Like the Haynesville Shale itself, Goodrich Petroleum Corp. (NYSE MKT: GDP) appears to be reclaiming its identity, recently adding 2,200 net acres in DeSoto Parish in the increasingly competitive gas play.

Goodrich is on the way back—finding its footing on ground it first began amassing 14 years ago.

The company has become leaner since exiting restructuring—at one point it was forced to cut 60% of its staff—and wilier in the structure of such deals.

Goodrich will earn its 2,200 acres through drilling and completion of wells—without paying any upfront cash, the company said May 31. The company’s Haynesville position is about 26,000 net acres.

The renaissance in the Haynesville has been predicated on longer laterals and more proppant. Goodrich plans to finish up a single short lateral in 2017 that, as of March, was still being worked. The plan for the remainder of 2017 is to drill 10,000 ft laterals.

So far, acquisitions and swaps have added to the company’s operated, long-lateral inventory, Robert Turnham, Goodrich president and COO, told Hart Energy. But its A&D strategy isn’t necessarily tied to longer laterals,

“Our number one priority is to acquire acreage within the core of the play regardless of potential horizontal lateral lengths over the acreage,” Turnham said. “We feel we will be able to drill joint wells with offset operators if necessary.”

Expansion is taking place, in some cases in old school fashion. Its 2,200-acre acquisition typifies the axiom that good deals often require good relationships.

Turnham said the company has a “good, long-term relationship with the previous owner of the leasehold rights.”

The company was able to structure a deal that made sense for both parties, “knowing they wanted to stay in versus sell out of the play.”

In what has become a commonality in highly competitive plays, Goodrich also entered into a swap on a portion of its undeveloped acreage in the Bethany-Longstreet Field with another operator. The acreage swap will allow the company to add 22 billion cubic feet (Bcf) of proved reserves, based on the company's year-end reserve report.

The swap also brings with it a footprint that carries lower transportation expense and adds to its inventory of extended lateral well locations.

Turnham said additional bolt-on acquisitions are possible. But the core in North Louisiana is fairly small and controlled by a small number of operators.

“There isn’t an abundance of tack-on opportunities,” he said, adding the company is willing to consider larger transactions, both on the property level and company level, “if it makes sense to our shareholders.”

Goodrich is climbing back from a rough stretch in the downturn, as oil prices left the company unable to make the Tuscaloosa Marine Shale (TMS) and debt management viable. The company pulled every lever it had, including selling part of its Eagle Ford Shale holdings in 2015 for $110 million and restructuring debt—but never considered selling the Haynesville. In the TMS, the company had oil reserves. The Haynesville gave it exposure to gas.

“We felt then, as now, that it was important to maintain some commodity diversification,” Turnham said.

As it entered bankruptcy in April 2016, the company said it would direct future capex toward the Haynesville.

Goodrich began building its position in 2003, when it was focused on the Cotton Valley and, in early 2008, with the discovery of the Haynesville it expanded to capture reserves.

A joint venture (JV) with Chesapeake Energy Corp. (NYSE: CHK)—Goodrich sold 10,000 net acres in 2008 for $175 million—helped the company gain expertise in the play. It also shared data with other operators, allowing the company to refine its methods much sooner than going it alone through trial and error, Turnham said.

In the past 15 months or so, new completion techniques have made the play even more compelling.

Turnham claims no prescience of the recent Haynesville resurgence. Keeping the position was simply a way of maintaining a way to toggle its capex, as needed, to the best rate of return based on commodity prices.

For the months ahead, Goodrich still has option value in the TMS—with about 128,000 net acres—and the Eagle Ford, with 14,100 net acres.

The company will wait for oil prices to rise—perhaps to $65—and for people to rediscover that TMS wells are capable of average EURs of 800,000 barrels of oil equivalent—with just 2,200 pounds of proppant per foot.

“We are pumping 4,000–5,000 lbs per foot in the Haynesville and seeing our reserves increase by up to three times our old well designs,” Turnham said. “We think the TMS will have another shot at becoming a very exciting, economic play in the future.”

Darren Barbee can be reached at dbarbee@hartenergy.com.

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