Mar 9, 2014 22:34 Halcón will spend $95 million in Tuscaloosa shale Halcón will spend $95 million in Tuscaloosa shale BY TED GRIGGS| email@example.com March 09, 2014 Comments Halcón Resources will devote around $95 million in 2014 to drill 10 to 12 wells in the Tuscaloosa Marine Shale with confidence that it can overcome drilling issues that have hampered production from some competitors’ early wells, Chairman and Chief Executive Officer Floyd C. Wilson said Thursday. Halcón is the latest company to report its Tuscaloosa drilling plans. On Feb. 20, Goodrich Petroleum President Robert Turnham said as many as 45 to 60 wells, and maybe more, may be drilled in 2014. Goodrich alone plans to drill or partner in 32 wells. In 2013, there were 10 wells drilled in the Tuscaloosa. “2014 will be a very big year for the TMS, obviously, if plans materialize as expected,” Turnham said. Halcón’s initial wells in the oil-rich formation, which stretches across the middle of Louisiana into Mississippi, are projected to cost $13.3 million apiece. Halcón has boosted its leased acreage in the Tuscaloosa to 307,000 acres from the 75,000 it had in mid-2013. The company will move its first rig into the formation in March and another in April. But Wilson doesn’t expect much production in 2014. “Look for a huge impact in 2015. This year there will be a bit of learning going on and positioning and so on and so forth,” Wilson said during a conference call with analysts. “But it’s certainly an attractive way for us to build a high-growth year without any requirement of having impact from this play at this time.” Wilson described the Tuscaloosa as “one of the most attractive” emerging formations in North America, although there are production challenges. Halcón’s team has been working the play for more than a year. The company is the leading driller in El Halcón in the eastern portion of the Eagle Ford Shale in Texas. El Halcón is similar to Tuscaloosa. That experience, as well as data-sharing agreements with other drillers in the Tuscaloosa, will help Halcón overcome the issues with Tuscaloosa. “This play has not had the benefit of 10 or 15 rigs drilling in it. It will …. That’s when the avalanche of new data comes to everybody,” Wilson said. “You’ve had a couple of pioneers out there drilling wells with some tremendous success and some mechanical issues.” Goodrich Petroleum, one of the largest players in the formation, has run into problems in two of its most recent wells where debris plugged portions of the horizontal sections of the wells. The debris resulted from fracturing, or fracking. The process involves forcing millions of gallons of water, sand and chemicals underground at high pressure to crack the rock and release oil and gas. Drillers fracture multiple sections of the horizontal section of a well, which can be 7,500 feet long. In Goodrich’s wells, debris blocked the wells’ production a few hundred feet into the horizontal section. Halcón Chief Financial Officer Mark Mize said the problems are more mechanical than geological. “If you want to take one analogy, this is the Eagle Ford Shale,” Mize said. “It’s just a slightly higher clay content like El Halcón.” More than 12,000 wells have been permitted in Eagle Ford since 2010, with 4,416 of those in 2013, according to the Texas Railroad Commission. Halcón is familiar with Tuscalosa’s issues and has ideas for working around them, Wilson said. The company is sharing that information with drillers. “We would expect everyone’s ability to get these wells drilled will improve with experience,” Wilson said. Goodrich CEO Walter Goodrich told investors and analysts on Feb. 20 that the company has made progress in resolving the issues as they occur. The company plans to land the wells lower in the formation, where the clay content is lower and there have been fewer issues with plugging, Goodrich said.