Halcón Resources Will Spend 40% of its 2014 Budget in the Eagle Ford - ~$380 Million

March 5, 2014 Kirk Eggleston

Halcon Resource's Eagle Ford Acreage Map

Halcón plans on spending ~$380 million in its East Texas Eagle Ford acreage (El Halcón) in 2014. That's approximately 40% of the company's budget.

At the end of February, 2014, there were 45 Eagle Ford wells producing, 10 wells completing or waiting on completion, and 4 wells being drilled.

Halcón currently has working interests in approximately 100,000 net acres tied to prospective drilling in the Eagle Ford formation in East Texas. The Company plans to operate an average of 3 rigs and spud 40 to 50 gross operated wells in 2014.

“Our focus in 2014 is on drilling wells in the sweet spots of our de-risked acreage in the Williston Basin and El Halcón. We will also begin drilling wells on our newly acquired acreage located in what we believe to be the core of theTuscaloosa Marine Shale. We are primed for growth and have a deep drilling inventory. We are committed to maintaining capital discipline and dedicated to improving capital efficiency.”

— Floyd Wilson, CEO

In 2014, the company plans to drill wells with an average lateral length of 7,500 feet, as tests continue to determine the most efficient completion design. In 2013, the company found there was a direct correlation between lateral length to EUR for wells completed with a sufficient volume of proppant.

Halcón's Fourth-Quarter Eagle Ford Production

Halcón operated an average of four rigs in El Halcón during the fourth quarter, spudded 13 wells and put 9 wells online. The company produced an average of 7,138 boe/d in El Halcón during the fourth quarter. That's an increase of 43% over the third-quarter of 2013.

Halcón Eagle Ford Highlights

~$380 million will be spent in Halcón's East Texas Eagle Ford acreage (El Halcón) in 2014
Halcón plans to operate an average of 3 rigs and spud 40 to 50 gross operated wells in 2014 in El Halcón
43% increase in Eagle Ford production to 7,138 boe/d in the fourth-quarter of 2013
At the end of February, 2014, 45 Eagle Ford wells were producing, 10 wells were being completed or waiting on completion and 4 wells were being drilled

Penn Virginia Grows Eagle Ford Position to 80,000 Net Acres in 2013

March 4, 2014 Kirk Eggleston

Penn-Virginia's Eagle Ford Shale proved reserves increased by 189% in 2013 to 75.6 mmboe (89% oil and NGLs). That's ~55% of the company's estimated total proved reserves.

The year-over-year increase in proved reserves was partially tied to a $401 million dollar deal in April 2013, when the company acquired ~40,600 gross (19,000 net) acres from Magnum Hunter Resources.

Overall, Penn-Virginia's Eagle Ford position grew 19% to 80,000 net acres in 2013. The company now has an estimated ~1,125 drilling locations.

“We continue to increase our core Eagle Ford Shale position through leasing at a cost of approximately $2,800 per net acre since early November. Our stated goal of 100,000 net acres in the Eagle Ford Shale remains intact and we remain confident this is achievable at attractive acquisition costs. As a result of [] successful downspaced drilling, we have increased our estimated drilling inventory by about 26 percent from 895 just a few months ago to the current estimate of approximately 1,125 drilling locations.”

— CEO, Baird Whitehead

Penn Virginia Fourth Quarter 2013 Eagle Ford Production

Penn Virginia had record oil production in the fourth-quarter of 11,139 b/d. Total production for the quarter was 13,111 boe/d. That's up ~5% from 12,489 boe/d.

During the quarter, the company decreased completion costs per well and increased productivity.

“Our well costs per frac stage decreased again, while our well productivity per stage increased as a result of pumping additional proppant and the continued use of multi-well pads and ‘zipper fracs.’ We will continue to implement advanced techniques to further optimize our well results and economics.”

— Whitehead

The peak average rate of production for 23 gross (12.3 net) of the company's most recent wells was 1,582 boe/d. 86% of production was oil. The average lateral length for these 23 operated wells 5,722 feet.

179 gross (116.7 net) wells were producing at the end of 2013. 13 gross (10.1 net) operated wells were being completed or awaiting completion at the end of the year. Two gross (0.9 net) outside operating wells were being completed. Six (4.2 net) operated wells being drilled.

Forest Oil Eagle Ford Drilling Shifting Gears in 2014 Due to Faulting

February 28, 2014 Kirk Eggleston

Forest Oil Eagle Ford Acreage Map Year-end 2013

Forest Oil is shifting gears in the Eagle Ford, after three gross (1.5 net) wells hit a fault line in the company's southern acreage during the fourth-quarter.

In 2013, Forest reported results on 44 gross (22 net) wells, with a 30-day average gross production rate of 408 boe/d. By contrast, 17 gross (8.5 net) wells drilled during the fourth-quarter had a 30-day average gross production of 304 boe/d. That's about ~25% less for the fourth-quarter, compared to the full year. Both gross production rates included the results from three gross (1.5 net) wells impacted by faulting.

The company had plans for 2014 to more than double its oil production in the Eagle Ford; however, due to faulting's negative impact on production in the fourth-quarter, the company is pulling back the reins.

77% of the company's $290-310 million capital budget was slated for the Eagle Ford, but new estimates have been set at 36%. Forest is re-allocating its budget to liquids-rich opportunities in the Ark-La-Tex, where it has a high degree of confidence in the geology.

“We are electing to defer Eagle Ford drilling activity as we complete the reprocessing and interpretation of 3D seismic data and also evaluate the success of recent well completion designs. Importantly, we maintain a balanced portfolio of projects that provides attractive risk-adjusted rate-of-return opportunities. This will enable us to reallocate capital to our liquids-rich opportunities in the Ark-La-Tex to maintain a consistent level of drilling activity in 2014. This decision will result in lower oil growth for 2014; however, we believe this is a prudent capital allocation decision”

Forest Oil Eagle Ford Outlook 2014

While seismic is being reprocessed and optimal well design is being evaluated, Forest will reduce the pace of drilling in the Eagle Ford. The company plans to drill 48 gross (24 net) wells, and expects that the net capital allocated to the Eagle Ford for drilling and completion activities in 2014 will total $95 million.

Forest Oil Eagle Ford Highlights

Faulting in southern Eagle Ford acreage impacts Forest Oil's allocation of 2014 capital budget and production plans
Eagle Ford capital budget slashed from ~$220 million to $95 million in 2014
48 gross (24 net) wells to be drilled in the Eagle Ford in 2014
Forest shifting focus in 2014 from Eagle Ford to Ark-La-Tex
25% less 30-day average gross production in Q4 compared to full year 2013
Net sales volumes in Q4 2013 of 2,950 boe/d