Restructuring deleveraging gives Goodrich a strong growth opportunity

On April 18, 2016, in the depths of the downturn, Goodrich Petroleum (ticker: GDPP) declared bankruptcy. At the time, the company was facing $500 million in debt and the lowest oil and gas prices in more than a decade. The restructuring proceedings and commodity price recovery, however, have left the company with a much brighter future. Goodrich’s current net debt is $16.7 million, and its Haynesville assets give it significant production potential.

Goodrich believes it has come out of the bankruptcy proceedings stronger than before, and is poised for strong growth. The company’s current goal is to “aggressively grow natural gas volumes and cash flow from our Haynesville development program while maintaining low debt metrics,” Goodrich President Robert Turnham told Oil & Gas 360®. The company believes it will be able to up-list to the NYSE by mid-year.

The restructuring resulted in significant debt reduction for Goodrich, which has given the company significant growth opportunities. In discussing the change since the restructuring, Turnham said “our mindset has changed dramatically due to de-leveraging from restructuring, available liquidity on the balance sheet and superior returns seen in the Haynesville.”

Goodrich’s core asset is its Haynesville acreage. The company owns 38,000 net acres in Northern Louisiana. 100% of this acreage is held by production from the 85 producing wells present. 2015 proved reserves from this acreage were 25.3 Bcfe, and the company estimates there are 235 potential drilling locations.

In addition to its core acreage in the Haynesville, Goodrich also owns additional acreage in eastern Texas in the Haynesville/Bossier shale. Acreage in the Eagle Ford and Tuscaloosa marine shale gives Goodrich potential oil value as well.

Coming Back Stronger, Goodrich has Haynesville Success

Source: Goodrich Q4 2016 Investor Presentation

Haynesville completion improvements pay off

Like many other popular shale plays, the Haynesville also has the possibility of additional wells in upper and lower target zones. If tests of this multi-target potential pay off, the number of potential drilling locations available to Goodrich may increase significantly.

Goodrich has been seeing very good results from upscaled completions in the Haynesville. The company’s original design consisted of hybrid fracs with 1000 lbs/ft of proppant and 300-450’ frac intervals. Current completions have 3000 lbs/ft of proppant in a slickwater fluid with 150-200’ frac intervals. Goodrich is currently testing even more intense designs, with 5000 lbs/ft of proppant and 75-150’ frac intervals.

Goodrich estimates that a 10,000 foot lateral well using the intense completion design will have an EUR of 25 Bcf. This would represent a 100% improvement in EUR per foot over previous shorter laterals with lower proppant volumes.

The company’s preliminary 2017 CapEx is $40 million, primarily concentrated in the company’s Haynesville assets. This CapEx will be used to drill 12-16 gross wells using the new completion designs.

The Haynesville has several advantages that the Marcellus and Utica do not. Foremost among them is the plentiful infrastructure. Gas from the Haynesville has no trouble getting to markets. Transportation costs, therefore, are much less of a factor and netbacks can be higher.

EnerCom Dallas presenter: GDPP

Goodrich Petroleum will be presenting its story at the Tower Club Downtown Dallas on Thursday, March 2, as part of EnerCom Dallas, an investor conference which is modeled after EnerCom’s The Oil & Gas Conference® in Denver.

The Dallas conference is designed to offer investment professionals a unique opportunity to listen to a wide variety of oil and gas company senior management teams update investors on their operational and financial strategies and learn how the leading independent energy companies are building value in 2017.

The forum offers healthy dialogue and informal networking opportunities for attendees.

To sign up for EnerCom Dallas and hear Goodrich, or to find out more information about presenting companies and industry experts speaking at EnerCom Dallas, click here to visit the conference website

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