Monday, November 1, 2010

Goodrich Petroleum Update

Goodrich Petroleum provided an operational update today.  Although the company buried the news in the release, Goodrich announced that it has sold some shallow ("non-core," of course) production and reserve acreage in east Texas and north Louisiana to an unnamed private company buyer for $70 million.  Goodrich retained the deep rights to the acreage.  Proceeds from the sale along with operating cash flow will fund the "vast majority" of the company's 2011 capital program.  In my opinion, it is always a potentially slippery slope when a company sells production and prospects to fund short-term capital needs.  But if they got a good price (there was too little information in the release to tell) and the deeper prospects are a better opportunity, then it likely is a good (enough) deal.

The company focused its attention on its prospects in the Shelby Trough area in east Texas, particularly on the Angelina River Trend in southern Nacogdoches Co.  Goodrich announced one completion in the area:
  • S.W. Henderson #1H: 21.0 MMcf/day IP on 22/64" choke at 10,250 psi; Angelina Co.
Next up for drilling is the H. Nelson #1H. Goodrich will operate one rig in the Angelina River Trend for the next year.  To augment its position in the area, Goodrich has leased another 5,000 net acres, 95% of which is in the Angelina River Trend.  The company's total Shelby Trough acreage is 28,000 net acres, as indicated in the lower left of the map below.


In the Joaquin area of the Shelby Trough in northern Shelby Co., Goodrich expects to complete two wells in the fourth quarter of 2010, the R. Dean #1H (Haynesville) and the R. Dean #2H (Mid-Bossier Shale).

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