Halcon Resources: Mid-Year Utica Shale Update

emailEmail    |    printPrint    |    Monday,June 10,2013

The Company has now drilled eight wells and is currently drilling its ninth well on its 140,000 net acre position in Northeast Ohio and Northwest Pennsylvania. These nine wells were drilled across approximately 70 miles and five counties. The status of each well is as follows:

Phillips 1H - Pennsylvania

The Phillips 1H (90% WI) in Mercer County, Pennsylvania, is now flowing to a sales pipeline and is undergoing flow optimization, including the installation of gas lift. This well was drilled to a total measured depth of 12,411 feet, had an effective lateral length of 5,360 feet and was completed with 20 frac stages. The Allam 1H (100% WI) in Venango County, Pennsylvania, was the discovery well for the Northeast extension of the play and is currently shut-in awaiting infrastructure. This well was drilled to a total measured depth of 14,300 feet, had an effective lateral length of 5,580 feet and was completed with 21 frac stages.

Brugler 1H - Ohio

The Brugler 1H (90% WI) in Trumbull County, Ohio, has been tested and is currently shut-in awaiting infrastructure. Production from this well should be placed into a sales pipeline in early July 2013. This well was drilled to a total measured depth of 10,959 feet, had an effective lateral length of 3,826 feet and was completed with 16 frac stages.Testing on the Yoder 2H (90% WI) in Mercer County, Pennsylvania, commenced on May 30, 2013.

This well was drilled to a total measured depth of 10,825 feet, had an effective lateral length of 3,810 feet and was completed with 14 frac stages.The Kibler 1H (100% WI) in Trumbull County, Ohio, is currently resting and Halcón plans to begin testing the well on June 15, 2013. This well was drilled to a total measured depth of 14,257 feet, had an effective lateral length of 6,734 feet and was completed with 26 frac stages.The Staab 1H (98% WI) in Crawford County, Pennsylvania, is currently resting and the Company plans to begin testing the well on July 11, 2013. This well was drilled to a total measured depth of 11,166 feet, had an effective lateral length of 4,374 feet and was completed with 17 frac stages.

Pilgrim 2-3H - Pennsylvania

The Pilgrim 2-3H (100% WI) in Mercer County, Pennsylvania, is currently being completed and Halcón plans to begin testing the well in early-August 2013. This well was drilled to a total measured depth of 16,185 feet, had an effective lateral length of 7,320 feet and is being completed with 31 frac stages.The Davidson 1-1H (100% WI) in Mahoning County, Ohio, is currently waiting on completion and the Company plans to begin testing the well in mid-August 2013. This well was drilled to a total measured depth of 11,634 feet, had an effective lateral length of 5,500 feet and is expected to be completed with 22 frac stages.The Avalon Farms 1H (100% WI) in Trumbull County, Ohio, is currently being drilled with a planned lateral length of 7,800 feet.

Pilot holes were drilled on five of the nine wells with complete log suites. In addition, a total of 1,844 feet of conventional core has been acquired across the Utica/Point Pleasant formations on four wells and completion operations on three of the wells were monitored with microseismic surface arrays to determine the efficiency of each frac job. The Company is also currently acquiring 285 square miles of 3-D seismic data across its leasehold position. Phase 1 of this survey encompasses 125 square miles and is expected to be completed by the end of 2013.

Halcón has also made numerous data trades with offset operators and has joined several industry data consortiums. The delineation phase that was previously outlined is essentially complete. The Company is now entering the evaluation phase and will integrate the compiled data with well test and production results to best determine where and how to proceed once the development phase commences.

The data acquired to date is encouraging. Based on petrophysics tied to core data, the original gas in place per section is 100 Bcf at the Allam 1H well and 117 Bcf at the Phillips 1H. The Allam 1H has 266 feet of net pay with an average of 4.4% effective porosity and approximately 75% hydrocarbon saturation, while the Phillips 1H has 304 feet of net pay with an average of 5.1% effective porosity and approximately 72% hydrocarbon saturation. These values compare favorably to other prolific shale reservoirs. The Allam 1H and the Phillips 1H wells are both located in the gas/condensate window of the play and have BTU contents of 1,210 and 1,250, respectively.

It is important to note that the average lateral lengths and the number of frac stages per well are expected to increase as Halcón transitions into the development phase, which should translate into improved rates and recoveries. The Company is targeting lateral lengths between 7,000 and 9,000 feet where possible. Shale play economics generally improve over time due to more effective drilling and completion techniques combined with a better understanding of the reservoir. Halcón continues to focus on building an inventory of approved/permitted multi-well pads in preparation for a full scale development program.

Halcón Field Services continues to identify midstream opportunities and is currently evaluating the potential for a joint venture in the play.



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