Halcon Resources Corp. (HK:US), the oil and natural gas producer run by former Petrohawk Energy Chairman Floyd C. Wilson, agreed to buy some of Petro-Hunt LLC’s North Dakota fields for about $1.45 billion in cash and stock.
Petro-Hunt, a closely held company owned by the Hunt family, and an affiliated entity will get $700 million in cash and $750 million in shares, Houston-based Halcon said in a statement today. The purchase includes about 81,000 net acres in four North Dakota counties with current net production equivalent to more than 10,500 barrels of oil a day.
The acquisition is the fourth and largest for Halcon, the Spanish word for falcon, since it was formed in November 2011. Wilson, who sold Petrohawk for $12.1 billion to BHP Billiton Ltd. (BHP) in August 2011, has said he will also eventually sell Halcon, which has a $1.52 billion market valuation. The company will focus on developing fields and isn’t looking at more big deals, Wilson said today on a conference call with analysts.
“This hawk is ready to soar,” said Wilson, Halcon’s chairman and chief executive officer. “We’ll have grown from an idea into a well-staffed oil company producing over 25,000 barrels of oil equivalent per day with the closing of this transaction.”
Halcon rose 1.6 percent to $7.18 at the close in New York.
With the purchase, Halcon is more than doubling its land holdings in the Bakken and Three Forks formations in North Dakota and Montana. North Dakota oil production reached a record of 701,134 barrels a day in August, up 3.7 percent from the prior month. The assets in today’s agreement hold reserves estimated at the equivalent of 42.4 million barrels of oil.
Petro-Hunt will own about 22 percent of Halcon after the deal closes, which is expected in December, according to the company. Halcon will finance the cash portion by selling $300 million of stock at $7.16 a share to the Canada Pension Plan Investment Board and with bank borrowings, according to the statement.
Halcon expects to expand its planned $1.1 billion capital spending plan by $300 million to accelerate drilling and extend pipelines in the area, Wilson said.
Mitchell Energy Advisors LLC advised Halcon on the transaction and Tudor Pickering Holt & Co. advised the pension board, according to today’s statement. Wells Fargo & Co. (WFC:US), JPMorgan Chase & Co. (JPM:US), Goldman Sachs Group Inc. (GS:US) and Barclays Plc (BARC) agreed to extend Halcon’s borrowing base to $850 million and provide a $500 bridge loan.
Petro-Hunt is based in Dallas. H.L. Hunt, who formed Hunt Oil Co. in 1934, was said to be the inspiration for the J.R. Ewing character in the television show “Dallas,” according to Forbes magazine.
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