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Halcon Resources Suspends Utica Drilling in 2014
YOUNGSTOWN, Ohio -- Halcon Resources Corp. confirms it plans to suspend drilling this year in the Utica shale in northeastern Ohio and northwestern Pennsylvania and instead concentrate on developing its holdings in Texas and North Dakota.
"We do not have any plans to move a rig in there [Utica] at this time," Halcon President and CEO Floyd C. Wilson told analysts during a conference call last week. "We've got a well flowing back and a well resting, and we're just going to have to wait and see what the results are there."
Wilson said initial results from Halcon's Utica holdings "haven’t been too wonderful" in the far northern tier of the play. "We're just going to see how we come out with these couple of new wells. It's no part of our spending for this year at the moment, and it's no part of our production expectations for this year at this moment," he says.
The CEO said as much during his last conference call with investors on Nov. 5, when he was asked about the prospects of future exploration in the Utica. "Well, we're not going to drill any more wells near the shitty ones we drilled already," he said.
This could have an impact on Halcon's overall investment in the Utica shale, especially a proposed phased $70 million project at the Ohio Commerce Park that woud entail Halcon partnering in a transloading operation at the site.
"We don't know where that stands right now," says Chuck Joseph, a broker for Routh-Hurlbert Co., the leasing agent for the Commerce Park that is facilitating the project. "It's still too early to tell."
Neverthless, the Commerce Park continues to make investments geared toward moving the project ahead, Joseph notes. "We've put the loop track in and continue to move forward," he says. The track would serve rail traffic in and out of the park. The plan is to build a complex that would offload crude oil and condensate that is transported from Utica wells and stored at the site. The crude and condensate could then be loaded onto rail cars for shipment west or east.
Thus far, Joseph reports that Halcon hasn't loaded product yet, but that could change as the Halcon wells that are producing start to deliver. "We might see that happen later this spring," he says.
Halcon's CEO stated last week that more than 90% Halcon's drilling completion budget would be directed to two de-risked core plays, the Williston Basin in North Dakota's Bakken shale, and the El Halcon basin in Texas.
The remainder of that budget -- about 10% -- would be devoted to a play the company announced Feb. 26, the Tuscaloosa Marine Shale, or TMS, position in Louisiana, leaving nothing for future Utica exploration.
Texas-based Halcon has leaseholds on 143,000 net acres in Ohio and Pennsylvania.
Halcon has three producing wells in Trumbull County, one each in Vienna, Lordstown and Hartford townships, according to the Ohio Department of Natural Resources. Another well at the Kibler pad in Lordstown is drilled, while a fifth well is being drilled in Warren Township, according to records.
Halcon also holds three additional permits in Trumbull County, the last of which was issued Nov. 1, according to ODNR.
The company also has a well in production in Jackson Township in Mahoning County, records show, and holds two additional permits to drill in that township. Those two permits were issued on Oct. 24.
Halcon does not have drilling operations in Columbiana County, nor does it have drilling interests in nearby Lawrence County in Pennsylvania, records show.
However, in Mercer County, Pennsylvania, Halcon holds 19 permits and has drilled at least three wells in that county, according to the Pennsylvania Department of Environmental Protection. The last permit issued for Halcon in Mercer County was Aug. 12, 2013.
Halcon currently has 29 wells being completed or waiting on completion companywide. It is operating eight rigs in the Williston, Ford and El Halcon basins, and anticipates moving a rig into the TMS play this month and another in April.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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