LORDSTOWN - A top official at the Houston-based energy company operating in the Mahoning Valley was frank when questioned Tuesday about the company's plans for natural gas and oil drilling in the Utica Shale.
"We won't drill any more wells near the s--- (poor) ones we drilled already, that's one major initiative," Halcon Chairman and CEO Floyd C. Wilson said during a quarterly conference call for investors and media Tuesday morning.
Hinting at low success rates in northern Trumbull County where the company holds mineral rights on hundreds of acres, Wilson said the company has decided instead to shift its focus to southern Trumbull County and northern Mahoning County.
Halcon Resources is operating the successful production well known as the Kibler along Brunstetter Road in Lordstown. The company has in recent days initiated drilling on a second Kibler well and holds permits for three other Kibler wells, including a permit for the fifth leg issued just Friday by the Ohio Department of Natural Resources.
Wilson said the company has secured "lots of room" for drilling in southern Trumbull County and northern Mahoning County, where it will concentrate drilling for the next several quarters.
The company said it expects to operate one rig at a time in the Utica Shale throughout 2014.
He said the company would be "more cautious than we were," in its Utica drilling plans. "We have had a lot of drilling results on these wildcat wells, and our focus will be on the southern end of the play at this time," Wilson said.
"I think that's our main initiative to consolidate our position in the southern end and drill a bunch of wells down there and let the mid-stream business get back on track after the fire in the processing plant."
He was referring to a September gas processing plant fire in Natrium, in West Virginia's northern panhandle. As a result of the fire, products from the first Kibler well headed for the Blue Racer Midstream pipeline heading to the Gulf Coast area instead are being rerouted.
The first Kibler well is producing an average of 358 barrels of condensate per day and 1.6 million cubic feet of gas per day into sales over the first 30 days, which is in line with expectations, company officials said in their quarterly operations report.
Wilson said plans to develop infrastructure pipelines in the northern end of the Utica Shale, which could include portions of northern Trumbull County and nearby areas of western Pennsylvania, are being delayed because of the need to cross wide expanses of "inhospitable surface" including areas like wetlands.
In southern Trumbull County and northern Mahoning County, some infrastructure already in place and rights of way already established for egress will make investment there more likely.
"Infrastructure spend is going to be less in those areas than it would have been in the northern wild cat areas," Wilson said.
Halcon's total revenue for third quarter ended Sept. 30 was reported at $305 million for the company that operates in several shale plays across the country. That's a revenue increase of 316 percent over third quarter last year.
Net production for the period increased 237 percent year-over-year to an average of 37,707 barrels of oil equivalent per day. Third quarter 2013 production was comprised of 83 percent oil, 6 percent natural gas liquids and 11 percent natural gas.
The company reported net income for the quarter of $18.1 million compared to a net loss of $0.9 million in the comparable quarter of 2012.