Halcon updates multistate resource play operations

Halcon Resources Corp., Houston, plans to add four to six operated rigs by the end of 2012 to the 11 it is currently running in its resource-style drilling program in the wake of its acquisition of GeoResources Inc. and assets in East Texas.

The company said its Halcon Field Services LLC midstream subsidiary continues work on infrastructure construction and solutions in all areas of activity.

Halcon holds 190,000 net acres prospective for the Woodbine, Eagle Ford, and other formations leased or under contract in Leon, Madison, Grimes, and Polk counties, Tex. Fifteen horizontal wells are producing and five are being drilled. The company expects to spud 18-22 wells in the second half of 2012 with 84% average working interest.

The company is operating five rigs in Leon, Madison, and Grimes counties and plans to add one to two rigs by yearend. Pad drilling has been employed in some areas.

Halcon’s first Woodbine completion, the AM Easterling-Gresham A1H, in which it has a 92% working interest, had an initial gross rate of 919 b/d of oil and 139 Mcfd of natural gas on a 32/64-in. choke. Drilled to 14,265 ft measured depth with 24 frac stages in a 6,730-ft lateral, it averaged 706 boe/d, 98% oil, in its first 30 days.

Halcon has working interests in 55,000 net acres prospective for the Bakken and Three Forks formations in Williams, Mountrail, and McKenzie counties, ND, and Roosevelt and Richland counties, Mont.

Halcon anticipates operating the majority of its acreage in Williams County and in Montana. It expects to lease or otherwise acquire or trade for acreage in and around its existing acreage and is targeting up to 125,000 net acres in the Williston basin. On Halcon’s operated acreage 29 wells are producing, 2 wells are being completed, 4 wells await completion, and 3 wells are being drilled.

Two of the most recently completed operated wells, in which Halcon has 28% working interests, in Williams County averaged 543 boe/d, 90% oil, and 610 boe/d, 90% oil, respectively, in the first 10 days of production while still flowing.

The company plans to continue running three operated rigs in the basin for the rest of 2012. Expectations are to spud 12-16 horizontal wells on operated acreage with 33% average working interest in the second half. Multiple initiatives are under way intended to further enhance economics by reducing costs and improving recoveries.

The company also expects to participate in 25-30 nonoperated wells in the second half with 8% average working interest.

Halcon has 130,000 net acres leased or under contract in the Utica/Point Pleasant play in Trumbull and Mahoning counties, Ohio, and Mercer, Venango, and Crawford counties, Pa. It plans to spud four to six wells in the balance of 2012, including two in October, with 95% average working interest.

Three pads are being built and construction is to start on at least three more by yearend. Halcon has five approved drilling permits and is in various stages of permitting several more wells. It expects to gain drilling efficiencies while lowering well costs through the use of pad drilling once a healthy backlog of approved drilling permits has been established.

Due to infrastructure requirements, combined with the practice of shutting in wells for up to 60 days after completion in an effort to maximize recoveries, Halcon estimates a spud-to-production time of 120 days/well. First production is likely in the 2013 first quarter and is expected to grow rapidly throughout the year.

Halcon has 70,000 net acres leased or under contract in the Tuscaloosa marine shale play in Rapides and Avoyelles parishes, La. The company targets 150,000-200,000 net acres. Halcon believes that costs below $10 million/well on a developmental basis and long laterals are crucial to the play’s economics.

Halcon spudded its first well, Broadway 1H in Rapides Parish, and plans to spud one to three wells in the second half with 100% average working interest using one rig.

Halcon anticipates building a 200,000-350,000 net acre position in undisclosed unconventional exploratory plays. The company has drilled a pilot well in one undisclosed play and is evaluating results from core analysis.

The company’s strategy for the exploratory plays is to use in-house geologic expertise to identify areas that it believes are prospective for oil or liquids-rich production. At this time, due to competitive concerns, Halcon is not disclosing additional details.

Halcon has 20,000 net acres leased or under contract in the Midway/Navarro play in Austin and Colorado counties, Tex., and targets 50,000-75,000 net acres in the trend.

It has drilled two wells in Austin County. Halcon previously disclosed that its initial vertical well, the Kollatschny-1, went to 17,320 ft measured total depth. It is being tested in the Navarro formation, and the company is contemplating an offset to access the Midway sands. The second vertical well, the Hillboldt-1, has been drilled to 15,500 ft measured total depth, had shows in the Wilcox, Midway, and Navarro formations, and a Navarro completion attempt is under way.

Halcon has 89,000 net acres leased, optioned, or under contract in the Wilcox play in Newton County, Tex., and Beauregard and Allen parishes, La.

Its first well, Columbia Land & Timber 9-1, in which Halcon has a 97.5% working interest, cost an estimated $1.5 million. The Upper Wilcox averaged 481 boe/d, 93% oil, in its first 7 days and is making 484 boe/d, 92% oil, on a 24/64-in. choke after producing for 23 days.

The company plans to use one rig to spud two to four wells in the rest of 2012 with 85% average working interest. The next well is to spud in November. The wells will initially be drilled vertically and completed using multistage hydraulic fracturing with the intent of comingling production from the Upper, Middle, and Lower Wilcox; however, the company believes there is an opportunity to drill horizontally to exploit the resource.

Halcon holds a concession on 45,000 gross and net acres from the Osage Minerals Council in Osage County, Okla., in the Mississippi lime play. The company has drilled five horizontal wells with 100% working interest and four salt water disposal wells since the end of April 2012.

Four of the wells are producing, and the fifth well is scheduled to be completed in October 2012. Halcon plans to evaluate the results from all five wells for 60 days before disclosing detailed production information.

Halcon has working interests in 24,000 net acres prospective for the Eagle Ford, Austin Chalk, and other formations in Fayette and Gonzales counties, Tex. Nineteen wells are producing, one well is being completed, one well awaits completion, and two wells are being drilled.

Due to improved completion techniques, the most recent wells are performing far better than previous wells. The more recent wells averaged 30, 60, and 90-day production rates of 461, 393, and 349 boe/d, respectively.

Four wells recently put online in Gonzales County have produced for 30 days and averaged 536 boe/d, 94% oil. Halcon recently completed three wells in Fayette County that have been online 4-13 days with average rates of 496, 617, and 707 boe/d, 94% oil, respectively.

Gross daily production from the Eagle Ford is averaging 5,070 boe/d, 93% oil, with average net daily production of 1,960 boe/d compared with average net daily production of 642 boe/d in the second quarter of 2012. The company is running two operated rigs and expects to spud 9-11 wells with 45% average working interest in the second half.

Due to a noncompete agreement, this Eagle Ford property will be divested. Halcon opened a data room on Sept. 17, 2012, and believes this property will be sold and closed by the end of the year.

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