Now that it has seen some encouraging well results, Goodrich Petroleum Inc. is stepping up activity in the Tuscaloosa Marine Shale (TMS) of Louisiana and Mississippi, where the company is about to close on an acquisition that will more than double its footprint in the emerging play.

While it’s certainly not abandoning the Eagle Ford Shale of South Texas, during the fourth quarter Goodrich plans to reallocate $15 million of capital from the Eagle Ford to the TMS, CEO Gil Goodrich said during an earnings conference call Wednesday.

“With continued success, we expect further acceleration of our TMS development activities in 2014,” he said.

Clearly our near-term focus is, as we think it should be, on the TMS as recent results and our pending acquisition provide a tremendous catalyst for production, reserve and NAV [net asset value] growth. Given the current state of the play, we fully expect further acceleration of TMS activity as we move forward and into 2014.

Last month, the company announced a TMS acquisition that on Wednesday the CEO confirmed was from Devon Energy (see Shale Daily, July 23).

“Devon had previously entered into a large joint venture covering five emerging crude oil and liquids plays in the United States with Sinopec,” Goodrich said. “Sinopec has elected to retain their one-third interest in the properties and jointly develop this acreage with us.” The TMS joint development activities are expected to begin during the fourth quarter. The CEO said the Devon deal is a winner for Goodrich on multiple fronts.

“First, our footprint in the play will more than double from 135,000 net acres to approximately 320,000 net acres,” he said. “Second, the additional acreage materially expands the range, diversity and balance of our overall position in the TMS. Third, the combination of the present value of the proved developed producing reserves associated with the seven producing wells and upon closing the corresponding $18 million increase in our borrowing base under our senior credit facility allows us to complete this acquisition with negligible impact to our current liquidity.

“Finally, the transaction accelerates our transition from a company whose reserves and inventory were dominated by natural gas towards a very balanced portfolio with tremendous opportunities for crude oil production and reserve growth.”

COO Robert Turnham said Goodrich is seeing well costs come down in the TMS as its recent Smith well was drilled and completed for about $13 million.

“We continue to believe we can drive our costs down over time to the $10 million range through better drilling efficiencies, pad drilling, zipper fracks and a more competitive service company environment,” Turnham said. “I want to remind you that even at current well costs, the economics are compelling in the play and very similar if not superior to what see in the Eagle Ford.”

TMS production rates are “very attractive,” and the production stream is 90-96% black, sweet oil, for which Goodrich receives “north of $100/bbl.” Natural gas has a high Btu content and yields 80-100 bbl of natural gas liquids per million cubic feet produced.

Sweetening the TMS is severance tax relief in both Louisiana and Mississippi that will last for 24-30 months, Turnham said. Royalties are lower than in other plays, and landowners and regulators are cooperative, he said.

In the TMS Goodrich reported that the:

Goodrich is currently drilling its CMR/Foster Creek 20-7H-1 (99% WI) well in Wilkinson County, MS, and plans to spud three additional operated wells by the end of the year.