Friday, May 9, 2014

Halcon Earnings Call

Halcon had their earnings call yesterday. Here are the highlights:
"We're looking for big ass results. I don't know what else to say."
Floyd Wilson, CEO, Halcon Resources

  • have over 316,000 net acres in the play
  • off to a solid start, drilled our first TMS well in Wilkinson County, Mississippi, a bit ahead of schedule and in about 39 days. It was a 21,171-foot TD with a 7,751-foot lateral. Completion operations are currently underway. 
  • confident we can reduce the drilling days by year end by 15% to 20%. 
  • drilling our second well now, the Black Stone minerals well, and we'll move in the second rig within 10 days or so. 
  • continue to evaluate joint venture or financing options for the TMS. 
  • This is 100% about balance sheet management and future rig count growth opportunities
  • we and a few others guide this play into its place as a-- one of the premier large-scale crude oil-based resource plays in the United States. 
  • Our excitement for the TMS continues to build.
  • If we decide to bring in a financial partner to assist in financing our TMS activities, the liquidity would, of course, be further improved by that transaction.
  • Lease acquisitions, seismic and infrastructure came in at $128 million for the quarter. Most of the spending was related to growing our acreage position in the TMS
  • we fully expect to reduce drilling days, which is the first win in any of these horizontal plays, by 15% or 20% through the course of the year. I notice that one of our peers in the play has reported that they expect to drill their wells in less than 40 days, assuming no major trouble. We are planning on this sort of timing, but we would expect to beat it, of course. On the cost side, we're walking into this thing as we do in any new play with full analytical planning in place in terms of tools, logs, pilot holes, whatever we think we require. Our initial feel for the play is that we'll drill most of our wells, first few wells, for about $13 million. We think we can get that down about $1 million a year, each year for a couple of years. And our thoughts haven't changed along those lines.
  • We would only do a deal that's attractive to us. And it's just one of the things that we have determined that would be appropriate for us to review for this play. Our plans for 2014 and our current plan for 2015 will be unchanged in the absence of any kind of a new JV or some sort of financing of that type. The only thing that might happen, we might ramp up a bit quicker at the end of the year and into '15, and that's just -- and by the way, that's all based more on results than it is on money. We're well equipped right now financially to deal with this play. And we're well experienced, as you know, in this kind of thing. So the results are the first thing. We've got plenty of money right now. Ramping up is an objective, but it's an objective based on results.
  • there's been a lot of wells drilled already, and we have the benefit of the learning curve that they've gone through. So right now, we feel like we have a good recipe down on the drilling side, and others do also. You're seeing every month, people come out with record drilling days -- time for drilling days. And we're right there with them, and we expect that trend will continue. But we don't see radical changes in the overall design of where you're setting casing and what you're targeting. That's kind of getting locked in for everybody right now. The completion side, like all of these plays, is probably where you have a little more room to tweak the designs a little bit to get better and better results.
  • we're drilling 20,000-21,000-foot wells every day in the Bakken. So those 2 backgrounds are a perfect fit for the drilling in the TMS. And then on the completion side, yes it is similar to what we're doing over there also. And so we're taking that learn and combined with all of our hundreds and hundreds of wells we previously did in the Eagle Ford throughout the whole trend, and we expect to hit the ground running on that front with this first well.
  • We've programmed the drilling and the completion for optimal -- at this stage of the game, optimal IPs and frac jobs that last, and we've equipped the wells appropriately. So we don't really have a formula. It seems to be that with the lateral this length and absent any completion problems, we should expect a really attractive -- certainly, an IP and a 30-day IP, but it's a little bit out in front of us here. To meet the type curves that we've proposed and to meet the type curves that some of our industry partners are using, you need a fairly stout start to make those work and others are doing it, and we expect to meet or beat our own expectations.
  • Leasehold: We have the amount that we spent on the TMS, that was about $63 million

1 comment:

  1. "Leasehold: We have the amount that we spent on the TMS, that was about $63 million".
    Halcon's 10Q states that $62.5 million was paid to Encana at closing and that the entire deal is worth $189.4 million, due by August 31, 2017. No more than $120 million this year.

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