Halcon Resources Corp (NYSE:HK) agreed to buy Williston Basin, producing oil and gas assets, from Petro Hunt and an affiliated entity for $1.45 billion.

Halcon

Under the terms of the agreement, Halcon Resources Corp (NYSE:HK) will pay $700 million in cash and $75o million in equity, which will be issued initially as preferred stock. It will be converted automatically into common stock at $7.45 per share following an increase in Halcón’s authorized common shares to accommodate conversion and after obtaining certain regulatory approvals.

In addition to the agreement, Canada Pension Plan Investment Board (CPPIB) will buy $300 million worth of Halcón’s common stock at $7.16 per share, after the closing of the purchase agreement of the Williston Assets.

According to Halcon Resources Corp (NYSE:HK), the deal was approved by its board of directors unanimously, and the company expects to complete the transaction by the end of 2012.

In a statement, Floyd C. Wilson, chairman and chief executive officer of Halcon Resources Corp (NYSE:HK), said, “This acquisition is immediately accretive on all measures and is consistent with our strategy of building an oil company with a multi-year drilling inventory in several liquids-rich basins. The assets we are acquiring are located in what is arguably the most attractive oil producing basin in the lower 48, on a risk adjusted basis.”

Furthermore, Wilson stated that the deal improves the company’s leverage profile and increase its estimated proved reserves, on a pro forma basis, by more than 58 percent, to approximately 115 million barrels of oil equivalent, wherein 79 percent are liquids.

The Williston Basin Assets stretch across Williams, Mountrail, McKenzie, and Dunn Counties in North Dakota. It is composed of 81,000 net acres, and its current average net production is more than 10,500 barrels of oil equivalent per day (Boe/d).

Third party engineers estimated that the total proved reserves of the Williston Basin Assets is around 42.4 million barrels of oil equivalent (MMBoe), 88% oil, with an internally estimated resource potential of greater than 100 MMBoe. There are five operated drilling rigs running on the properties.

According to Bruce W. Hunt, President of Petro-Hunt, the company will continue to develop its more than 600,000 acres of oil and gas leaseholdings in the Williston Basin, and to continue to operate the production of approximately 24,000 Boe/d.

With regards to the acquisition deal, Hunt commented, “We are pleased to become a significant Halcón shareholder through this transaction. The track record of Halcón’s management team speaks for itself, and we are confident they will do a great job of developing these solid assets. Petro-Hunt has a long history of operating oil and gas properties in the Williston Basin.”

According to Halcon Resources Corp (NYSE:HK), Wells Fargo & Company (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Goldman Sachs Group, Inc. (NYSE:GS), and Barclays Plc (NYSE:BCS) increased the borrowing base of the company to $850 million, and agreed to provide a $500 million bridge loan.

Floyd Wilson – Halcon Resources Corporation – Chairman, CEO states on the conference call, the rationale for the acqusition:

This transaction is a pure execution of our strategy that positions us in several liquids-rich basins. The Bakken/Three Forks now joins the Woodbine/Eagle Ford and the Utica/Point Pleasant as Halcon core areas. All three key areas have the critical mass to grow organically for years to come, and we are currently running drilling rigs in all three plays.
This transaction in the Bakken is immediately accretive on all measures, and, when taken with the other activities we announced this morning, is significantly deleveraging. This premier acreage position is prospective for the Bakken and Three Forks, and much of it is located in the core of the play.

Current production from these assets is over 10,500 barrels of oil equivalent per day and total proved reserves are estimated at approximately 42 million barrels of oil equivalent, 88% oil, 61% undeveloped, with an estimated total resource potential of over 100 million barrels of oil equivalent.