Goodrich News Release 12-10-2014 -Verberne Results -2015 Budget
Goodrich had an early morning news release to provide us with its tentative 2015 capital expenditure budget and some updates on current wells.
The CapEx budget is tentatively set at $150-$200 million for 2015 with flexibility built in to raise the budgeted amount, depending upon the price of oil and whether a sale of all or a portion of its Eagle Ford properties can be found.
Exploring the possibility of selling its Eagle Ford holdings is in the early stages.
The news release also provide some well up-dates.
The Verberne 5H-1 in Tangipahoa Parish was announced at a peak 24 hour flow rate of 1,335 barrels of oil per day with a 14/64 choke. This well had a 6,600 foot lateral with 21 stages.
Note that this is a sister well to the Blades 33H-1 completed back in April. The Blades had a 5,000 foot lateral and peak production numbers of 1,250 barrels per day and was also reported to have a 14/64 choke
The company has modified its current frac plan to have longer stages (roughly 320 foot) and adjusted its cluster spacing, but retained roughly the same proppant per foot. Further, this new frac design uses less fluid and, thus, less pump time. Savings on completion costs are in excess of $1 million per well as a result of these changes.
Based on the nice results from the Verberne, the changes don't appear to have caused a negative impact on production.
Further, the company pointed out that drilling times are continuing to slide downwards with several recent wells being completed in the 25-30 day time frame, including its most recent well, the Kent 41H-1 in Tangipahoa Parish.
The Williams 46H-1, also in Tangipahoa Parish and another sister well to the Blades, has started flow back. It is at a current 24 hour BOE of 1,000 barrels, but has not reached peak production, yet. This well had a 6,400 foot lateral and 20 stages.
The Kent 41H-1, located further south in Tangipahoa Parish, is awaiting fracturing. It has a 6,000 foot lateral. (I anticipate this well to be fracked once Comstock CMR Foster Creek 28-40 #1 fracturing operations are completed. I would expect these operations to be completed by early next week.)
In addition to the Kent, drilling has been completed on the CMR Foster Creek 8H-1 in Wilkinson County. The CMR Foster Creek 8H-2 is being drilled in the lateral at present. This is the first 2 well drill for Goodrich and these wells are located near to the Crosby 12-1H-1 well.
No update was given on the recently spud Kinchen 51H-1 in Tangipahoa Parish just north of Kentwood or the B-Nez 43H, another Blades offset well, or the soon to be completed T. Lewis 7-38H-1, located in Amite County adjacent to the Goodrich CMR 8-5 and EnCana Lewis 7-18H-1 wells.
It is obvious Goodrich is focused on drilling wells in proven areas in the heart of the play at this time.
Further, Goodrich estimated cost savings on single wells of $1.5 million in 2015 by using the new frac design and by anticipating the continuation of improved drill times. The company appears to be looking toward more 2 well pads in 2015 to utilize the savings that can be had from these multiple well pads as an additional improvement in costs.
The news release concluded with the anticipation that under the present circumstances economic development of the play should continue in 2015. (Present circumstances include Goodrich having a substantial portion of its production hedged at $96.11 for 2015).
There are currently 4 Goodrich rigs in the TMS. One will be retired upon completion of its drill shortly, such that by January 1 there should be 3 rigs operating in the play by Goodrich.
At a $150-$200 million CapEx budget for 2015, I would expect this 3 rig program to drop to 2 pretty quickly. And, without the sale of some of the Eagle Ford holdings or an increase in the price of oil, the rig count could easily drop to 1 across the summer.
I'm basing this on a wide margin estimate of cost per well of $10-$14 million, which would mean a wide ranging 10-20 wells for 2015. Three (3) rigs could drill 30 wells per year using the current drilling times.
All in all, this report is very positive for both the TMS and Goodrich Petroleum.
In my opinion, prices must rise or some dramatic improvement in costs must occur in order for much TMS activity to continue beyond the end of 2015.
Here is a link to the full the news release: