Halcon hits TMS snag

Snag: Floyd Wilson-led Halcon has completion trouble in TMS

US independent Halcon Resources hit a snag drilling its second operated Tuscaloosa Marine shale well and reported a loss of $73.3 million in the second quarter.

Halcon said it is continuing with completion operations at the Black Stone 4H-2 well in Wilkinson County, Mississippi, after successfully pumping all 22 of the 5400-foot lateral's fracture stages.

"However, the company encountered fill during clean-out operations near stage 10. Halcon was only able to partially clean out the fill and additional clean-out operations are underway," Halcon said in a quarterly update.

It did not elaborate further on the extent of the problem or what effect it might have on the well, but said "flow back is expected to commence once clean-out operations are finalised". No time line was provided.

It is the latest completion issue for an operator in the Tuscaloosa Marine, a play that holds big promise in potential oil resources but whose downhole surprises have proved difficult to predict.

Sanchez Energy was recently disappointed at its first Tuscaloosa Marine well, the Dry Fork East-2H, after it drilled what was apparently a clean hole only to have the drill string unexpectedly part in the vertical section.

Nevertheless, Halcon and other will continue to explore the play, running an average of two rigs there with plans to spud eight wells in the second half of the year. It holds a total of 315,000 acres.

Its first TMS well, Horseshoe Hill 11-22H-1, was a success hitting a 24-hour average initial production rate of 1548 barrels of oil equivalent per day.

Its next, the Fassman 9H-1 in Wilkinson County, is awaiting completion. That well's 6030-foot lateral was drilled in just 6.5 days, encouraging for the company that is trying to reduce drill times in the capital-intensive play by 15% to 20% by year's end.

The SD Smith 1H, also in Wilkinson County, is awaiting completion as well.

Halcon reported a loss of $73.3 million for the three months the ended in June, compared to a profit of $36.4 million a year earlier.

That came on revenues of $327.1 million, an increase of 53% compared to the 2013 period.

The loss was attributed to a $106 million shortfall on oil and gas derivatives. Without that, Halcon would have made a profit of $32.5 million.

Production for the quarter came in above guidance and was up 44% from a year ago to average 42,055 boepd, with 85% oil.

That was helped by a 453% boost in production in the eponymous El Halcon play in East Texas, hitting an average of 9111 boepd in the second quarter.

Halcon said it expects to produce between 41,000 to 43,000 boepd in the third quarter.

"Second quarter results were solid and reflect our ongoing efforts to maximize returns," said president Steve Herod.

Halcon spent around $164.2 million on leasehold acquisitions in the Tuscaloosa Marine in the second quarter.

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