New York-based Hess Corp. detailed its 2017 capital expenditure (capex) budget Thursday, including plans to ramp up activity in the Bakken Shale.
The exploration and production (E&P) company -- which holds a significant acreage position in the Bakken as well as assets in the Gulf of Mexico (GOM), Norway and Guyana -- said it plans to spend $2.25 billion in capex in 2017, including $1.35 billion in the United States.
That budget includes $700 million for North Dakota's Bakken, where Hess plans to go from two rigs to six rigs by year-end 2017 while bringing 75 new wells online for the year. Hess also has capex earmarked for pad development in anticipation of 2018 drilling activity there, the company said.
The U.S. budget will include development in the deepwater GOM, where Hess said it plans to drill two wells and complete three in the Stampede Field. Also in the deepwater GOM, Hess said it will drill and complete a production well at the Penn State Field.
"Our 2017 budget reflects our balanced approach to investing in short cycle and long cycle growth options while maintaining our financial flexibility," CEO John Hess said. Between the Bakken assets and offshore and international investments, "Hess is well positioned to deliver sustainable growth, cash generation and returns for our shareholders."
Net 2017 production is expected to average 300,000-310,000 boe/d, which includes net Bakken production of 95,000-105,000 boe/d. Hess reported 107,000 boe/d from the Bakken for 3Q2016.
During a third quarter conference call with analysts, John Hess said the company would strongly consider ramping up in the Bakken in 2017 as the oil price outlook grew more optimistic. He said at the time that the company's "core of the core" in the Bakken could generate returns competitive with the Permian Basin, widely viewed as the most economic oil play in the U.S. onshore.
Hess's 2017 spending plans reflect an industry-wide shift back to growth for the E&P sector after two years in retreat.
With oil prices forecast to rise on a tightening supply-demand balance, analysts are predicting a surge in capex from U.S. E&Ps in 2017. Earlier this week, Permian pure-play Parsley Energy unveiled plans to nearly double its capex in 2017, with production expected to grow roughly 58% year/year while shifting to an oilier mix.
Hess plans to hold a conference call Jan. 25 at 10 a.m. EST to discuss 4Q2016 results.