Costs down, output up

Halcon again cuts capex, but this time due to help from service providers

Maxine Herr

For Petroleum News Bakken

Halcon Resources is further reducing its 2015 drilling and completion budget by $25 million, but this time it’s the result of lower service costs and enhanced efficiencies, bringing the budget to $350-$400 million.

In January, the company announced it was cutting its original budget of $750-$800 million nearly in half. At that time, Halcon felt service costs were too high and it was expecting adjustments. Those adjustments came through negotiating better prices from service providers along with modifying operating techniques. The company expects to further improve oil recoveries and reduce costs.

In a Feb. 17 statement, the company said its completed well costs have come down more than 20 percent compared to the fourth quarter 2014 average and anticipates well costs to drop another 10 percent within the Williston Basin by mid-year 2015. Its average well cost on the Fort Berthold Indian Reservation is $8.5 million and the company plans to focus its efforts in this high-return area spending 65 percent of its total drilling and completions budget on these wells.

And by modifying its drilling and completion techniques, Halcon improved well results by 57 percent year-over-year in the Williston Basin throughout 2014 to realize an average of approximately 28,900 barrels of oil equivalent per day. The Houston-based independent’s entire production averaged approximately 42,000 boepd, representing a 65 percent increase over 2013 according to data released on Feb 17.

In December, Halcon’s North Dakota Bakken production averaged 32,975 barrels per day from operated, non-confidential wells, making it the 12th largest Bakken producer in the state according to the latest production data released by the Department of Mineral Resources on Feb. 13 (see chart, page 12). In addition, Halcon had the highest 24-hour initial production volume reported between Feb. 10 and 16 in North Dakota at 3,715 barrels from a middle Bakken well in the Eagle Nest field on the Fort Berthold Indian Reservation in northern Dunn County (see commentary on page 7 and charts on pages 9 and 10).

Decreasing drilling rigs

During the fourth quarter, Halcon averaged three rigs in the Williston Basin, spudded 11 wells, and put five wells online. It also participated in 88 non-operated wells during the quarter with an approximately 3 percent working interest. Throughout 2014, the company averaged 3.5 rigs, spudded 53 wells and put 59 wells online in the basin. The company operates 172 producing Bakken and 53 Three Forks wells and has 18 wells either being completed or waiting on completion.

In 2015, Halcon will release one of its rigs and operate just two and only spud 25 to 30 gross operated wells with an average working interest of about 57 percent. It expects to participate as a non-operator in 85 to 90 gross wells during the year with 4 percent working interest, a drop from the 263 wells in which it held 5 percent throughout 2014. The company holds working interest in more than 127,000 net acres in the Bakken and Three Forks.

Proved reserves see growth

Halcon also estimates proved reserves at the end of 2014 totaled approximately 189.1 million boe, a 60 percent pro forma reserve growth. Eighty-two percent of those reserves are oil, 9 percent natural gas and 9 percent natural gas liquids. Seventy-four percent of the reserves are in the Williston Basin, another 22 percent are in the Eagle Ford with the remaining 4 percent in the company’s other plays. The El Halcon in the Eagle Ford averaged production of approximately 8,600 boepd in 2014 which was a 136 percent increase over 2013. The company plans to operate one rig and spud 12 to 15 gross operated wells in the Eagle Ford; it currently has 89 wells producing in the region.

---

Did you find this article interesting?

Tweet it

Digg it

Print this story | Email it to an associate.

Click here to subscribe to Petroleum News for as low as $89 per year.