Seeking Alpha

Halcon Resources nabs up to $400M in Tuscaloosa Marine Shale funding

  • Halcon Resources (HK -2.2%) says Apollo Global Management (APO -1.2%) will invest up to $400M in one of its wholly owned subsidiaries that will hold all of its 314K acres in the Tuscaloosa Marine Shale, which stretches across Louisiana and Mississippi.
  • Apollo will contribute $150M for 150K preferred shares of the subsidiary, with an option to buy 250K additional shares, and will receive up to 4% overriding royalty interest from 75 wells to be drilled and completed on the Tuscaloosa acreage.
  • HK also says its Horseshoe Hill 11-22-H-1 well in Mississippi had an initial daily production rate of 1,208 bbl of oil and 1.1M cf of natural gas.
  • HK already had said it plans to begin drilling 10-12 wells in the TMS this year and expects to participate in 15-20 non-operated wells.
Comments (8)
  • mcoop888
    , contributor
    Comments (2) | Send Message
    Excellent work by the Halcon team. This structure greatly reduces the risk to the HK shareholders, while not terribly reducing potential gains if the TMS play is a big winner.
    I suffered for years as a CHK shareholder when they made one bad JV deal after another. Mr. Wilson has been wise to avoid these.
    Apollo having preferred stock in an HK subsidiary will not materially affect the potential selling of HK, hopefully for a price much higher than today's $6.25.
    9 Jun, 02:32 PM Reply Like
  • ebeads2003
    , contributor
    Comments (22) | Send Message
    I also lost a bundle on CHKR trust. Abrey and Tom should be in jail for grand theft, not setting up new companies.
    9 Jun, 03:09 PM Reply Like
  • Anne Bonney
    , contributor
    Comments (84) | Send Message
    Floyd Wilson is a different type of manager. Never touched CHK or the trust because I did not like Aubrey's management. Ditto, SD. This is my second round with a Wilson-run company. Fully expect a good result this time, too. Very long and very patient with HK. Go, Floyd, go!


    BTW, CHK & SD HQ are pretty much in my backyard.
    9 Jun, 03:34 PM Reply Like
  • Michael_Phillips
    , contributor
    Comments (471) | Send Message
    Aubrey is the greatest promoter this country has seen since P.T. Barnum. He is a visionary, which sometimes means costing a lot of people money along the way. But don't discount the momentum that he created in the nat gas market.
    10 Jun, 09:13 AM Reply Like
  • Egad
    , contributor
    Comments (13) | Send Message
    I'll strongly consider selling my APO stock the moment I see an official announcement on this. I have looked closely at the TMS and I have no faith in it. My opinion of this deal will obviously depend on the terms that terms that Apollo has agreed to, but my initial take is they are being fleeced by Floyd Wilson.
    9 Jun, 04:40 PM Reply Like
  • joeg1969
    , contributor
    Comments (342) | Send Message
    Fleeced by Mr.Floyd?Really Just how dumb do you think APO is? Long $HK
    9 Jun, 05:24 PM Reply Like
  • Egad
    , contributor
    Comments (13) | Send Message
    I think they are very bright when looking at financial statements, but not quite as knowledgeable at estimating reserves and future production from oil and gas properties. This isn't the type of deal you can do by looking at a cash flow, particularly this early in the production history.


    As I said, I'm long APO, but I don't like this deal.
    9 Jun, 09:36 PM Reply Like
  • redstore
    , contributor
    Comments (3) | Send Message
    Egad, I don't own any stock in Halcon, but not having any faith in the TMS is being a little short sighted! Goodrich, EOG, and Halcon have worked diligently for the past three years to crack the "Fracking code" on this play, and I believe they have finally done it. They have known the oil is there, just not how to extract it. I believe they are on the last row of the Rubik's cube. JMO
    10 Jun, 03:32 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio: