Halcon Resources has raised its estimated ultimate recoveries 39 percent for wells in its Fort Berthold area acreage due in large part to the success of slickwater fracking, which the company began using in 2013. Halcon’s average EUR now is 801,000 barrels of oil equivalent, of which 687,000 barrels or 86 percent is oil.
“We plan to complete all future wells in Williston Basin with slickwater fracks,” Floyd Wilson, Halcon chairman and CEO, said in a Feb. 27 conference call.
Halcon’s revised EUR may be too conservative - the slickwater-completed wells in the Fort Berthold area are currently outperforming the 801,000 boe type curve. The company’s engineers now estimate an average EUR for its Fort Berthold wells at 970,000 boe.
In its Williams County focus area, Halcon increased its estimated average gross EUR 43 percent to 477,000 boe, with oil making up 87 percent.
“We’ve increased the average type curves on our EUR estimates in all areas based on improved results related to drilling and completion modifications,” Wilson said, adding that one of the big improvements has been slickwater fracks. “We started with those up in the Williams County area. They were very successful. We’ve started down in Fort Berthold with those, and they’re meaningfully outperforming our new type curve.”
As a result of that success, Halcon plans to spend 49 percent of its $950 million overall drilling and completions budget on its Fort Berthold acreage in 2014.
“In the Williston Basin, our Bakken/Three Forks program is going great,” Wilson said. “We have production growth there in 2013 of 77 percent. This year, all of our rigs are drilling in the highest-return area at Fort Berthold. We expect to spend a little - just barely less than half - of our drilling and completion capex in 2014 in the Williston Basin.”
Halcon will also move to all pad drilling in 2014.
“We expect to draw 100 percent of our 2014 wells off pad versus a little less than 75 percent last year,” Wilson said.
Since transitioning to pad drilling, Halcon reports cutting its spud to total depth time by 25 days and reports a savings of $1.3 million in drilling four wells on one pad compared to drilling four separate wells.
Downspacing inventory boost
Downspacing continues to pay off for Halcon as it continues with infill drilling. Early results suggest that up to 16 wells per spacing unit may be feasible in the Fort Berthold area, a density which could potentially increase the company’s Fort Berthold well inventory as much as three-fold, Wilson said. “Continued downspacing there has yielded real success and has the potential to more than triple our operated well inventory in the Fort Berthold, as events unfold,” he said.
In pilot testing of downspacing in the northern end of its North Fort Berthold area in McKenzie County in the third quarter, Halcon had three Bakken wells on spacings of 660 feet that came in with an average initial potential, IP, of 2,665 boepd. Halcon decided to downspace the majority of future drilling in its Fort Berthold area on 660-foot spacings, as well as to drill both Bakken and Three Forks wells on 660-foot spacings on four other pads in the Fort Berthold area. The company is also will test downspacing in its acreage in Williams County.
In addition to downspacing, Halcon is also testing deeper into the Three Forks formation, testing the second bench of the Three Forks in its Fort Berthold area. Halcon also has a 15.5 percent working interest in a Continental Resources operation that is testing the first three benches of the Three Forks.
“We’re looking at 660-foot … middle Bakken wells,” Wilson said. “We’re looking at lease line wells wherever possible, so you don’t leave that oil behind. We’re looking at … full development of the first bench of the Three Forks and all the areas that we think it’s good. And we’re looking at significant second bench development in those areas that we think it’s good. And those areas where we think it’s good are being augmented daily by information from other operators, because everybody is solving for the same thing.”
Good years
Halcon had a good year in 2013, and 2014 looks even better with production guidance up, reserves up, and costs and capital expenditure down.
Halcon’s fourth quarter Bakken/Three Forks production rose 15 percent over the third quarter, despite brutal winter weather in December, which the company estimates cut production by 1,040 boepd.
In 2013, the company’s Williston Basin production increased by more than 75 percent.
Williston Basin production averaged 24,125 boepd in the fourth quarter, compared to third quarter output of 21,039 boepd.
Halcon Resources is planning to increase company-wide production by more than 60 percent in 2014 while reducing its previously estimated capex. In mid-December, Halcon announced it had lowered its 2014 drilling and completions budget by 14 percent from $1.1 billion to $950 million. That revised 2014 drilling and completion capex is approximately 36 percent less than the approximately $1.5 billion the company spent on drilling and completions in 2013.
In the Williston Basin, Halcon plans to operate four drill rigs and spud between 40 and 50 gross operated wells, and plans to participate in another 200 to 225 gross non-operated wells with an average working interest of 3 percent.
The company currently has 141 Bakken and 39 Three Forks wells producing in the Williston Basin, another 12 Bakken and seven Three Forks wells either being completed or awaiting completion and two Bakken and two Three Forks well being drilled. Halcon holds approximately 142,000 net acres in the Williston Basin, and operates approximately 75 percent of that acreage with an average working interest of 94 percent.
Halcon ranked as the 12th largest Bakken oil producer in North Dakota in December based on output from operated, non-confidential wells.
