Halcon: Well in Lordstown is very productive

LORDSTOWN – “One of the most productive wells in the Utica Shale Play” is how the head of a Houston-based energy company on Thursday described a Lordstown exploratory well.

Halcon Resources, which has secured enough acreage to drill hundreds of horizontal wells in southern Trumbull and Mahoning counties, will invest significant time and dollars into the area in the next 12 to 18 months, said Chairman and Chief Executive Officer Floyd Wilson.

“The Kibler 1H discovery well in Trumbull County came in at 2,233 barrels of oil equivalent per day, one of the top producers in the play, and we have room for about 500 wells in the area,” Wilson said during a quarterly earnings conference call with investors and media. “Our spend is going to be around the Kibler area for the next 12 to 18 months for sure.”

The company has said it intends to operate at least one rig in the area for the rest of this year.

Wilson declined to release details on how many acres of mineral rights the company has secured by county, but a prepared statement released by the company said it has 142,000 net acres leased or under contract in the Utica Shale Play. The Utica Shale is a large area of eastern Ohio and western Pennsylvania known to contain large amounts of natural gas and petroleum products deep underground.

Wilson said plans by the company’s midstream subsidiary Halcon Field Services, to build an oil storage and rail-loading facility in Lordstown’s Ohio Commerce Center also is moving forward quickly.

Wilson said he is hoping phase one of the project will be in operation and transporting about 30,000 barrels of oil or oil equivalent per day by year’s end, stepping up earlier projections for a 2014 startup.

The final plan calls for four bay truck racks; a 20-rail car loading platform; six 50-foot-high-by-125-foot-wide petroleum storage tanks and three petroleum product stabilizers in the facility along state Route 45.

“This is a high gravity oil or condensate that we are going to have to stabilize in order to move it, and we need to egress from the local market as fast as we can,” Wilson said. “It will be open to other companies as well, who have a lot of interest in what we are doing there.”

With more than 12,000 feet of recently installed loop track and direct access to rail service, Wilson called the Ohio Commerce Center an ideal location for low-cost rail services to support the rapid production growth expected in the northern tier of the Utica Shale Play.

Halcon so far has drilled nine wells in Trumbull and Mahoning counties, Ohio, and Venango and Mercer counties in Pennsylvania. Only one is on line, with production hindered largely by the lack of pipeline infrastructure, Wilson said. He noted, however, that the Kibler well, located on the south side of Brunstetter Road, will soon be on line.

The company said it expects seven of the nine wells “to be flowing into sales pipelines by the end of the year.”

Halcon, which has the largest concentration of land around the Kibler area, also has drilled the most horizontal wells in the northern end of the Utica Shale Play so far, Wilson said. Competing energy company, BP, has planned or begun drilling for 12 test wells, all in northern Trumbull County townships of Kinsman, Gustavus, Vernon, Johnston, Hartford, Mecca and Greene.

Wilson said tests are showing higher amounts of dry gas in the northern areas of western Pennsylvania and eastern Ohio, and the areas of Lordstown and Mahoning County are showing more promise for wet gas. Wet gas is natural gas that contains other hydrocarbons like butane, ethane, propane or methane. These products can be separated and marketed for use in the manufacture of other products.

Mike Chadsey, public relations manager for industry trade group Ohio Oil and Gas Association, said Halcon’s report represents great news for development in the northern end of the Utica Shale.

Chadsey said skilled trades workers, who have been seeing increase in workload due to manufacture and installation of pipe and gas drilling equipment, have expressed enthusiasm at the growth.

“They know we have got a lot of work going on, and that is the part I am so excited about,” Chadsey said.

In its second-quarter earnings report released Thursday, Halcon showed significant gains compared to the same quarter of 2012. Net income equaled $16.8 million for the quarter compared to net income of $2.8 million in second quarter 2012.

Noting that activity has increased companywide, Wilson said, “We continue to make progress on all fronts. Operationally, we are generating better returns on the wells we have recently drilled in our core areas by focusing on improving recoveries and reducing costs.”