UNITED STATES BANKRUPTCY COURT SOUTHERN AND WESTERN DISTRICTS OF TEXAS HOUSTON DIVISION CASE NAME: HALCÓN RESOURCES CORPORATION, et al. Petition Date: August 7, 2019 CASE NUMBER: 19-34446 MONTHLY OPERATING REPORT SUMMARY FROM AUGUST 7, 2019 THROUGH OCTOBER 8, 2019 See Attached Financials See Attached Financials See Attached Financials ***The original of this document must be filed with the United States Bankruptcy Court and a copy must be sent to the United States Trustee*** Are all accounts receivable being collected within terms? YesNo Are all post-petition liabilities, including taxes, being paid within terms? YesNo Have any pre-petition liabilities been paid? YesNoIf so, describe Per various court orders, incl. but not limited to payroll, benefits, taxes, royalties, and trade vendors. Are all funds received being deposited into DIP bank accounts? YesNo Were any assets disposed of outside the normal course of business? YesNo If so, describe Are all U. S. Trustee Quarterly Fee Payments current? YesNo What is the status of your Plan of Reorganization? Debtors emerged with Effective Date 10/8/19 I certify under penalty of perjury that the following complete Monthly Operating Report (MOR), consisting of MOR-1 through MOR-9 plus attachments, is true and correct. SIGNED: /s/ RAGAN T. ALTIZER (ORIGINAL SIGNATURE) (1) All other policies, including but not limited to Vehicle, Well Operator, Pollution, Care/Custody MOR-1 TITLE: Executive Vice President, Chief Financial Officer and Treasurer REQUIRED INSURANCE MAINTAINED AS OF SIGNATURE DATE CASUALTYYES(X) NO( )5/25/2020 LIABILITYYES(X) NO( )5/25/2020 DIRECTORS & OFFICERSYES(X) NO( )10/8/2020 WORKER'SYES(X) NO( )5/25/2020 (1) ALL OTHERYES(X) NO( )5/25/2020 ATTORNEY NAME:Alfredo R. Pérez FIRM:Weil, Gotshal & Manges LLP ADDRESS:700 Louisiana Street ADDRESS:17th Floor CITY, STATE ZIP:Houston, TX 77002 TELEPHONE:(713) 546-5000 MONTH Aug 2019 Sep 2019 Oct 2019 REVENUES (MOR-6) $-$- $-INCOME BEFORE INT, DEPREC./TAX (MOR-6) $-$- $-NET INCOME (LOSS) (MOR-6) $-$- $-PAYMENTS TO INSIDERS (MOR-9) $192,709 $920,897 $-PAYMENTS TO PROFESSIONALS (MOR-9) $-$- $659,123 TOTAL DISBURSEMENTS (MOR-7) $34,802,811 $31,445,821 $292,526,011
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 COMPARATIVE BALANCE SHEETS See attached month-end financial statements (full month Aug/Sept only) per agreement with US Trustee Office MOR-2 ASSETS Aug 2019 Sep 2019 Oct 2019 CURRENT ASSETS Cash Accounts Receivable, Net Inventory: Lower of Cost or Market Prepaid Expenses Investments Other TOTAL CURRENT ASSETS $-$- $-PROPERTY, PLANT & EQUIP Less Accumulated Depreciation NET BOOK VALUE OF PP & E OTHER ASSETS: 1. Tax Deposits 2. Investments in Subs 3. (attach list) TOTAL ASSETS $-$- $-
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 COMPARATIVE BALANCE SHEETS See attached month-end financial statements (full month Aug/Sept only) per agreement with US Trustee Office MOR-3 LIABILITIES & OWNER'S EQUITY Aug 2019 Sep 2019 Oct 2019 LIABILITIES: POST-PETITION LIABILITIES (MOR-4) PRE-PETITION LIABILITIES: Notes Payable-Secured Priority Debt Federal Income Tax FICA/Withholding Unsecured Debt Other TOTAL PRE-PETITION LIABILITIES TOTAL LIABILITIES $ - $ - $ - OWNERS' EQUITY (DEFICIT): MEMBER'S EQUITY PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT RETAINED EARNINGS: Filing Date RETAINED EARNINGS: Post Filing Date TOTAL OWNER'S EQUITY (NET WORTH) $ - $ - $ - TOTAL LIABILITIES & OWNER'S EQUITY $ - $ - $ -
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 SCHEDULE OF POST-PETITION LIABILITIES See attached month-end financial statements (full month Aug/Sept only) per agreement with US Trustee Office * Payment Requires Court Approval. MOR-4 Aug 2019 Sep 2019 Oct 2019 TRADE ACCOUNTS PAYABLE $-$- $-TAX PAYABLE: Federal Payroll Taxes $-$- $-State Payroll & Sales $-$- $-Ad Valorem Taxes $-$- $-Other Taxes $-$- $-TOTAL TAXES PAYABLE $-$- $-SECURED DEBT POST-PETITION $-$- $-ACCRUED INTEREST PAYABLE $-$- $-*ACCRUED PROFESSIONAL FEES: $-$- $-OTHER ACCRUED LIABILITIES: 1. Insurance $-$- $-2. Operational Expense $-$- $-3. Other (List) $-$- $-TOTAL POST-PETITION LIABILITIES (MOR-3) $-$- $-
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 AGING OF POST-PETITION LIABILITIES MONTH: As of October 8, 2019 (Emergence) AGING OF ACCOUNTS RECEIVABLE MOR-5 MONTH Aug 2019 Sep 2019 Oct 8, 2019 0-30 DAYS $ 3,123,905 $1,126,321 $1,126,321 31-60 DAYS $ 156,860 $2,955,503 $2,534,861 61-90 DAYS $ 168,132 $33,750 $33,750 91 + DAYS $ 416,203 $351,177 $351,177 TOTAL $ 3,865,100 $ 4,466,751 $4,046,110 DAYS TOTAL TRADE ACCTS FED TAXES STATE TAXES AD-VALOREM, OTHER TAXES OTHER 0-30 DAYS $ - $ 10,331,161 31-60 DAYS $ - $ 511,725 61-90 DAYS $ - $ 123,966 91 + DAYS $ - $ 294,644 TOTAL $ - $ 11,261,497
HALCÓN RESOURCES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) August 31, 2019 September 30, 2019 Current assets: Cash and cash equivalents Accounts receivable Receivables from derivative contracts Prepaids and other Total current assets Oil and natural gas properties (full cost method): Evaluated Unevaluated Gross oil and natural gas properties Less - accumulated depletion Net oil and natural gas properties Other operating property and equipment: Other operating property and equipment Less - accumulated depreciation Net other operating property and equipment Other noncurrent assets: Receivables from derivative contracts Operating lease right of use assets Funds in escrow and other Total assets Current liabilities: Accounts payable and accrued liabilities Liabilities from derivative contracts Current portion of long-term debt Operating lease liabilities Total current liabilities Long-term debt, net Liabilities subject to compromise Other noncurrent liabilities: Liabilities from derivative contracts Asset retirement obligations Operating lease liabilities Commitments and contingencies Stockholders' equity: Common stock Additional paid-in capital Retained earnings (accumulated deficit) Total stockholders' equity Total liabilities and stockholders' equity $ 17,061 32,924 10,648 15,301 $ 17,009 37,826 15,310 14,642 75,934 84,787 2,133,202 439,843 2,155,288 438,365 2,573,045 (1,669,819) 2,593,653 (1,709,719) 903,226 883,934 203,487 (13,621) 203,373 (14,416) 189,866 188,957 4,820 3,894 1,136 4,120 3,694 1,138 $ 1,178,876 $ 1,166,630 $ 91,326 11,814 248,234 1,461 $ 112,578 6,829 258,234 1,337 352,835 378,978 - 645,279 - 625,005 4,248 7,086 2,514 1,625 10,153 2,438 16 1,089,695 (922,797) 16 1,087,441 (939,026) 166,914 148,431 $ 1,178,876 $ 1,166,630
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 STATEMENT OF INCOME (LOSS) See attached month-end financial statements (full month Aug/Sept only) per agreement with US Trustee Office Accrual Accounting Required, Otherwise Footnote With Explanation * Footnote Mandatory •• Unusual and or infrequent item(s) outside the ordinary course of business: requires footnote MOR-6 MONTH Aug 2019 Sep 2019 Oct 2019 Filing to Date REVENUES (MOR-1) $-$- $-TOTAL COST OF REVENUES $ - $ - $ - GROSS PROFIT $-$- $-OPERATING EXPENSES: Selling, General & Administrative $-$- $-Insiders Compensation [MOR 9] $-$- $-Professional Fees $ - $ - $ - Other (attach list) $ - $ - $ - $ - $ - $ - TOTAL OPERATING EXPENSES $-$- $-INCOME BEFORE INT, DEPR/TAX (MOR-I) $ - $ - $ - INTEREST EXPENSE $-$- $-DEPRECIATION $ - $ - $ - OTHER (INCOME) EXPENSE* $ - $ - $ - OTHER ITEMS** $ - $ - $ - TOTAL INT, DEPR & OTHER ITEMS $-$- $-NET INCOME BEFORE TAXES $-$- $-FEDERAL INCOME TAXES $-$- $-NET INCOME (LOSS) (MOR-1) $ - $ - $ -
HALCÓN RESOURCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands) Month Ended August 31, 2019 September 30, 2019 Operating revenues: Oil, natural gas and natural gas liquids sales: Oil Natural gas Natural gas liquids Total oil, natural gas and natural gas liquids sales Other Total operating revenues Operating expenses: Production: Lease operating Workover and other Taxes other than income Gathering and other Restructuring General and administrative Depletion, depreciation and accretion Full cost ceiling impairment (Gain) loss on sale of Water Assets Total operating expenses Income (loss) from operations Other income (expenses): Net gain (loss) on derivative contracts Interest expense and other Reorganization items Total other income (expenses) Income (loss) before income taxes Income tax benefit (provision) Net income (loss) $ 13,892 545 1,574 $ 15,241 (510) 996 16,011 67 15,727 83 16,078 15,810 3,948 500 947 5,255 1,059 7,340 11,538 - 69 3,832 624 1,004 1,828 1,323 1,490 (4,768) 45,568 13 30,656 50,914 (14,578) (35,104) 557 (2,759) (11,696) 11,615 (2,678) 9,938 (13,898) 18,875 (28,476) - (16,229) - $ (28,476) $ (16,229)
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 UST Fees The debtors have provided a copy of consolidated cash flow as used in DIP reporting. See attached. MOR-7 *Applies to Individual debtor's only. CASH DISBURSEMENTS 8/7/19 - 8/31/19 9/1/19 - 9/30/19 Q3 2019 Subtotal Estimated UST Fees 10/1/19 - 10/8/19 Q4 2019 Total Estimated Halcón Holdings, Inc. (19-34446) $ 779,822 $ 691,723 $ 1,471,546 $ 14,715 $ 143,561 $ 143,561 $ 975 Halcón Resources Corporation (19-34446) $ 4,247,060 $ 5,442,038 $ 9,689,099 $ 96,891 $ 276,540,824 $ 276,540,824 $ 250,000 Halcón Permian, LLC (19-34446) $ 3,924,897 $ 3,200,743 $ 7,125,640 $ 71,256 $ 475,406 $ 475,406 $ 4,875 Halcón Resources Operating, Inc. (19-34446) $ 200,008 $ 149,311 $ 349,319 $ 4,875 $ 50,186 $ 50,186 $ 650 Halcón Energy Properties, Inc. (19-34446) $ 16,065,283 $ 13,111,039 $ 29,176,322 $ 250,000 $ 7,871,962 $ 7,871,962 $ 78,720 Halcón Operating Co., Inc. (19-34446) $ - $ - $ - $ 325 $ - $ - $ 325 Halcón Field Services, LLC (19-34446) $ 9,585,740 $ 8,850,966 $ 18,436,706 $ 184,367 $ 2,369,019 $ 2,369,019 $ 23,690 Total Disbursements $ 34,802,811 $ 31,445,821 $ 66,248,632 $ 622,430 $ 287,450,958 $ 287,450,958 $ 359,235
Project Hanover Updated DIP Budget ($ in 000s) Subject to FRE 408 and All Applicable State Law Equivalents Emergence RECEIPTS Gross Oil Receipts Gross Gas & NGL Receipts Hedge Settlements JIB Receipts Other Receipts Revenue Distribution - - 741 72 97 - - - - 2 32 - 22,100 - - 52 199 - - 1,553 45 4 79 (5,889) - - 243 19 1 - - - 858 26 10 - 17,948 - - 482 86 - - 729 17 128 28 (5,398) - 895 14 497 10 - - - (335) 223 42 - AGGREGATE RECEIPTS OPERATING DISBURSEMENTS Gathering & Transportation Lease Operating Expense Drilling & Completion Capex Midstream Capex Seismic & Other Capex Processing & Production Taxes Payroll & Benefits Facilities, Rent & Insurance G&A Expenses 909 34 22,352 (4,207) 263 893 18,517 (4,496) 1,415 (70) - - - - - - 22 - (93) (889) (1,446) (3,659) (2,054) (5) - (625) (1) (327) (409) (2,969) (3,481) (5,904) (59) (232) (42) - (373) (195) (467) (1,912) (862) - (11) (756) (320) (150) (332) (448) (2,070) (4,835) (1) (101) (47) (85) (50) (1,140) (1,101) (1,497) (1,682) (55) - (785) (1) (186) (49) (593) (4,103) (880) (4) (74) (191) - (150) (32) (563) (596) (525) (0) - (2,413) - (79) (2,077) (6,234) (2,791) (265) (0) - (569) (149) (383) - - - - - - - - (200) Total Operating Disbursements (71) (9,006) (13,467) (4,673) (7,968) (6,446) (6,044) (4,208) (12,468) (200) OPERATING CASH FLOW One Time / Non-Recurring Items 838 (8,972) 8,885 (8,880) (7,705) (5,553) 12,473 (8,704) (11,053) (270) Professional Fees US Trustee Fees Utility Deposit (3,644) - - - - - - - - - - - - - - (627) - - (2) - - (8) - - - - - (16,591) - - Total Non-Recurring Items Revolver Interest & Fees Senior Notes Interest & Fees DIP Interest & Fees (3,644) - - (700) - - - - - - - - - (1,730) - - - - - - (627) - - (176) (2) (2) - - (8) - - - - - - - (16,591) - - (120) Total Interest & Fees (700) - - (1,730) - (176) (2) - - (120) TOTAL NON-OPERATING DISBURSEMENTS (4,344) - - (1,730) - (803) (3) (8) - (16,712) Note: Strip pricing as of 10/1/2019 Draft - Subject to Material Revision 10 of 13 11/14/2019 3:05 PM Beginning Revolver / Exit Facility Balance 223,234 223,234 223,234 223,234 223,234 223,234 223,234 223,234 223,234 223,234 ( +/- ) Permanent Draw / (Paydown) - - - - - - - - - - ( +/- ) Draw / (Paydown) - - - - - - - - - (106,927) Ending Revolver / Exit Facility Balance 223,234 223,234 223,234 223,234 223,234 223,234 223,234 223,234 223,234 116,307 Beginning DIP Balance - 25,000 25,000 25,000 25,000 35,000 35,000 35,000 35,000 35,000 ( +/- ) DIP Draw / (Paydown) 25,000 - - - 10,000 - - - - (35,000) Ending DIP Balance 25,000 25,000 25,000 25,000 35,000 35,000 35,000 35,000 35,000 - Borrowing Base 25,000 25,000 25,000 25,000 35,000 35,000 35,000 35,000 35,000 275,000 Less: Outstanding Revolver Balance - - - - - - - - - (116,307) Less: Outstanding Letters of Credit - - - - - - - - - (1,766) Less: Outstanding DIP Balance (25,000) (25,000) (25,000) (25,000) (35,000) (35,000) (35,000) (35,000) (35,000) - Ending Availability - - - - - - - - - 156,927 Total Liquidity (Availability + Cash) 27,753 18,781 27,666 17,056 19,352 12,995 25,465 16,739 5,790 159,747 NET CASH FLOW $ (3,505) $ (8,972) $ 8,885 $ (10,610) $ (7,705) $ (6,355) $ 12,469 $ (8,712) $ (11,053) $ (16,982) Beginning Book Cash Balance 6,258 27,753 18,781 27,666 17,056 19,352 12,995 25,465 16,739 5,790 ( +/- ) Net Cash Flow (3,505) (8,972) 8,885 (10,610) (7,705) (6,355) 12,469 (8,712) (11,053) (16,982) ( +/- ) Revolver Draw / (Paydown) 25,000 - - - 10,000 - - - - (141,927) ( +/- ) Equity Investment - - - - - - - - - 155,929 Ending Book Cash Balance 27,753 18,781 27,666 17,056 19,352 12,995 25,465 16,739 5,790 2,820 Strip Pricing - NYMEX 10/1 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Week of Forecast ==> Wk-(9) Wk-(8) Wk-(7) Wk-(6) Wk-(5) Wk-(4) Wk-(3) Wk-(2) Wk-(1) Wk-0 Week Ending ==> 11-Aug 18-Aug 25-Aug 1-Sep 8-Sep 15-Sep 22-Sep 29-Sep 6-Oct 13-Oct
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 CASH ACCOUNT RECONCILIATION (USD) MONTH: As of October 8th 2019 (Emergence) N.A. MOR-8 All balances in USD Debtor Entity Halcón Holdings, Inc Halcón Resources Corporation Halcón Energy Properties, Inc. Halcón Resources Corporation Halcón Resources Corporation Halcón Resources Corporation Halcón Resources Operating, Inc. Halcón Resources Operating, Inc. BANK NAME Comerica Bank JP Morgan Funds Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, ACCOUNT NUMBER XXXX1772 XXXX0732 XXXX3758 XXXX6308 XXXX3068 XXXX0339 XXXX1751 XXXX3043 ACCOUNT TYPE Credit Card Payments P&A Escrow Inactive Petty Cash & Derivative Receipt Payroll ZBA Utility Adequate Assurance Accounts Payable ZBA Concentration BANK BALANCE $16,397 $518,641 $-$78,144 $-$80,000 $-$5,569,182 DEPOSIT IN TRANSIT $-$- $-$- $-$- $-$- OUTSTANDING CHECKS $-$- $-$- $-$- $(2,635,660) $-ADJUSTED BANK BALANCE $16,397 $518,641 $-$78,144 $-$80,000 $(2,635,660) $5,569,182 BEGINNING CASH - PER BOOKS $17,042 $517,286 $-$259,724 $-$- $(167,539) $3,394,016 RECEIPTS $-$1,355 $-$489,926 $-$- $-$358,442,183 TRANSFERS BETWEEN ACCOUNTS $55,000 $-$- $(671,506) $5,403,204 $80,000 $48,061,906 $(64,645,848) (WITHDRAWAL)CONTRIBUTION-BY INDIVIDUAL DEBTOR $-$- $-$- $-$- $-$- CHECKS/OTHER DISBURSEMENTS $(55,645) $-$- $-$(5,403,204) $-$(50,530,027) $(291,621,169) ENDING CASH - PER BOOKS $16,397 $518,641 $-$78,144 $-$80,000 $(2,635,660) $5,569,182
CASE NAME: HALCÓN RESOURCES CORP CASE NUMBER: 19-34446 CASH ACCOUNT RECONCILIATION (USD MONTH: As of October 8th 2019 (Emerg Corporation Securities, LLC MOR-8 All balances in USD Debtor Entity Halcón Resources Operating, Inc. Halcón Resources Corporation Halcón Resources Corporation Halcón Resources BANK NAME Wells Fargo Bank, N.A. West Virginia State Treasurer's Office Whitney Trust & Asset Management Wells Fargo ACCOUNT NUMBER XXXX1747 XXXX7085 XXXX0138 XXXX8603 ACCOUNT TYPE Royalty Disbursement ZBA P&A Escrow P&A Escrow Legal Escrow TOTAL BANK BALANCE $-$50,956 $59,402 $146,033 $6,518,755 DEPOSIT IN TRANSIT $-$- $-$- $-OUTSTANDING CHECKS $(434,491) $-$- $-$(3,070,152) ADJUSTED BANK BALANCE $(434,491) $50,956 $59,402 $146,033 $3,448,603 BEGINNING CASH - PER BOOKS $(331,412) $50,745 $59,215 $145,537 $3,944,613 RECEIPTS $-$192 $187 $496 $358,934,340 TRANSFERS BETWEEN ACCOUNTS $11,194,365 $-$- $-$(522,879) (WITHDRAWAL)CONTRIBUTION-BY INDIVIDUAL DEBTOR $-$- $-$- $-CHECKS/OTHER DISBURSEMENTS $(11,297,445) $-$- $-$(358,907,490) ENDING CASH - PER BOOKS $(434,491) $50,937 $59,402 $146,033 $3,448,585
CASE NAME: HALCÓN RESOURCES CORPORATION, et al. CASE NUMBER: 19-34446 PAYMENTS TO INSIDERS AND PROFESSIONALS Of the total disbursements shown for the month, list the amount paid to insiders (as defined in Section 101(31)(A)-(F) of the U. S. Bankruptcy Code) and the professionals. Also, for insiders identify the type of compensation paid (e.g., salary, commission, bonus, etc.) (Attach additional pages as necessary.) (1)Resigned from Company, effective 8/15/19 (1)Departed from Company, effective 9/30/19 MOR-9 Revised:6/14/96 PROFESSIONALS NAME/ORDER DATE Aug 2019 Sep 2019 Oct 2019 Nov 2019 Weil, Gotshal & Manges LLP (Dkt 308, 9/24/19) $-$- $-$- FTI Consulting (Dkt 317, 9/24/19) $-$- $-$- Perella Weinberg Partners LP (Dkt 309, 9/24/19) $-$- $-$- Kurtzman Carson Consultants LLC (Dkt 30, 8/7/19) $-$- $659,123 $-KPMG (Dkt 367, 10/22/19) $-$- $-$- Deloitte & Touche LLP (Dkt 368, 10/22/19) $-$- $-$- Deloitte Tax LLP (Dkt 369, 10/22/19) $-$- $-$- TOTAL PROFESSIONALS (MOR-1) $-$- $659,123 $-INSIDERS: NAME/POSITION/COMP TYPE Aug 2019 Sep 2019 Oct 2019 Richard Little, CEO (Employee Compensation) $52,083 $104,166 $-David Elkouri, EVP Chief Legal Officer (Employee Compensation) $33,333 $385,963 $-Ragan Altizer, EVP, CFO & Treasurer (Employee Compensation) $58,334 $58,334 $-(1)Quentin Hicks, EVP, CFO & Treasurer (Employee Compensation) $13,542 $-$- (2)Jon Wright, EVP & COO (Employee Compensation) $35,417 $372,433 $-James W. Christmas, Chairman of the Board (Director Fees) $-$- $-William J. Campbell, Director (Director Fees) $-$- $-Michael L. Clark, Director (Director Fees) $-$- $-Janine J. McArdle, Director (Director Fees) $-$- $-Darryl L. Schall, Director (Director Fees) $-$- $-Ronald D. Scott, Director (Director Fees) $-$- $-Nathan W. Walton, Director (Director Fees) $-$- $-Carin M. Barth, Director (Director Fees) $-$- $-TOTAL INSIDERS (MOR-1) $192,709 $920,897 $-