Current WRD Stock Info

Testing Gen 4 completions, refracs

WildHorse Resource Development (ticker: WRD) announced third quarter results Wednesday, showing a net loss of $17.3 million. After excluding the effects of hedging and other special charges, Carrizo posted adjusted earnings of $11.6 million.

WildHorse produced 36.6 MBOEPD in Q3, more than double the 14 MBOEPD the company produced in Q3 2016. This expansion is predicted to continue into 2018, as WildHorse expects 82% production growth next year.

WildHorse holds about 385,000 net acres in the Eagle Ford, enough to give it the second largest Eagle Ford position in the industry. Notably, this is in the northern portion of the play, not in the better-known southern area.

WildHorse Predicts 83% Production Growth In 2018

Source: WildHorse Investor Presentation

WildHorse reports that the northern Eagle Ford still has strong well results, and its current third-generation completions are outperforming the company’s 91 BOE/ft type curve. The company is testing its fourth-generation design, which it believes will further increase productivity. This new design calls for increased proppant concentrations, with shorter stage spacing to more thoroughly fracture each well.

The company is working to delineate its acreage, including continued work integrating the acreage it recently purchased from Anadarko and KKR. WildHorse drilled 10 gross wells in the acquisition acreage this quarter, and expects to continue activity in the area in Q4. WildHorse also has continued its tests of refracs in the basin, bringing two online this quarter. The company has already run refracs on four other wells, and reports that all six operations have produced encouraging results.

WildHorse is taking a different route to ensure service availability. While many companies are trying to lock in their sand, rig and other contracts, WildHorse is diversifying. The company reports it is currently using ten different sand suppliers, three drilling vendors and four different pressure pumping vendors. According to WildHorse, this strategy provides flexibility and ample capacity, allowing it to proceed with operations at its own pace.

WildHorse Predicts 83% Production Growth In 2018

Source: WildHorse Investor Presentation

Q&A from today’s Q3 earnings call

Q: Are the Austin Chalk wells still taking about 30 days and $7  million a piece on average? And then my second question is, can you do a little compare and contrast and tell us how the Chalk wells look versus the Eagle Ford and then the first Chalk well versus the second Chalk well? And then really finally, what are the unique drilling and completion risks associated with those Chalk wells?

WRD: Lots of questions there, I’ll try to summarize it real quick. As far as the drilling days, there has been significant improvement in the very few Austin Chalk wells and that actually, and quite frankly, is part of the reason, we’re not willing to release – are not ready to release at this point a kind of go-forward overall type curve cost and rate, because we’ve made so much improvement. As an example, our first Austin Chalk well was 37 days. Our second Austin Chalk well from spud to rig release was 25 days. And so with that kind of improvement, we hate to put a marker out there that says it’s going to be 25. We continue to see improvements with the rig it’s drilling right now. So hopeful that we continue to see those types of improvements with the same ones that we saw in the Eagle Ford.

If you remember back at our IPO presentation, even in the Eagle Ford, when we first started drilling the Eagle Ford here a couple years ago, these were 25-day well. And now, our best wells are down to 10 days. So, hope for a lot of continued improvement in the Chalk. The difference in the two wells, Austin Chalk wells from a performance perspective that we’ve seen so far, has some to do with pressure. The Winkelmann well, which is down in Washington County, is a lot deeper and, obviously, as you can see from the results, gassier. So, that imputes a little bit more rate to it. The Bennett well up in Burleson County that we just mentioned today has a very, very flat production profile. It is an economic well, particularly if we continue to make improvements in efficiency on the drilling and the completion side. But a lot of potential in our minds in the Austin Chalk and that’s why we’re continuing to invest in it.

Q: You’ve successfully digested two significant transactions,

two significant acquisitions for Eagle Ford this year. And so, if you were just to perform a look-back on these two

deals, have there been any surprises, either positively or negatively, relative to your acquisition case expectations?

WRD: I haven’t seen anything negatively. I think the positive aspects are how quickly we’ve been able to integrate those into our operations and how well they fit. As Drew described it a number of times when we bought the Anadarko/KKR acquisition, it truly was kind of the hand-in-glove type acquisition. So, the synergies between the two acquisitions, along with our legacy acreage, have really been a perfect fit, and really what’s been able to – enabled us to build the size and the scale that we have in that area.

WRD: The only thing I’ll add from a positive perspective that might go back to reinforce some of the commentary we’ve had on LOE in the third quarter. When we acquired the Anadarko assets, of course, we have a forecasted staffing levels and LOE assumptions. And one of the things that was surprising, I guess, from a positive perspective was we ended up hiring about 20% of the existing staff to bring all those hundreds of wells into our organization. And so, that was a positive surprise to us that we were able to reconfigure our field operations to integrate that large of an asset from a well count perspective and only acquire about 20% of the existing staff that it was taking to manage those operations.

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