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November 2014

Halcon - Expanded Summary

Posted by bernell on November 11, 2014

Now that everyone has absorbed the body blow of Halcon leaving the TMS for the "near term," let's delve more into the specifics of what was said today.

Floyd Wilson announced in prepared remarks about leaving the TMS, then called upon his chief operating officer, Charles Cusack, at 14:20 of the presentation to talk specifically about the TMS.  Here is my amateur transcription of  Mr. Cusack's remarks concerning the TMS.

"We are drilling our 9th and 10th wells right now.

We continue to have drilling improvements and we’re feeling very confident the way we’re doing the wells evidence by our Creek Cottage West drilled over 21,000 feet in 26 days.

We really getting that recipe down on that side.

On the completion side we have five wells that are now flowing.  We’ve had more of a learning curve on that side. We had a couple of hiccups. We under stimulated our first well.  It came in at a decent rate, but it is going to be an underperformer because of being understimulated.

And, then we fracked into some small faults in another well, possibly two of them.

We’ve learned you need to be near 2D seismic lines and that a 3D seismic profile will probably be critical to the TMS going forward.

Our 4th well is close to a type curve well and our 5th well that we just brought on, the Shuckrow, is our best well to-date.

It’s still cleaning up, but we have a projected 24 hour rate probably over the next few hours that will get it well over 1,000 barrels of oil per day…1,066 is our estimate and 800 – 1,000 cubic feet of gas a day.  That will be a 1,276 boe per day, including NGL’s and minus the shrink.

In addition, we just finished pumping the George Martens frack. That’s 25 stages.  It all pumped really well.  And that’s the furthest west well completed to-date in Wilkinson County, so it is a step out well, helping to delineate the acreage.

We have 4 more wells that will be coming on-line over the next two months.  In addition, other industry has 12 additional wells. So, that’s a lot of data in the next two months.

And we’re drilling our first well over in Tangipahoa.  So, you’re 50 miles across. So, we’re very confident.

We’re very confident in our type curves.  You’re going to see more and more wells as evidence of that."

I'm not going to quote anyone else, but I gathered a good deal more from the question and answer session.  The responses were by Floyd Wilson and here are a few points that I gathered...some may be quotes, but I didn't take the time to double check them, so let's just consider them to be my remembrance of what was said rather than direct quotes...

1. They are NOT pulling out of the TMS, but, for now, they are not a TMS company.

2. They will continue to participate in wells with other operators.

3. They will review the results of wells over the next few months (the end of the first quarter of 2015 was mentioned at one point).  They will obviously be looking at oil prices, cost reductions both from improvements in drilling/completing, and for perhaps cost reductions from the suppliers.

4. They still have high hopes the play will be productive and are very confident in the potential of the play. But, they have elected to slow down for now and see how things settle out.

5. They are not concerned about leases (that they care about).  They have long enough terms and/or enough held by production such that they have time to see how things shake out.

6. The information sharing among the companies in the TMS is excellent and they fully expect to see improvements in the costs, including "train wrecks" with wells. Experience should also bring costs down.

7. If they hit their "model" in the TMS and get costs down, those wells will hit the profit of all except the best wells in the Williston Basin. They are not competitive today and they have no lease issues.  They have high hope and expectations for that play.

8. A 3D study may be necessary to avoid drilling issues going forward.

So, there you have it.  Halcon is leaving for the near term, but could return if things get better.

Stay tuned, Folks. 

There is never a dull moment here in the TMS!

What do you think about it?