Tuscaloosa marine shale pinched by low oil prices

Feb. 10, 2015
Halcon Resources is pulling out of the Tuscalossa Marine Shale for now while Comstock Resources Inc. suspended its drilling program there in response to falling oil prices.

Halcon Resources is pulling out of the Tuscalossa Marine Shale for now while Comstock Resources Inc. suspended its drilling program there in response to falling oil prices.

Comstock allocated $307 million for 2015 drilling and completion activity, saying it would start a drilling program for natural gas on its Haynesville properties. It released its only rig in the Tuscaloosa during December 2014 as it postponed drilling activity there until crude oil prices improve.

As of late 2014, Comstock of Frisco, Tex., operated four rigs drilling on its Eagle Ford oil properties. It planned to release two of them in early 2015 and to move the other two to the Haynesville play in North Louisiana. Meanwhile, Comstock planned to continue its Eagle Ford gas program.

Comstock executives believe improved completion technology, including longer laterals, will provide strong returns in the Haynesville, although they added that they will continually evaluate the market and adjust drilling plans accordingly.

The budget called for spending $161 million to drill 14 Haynesville/Bossier gas wells during 2015.

Comstock also planned to refracture 10 of its existing Haynesville shale producing wells. After 3 years of gas production declines, Comstock anticipates 2015 could mark a turnaround for its gas production.

Comstock was not the first to announce plans to stop drilling in the Tuscaloosa.

Halcon Resources in November said it was pulling out of the Tuscaloosa Marine Shale for now and would instead focus on a scaled-down drilling program in Texas and North Dakota.

Floyd Wilson, Halcon chairman and chief executive office, called the Tuscaloosa "currently a relatively high-cost play." Industry has said the region is one of the most expensive to drill with costs running above $10 million/well. The high drilling costs stem from high regional service costs and the need for operators to drill one well instead of drilling multiple wells from one site.

Encana Corp., Goodrich Petroleum Corp., VirTex Operation Co., and Sanchez Oil and Gas Corp. remain active in the Tuscaloosa.

In late 2014, Goodrich said it planned to spend $150-200 million for drilling in the area in 2015. Encana said it planned to invest $350-400 million in three regions, including the Tuscaloosa.