A year ago, the nascent Tuscaloosa Marine shale play in Mississippi and Louisiana hosted a dozen completed, producing wells and a still-uncertain future as the holes were costing more than $15 million and initial rates of 1,000-plus barrels remained elusive.

Now, several upsized wells have come online in the region, which offers favorable tax rates, take-away infrastructure at the ready and Louisiana Light Sweet pricing discounted by just $2 for the short haul to pipe.

And small-cap Goodrich Petroleum Corp. has firmly forged its stock as the one to own to have a nearly pure-play piece of what may be a 60,000-square-mile oil field. In early July, upon rumblings of potentially good reserve-life news from Goodrich's six-month-old Crosby 12H-1, the $12 stock began to soar. By early October, after reporting Crosby had made more than 100,000 barrels of oil equivalent (BOE), 94% oil, in its first five months, shares topped $28.

Its Smith 5-29H-1 then came online with a 24-hour peak rate of 1,045 BOE. Meanwhile, it picked up two-thirds interest in an additional 277,000 gross acres, producing about 750 BOE a day, for $23.7 million from Devon Energy Corp. The add has brought its position to more than 300,000 net acres.

Buoyed by the new stock price, Goodrich raised $166 million net in an oversubscribed, 6.9-million-share sale. It exchanged $167 million of 5% convertible senior notes due 2029 for new notes due 2032, pushing the initial call to October 2016. Its bank facility was increased to $270 million with none drawn at year-end. Cash on hand became $59 million and an additional $52 million was in a restricted account.

By early November and online for 8.5 months, the Crosby well had made 138,000 BOE. It and five of Goodrich's other wells were looking like they would ultimately give up more than 600,000 barrels each.

The recipe

Goodrich's TMS entry was in 2011 with nearly a decade of experience already in horizontal, tight-rock plays, beginning with the Cotton Valley and then the Haynesville and Eagle Ford. For it and its predecessors, however, the Tuscaloosa journey had been a climb that required earnest capital commitment and unprecedented geoscience to solve for expandable-clay content and a rubble zone that wants to grab the drillpipe and not let go.

To enjoy the rest of this article, please read the February issue of Oil and Gas Investor.

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