Oil & Gas Investment

History

The Hallwood petroleum management group is known in the industry as an innovator and pioneer in the exploration and production of unconventional shale oil and gas contained in onshore fields. Since 1984 we have successfully drilled hundreds of conventional and non-conventional wells and have developed horizontal well drilling technique and creative hydraulic fracturing technology.

In 2001 the management team consolidated the properties held by the various Hallwood operating entities and sold unconventional resource properties which including coal bed methane in the San Juan Basin of New Mexico and Colorado to a subsidiary of Unocal for approximately $268 million.

We then invested approximately $120 million to extend the prolific production of the Barnett Shale in the Fort Worth Basin of Texas into Johnson County with a project that was sold to Chesapeake Energy Corporation in two stages in 2004 and 2005 for a total of over $535 million.

In summary, Hallwood has had a long history of acquiring, owning, operating and selling oil and gas projects.

BlueCrest Alaska

In August 2012, Hallwood closed a transaction in the Cook Inlet of Alaska whereby our affiliate BlueCrest Energy Inc. acquired Proved + Probable reserves from Pioneer Natural Resources.

In 2013, the Cosmopolitan State #1 well was completed. The results delineated newly-discovered oil and gas pay zones over a 5,000-foot interval with more than 700 feet of net pay. Reserves are 79% oil, 21% gas.

An updated reserve report dated July 2016 prepared by independent engineers Ryder Scott with Brent oil pricing and assuming a lifetime non escalated average projected oil price of $58 per bbl. shows proved undeveloped (1P) reserves of 79 million bbl. with a PV10 value of $1.384 billion, proved and probable (2P) reserves of 123 million bbl. with a PV-10 value of $1.885 billion and proved, probable and possible (3P) reserves of 258 million bbl. with a PV-10 value of $3.409 billion.

The updated forecast includes our plan to hydraulically fracture each new well, although the expected total ultimate recovery per well was not increased for this analysis. Fracking requires greater cost and completion time per well, but it is expected to result in substantially higher initial production rates.
Hallwood Financial owns a fully diluted 17% beneficial interest in BlueCrest.