Report: Drilling results poor in northern county

LORDSTOWN - A top official at the Houston-based energy company operating in the Mahoning Valley was frank when questioned Tuesday about the company's plans for natural gas and oil drilling in the Utica Shale.

"We won't drill any more wells near the s--- (poor) ones we drilled already, that's one major initiative," Halcon Chairman and CEO Floyd C. Wilson said during a quarterly conference call for investors and media Tuesday morning.

Hinting at low success rates in northern Trumbull County where the company holds mineral rights on hundreds of acres, Wilson said the company has decided instead to shift its focus to southern Trumbull County and northern Mahoning County.

Halcon Resources is operating the successful production well known as the Kibler along Brunstetter Road in Lordstown. The company has in recent days initiated drilling on a second Kibler well and holds permits for three other Kibler wells, including a permit for the fifth leg issued just Friday by the Ohio Department of Natural Resources.

Wilson said the company has secured "lots of room" for drilling in southern Trumbull County and northern Mahoning County, where it will concentrate drilling for the next several quarters.

The company said it expects to operate one rig at a time in the Utica Shale throughout 2014.

He said the company would be "more cautious than we were," in its Utica drilling plans. "We have had a lot of drilling results on these wildcat wells, and our focus will be on the southern end of the play at this time," Wilson said.

"I think that's our main initiative to consolidate our position in the southern end and drill a bunch of wells down there and let the mid-stream business get back on track after the fire in the processing plant."

He was referring to a September gas processing plant fire in Natrium, in West Virginia's northern panhandle. As a result of the fire, products from the first Kibler well headed for the Blue Racer Midstream pipeline heading to the Gulf Coast area instead are being rerouted.

The first Kibler well is producing an average of 358 barrels of condensate per day and 1.6 million cubic feet of gas per day into sales over the first 30 days, which is in line with expectations, company officials said in their quarterly operations report.

Wilson said plans to develop infrastructure pipelines in the northern end of the Utica Shale, which could include portions of northern Trumbull County and nearby areas of western Pennsylvania, are being delayed because of the need to cross wide expanses of "inhospitable surface" including areas like wetlands.

In southern Trumbull County and northern Mahoning County, some infrastructure already in place and rights of way already established for egress will make investment there more likely.

"Infrastructure spend is going to be less in those areas than it would have been in the northern wild cat areas," Wilson said.

Halcon's total revenue for third quarter ended Sept. 30 was reported at $305 million for the company that operates in several shale plays across the country. That's a revenue increase of 316 percent over third quarter last year.

Net production for the period increased 237 percent year-over-year to an average of 37,707 barrels of oil equivalent per day. Third quarter 2013 production was comprised of 83 percent oil, 6 percent natural gas liquids and 11 percent natural gas.

The company reported net income for the quarter of $18.1 million compared to a net loss of $0.9 million in the comparable quarter of 2012.

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Permalink Reply by Joseph-Ohio on November 11, 2013 at 3:48am
Thanks Craig.
Good to read an optimistic post.
Would like to see it come to fruition.
Standing by.

J-O
Permalink Reply by Mark McGrail on November 11, 2013 at 5:53am

Craig's thoughts make sense.

BP has more land leased in the northern portion of Trumbull County than Halcon does.

It appears that BP likes what they have found in that area, Halcon appears not to be satisfied with the acreage they have under lease.

So BP is the one to watch in northern Trumbull County.

Permalink Reply by Craig Stull on November 11, 2013 at 1:04pm

Mark,

I am hearing rumors of a cracker plant being built in northern TRUMBULL. I believe BP likes what they have found !!

Permalink Reply by Mark McGrail on November 11, 2013 at 2:13pm

Craig,

I have heard similar talk. Let's hope

Permalink Reply by Joseph-Ohio on November 11, 2013 at 2:22pm
Maybe HK sells (or trades) their northern acreage to BP to improve their position to the south and thereby BP in turn improves it's position in the north ?
Permalink Reply by Mark McGrail on November 11, 2013 at 5:14pm

No matter who trades with who in the end they have to deal with Enervest. Enervest controls much of the acreage in that area . This may be why Halcon is pulling back right now. It will take a sizable investment to buy out Enervest. With so much money already spent on lease purchases perhaps Halcon has decided to focus on returns on that investment through production. It has decided that SW Trumbull and NW Mahoning is the place to recoup some of it's investment.

Maybe, perhaps, might etc. about Halcon; Who knows ? Right now I know that BP is the player in northern Trumbull County.

Permalink Reply by Joseph-Ohio on November 11, 2013 at 10:59pm
Thanks Mark.
Permalink Reply by Mark McGrail on November 12, 2013 at 3:01am

Larger companies tend to move more slowly, cautiously. That's what we see with BP. As long as it continues to drill and build infrastructure I see that as a good sign for the future of Trumbull County.

BP in the north, Halcon in the south.

Permalink Reply by Joseph-Ohio on November 12, 2013 at 3:29am
What's your considered opinion / leasing prognosis for Ashtabula County Mark ?

EV & CHK seem to have a foothold here.

Thinking many of them (leases) could be coming to term.

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