Tuesday, November 5, 2013

Goodrich Earnings Call - 11/5/13

Goodrich Petroleum presented their third quarter results today.  The TMS highlights are:

  • execute an increased capital budget and acceleration of the TMS in 2014
  • currently have 2 rigs running in the TMS, going to 3 rigs in the first quarter of 2014, and 5 rigs by the end of the year with continued success.
  • We've established a preliminary capital expenditure budget for 2014 at $375 million, with $300 million allocated to acceleration of development of the TMS, where we estimate that we will drill or participate in as many as 31 gross, 24 net wells, which is a blend of 100% working interest wells and 67% working interest wells.
  • We are budgeting 45-day drill times, although we think we will do better, 60 days spud to spud, and 75 days spud to sales cycles times.
  • We continue to be optimistic with the resource potential of the play as our Crosby wells cumulative production has reached 138,000 barrels of oil equivalent per day or over 90% crude oil in 8.5 months, with a current rate of approximately 250 BOE per day on a very flat declining curve. This would compare to similar cumulative production from the Anderson 17 #1 well in 15.5 months, and 155,000 BOE for the Anderson 18 #1 in 16 months. 
  • When considering recent wells in which we've operated or participated as an non-operator, 5 of the last 6 wells are trending on or between our 600,000 BOE and 800,000 BOE curves, with the oldest of these wells now approximately 18 months old.
  • The Crosby well continues to perform in excess of our 800,000 BOE curve.
  • We have drilled our Huff well in Amite County, Mississippi, with 5400 feet of usable lateral. We drilled the curve and lateral in a record time of 12 days but have experienced completion delays due to temporarily sticking to drill pipe, which we have now resolved, and cleaning up the wellbore prior to running production casing.
  • We believe our ability to knock at least 10 days off of our 45-day AFE of $13 million, which will save $1 million in drilling costs is very achievable, considering that we normally drill the vertical portion of the well and run intermediate casing in less than 25 days.
  • We spudded our Weyerhaeuser 51-1 well last week, which is the initial well on our newly acquired acreage with our partner, Sinopec, with plans to drill 3 wells back to back on the acreage.
  • After the Huff, that rig will move to the CMR 8-5 well in Amite County, Mississippi. 
  • The 3 wells drilled on Sinopec JV acreage will be spread out from the Weyerhaeuser in the middle to a well on the east and an additional well to the west.
  • We continue to see very consistent results across the CMS when similar frac recipes are pumped. 
  • The increased activity levels in 2014 from us, Encana, which today announced it will spend $200 million to $300 million in the TMS next year, and other companies we know are building positions, to allow for rapid delineation and progression to development mode for the company.
  • We feel like we've got a nice core acreage position that's already de-risked. You will see us with a combination of stepping out away from the core in a gradual manner, and in particular, locating wells near Devon wells, in particular, on our acreage block, where we could put the proper or the more effective completion recipe on those wells.
  • We are seeing new operators in the play. To answer your last question, we expect 2 or 3 of them. Certainly 2 of them to potentially start talking about that, so we're aware of the files from assignments in the parish courthouse. And so I think that's a given, but we'll let them discuss it when they're ready to talk.

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