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Halcon Resources Corp. Message Board

  • space_goat_one space_goat_one Nov 29, 2013 2:05 PM Flag

    OIl Prices - HK's BIG problem

    I'm seeing more signs and picking up more sentiment that points to WTI prices dipping below $80 for a significant period in 2014. Combine this with the Bakken discount and HK could be selling the majority of its oil for less than $70.

    Of course this affects ALL E&Ps but those that are highly levered and relying on cash flow for fast growth will have the hardest time. HK is front and center in this.

    How much of their 2014 production is hedged?

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    • Great thread.

    • 80%.......and as crude drops back in price, the producers who have the highest the oilsands in Canada, who need crude oil prices above $75 to make even small margins................or 2nd-tier oil-shale operators whose costs per well are over 8 million per well.......will slow down and reduce CAPEX, just like HK is planning already to do in 2014......but in HK's situation, the growth will continue----the reserves will climb----and the cash-flow will jump........even as they spend less $$$ to deliver that crude.......due to several factors-----that I'll not wear out or be repetitive .....the real investors here know what these cost saving measures are.

      • 1 Reply to subdeep7
      • The mid range on some of their 2014 cost guidance are as follows...Loe: $9/boe, G&A: $8/boe, Non Inc. tax: $7/boe, Gathering: $1.50/boe and the low end of depletion $35/boe for an estimated $60.50 per boe in production cost. So if crude averages $85 next year they should gross roughly $75/boe for a gross profit of $14.50/boe. However, after the debt recap their going to have $250mil in annual interest expense. At their production guidance this comes to $17/boe and wipes out the $14.50. Which is why wall st is pounding it and the market is skittish.

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