Hess Corporation announce 2015 budget

Hess Corporation have announced a 2015 capital and exploratory budget of US$4.7 billion, a 16% reduction from its 2014 actual spend of US$5.6 billion.

Of this, US$2.1 billion (45%) is budgeted for unconventional shale resources, US$1.2 billion (26%) for production, US$1.0 billion (21%) for developments and US$0.4 billion (8%) for exploration.

CEO John Hess said: “Our company is well positioned to manage through the current price environment, with a strong balance sheet and resilient portfolio. Our 2015 budget reflects a disciplined approach to maintaining our financial strength and flexibility while preserving our long term growth options.”

Greg Hill, President and COO, stated: “We are reducing our 2015 spending in the Bakken to US$1.8 billion, compared with US$2.2 billion in 2014. In 2015, we plan to operate an average of 9.5 rigs and bring approximately 210 new operated wells online, compared with 17 rigs and 238 operated wells brought online in 2014.

“Hess has some of the best acreage in the Bakken, and we will continue to drill in the core of the play which offers the most attractive returns. Substantially all our core acreage is held by production, which allows us to defer investment in the short term while maintaining the long term value and optionality of this important asset. As oil prices recover we will increase activity and production accordingly.

“In the Utica, we plan to spend US$290 million compared with approximately US$500 million last year, as we transition to early development at a measured pace in this price environment and as infrastructure builds out. Over 2015 our joint venture with CONSOL intends to execute a two rig program focused in the core of the wet gas window and bring 25-30 new wells online, compared with four rigs and 39 new wells in 2014.

“Our 2015 budget also includes continued offshore production drilling at the Tubular Bells and Shenzi fields in the deepwater Gulf of Mexico, at the South Arne Field in Denmark, the Valhall Field in Norway, the Okume Complex in Equatorial Guinea, and also in the Joint Development Area of the Gulf of Thailand. Additionally the budget will fund continued full field development of the North Malay Basin project in Malaysia and development of the Stampede Field in the deepwater Gulf of Mexico. Our 2015 exploration drilling program includes wells in the deepwater Gulf of Mexico, offshore Guyana and Kurdistan.”

Unconventionals - US$2.1 billion:

  • US$1.8 billion for the development of the Bakken Shale in North Dakota. Approximately US$1.45 billion is dedicated to drilling and completion activities, pad level facilities and low pressure gathering lines; US$350 million is planned for major infrastructure projects
  • US$290 million for drilling 20-25 wells in the core of the wet gas window of the Utica Shale play in Ohio

Production - US$1.2 billion:

  • US$300 million to drill four production wells and begin one water injection well at the South Arne Field (Hess 62% and operator) in Denmark, and to bring three production wells online and drill one new well at the Valhall Field in Norway (Hess 64%, BP operator)
  • US$250 million to complete drilling of one production well and one water injection well, and for continued facilities work at the Tubular Bells Field (Hess 57.1% and operator) in the deepwater Gulf of Mexico
  • US$220 million to drill two production wells (Hess 85% and operator) in Equatorial Guinea
  • US$200 million to complete drilling of production, appraisal and water injection wells at the Shenzi Field (Hess 28%, BHP operator) and for small-scale well-related activity elsewhere in the deepwater Gulf of Mexico
  • US$175 million to drill 8-10 wells and progress the ongoing Booster Compression project in the Joint Development Area (Hess 50%) in the Gulf of Thailand

Developments - US$1.0 billion:

  • US$600 million to install three wellhead platform jackets, progress fabrication and commence Phase 1 drilling for the North Malay Basinfull field development project (Hess 50% and operator) in Malaysia
  • US$300 million to progress hull and topsides fabrication and commence drilling at the Stampede Field (Hess 25% and operator) in the deepwater Gulf of Mexico

Exploration - US$0.4 billion:

    • Drill the Sicily well (Hess 25%, Chevron operator) in the deepwater Gulf of Mexico • Drill the Liza well (Hess 30%, Esso Exploration and Production Guyana Limited operator) in offshore Guyana • Complete drilling operations in the Dinarta block (Hess 80% and operator) in Kurdistan

Adapted from press release by Joe Green

Published on 27/01/2015

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