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Debt, not oil, proving bountiful in Tuscaloosa Marine Shale

Marissa Hall | Shale Plays Media

The same man who built Petrohawk Energy Corp., the company that first tapped the Eagle Ford shale play, is piling up debt attempting to have repeat success with Halcon Resources Corp. in the Tuscaloosa Marine Shale (TMS). Floyd Wilson has built four public energy companies in his 44 years as an entrepreneur in the oil and gas industry, according to an article by Asjylyn Loder for Bloomberg Businessweek.

At present, Halcon has yet to successfully tap into the massive reserves estimated to lie in the TMS. Wilson believes that up to 1.2 billion barrels of oil could be drawn from the shale, but as of September 5 the company’s debt stands at $3.2 billion.

Loder’s thorough telling of Halcon’s business prospects includes the company’s history as well as its involvement in other areas. However, it’s the TMS that is proving the biggest challenge for Halcon.

Squeezing oil from the TMS is an engineering challenge. The formation is 2 miles underground through rock interlaced with rubble and sand. On a humid July morning, a sign in the red clay of Wilkinson County, Mississippi, announces Halcon’s Fassmann 9H-1 well. A Helmerich & Payne Inc. Flex3 rig rises above the clearing. A monitor in the air-conditioned supervisor’s trailer shows the drill bit has reached a depth of 12,000 feet (3,660 meters).

Progress is slow. In the rig operator’s cabin 30 feet up, one man steers a circulating bit screwed to the end of 2 miles of pipe, monitoring progress on a bank of flashing screens. The bit must pierce the TMS horizontally in the right spot. His margin of error: 5 feet.

That particular attempt missed. The drill veered off course, and more time, energy, and money would be required to try again.

At more than $13 million apiece, Halcon’s wells in the TMS are the company’s most expensive. Halcon abandoned its first well, the Broadway H1, after an underground casing failed. It has two producing wells in the play. Three others are in progress.

Wilson keeps a positive outlook, believing that sooner or later the company will hit a sweet spot and all the work will result in a very lucrative payoff.

For all the details about Wilson’s business ventures, see Loder’s full story: Drillers Piling Up More Debt Than Oil Hunting Fortunes in Shale

Related: Halcon Provides Tuscaloosa Marine Shale (“TMS”) Operational Update and Announces TMS Development Partnership

One comment

  1. Keep an eye on KFG Resources (KFG.V), Canadian based junior that drilling and putting well after well into production in the Tuscaloosa area. Between 2011 to 2013 they went from 10 to 15 to 22 and right now 25 producing wells. $5 million market cap it’s very undervalued.

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