Halcon Resources Corp (HK)’s Bakken Investments Pay off Big Time

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The proppant gets the props

One area that’s really helping Halcon improve its Bakken well production is the company’s decision to change to a ceramic proppant while increasing the proppant volume per lateral foot. If the ceramic proppants prove to be the best option for Bakken drillers it could prove to be a big boost for a company like CARBO Ceramics Inc. (NYSE:CRR). The company’s proppants cost more than raw frac sand but can increase both production rates and estimated ultimate recovery rates by more than 20%. This leads to high return on investments and faster payouts for producers.

Halcon’s numbers really seem to confirm the value of ceramic proppants. Not only did the company see tremendous increases in average initial production rates, but Halcon also sees the estimated ultimate recovery from its wells increasing as well. Two wells in the Marmon area saw average initial production 91% higher than previously drilled wells and it’s attributing this to the modified design change and use of ceramic proppants. Further, the company estimates that the ultimate recovery of these two wells will be 462,000 barrels of oil equivalent which is 40% higher than the wells drilled under its previous methods. Halcon sees its modifications as a “game changer” to that area of the Bakken.

Foolish bottom line

When you combine lower costs with higher production and higher ultimate recoveries you have a recipe for solid returns. That’s exactly what Halcon is seeing from its Bakken wells, which speaks very well of its future in the play. The company’s investments and hard work in modifying its well designs really seems to be paying off.

The article Halcon’s Bakken Investments Pay off Big Time originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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