Hess has eyes on the Williston, offshore Guyana, Stampede for 2017 capital expenditures
Hess Corporation (ticker: HES) said it expects 2017 capital and exploratory expenditures to be $2.25 billion in 2017. This represents an increase of $350 million over 2016’s CapEx. Several areas have significant potential for development in 2017.
Hess outlined its projected spend as follows:
- $700 million is slated for development in the Williston Basin,
- $475 million is planned for exploration and development in the newly discovered Liza Field in offshore Guyana,
- $425 million will go to continuing development in the ultra-deep GOM Stampede field,
- $650 million for development and production operations in other offshore fields including Norway’s Valhall field.
Offshore Guyana discovery
The Stabroek Block in offshore Guyana, where Hess owns 30% interest, has been the site of the recent Liza discovery. Three test wells in this area have logged several different pay zones that may be developed. This field is believed to have multiple zones and play types containing a total estimated gross recoverable resource between 800 million and 1.4 billion BOE. Continued exploration and appraisal is expected to occur in 2017, with Hess planning to be in a position to sanction the first phase of the Liza development in 2017.
Additionally, the nearby Payara-1 well encountered a second oil discovery about 10 miles northwest of the Liza area. Appraisal of this discovery is expected to occur in 2017. The Snoek prospect, a third location six miles south of the Liza discovery, is also planned to be drilled in 2017.
Hess seeks to triple rig count in Williston Basin
Hess’s activity in the Williston Basin is expected to increase from two to six rigs, the company said, and it seeks to complete about 75 wells in 2017. This represents a slight increase over the 71 wells drilled in 2016. During this drilling program Hess plans to complete 10 wells with 60 frac stages instead of its standard 50 and 15 wells with higher proppant loading.
Offshore development continues in multiple locations
Development of the Stampede Field in deepwater GOM is expected to continue on schedule in 2017, with two wells drilled and three completed in 2017. The Stampede Field is one of the deepest plays in the Gulf of Mexico, with several pay zones at a depth of 28,000-31,000 feet. First oil from the field is expected in 2018.
The North Malay Basin gas field development, where Hess owns a 50% interest with Petronas Carigali, is continuing through 2017 with first gas expected in third quarter 2017. This basin comprises nine natural gas fields with an expected cumulative production rate of 165 million cubic feet per day.
Hess expects to restart drilling operations in the Valhall Field in Norway, an offshore field operated with BP that was first developed in 1979.
HES Q4 2016 results beat expectations
Hess released its estimated fourth quarter results yesterday, showing a narrower loss than expected. Net loss was $4,892 million, or $15.65 per common share, which includes a noncash accounting charge of $3,749 million on deferred tax assets and other after-tax charges totaling $838 million. The adjusted net loss was $305 million, or $1.01 per common share. Oil and gas production was 311,000 BOEPD. Year-end total proved reserves were 1,109 million BOE, reserve replacement was 119% for 2016 at a finding and development cost of approximately $13 per BOE.
