This New Oil Play Still Looks Good

Goodrich Petroleum is out with its latest well results for the Tuscaloosa Marine Shale. Solid results suggest the play just might be the oil play that can fuel returns for Goodrich, Halcon Resources and Encana.

Jun 4, 2014 at 5:05PM

Earlier this week, Goodrich Petroleum (NYSE:GDP) announced solid well results in the Mississippi portion of the Tuscaloosa Marine Shale. The company's C.H. Lewis 30-19H-1 well achieved a peak 24-hour average production rate of 1,450 barrels of oil equivalent, or BOE. It really was an oil-rich well, as 1,387 barrels of that production was oil, or more than 95%. It was actually one of the best wells that Goodrich Petroleum or its main competitors in the play, Encana (NYSE:ECA) or Halcon Resources (NYSE:HK), have drilled to date, as the following slide indicates.

Goodrich Petroleum Tuscaloosa Marine Shale

Source: Goodrich Petroleum Investor Presentation (link opens a PDF).

Drilling down into the results
As that slide notes, the C.H. Lewis well was drilled in close proximity to Goodrich Petroleum's Smith 5-29H #1 well, which delivered a peak 24-hour production rate of 1,045 BOE, as well as Encana's Anderson well pad, which had rates as high as 1,540 BOE to as low as 915 BOE. Needless to say, this is a pretty solid result, which bodes well for the company's acreage position in Mississippi.

The result also suggests strong oil-rich growth potential for Encana, which also has a strong acreage position in the Mississippi portion of the Tuscaloosa Marine Shale, as detailed on the following slide.

Encana Tms

Source: Encana Investor Presentation (link opens a PDF).

Encana sees this oil play having massive upside potential thanks to the nearly 8 billion barrels of oil, gas, and liquids saturating the rocks underneath Mississippi and Louisiana. Because of this, the company sees the potential for the play to produce more than 50,000 barrels of oil per day in the future, when it enters full development mode. This should yield fairly profitable returns as Encana sees 40%-50% rates of return once the company enters full development mode.

Still waiting on Halcon Resources
It's returns like these that drew Halcon Resources to the play. The company, which is in the process of drilling its first few wells, has amassed a very large acreage position, as the following slide notes.

Halcon Resources Tms

Source: Halcon Resources Investor Presentation (link opens a PDF).

While Halcon Resources' acreage position isn't all that close to Goodrich Petroleum's most recent well results, the company's acreage does appear to be within the oil producing zones. As that slide noted, both Goodrich Petroleum and Encana have drilled oil wells in and around Halcon Resources' acreage.

Investor takeaway
That being said, Encana, Goodrich Petroleum, and Halcon Resources are still appraising the play. Wells can cost upwards of $14 million apiece because of the depths needing to be drilled. Moreover, there are plenty of areas that still need to be tested, so the opportunity might not be as large as the acreage positions these companies possess. That's why investors in each company need to keep an eye on future well results to make sure these companies don't start drilling dry holes. However, so far, the results from this new oil play still look good. 

OPEC is absolutely terrified of this game-changer
OPEC isn't all that worried about American shale plays. That being said there is an energy technology that has it absolutely terrified. In an exclusive, brand-new Motley Fool report we reveal the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers