Hess Corp. announced Thursday that it would spend $6.8 billion in global capital expenditures (capex) in 2012, more than one-third of which would target unconventional sources in the United States, specifically the Bakken, Eagle Ford and Utica shales.
"We believe that the investments we are making in unconventionals are lower risk and will generate long term profitable growth for shareholders," said Hess CEO John Hess. "We expect to fund the majority of our 2012 program from internally generated cash flow and asset sales."
The New York City-based major, which now holds a sizeable acreage position in several shale plays, said it plans to spend $2.5 billion on unconventionals, nearly 37% of total capex.
In the Bakken, the company said it will continue with the expansion of its gas processing facility in Tioga, ND and further develop the play, where it now operates 16 drilling rigs. Hess has the second-largest position in the Bakken (900,000 net acres), just behind Continental Resources (901,098 net acres).
Hess also said it plans to drill appraisal wells in the Eagle Ford and Utica shales, in Texas and Ohio, respectively.
"Our focus in 2012 will be on execution," said Greg Hill, president of worldwide exploration and production. "We are committed to creating value and delivering sustainable growth in production and reserves from both our unconventional and conventional portfolios."
Other 2012 capex figures include:
Hess has been snapping up unconventional acreage for more than a year. Last September the company acquired almost 185,000 net acres in Ohio's Utica Shale and more than 18,000 undeveloped net acres in Louisiana's Haynesville Shale after agreeing to buy Marquette Exploration LLC for $750 million (see Shale Daily, Sept. 9, 2011). The company also agreed to pay Consol Energy Inc. $593 million to acquire a half interest in nearly 200,000 net acres in eastern Ohio (see Shale Daily, Sept. 8, 2011).
In December 2010 Hess paid $1.05 billion in cash to acquire 167,000 net acres in the Bakken from TRZ Energy LLC (see Shale Daily, Dec. 30, 2010).
According to NGI's Shale Daily Unconventional Rig Count for the week ending Jan. 13, activity in the Bakken/Sanish/Three Forks play increased 23% from one year ago as the number of rigs operating there grew from 163 to 200. Activity in the Eagle Ford grew 94% over the same period, from 123 rigs to 239.