Goodrich Petroleum Corp. has 99 problems, but low oil prices isn’t one.
Goodrich released its capital expenditure budget for 2015, and it has some people scratching their heads. Over 95 percent of the $150-200 million budget is oil-directed and will go in its entirety to the development of the Tuscaloosa Marine Shale (TMS). According to the company’s press release, “costs are coming down and results have continued to improve” in the TMS.
The TMS is still largely undeveloped, and oil and gas companies have yet to hit any major payzones in the region, leaving oil production distressingly minimal for most companies. Halcón Resources Corp., another of the major companies operating in the TMS, recently announced that it was putting its efforts in the untempered shale on hold. But Goodrich is in it for the long haul, going full speed ahead.
Goodrich anticipates that approximately 6,100-6,700 barrels of oil per day will be pulled from the shale, a stark contrast to the million barrels a day produced in the Eagle Ford and Bakken shale plays. The company’s overall natural gas production is anticipated to decrease by about 15-20 percent, largely due to the sale of its Cotton Valley field in East Texas. The deal is expected to be closed on December 22, according to the press release.
Goodrich’s budget does leave room for flexibility in the coming year. Low oil prices have kept the company’s expected expenditures low. Goodrich is prepared to expand its budget “to accelerate with improvement in oil prices and the monetization of certain assets” should oil prices rise.
The press release also included the announcement of two completed wells in Tangipahoa Parish. The Verberne 5H-1 well produces a peak of 1,375 barrels of oil (boe) equivalent per day and operates on a restricted choke program. The Williams 46H-1 well produces roughly 1,000 boe per day but has not yet reached peak daily production. Goodrich anticipates the completion of several more wells in coming weeks.
An innovative fracturing design has allowed the company to drill these wells in shorter periods of time, saving Goodrich more than $1.5 million for a single well pad.