Halcon Resources Corp., Houston, plans this year to spud 10-12 operated wells in the Tuscaloosa Marine shale (TMS) and to participate in 15-20 other wells in the play. To support the work, it has signed a definitive agreement with affiliates of Apollo Global Management LLC (AGM), New York, for investment of as much as $400 million.
The investment will be in HK TMS LLC, a wholly owned subsidiary of Halcon Resources that will hold all the operator’s Mississippi and Louisiana acreage prospective for the TMS.
Apollo will buy 150,000 HK TMS preferred shares for $150 million in cash and may buy 250,000 more shares on the same terms. The preferred shares will pay quarterly cash dividends at 8%/year.
HK TMS agreed to assign a 4% overriding royalty interest in conjunction with the preferred-share issue in 75 net wells to be drilled and completed on its TMS acreage. The rate might be cut to 2% “under certain circumstances.” The number of wells subject to the override will increase to the extent Apollo subscribes for additional preferred shares but will not be more than 200.
Halcon holds 314,000 net acres in the TMS play, on which it plans to run an average two rigs this year.
The company reported that a recent well in Wilkinson County, Miss., achieved a 24-hr average initial production rate of 1,208 b/d of oil and 1.1 MMcfd of natural gas on a 19/64-in. choke.
Halcon drilled the well, Horseshoe Hill 11-22H-1, in 39 days with a 7,060-ft effective lateral, completing it with 24 frac stages. Twenty-one frac stages were effectively pumped, and three were partially pumped with proppant placement below design.
The company said gas composition indicated that, with full ethane recovery, the well would produce an additional 212 b/d of NGL for a total 24-hr average initial production rate of 1,548 boe/d. Halcon holds a 92% working interest in the well.
Elsewhere in the play, the company expects to begin completing the Black Stone 4H-2 well in Wilkinson County, Miss., this month. The well, in which it holds 87% a working interest, has a 5,400-ft lateral.
Halcon recently spudded the Fassman 9H-1 well in Wilkinson County and plans a 6,030-ft lateral. It holds an 84% working interest.
The company also has spudded the SD Smith 1H well in the same county, planning a 7,660-ft lateral. Its working interest is 62%.
Meanwhile, Halcon Field Services, a midstream subsidiary, has acquired rights to develop an oil-handling terminal at the Port of Natchez on the Mississippi River. The port has loading docks, pipelines, and direct access to the Canadian National rail system.