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Goodrich Petroleum 8-7-2014- What We Know Today

Posted by bernell on August 8, 2014

Goodrich Petroleum and the Tuscaloosa Marine Shale Play are about as tied together as Siamese twins.

Oh, sure, I know Goodrich is in some other plays. 

And, I know there are other players in the TMS, but let’s face it.  There is no company with more or broader holdings in the TMS than Goodrich.  Further, if the TMS goes down, so does Goodrich. 

Book it.

By the same token, if the TMS flourishes, so will Goodrich. 

Personally, I’m betting on both Goodrich and the TMS.

But, I digress.

Because Goodrich and the TMS are tied so close together, the 2nd quarter conference call yesterday was a school on the current state of affairs in the play.  I’ll have to hand it to Gil Goodrich and Rob Turnham, they pretty much lay things out there for you. 

Now, whether we can absorb it all remains to be seen.

I’m sure I didn’t take in all that was said, but I’m gonna give you my impressions from the report anyway. 

Here goes.

Let’s first look at 2nd quarter well results first.

The Blades 33H-1 in Tangipahoa began producing in April (It seems so much longer ago!) and the success of this well certainly excited the interest in the southeastern portion of the play.  April to June this well has produced over 58,000 barrels of oil.  That is a commercial production level, folks.  Tangipahoa and Washington parishes have felt the effect of the Blades 33H-1 with leasing activity.  Drilling activity will soon follow.

The Nunnery 12-1H-1 began producing in June, but didn’t have the numbers the Blades 33H-1 did.  Located about 12 miles north of the Louisiana line in Amite County and bordering Pike County, this well wasn’t an exciting one at first.  Goodrich pointed out during the Q&A time that the well was holding up nicely and that a recent installation of a submersible pump on the well was yielding nice numbers.  In essence, this well wasn’t going to be a headliner, but as a “development” well (a well drilled during the full out development phase of the play, whereby 2+ wells are drilled at a time from a pad), this well was fine, especially considering the thickness of the shale.

Likewise, Beech Grove 94H in East Feliciana Parish was doing a bit better than folks realized.  This well, which began producing in June, has had a much slower drop in production than normal and Goodrich places it as a 600,000 BOE EUR (estimated ultimate recovery) well.  In other words, this is on the low side of the targeted commercial level.

The SLC, Inc. in West Feliciana Parish just south of the Mississippi line began flowing back recently with a peak production of 900 BOE with 96% oil, meaning an 860 barrels of oil per day well.  This, too, is a commercial level well. 

The Bates 25-24H-1 a couple of miles northeast of Liberty in Amite County will soon join these other 4 wells to provide a pretty fair effort at delineating a substantial portion of the holdings of Goodrich Petroleum. 

So, what does this mean?

Management was asked to name a % of their acreage that had been proven viable.  The response was roughly 40 to 50% (before the Bates results are known) and that 0% has been proven to be noncommercial.

 More delineation is needed.

BUT, for now…

Goodrich is going to focus efforts on proven areas. 

The only well completed in proven areas during the past quarter was the C. H. Lewis 30-19H-1, which has produced 37,000 barrels of oil in its first 43 days of production.  That’s strong folks.

Upcoming “sweet spot” wells being fractured or drilled at present include the Denkmann 33-28H-2 and Spears 31-6H-1 in Amite County, and CMR Foster Creek 24-13H-1 and CMR Foster Creek 31-22H-1 in Wilkinson County. 

Future wells planned appear to be the Kent 41H-1 and Verberne 5H-1 in Tangipahoa Parish, the CMR Foster Creek 8H-1 (Goodrich’s first 2 well drill) and Jackson 11-2H-1 in Wilkinson County. 

The Kent 41H-1 may technically be classified as a delineation well, but, if so, it will be the only delineation well drilled by Goodrich in the next several months.

Other possible wells in the “fairway” or sweet spot in Amite County were mentioned, though none are permitted at this time.

Discussions were held as to depth and natural fractures and value of holdings and on and on, but the bottom line is that there appears to be a significant amount of holdings by Goodrich in good to great acreage and a substantial amount of holdings that remain unknown, for now.

Except for a remaining question of longevity or life of these wells (often referred to as curve or type curve), the play certainly should carry the designation of being a “commercial play.” 

There are ample wells with sufficient age out there to determine a type curve, but not since the current fracturing methods were put into place.  The Goodrich Crosby 12-1H-1 is the oldest and it has been around for only 18 months.

Despite what early in 2014 appeared to be setbacks and some continuing mechanical issues with drilling and completing these wells, Goodrich Petroleum and the TMS appears to be quickly headed in the right direction.

Okay, that’s what I absorbed and that’s what I think about it.

Now, what do you think?

What do you think about it?