Huge well #'s and 2014 guidance of 38000-42000 which not one person can explain on this board ??? If Halcon is kicking butt with production and knows it why the LOW guidance? Zoom you have given zero explanation to LOW guidance ... waiting for your response
Halcon Resources: The Roller Coaster Continues And New Lows Should Not Be Ruled Out [View article]
Jacksalmon- there's something fishy with your logic. They have over $800 mil in liquidity entering Q4. Their publicized divestiture ads another $250-300 mil to that amount and Q4 revenues are anticipated to bring in another $200 mil of free cash.
Q4 drilling and completion activities are expected to mirror Q3, where HK experienced a Q over Q average production increase of 9,000 boed and $187 mil of free cash. Last week, Wilson announced the most recent well to come off the confidential list IP'd at over 3,900 boed, and they were proceeding to use the new fracing technique on all Q4 well completions.
Economies of scale create cash flow. With the same number of wells, I'm going to speculate that results will actually average 20% higher in Q4 and their production gain will be closer to 11,000 boed rather than the 9,000 increase last quarter (without adjusting for the production divestiture). If you don't know how it's computed, a 3900 boed is the type well that can produce a 200% first year IRR. The need for additional borrowings or equity sales to meet Capex is being pushed further and further away.
Your right about end games, but with thousands of drilling locations available, that is decades away and another 25 years on top of that to just produce the proven EURs. We're in for the long haul with newest Bakken tests averaging closer to 900,000 BOED EUR/well. To put that into an economic perspective for you- If Wilson goes and borrows $9 mil to drill and complete a new well, the first 120,000 boed produced comes close to covering the well's cost and may be recovered in the first year or sooner. The next $80 mil of production income belongs to the company (net of operating costs, royalties, debt service, debt reduction, taxes, Capex and profits). One well could pay for three or four more, then they pay for three or four more, and meanwhile, the growing revenue income is cumulative. 2014 could produce well over $1 bil in free cash. It's an over-simplification, but that's how it's done
Not bad at all. The avg for above is 1236.6
So just for those wells alone, 1236 x 90days = 111,240
At an estimated avg price per barrel of $93 for Q4, those wells alone produce 1,045,320 of rev.
Yeah, I'm thinking there is some Sand bagging going on with the production estimates. (Apple has been doing that for years).