Halcón Resources reduces debt but gets NYSE de-listing warning

Halcón Resources received a de-listing warning from the New York Stock Exchange, but the Houston energy company said it has a deal to reduce its debt and help it survive long term.

The exploration and production company said it worked out a deal to reduce its long-term debt by $548 million after privately negotiating with unnamed holders of its outstanding debt.

Earlier this year, lenders trimmed its borrowing base and Halcón slashed its spending by more than 50 percent as the company struggled through the ongoing oil downturn.

The NYSE warning comes after the company’s stock sold below $1 a share for 30 business days. Halcón has traded mostly below $1 a share since mid-July, but jumped to a high of $1.26 a share Friday morning. The company sold for more than $7 a share last year before oil prices plummeted.

“We remain steadfast in our mission to continue improving our balance sheet and are confident we will emerge from this downturn a much stronger company,” Halcón Chairman and CEO Floyd Wilson said in a prepared statement.

The company is moving forward with a series of debt exchanges that will not be due until starting in 2020. The deal involves reducing its borrowing base by another $50 million down to $850 million.

“Not only do these exchanges result in a material reduction to our long-term debt, they also effectively improve our leverage profile by almost a full turn and reduce our annual cash interest expense by approximately $12 million,” Wilson added.

Raymond James & Associates analyst Andrew Coleman said Halcón is essentially trading some of its public debt for 50 cents on the dollar in order to stay afloat.

“There’s a number of guys that are probably looking at similar options,” Coleman said. “With the shellacking of commodity prices, this is what you have to do.”

Coleman said it is a good move for Halcón but that much work remains. Wilson has a history of being ahead of the curve, Coleman said, although he has a history of being a polarizing CEO. But Halcón and others still really need oil prices to stabilize, he said.

Under NYSE rules, Halcón can regain compliance during a six month period by increasing its stock value. In the meantime, the company will continue to be listed.

Halcón said it will to notify the NYSE of its intent to cure this deficiency.