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Halcón Resources: Success In The TMS Redefines Upside Potential
- Recent drilling results in the Tuscaloosa Marine Shale, both by Halcón and other operators, indicate that the play’s ultimate success is increasingly probable.
- A week ago, Halcón received an important endorsement of its TMS asset from Apollo Global Management in the form of the first tranche of a $400 million mezzanine financing.
- Given the scale and quality of Halcón’s position in the TMS, the asset may prove defining for the stock’s valuation.
- Factoring in the potential impact from the TMS, the stock’s risk/reward profile appears favorable.
SandRidge Energy: A Strong Start For Q2 2014
- Following weak drilling results in Oklahoma in January-February, SandRidge posted much stronger wells in March and April.
- The most recent well data impresses with a much improved percentage of strong and “monster” wells on one hand and reduced percentage of under-performing wells on the other.
- Given the recent acceleration of drilling activity, SandRidge will likely achieve a very impressive sequential production increase in Q2.
- The Woodford Shale results have continued to lag.
Penn Virginia: Eagle Ford Drilling Program May Accelerate
- Today’s convertible offering closes Penn Virginia’s funding gap.
- The company now has ample liquidity to accelerate its drilling program and commit capital to the Upper Eagle Ford testing.
- Leasing program in the Eagle Ford is continuing.
Sanchez Energy: $900 Million Debt And Equity Offering - Quick Synopsis
- Following the Catarina acquisition, Sanchez Energy is putting in place permanent capital components.
- The company is offering $200 million of common stock and is terming out its bank borrowings with a $700 million senior notes offering.
- The offerings signal potential acceleration of drilling activity in Catarina and other prospects, including the TMS.
Sanchez Energy: From 'Asset-Poor' To 'Asset-Rich'
- Sanchez emerged as the winning bidder on Shell's Eagle Ford assets. The purchase price is highly favorable to Sanchez.
- In an optimistic scenario, the transaction could add over $1 billion to the stock’s intrinsic value.
- From a strategic perspective, the acquisition fully resolves the company’s drilling inventory challenge.
- Only a small portion of the potential upside is reflected in the post-announcement price move.
Halcón Resources: Inaugural TMS Well Shines; Financing Is Expensive
- Halcon’s inaugural HorseShoe Hill well in the TMS is a convincing success.
- The well confirms the strong performance of the most recent three TMS wells by Goodrich Petroleum.
- Positive read-across to Goodrich, Comstock, Sanchez and Encana.
- Preferred financing from Apollo is expensive but is structured to limit the sell-down of the asset.
Halcón Resources: Impressive Downdip Test Results At El Halcón
- Halcón's downdip wells in the East Texas Eagle Ford are performing admirably, which suggests that the best wells are still ahead.
- The Reveille #1H produced over 40,000 barrels of oil in 42 days, setting a new productivity record in the play.
- The Keystone #1H is another notable test which confirms the excellent quality of Halcón's acreage in Burleson County.
Ultra Petroleum: Uinta Oil Potential
- Ultra estimates EURs for its most recent Uinta wells in the 250-400 Mbo range, consistent with the company’s earlier indications.
- At $1.5 million drill & complete cost, the wells yield exceptional returns, even at 160 Mbo EUR, the low end of the EUR estimate range.
- However, current production rate of 6,900 barrels of oil per day is somewhat below expectation.
Halcón Resources: Latest El Halcón Well Results
- Following a production slowdown in El Halcón during the winter months, Halcón Resources staged a strong turn-around in March.
- The company’s downdip wells are performing strongly, which may signal a bright future for the play in general.
- The Reveille #1H sets a new productivity record in the East Texas Eagle Ford.
Halcón Resources: Weak First Quarter; A Stronger Quarter Ahead
- While Halcón’s Q1 production came in above guidance, the result is underwhelming in absolute terms.
- Q2 is shaping up as a much improved quarter, with the production guided to increase by 20% sequentially.
- El Halcón shows good promise in the southern portion of the acreage. The entire 100,000 net acres in the play are pronounced de-risked.
- A convincing success in the TMS remains critical to the stock price.
SandRidge Energy: A Weak Quarter, But There May Be A Silver Lining
- SandRidge’s Mid-Continent production declined 2% sequentially in Q1.
- The decline occurred despite heavy outspending relative to internally generate cash flow.
- Stronger well results in March and increased drilling activity set the stage for fast sequential growth in Q2.
Bill Barrett: Three Catalysts
- East Bluebell may emerge as the highest-return asset in Bill Barrett's portfolio – well performance exceeds expectations, well costs are declining.
- Initial Codell well results in Chalk Bluffs are strong, validating the prospect's potential.
- Recent transactions in the Powder River Basin improve outlook for a successful divestiture.
SM Energy: Critical Mass In The Powder River Basin Deep Oil Play
- SM Energy has further increased its position in the over-pressured Frontier Sandstone oil play in the Powder River Basin.
- SM provided an update on existing well performance, which is very encouraging.
- The company's position has the scale and quality to make material difference for the stock in the event of continued success.
- SM's delineation program may provide a fresh impetus for other operators to accelerate their efforts.
SandRidge Mississippian Trust I: From Weak To Worse
- SDT posted yet another disappointing operating report: average daily oil production declined by 22% quarter-on-quarter..
- The Trust’s oil production shows no signs of a “flattening” that would be expected of a well portfolio with a hyperbolic type curve..
- The press release states that severe winter weather impacted the volumes during the quarter. However, the impact is not quantified..
- If no improvement, fresh concerns may emerge with regard to the Trust’s reserves..
SandRidge Mississippian Trust II: Oil Volumes Disappoint
- SDR’s oil production declined 17% sequentially during the reported quarter.
- The decline is alarming given that seven new wells were brought on production during the period.
- The press release quotes well performance as a factor contributing to the weak result.
- Severe winter weather is also mentioned but not quantified.
Sanchez Energy: The Tuscaloosa Marine Shale Factor
- Sanchez has benefited from the positive news flow from the Tuscaloosa Marine Shale.
- While the company’s 40,000-acre position is relatively small, the leverage it provides to the success of the TMS play is large enough to have a material impact on the stock.
- Sanchez plans to drill four operated wells in the TMS in 2014.
- Over a dozen wells by other operators in the play will provide “read-across” in the next three-four months.
Comstock Resources: New Venture Initiatives Are Paying Off
- Just several months after acquiring the TMS and East Texas Eagle Ford acreage, Comstock has already benefited from the plays’ active delineation by offset operators.
- Both blocks are located favorably relative to recent notable producing wells.
- Additional upside exists from the TMS exposure.
SandRidge Energy: March Well Results Show Improvement
- Following weak well results in Oklahoma in January-February, SandRidge posted much stronger wells in March.
- The average test rate for the Q1 Well Sample in Oklahoma has improved and is now in line with Q4 2013.
- The probability of a weak production report for Q1 is nonetheless high due the expected quarter-on-quarter well count decline and high percentage of weaker wells in January-February.
- However, if such weakness indeed manifests itself, it should not be perceived as a deterioration in well performance.
Goodrich Petroleum: Cracking The Code Of Tuscaloosa Marine Shale
- Two successful lower TMS wells in a row validate the management's assertion that the modified well design is effective.
- The TMS may quickly emerge as a proven commercial play, with optimized drilling techniques driving further upside.
- Goodrich's Blades well suggests that the TMS' core may be extensive.
- An avalanche of new well results is expected over the next three months.
Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story'
- The article provides illustrative valuation analysis of Kodiak’s drilling inventory, including risks and upsides.
- The stock is priced very reasonably relative to its value potential.
- The transition into full development mode and substantially reduced operating risk should help to close the gap between the stock price and the underlying NAV.
Halcon Resources: Strong Read-Across From Goodrich's TMS Result
- The outstanding Blades 33H-1 well result in the TMS reported this morning by Goodrich Petroleum has a strong positive read-across to Halcon.
- Halcon's first TMS well, the Horseshoe Hill 11-22H-1, is expected next month, and another five wells are planned to be spudded by July.
- The Blades well provides a potent catalyst for Halcon's stock. Another half a dozen offset operator well results are expected within two months.
SandRidge Energy: How Is The Quarter Shaping Up?
- SandRidge's latest Oklahoma well results are presented and discussed.
- Using production test results for a 32-well sample as a proxy for the company’s overall well quality, Q1 2014 is shaping up as a middle-of-the-road quarter.
- Given that the number of wells brought on production during Q1 will likely be below the 2013 average, it is difficult to expect meaningful sequential production growth.
Halcón Resources: New Eagle Ford Wells Announced
- Presented are the latest well-by-well production data and analysis for Halcón's East Texas Eagle Ford operation.
- After a 43% sequential production increase in Q4, Halcón will likely post a much slower growth in the play during Q1.
- The slow-down is attributable to a pause in the company’s completions calendar in December and January, not well results.
- Early data for the most recent wells indicates continued consistent performance. Growth momentum will be regained going into Q2.
- Among the latest East Texas Eagle Ford news, Halcón is not the buyer of Clayton Williams’ asset package in Brazos County.
Penn Virginia: Divestiture Announcement May Come As Early As This Month
- Bids on Penn Virginia's non-core Selma Chalk and Granite Wash asset packages are due in a week.
- Transactions may be announced by the end of this month.
- As Penn Virginia has secured ample core drilling inventory, the market will welcome the divestiture, even if the price received is not very high.
- Any proceeds above $120 million will likely be viewed as a positive. Proceeds above $150 million would be a home run.
SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime
- The article provides well-by-well production data and analysis for SandRidge’s Mississippian wells within the company’s southern Comanche County focus area.
- The analysis indicates the presence of a unique gas-prone sweet spot that stands behind the prolific company-estimated 542 MBOE EUR for the area.
- The analysis also reveals poor well performance in other select areas, which indicates that acreage in those areas is uneconomic or marginal.
Apache Emerges As The Most Active Driller In East Texas Eagle Ford - Read-Across To Halcon, Clayton Williams And Comstock
- Apache has made public its plans to ramp up drilling on its East Texas Eagle Ford acreage. Thee rigs are currently running, a fourth rig will be added shortly.
- Apache has shared valuable well performance data that add to a better understanding of the play's economics.
- The article discusses implications for offset operators: Halcon, Comstock and Clayton Williams.
Ultra Petroleum Vs. Bill Barrett: The East Bluebell Conundrum
- Presenting at a conference last week, Bill Barrett provided an update with regard to its Uinta Basin oil program.
- The rate of return estimate for East Bluebell is increased from 40% to 60%. A type curve is presented for the first time.
- Bill Barrett's type curve is noticeably different from the historical production data shared several months ago by Ultra Petroleum for its adjacent Three Rivers property.
- Should Bill Barrett's type curve prove overly conservative, realized drilling returns on the southern portion of the East Bluebell block may end up substantially higher than currently estimated.
Bakken: Who's Got The Most Productive Wells?
- In a recent presentation, WPX Energy presented a summary of its updated well performance study for the Bakken play.
- While the analysis has natural limitations, the results are instructive and provide a broad, unbiased picture of average well productivity in the play.
- According to WPX, average 1-year cumulative production per well for a large sample of Middle Bakken wells brought online in 2011-2012 was ~90,000 barrels of oil.
Halcón Resources: Latest Eagle Ford Results
- The article discusses Halcón's operating progress in the East Texas Eagle Ford play (El Halcón).
- Well completion calendar in the Eagle Ford appears to have been slow so far this year, which may impact the pace of production growth during the quarter.
- Several new well results indicate continued consistent well performance.
- The southern-most evaluation well, the Stifflemire #1H, showed a strong initial production rate with high oil yield.
- Recent increase in the EUR translates into 50% single-well returns, assuming $100 per barrel WTI.
Midstates Petroleum: CEO's Departure And Curious Math Of The Mississippian Lime
- Midstates announced last week that its CEO and Chairman of its Board, John A. Crum was stepping down.
- The company's press release emphasizes focus on capital efficiency going forward.
- The article explores potential causes of the leadership change and highlights challenging drilling economics math in the Mississippian Lime play.
Mississippian Lime: Tom Ward's 600,000-Acre Comeback
- Tom Ward's Tapstone Energy is the acquirer of Shell's Mississippian Lime assets.
- A detailed well-by-well analysis of Shell's well performance in the Mississippian provides insight into the major's likely motivation to exit the play.
- Abundance of acreage available for sale or primary leasing has deflated land valuations in the Mississippian to their pre-bubble levels.
- Capital raising environment in the Mississippian has changed: investors' "exuberance" of the 2011-2012 period is unlikely to return.
Midstates Petroleum: Will Open-Hole Completions Be A Game Changer In The Mississippian Lime?
- The article presents detailed production test data and analysis for Midstates' open hole completion pilot.
- Initial production rates highlight above-average productivity of Midstate's acreage.
- Open hole completion designs without fracture stimulation may substantially reduce water cuts and prove effective in high-permeability portions of the play.