each area, it will make much more steady improvements or projections.

Joseph Almon – JP Morgan

Got you. That’s helpful. And then the production from the assets you plan to sell that production is still in your production guidance, right. And you only take that out once you sold the – or made an agreement to sell the assets?

Floyd Wilson

Yeah, we will only remove those when we have a binding situation because you never know about divestitures or acquisitions for that matter. There is no good reason to include or not include those until something is firm.

Joseph Almon – JP Morgan

Got you. And then lastly, could you just update us on the sales process for the non-core asset sales?

Floyd Wilson

I think the big one for this year is Eagle Ford sale. That process is ongoing. We’ve had quite a few people look at it. And the rest of those were scheduled for a bit of that activity in 2013 and a bit more in 2014.

Joseph Almon – JP Morgan

All right. Very helpful. Thanks, everybody.

Operator

Thank you. Our next question is from Steve Berman of Canaccord Genuity. Your line is open.

Steve Berman – Canaccord Genuity

Hi. Thanks. Good morning. Just a follow-up to Joe’s question on the Eagle Ford. Can you tell us what the current production is so we can kind of get a feeling for what we’ll have to back out at some point here?

Floyd Wilson

We haven’t given production by region and we’re not doing that today.

Steve Berman – Canaccord Genuity

Okay. Florida on the $1 million in savings in the Woodbine Eagle Ford, in your recent presentations, you had a $6 million drill and complete cost and there is that $1 million in savings getting you down to that 6 or is that taking you even below the $6 million number?

Mark Mize

Each well will be a little bit different. The way that the leases are shaped in Texas allow for certain length laterals in certain areas and maybe shorter laterals in some other areas. I would say it’s about half and half that those improvements would be an approval in that $6 million number and the rest of it would be getting some of the well down to that number. Something that we haven’t talked too much about. We’ve just drilled one well in 15 days top to bottom, and that’s a major improvement over the 30 to 40 days before and that didn’t have that much to do with the whole size. So, we’re looking to make improvements in that play. As much as you see in almost all of these plays.

Steve Berman – Canaccord Genuity

Okay. Another question for Mark, can you break down the $984 million and pro forma liquidity between cash and revolver availability?

Mark Mize

Yeah. I mean, but we – if we roll forward that numbers, if you roll forward to December 13, when we expect to close on the Boston well, the credit lines is going to from 525 up to 850. And there’s cash embedded in that billion dollars number or just under a billion of about $135 million. Then you have the credit line and then we have the senior notes that are also going to be coming out of the escrow, if you take all those sources I mean net out. The acquisition, that the exact number, we come to is about $984 million of liquidity.

Steve Berman – Canaccord Genuity

Okay. All right. Thanks. That’s it from me.

Operator

Thank you. Our next question is from Ronald Mills of Johnson Rice. Your line is open.

Ronald Mills – Johnson Rice

(Inaudible) Utica. I think, where you’re located – you’re targeting more of the Utica versus the Point Pleasant and some of the industry results down south. But if you look at from a technical standpoint proxy thickness resistivity in it do those compare pretty favorably to each other, which is – which is why based on your debt information that as said you continue to remain so comfortable about that portion of the play?

Floyd Wilson

Ron. We have, as you know and others have lots of data points, both in the south end the play and that’s the north end from drilling has been done over the years. Our opinion is that the section is all one unit. The member that is the point in the South is brighter and more attractive in the Utica in the south, up in the North end, sector up north and The Point Pleasant, the Utica and is brighter and more porosity and so on. So to take the two as net unit, they look about the same north and south to us.

Ronald Mills – Johnson Rice

Okay. Good. And just to clarify, which you don’t matter though would buy an Eagle Ford I want to make sure that between drilling and the – meanwhile I understand, I get it right, did you say that 2 to 6 wells you’re drilling right now targeting in the Eagle Ford over those on the completion side?

Floyd Wilson

2 of the 6 wells that have rigs on a merger. Our drilling Eagle ford laterals now and the other ones are all scheduled to drill Woodbine and I think upcoming we’ve got at least two more eagle host to be started this year and most of rest will be Woodbine this year.

Ronald Mills – Johnson Rice

And then on the conform of the six wells that are either completing or waiting completion, are those also split between Eagle Ford and Woodbine?

Floyd Wilson

I think there are a two, one, one Eagle Ford, and asking Robert here.

Mark Mize

One Eagle Ford and five Woodbines.

Floyd Wilson

We’re seeing some seismic on several of our plays. I and so here in Madison County grimes and Leon, We’ve got a large seismic project that we just kicked off so we’re concentrating our intensity up on the north end of the play in Leon County where we have tones of places that drill wells in and success with every attempt so far as we get a little bit more data from these kind of outputs wells, we’re drilling in the rest of the play. And as we get information from the seismic you’ll see us moving more rigs to the south, but I think for the, certainly for the first half of 13, the 80% of the rigs are going to be up in the north end of the play.

Ronald Mills – Johnson Rice

And that’s, and that’s the primary target. There’s a Woodbine.

Floyd Wilson

The upper Woodbine. Yes.

Ronald Mills – Johnson Rice

Perfect. And then lastly, just on the CapEx, just to make sure that the $900 million of drilling in the old budget and completions versus the $1.2 billion. That 1.2 billion it does include the Eagle Ford component, it sounds like from your press release. But in that DMC budget is there also already been some reallocation to allow that increased focus and total the 90 plus percent on year on your 3 main project areas?

Floyd Wilson

There’s been a lot of reallocation within the 1.2. The Eagle Ford component, I can tell you are about $100 million. So that would be a change chances are if and when that occurs the probably won’t’ reallocate those funds. We don’t need to. We’ll probably just spend a little bit less next year.

Ronald Mills – Johnson Rice

Okay, perfect. This, it looks like for most capital efficiency standpoint that on, based on your guidance it, it looks like that capital efficiency is, is showing a nice improvement. So congrats.

Floyd Wilson

Thanks.

Operator

Thank you. Our next question is from Mike Kelly of Global Hunter. Your line is open.

Mike Kelly – Global Hunter

About the completion schedule going forward in the Utica Woodbind in Tuscaloosa, you really have progresses throughout ‘13?

Floyd Wilson

We’re basically doing pad drilling everywhere. So the completion schedule is pretty much tied to when you have wells on a pad ready to be fracked and you’ve got the rig out of the way. So the results are somewhat lumpy. But over a period of the year it should even out as if you were doing them one by one. I’ll just tell you that by the start of the year, it will be a pretty even process throughout all the three core areas in terms of all of them will be utilizing pad drilling or 90% of the locations will be pad drilling. And w will be fracking two or three wells on these pads in every case.

So we’ll have hopefully they’ll just be – it will become fairly steady. But we’re certainly going to have sometimes when you’ve – if you’ve taken a month to drill a well, you got 90 days of just pure drilling, if you have a three well completion coming up. Then you got a good another month of completing three wells. So a pad with three wells on it could easily take you 120 days whereas you could have been doing one well at a time in about 45 days or 60 days. So overtime this should even out in terms of the production response.

Mike Kelly – Global Hunter

Okay. And then just focusing on the Utica, will you be ready in the beginning the year there to really take that gas or wet gas and what are your plans in terms of the shut-in period?

Floyd Wilson

We have an ongoing and an aggressive infrastructure strategy being worked for that area. We are making interim arrangements for deliveries while we’ll be doing some construction. We’re still evaluating options up there in terms of doing everything ourselves or joining with someone else. It’s in the same position that we are. So I think we’re working on that. We won’t have any delays on this initial slug of drilling up there based on infrastructure. We might have some significant improvements that could take up to a year to install that would allow for better price discovery. But we don’t plan on any delays.

Mike Kelly – Global Hunter

Okay. And when should we expect really that first slug of wells completion results out of that station?

Floyd Wilson

Yeah. I didn’t answer the other part of your question. It’s become pretty clear that this whether they call a resting period or soaking period has become pretty clear. So there is a valuable component of completions up there, so we’re programming about 120 days from moving a rig to having first production on wells using a 60 day kind of soaking period. We have – these rigs, very quickly, they should be drilling wells in less than 30 days. We’ve got two rigs running right now, we’ll add a rig in the fourth quarter and a rig in the second quarter, so – add a rig in the first quarter of next year and a rig in the second quarter, so you can – whatever that math comes to that we’ll be doing.

Mike Kelly – Global Hunter

Okay. Thanks. And then just on the divestiture front, we all know the Eagle Ford process is ongoing. Maybe you can just refresh us on the overall strategy there, divestitures and really what’s on the table and the potential timeframe in ‘13?

Floyd Wilson

Yeah, the overall strategy is a strict focus on moving out mature no upside properties, even though they might be nice money makers in favor of these newer properties where we have years and years of drilling to do. So, I would say that, Steve will have some other property on the market by the middle of the year in 2013 and we’re not sure which properties exactly yet but we have a hit list of targets there and opinion on how that goes.

We might sell some more in ‘13 or my wait till ‘14. We are trying to make sure that there are two factors there that we think about one is all those properties that we acquired with a couple of the deals are good properties, they might be mature and all but they were all making money and they’ll have production. So we don’t want to lose that production until we can overcome that loss with this new drilling. So that’s a major focus of ours is not to go backwards.

Mike Kelly – Global Hunter

Okay. Thank you.

Operator

Thank you. Our next question is from Jason Wangler of Wunderlich Securities. Your line is open.

Jason Wangler – Wunderlich Securities

On mid-way (inaudible), obviously the first well look good and you are testing the second. Do you have an idea of what the plans are rest of this year and obviously more drilling in ‘13 or are you still kind of unsure, you are waiting to see what the two wells look like?

Floyd Wilson

On wildcats, the jury is always out but up there we’re getting ready to complete the second well. We’ve got this first one on production just recently. We’re shooting some seismic, so we’re determined we’re not going to do any more drilling until we have the seismic. As you pointed out early that play is not a – the zones are a blanket but you need a little, you need to have a stratigraphic – the good part of the section needs to be on a bit of a regional feature. So we’re going to wait and have the seismic. I should say that this is in keeping with the entire good for 2013. These thing that we get of – is going to be upside 90% of over 90%, the money is going to the three core plays and 100% the growth is coming out of three core plays.

Jason Wangler – Wunderlich Securities

Perfect. That I all had. Thank you.

Operator

Thank you. Our next question is from Chad Mabry of KLR Group. Your line is open.

Chad Mabry – KLR Group

Does on the 2013 CapEx and an activity. Can you provide, you mentioned $1.2 billion on the indie CapEx, what’s the acreage put in there, or would that be in addition to the 1.2?

Floyd Wilson

If we acquired acreage it will be in addition to it. We made most of our significant acreage investments this year. So we don’t feel like it will be a significant number. And in relation to the overall scheme of things will report the actual expenditures every quarter as we do.

Chad Mabry – KLR Group

Okay. Proceeded and I looking at them, I guess, sort of the remaining 10% of the budget. So we expect that to be more or less spread across the other place in the portfolio or is there any one that could get more attention than the others?

Floyd Wilson

The Tuscaloosa Marine Shale certainly got the possibility of getting more attention depending on early results from the three wells that we plan to drill right now. We do have some Wilcox drilling schedule, but frankly we pulled any where we don’t have lease capture issues, which we don’t have those and so and so few places. We pull all capital in directed towards the three core plays.

Chad Mabry – KLR Group

All right, I’d appreciated. Thank you.

Operator

Our next question is from Jeff Robertson of Barclays. Your line is open.

Jeff Robertson – Barclays

Thank you. Floyd, I think you mentioned that about 40% of the drilling and completion capital was going to go into the Bakken. Can you put, can you provide the split for the Woodbine in the Utica?

Floyd Wilson

We haven’t done that. 90% of it’s going to the, the three plays in the Woodbine just about the size of the of the Bakken. So if you think about $1.2 billion in we’ve got 80% of going into the, the Bakken and the Woodbine.

Jeff Robertson – Barclays

Okay. And then it in terms of the exploration plays, if you all have success in the TMS and decide to put more capital there, would that be incremental to the budget or would you reallocate from any of the three core areas. Putting the money back into the TMS

Floyd Wilson

Hard to really speculative about that it would be where oil well guys here. So is the staggering success we try to figure out how to beef up the budget right now our plan would be to just reallocate away from plays where we don’t have any expirations. We have a – an idea that we can try to shape the budget this in 2013, rather revenue increase it. So where we’re working on that pretty hard. Having said that, some really good success in any of these plays would kind of change the deck a little bit.

Jeff Robertson – Barclays

Okay. And then, lastly on the you will have a footnote for the capital that the notion that you might put in a separate credit facility for Halcon field services, do that partly depend on the direction you decide to go in the Utica as far as how much capital you all will have to put out versus whether or not you team up with somebody else?

Floyd Wilson

Chances are in teaming up we do would be in some area, where another operator has the same logistical issues that we might. And so we’re doing – we’re following the pattern that we did it Petro-Hunt as soon as you can establish I know look first EBITDA from those sorts of assets you can finance them separately from your main corporate activity in. I’m just saying that we intend to do that as we get Petro-Hunt.

Jeff Robertson – Barclays

Okay. Thank you.

Operator

Thank you. We have a follow-up question from Jason Wangler of Wunderlich Securities. Your line is open.

Jason Wangler – Wunderlich Securities

One more just a curious, is that every time with the Woodbine you kind of give us an idea of the well results, whether it’s been specifically each well or an average as you’ve kind of gotten handful now and then as you get the amount of production for 30, 60, 90 days?

Floyd Wilson

Yeah. Right now we’re waiting on 6 wells to be fracked in flow back and then we got a few rigs are nearly done drilling, we’ll probably put out some sort of an operational update, prior to the next quarter, we just haven’t been in a position to have any anything to talk about substance. We do intend to continue to track 90 day rates on wells and see how that looks verses our type curve.

I saw graph yesterday that on that southern bay well that we completed. I don’t know if 5 or 6 weeks ago, first 30 days, it’s outperforming the type curve dramatically. But we like to see about 90 days before really call those. We’ll put out information as we’ve done in the past, we will tend to put out a lot of information on everything at one time during the quarter, and now put out single well results just doesn’t – it just isn’t our style to hold our breath about one well every few minutes.

Jason Wangler – Wunderlich Securities

Sure. I just wanted to more understand as we get the wells and so if they get into the couple of months, will you have enough wells and you’ll have enough time to kind of give us that, call it, around end of this year, beginning of next year?

Floyd Wilson

We’ll have another 10 or 12 wells fracked in on production within a few more weeks.

Jason Wangler – Wunderlich Securities

Perfect. I appreciate it.

Operator

Thank you. I am not showing any further questions in the queue. I’d like to turn the call back over to Mr. Floyd Wilson for any further remarks.

Floyd Wilson

Thanks for joining, everyone. We look forward to 2013 in the fourth quarter. Give us a ring if there is something that we didn’t cover that you’d like to talk about. Thanks.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone, have a great day.

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