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Richard Zeits

 
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  • Halcón Resources: Success In The TMS Redefines Upside Potential
       • Thu, Jun. 26 APA, GDP, HK 29 Comments

    Summary

    • 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
       • Wed, Jun. 11 SD 10 Comments

    Summary

    • 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
    Wed, Jun. 11 PVA 2 Comments

    Summary

    • 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
    Wed, Jun. 11 SN 4 Comments

    Summary

    • 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'
       • Tue, Jun. 10 APC, RDS.A, RDS.B 7 Comments

    Summary

    • 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
    Mon, Jun. 9 CRK, ECA, GDP 83 Comments

    Summary

    • 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
       • Thu, Jun. 5 CRK, SM, HK 12 Comments

    Summary

    • 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
       • Sat, May. 17 BBG, UPL 5 Comments

    Summary

    • 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
    Editors' Pick • Wed, May. 14 CRK, SM, HK 15 Comments

    Summary

    • 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
       • Tue, May. 13 HK 8 Comments

    Summary

    • 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
       • Sat, May. 10 SD 7 Comments

    Summary

    • 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
       • Fri, May. 9 SM, UPL, EOG Comment!

    Summary

    • 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
       • Wed, May. 7 BBG, CHK, DVN 4 Comments

    Summary

    • 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
       • Sat, Apr. 26 SD, SDT 24 Comments

    Summary

    • 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
    Fri, Apr. 25 SD, SDR 55 Comments

    Summary

    • 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
       • Thu, Apr. 24 SN 5 Comments

    Summary

    • 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
       • Wed, Apr. 23 CWEI, ECA, GDP Comment!

    Summary

    • 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
    Sun, Apr. 20 SD 9 Comments

    Summary

    • 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
       • Sun, Apr. 20 DVN, ECA, HK 23 Comments

    Summary

    • 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'
       • Tue, Apr. 15 KOG 26 Comments

    Summary

    • 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
    Editors' Pick • Mon, Apr. 14 CRK, SN, HK 40 Comments

    Summary

    • 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?
    Editors' Pick • Wed, Apr. 9 SD 50 Comments

    Summary

    • 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
    Wed, Apr. 9 HK 20 Comments

    Summary

    • 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
       • Fri, Apr. 4 PVA 6 Comments

    Summary

    • 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
       • Thu, Apr. 3 SD 24 Comments

    Summary

    • 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
       • Thu, Apr. 3 APA, CRK, CWEI 15 Comments

    Summary

    • 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
       • Wed, Apr. 2 BBG, UPL 5 Comments

    Summary

    • 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?
    Tue, Apr. 1 KOG, MRO, OXY 11 Comments

    Summary

    • 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
       • Fri, Mar. 28 APA, CWEI, SM 19 Comments

    Summary

    • 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
       • Wed, Mar. 26 SD, MPO 26 Comments

    Summary

    • 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
    Editors' Pick • Mon, Mar. 24 CHK, DVN, REPYY 40 Comments

    Summary

    • 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?
       • Thu, Mar. 20 SD, MPO 23 Comments

    Summary

    • 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.