Halcon: 2 Rigs In Fort Berthold; 1 Rig In Eagle Ford; Grail Field Has Been Updated -- February 5, 2015; Union Pacific Sees Continued Growth

Active rigs:

	2/6/2015	02/06/2014	02/06/2013	02/06/2012	02/06/2011
Active Rigs	137	191	182	201

 
Link here to see updated Grail oil field.

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Union Pacific Sees Further Growth

The Dickinson Press is reporting:

The new top executive of Union Pacific Corp. said on Thursday he felt a sense of momentum at the No. 1 U.S. railroad as it works to improve service amid growth in the U.S. economy, but said the impact of falling oil prices remains an unknown factor.

Altogether, around 4.5 percent of Union Pacific’s freight volumes are related to shale drilling in North Dakota. Only around 1.5 percent comes from hauling the oil itself, while 2.5 percent comes from fracking sand and the rest is related to drilling equipment and pipes.

Fritz, 52, is somewhat of a departure for the company’s chief in command of a major railroad, with a career that included stints at General Electric Co. and Cooper Industries — now part of Eaton Corp.

Fifty-two years old. Pretty impressive.

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Halcon Update For Investors

See Disclaimer

Richard Zeits on Halcon over at Seeking Alpha:  

• Based on my well-by-well aggregation analysis, Halcón’s Q4 2014 Eagle Ford production increased ~22% sequentially (~40% year-on-year).
• Latest well results are in line with the company’s average well performance in the area. 

Halcón recently announced additional spending reductions in 2015, with the drilling and completions budget now expected to be $375-$425 million. Drilling will be limited solely to the Fort Berthold area in the Bakken and El Halcón in East Texas. In addition, ~$20 million is allocated to leasehold, infrastructure, seismic and other categories.

This is a major spending curtailment relative to 2014. By comparison, in Q3 2014 alone, Halcón spent $322 million on drilling and completions and $11.3 on infrastructure/seismic.

Halcón is planning to operate an average of two rigs in the Fort Berthold area and one rig in El Halcón in 2015. The company does not anticipate any significant lease expirations despite this reduced rig count.

Halcón expects to produce an average of 40,000-45,000 barrels of oil equivalent per day in 2015. By comparison, Halcón produced an average of 43,554 boe/d during Q3 2014. Assuming an average production rate of 45,000 boe/d in Q4 2014. Halcón would need to achieve the high end of its 2015 production guidance in order to avoid a production decline throughout the year. Given the very significant budget cutback, maintaining production flat in 2015 would be challenging, in my opinion, even though Halcón has effectively high-graded its drilling program, focusing the lion's share of is capital spending on the prolific Fort Berthold area.

It is important to note that Halcón is significantly hedged throughout 2015. Based on the midpoint of the 2015 production guidance range, ~88% of the estimated oil volumes (a total of 31,332 bo/d) are hedged at a weighted average price of $87.29 per barrel and approximately 86% of the estimated natural gas volumes are hedged at a weighted average price of $4.00 per MMBtu.

I should also note that, despite the favorable hedge position, the Williston Basin differential that has widened considerably in the past several months may remain a significant headwind for Halcón this year.