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Halcon's First Operated TMS Well 'In Line' With Others in the Play

The oil-rich Tuscaloosa Marine Shale (TMS) of Louisiana and Mississippi is evolving into a world-class play, according to Halcon Resources Corp. CEO Floyd Wilson. On Monday the company turned in the numbers for its first operated TMS well, which are in line with those of peers in the play.

The Horseshoe Hill 11-22H-1 well (92% working interest) in Wilkinson County, MS, achieved a 24-hour average initial production rate of 1,208 boe/d and 1.1 MMcf/d of 1,551 BTU natural gas on a 19/64-inch choke. Assuming full ethane recovery, the company estimates that the well would produce an additional 212 bbl of natural gas liquids per day for a total 24-hour average initial production rate of 1,548 boe/d. The well has a 7,060-foot effective lateral and was completed with 24 frack stages, 21 of which were effectively pumped and three of which were partially pumped with less proppant placed than designed. Halcon drilled the well in 39 days.

Recently, Goodrich Petroleum Corp. announced a TMS well with a peak 24-hour average production rate of 1,450 boe/d (see Shale DailyJune 2). At the time, analysts following the company reacted to the news favorably. Meanwhile, Sanchez Energy Corp. last month spud its first company-operated TMS well (see Shale DailyMay 22).

Analysts at Tudor, Pickering, Holt & Co. wrote that production from Halcon's well is "in line with recent strong results out of [the] play." While less oily than other recent wells, this could be a good thing for well pressures, they said in a note Monday.

Wells Fargo Securities analyst Gordon Douthat said in a note that the Halcon results are in line with recent numbers from Goodrich. The Halcon well is "solid first well in the play, in our view," he said.

The Horseshoe Hill 11-22H-1 well’s IP rate is one of the best released for a TMS well to date when measured strictly by its initial 24-hour flow, coming in 8 boe/d above that for Encana's recent Anderson 17H-2 well in Amite County, MS. However, Horseshoe trails the Anderson well on an IP-per-lateral foot basis, with a rate of 0.22 boe/d, versus 0.30 boe/d for the Anderson horizontal.

Halcon has also drilled the Black Stone 4H-2 (87% WI) well in Wilkinson County in 28 days with a 5,400-foot lateral. Completion operations are expected to begin this month. The company recently spudded the Fassman 9H-1 (84% WI) in Wilkinson County with a second rig and is planning a 6,030-foot lateral for the well. And it spudded the SD Smith 1H (62% WI), also in Wilkinson County, and is planning a 7,660-foot lateral.

The company said it plans to spud 10 to 12 operated wells in the TMS, running an average of two rigs this year. And it plans to participate in 15-20 nonoperated TMS wells during the year.

Halcon also announced that it struck a deal with Apollo Global Management LLC for Apollo units to invest $400 million in TMS-focused subsidiary HK TMS LLC. Upon closing, HK TMS will hold all of Halcon's acreage in Mississippi and Louisiana that is prospective for the formation. Halcon holds 100% of the common shares of HK TMS and is the sole manager of HK TMS.

And midstream unit Halcon Field Services has acquired rights to develop an oil handling terminal at the Port of Natchez, a location with direct access to more than two million b/d of refining capacity on the Lower Mississippi River. The Port of Natchez has existing infrastructure including loading docks, pipelines and direct access to the Canadian National railroad, Halcon said.

"We are off to a solid start in the TMS, and the capital from our partnership with Apollo will help us to accelerate activity," Wilson said. "The TMS is quickly evolving into a world-class oil play."

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