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Goodrich Targeting Oil in Eagle Ford, TMS

Goodrich Petroleum Corp. plans to spend between $175 million and $200 million on capital expenditures (capex) in 2013, most of which will go toward drilling for oil in the Eagle Ford Shale and Tuscaloosa Marine Shale (TMS), but a small portion will be spent on dry gas in the Haynesville Shale.

The Houston-based company said its preliminary capex budget includes $160 million to $185 million for drilling and well completions, and $15 million for leasehold and infrastructure expenses. Goodrich said it plans to drill or complete 44-48 gross (24-26 net) wells in 2013, about 85% of which will target oil.

The company added that although it plans to be flexible with its capex allocations between the Eagle Ford and TMS, it will primarily focus its oil efforts in the Eagle Ford, spending between $115 million and $137 million there to drill 24-28 gross (16-19 net) wells. In the TMS, Goodrich plans to spend $25 million to $50 million to drill six to 10 gross (two to four net) wells.

In the Haynesville, the company will allocate $22 million to complete 13 gross (six net) wells that have previously been drilled.

For its 2013 production guidance, Goodrich estimates oil volumes will grow 40-60% over 2012. Natural gas volumes for 4Q2013 are also expected to be 10-15% higher from the previously issued guidance for 4Q2012, but it estimated that year/year (y/y) volumes would decline 10% between 2012 and 2013, and overall production per Mcfe would be relatively flat y/y. The company estimates oil volumes will make up about 30-30% of total production and 65-70% of revenue in 2013.

In the Eagle Ford, the company said average drilling days per well fell 40% from 3Q2012 to 4Q2012, to 11 days per average 6,000-foot lateral. Goodrich estimates gross well costs in 2013 will range from $7 million to $7.5 million per average 6,000-foot lateral. It credited faster drilling and cycle times achieved during 2H2012, as well as reduced pressure pumping agreements set for 2013, with bringing down well costs.

The company added that it plans to spud its first test well targeting the Pearsall Shale formation in 1Q2013. The Pearsall is a formation that underlies the Eagle Ford that is believed to include portions of Dimmit, Maverick and Webb counties in South Texas.

In the TMS, Goodrich said it was unable to repair a parted casing connection at the Denkmann 33H-1 well, which is located in Amite County, MS. Goodrich holds a 75% working interest (WI) in the well.

Goodrich has a 50% WI in the Crosby 12H-1 well, located in Wilkinson County, MS, and a 12% WI in the nonoperated Ash 31H-1 and 31H-2 wells, which are both in Amite County. The company plans to begin hydraulic fracturing operations at all three wells this month.

According to company reports, Goodrich holds 52,707 gross (38,300 net) acres in the Eagle Ford, 156,000 gross (134,200 net) acres in the TMS, and 10,000 net acres in the Pearsall. The company also has 35,678 gross (18,110 net) acres in what Goodrich considers its Haynesville core in North Louisiana. Additional acreage that may be prospective to the Haynesville includes two areas in East Texas: 40,156 gross (38,450 net) acres in the Cotton Valley area, and 48,319 gross (30,300 net) acres in the Angelina River Trend, also known as the Shelby Trough.

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