Bakken Explorers 2015: On the cutting edge of completions

For four years, Halcon Resources has been experimenting with Bakken fracturing modifications, which has proven a good investment

Mike Ellerd

Petroleum News Bakken

Within a year of entering the Williston Basin through its acquisition of GeoResources in 2012, Halcon Resources was seeing 77 to 91 percent improvements in 24-hour and 30-day initial production volumes by implementing modified completion methods. Now, two years later the Houston-based independent continues to reap the benefits of continued completion method experimentation on its core Bakken acreage on the Fort Berthold Indian Reservation and in Williams County.

In April 2013, Halcon was experimenting with modifications intended to both increase production and lower well costs, including an increase in the number of frack stages, greater proppant loads, and a reduced gel component using plug and perf completion technology. The company reported that IPs on two Three Forks wells on FBIR completed with modified methods improved 20 percent over previously completed wells in the area. IPs for those two wells averaged 1,810 barrels of oil equivalent per day.

In August 2013, the company was using mostly ceramic proppant and in greater volumes, and was experimenting with slickwater in its FBIR completions. While the ceramic proppant costs were higher, they were offset by batch drilling and a tightening of drilling time.

By November 2014, however, Halcon had turned to using 100 percent sand in its FBIR well completions and those wells were outperforming the company’s type curves. On FBIR, 24-hour IPs were averaging 2,935 boepd, 15 percent above the company average.

At the same time, the company was also experimenting with a hybrid slickwater design intended to deliver more proppant with less water. Test results showed those wells were producing on par with other completion methods, but by using approximately 35 percent less water the company was realizing cost savings of approximately $300,000 to $400,000 per well. By the end of the next quarter, the results were so favorable that Halcon had decided to apply the modified methods to nearly all of its Bakken play wells. “During 2014, up in North Dakota, we have been utilizing a modified or hybrid slickwater completion design in an effort to further decrease completed well costs and also the results have convinced us to move forward with this completion design on most wells,” CEO Floyd Wilson told analysts in an earnings conference call in late February. “This frack job is designed to place the same amount of proppant, but use less water.”

Payoffs

The completion modifications, coupled with batch drilling, helped lower Halcon’s competed well costs by 25 percent through the first half of the first quarter of 2015. As of late February, the company put completed costs for its FBIR wells at approximately $8.5 million, down from approximately $11 million in the fourth quarter. In addition, those wells are outperforming the company’s published 800,000 boe type curve.

And Wilson told analysts in late February that more savings are expected. “Drilling and completion efficiencies are ongoing as always at Halcon. Our drilling cycle times spud to rig release improved by over 20 percent on the reservation (FBIR) and approximately 15 percent in Williams County last year,” Wilson said. “Our completion cycle times, rig release to the end of the completion improved by over 30 percent companywide.”

Furthermore, those savings come at a time when the company’s service costs are declining and it trims capital expenditures amid the global crude oil market slump, all while the company continues to grow production. “Costs are screaming down, and we’re finding that we’re targeting ... single rate of return investments that are similar to what we had last summer with the lower cost,” Wilson said in late February.

Looking ahead

Halcon made several cuts to its 2015 capex ending up with plans to spend between $350 million and $400 million, less than half of the $1.2 billion the company spent in 2014. The company expects the 2015 capex to be “front-end loaded” in 2015 due to a large number of wells awaiting completion.

With a reduced capex in 2015, the company is anticipating production to remain flat in the first half of the year with an overall growth rate of 5 percent for the year. It has put first quarter production guidance at 42,000 to 44,000 barrels of oil equivalent per day.

Halcon beat its 2014 production guidance averaging 42,107 boepd over the year, up 26 percent over 2013. In the fourth quarter, production averaged 46,076 boepd. A majority of the company’s production comes from its Williston Basin assets. Halcon grew its Williston Basin production 57 percent year over year in 2014.

The company holds approximately 127,000 net acres in the Williston Basin with proved reserves of 140 million boe.

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