Goodrich Petroleum Corp. says it has significantly lowered the cost of drilling in the Tuscaloosa Marine Shale, but still posted a first-quarter loss.
Goodrich is one of the major players in the shale, an oil-rich formation that stretches across the middle of Louisiana into Mississippi.
Goodrich said current well costs have been lowered by about $3 million because of shorter drilling times and lower service costs. The lower-cost wells — now totaling about $10 million — offer more competitive rates of return.
That’s important for Goodrich, which has leased more than 325,000 acres in the Tuscaloosa and large pieces of East Feliciana, Tangipahoa and St. Helena parishes.
Wells in the still-developing Tuscaloosa are some of the most expensive, if not the most, in the United States. The formation has been among the hardest hit by the drop in oil prices, which were at more $100 last summer. Prices fell below $50, but are now at about $60 per barrel.
Goodrich says it can break even on a $10 million well with $50 oil if the well produces 600,000 barrels of oil, the lower end of expected production. The 10 largest TMS wells have had peak production rates equivalent to 1,500 barrels of oil per day.
Goodrich reported that a recently completed well in Tangipahoa Parish produced the equivalent of 650 barrels of oil per day during flowback testing, a measure of the well’s economic potential. The company expects to complete the Kent 41H-1 well later this year.
The update was part of the Houston-based company’s first-quarter earnings report.
Goodrich reported a first-quarter loss of $28.5 million, or 58 cents per share, compared to a loss of $29.9 million, or 68 cents per share, a year ago.
The company’s hedging strategy allowed it to sell its oil for an average of $75.95 per barrel during the first quarter, down from $91.34 a year ago. For 2015, the company has a total of 3,500 barrels of daily production swapped at an average price of $96.11.
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