Hess Corp. plans to ramp up to six rigs and produce 135,000-145,000 boe/d in the Bakken Shale in 2019 as part of a $1.87 billion capital expenditure (capex) budget in the United States, management said Monday.
The New York-based exploration and production (E&P) company has set an overall 2019 capex budget of $2.9 billion, including $1.89 billion for production, $570 million for development and $440 million for exploration and appraisal. Last year, Hess had announced a $2.1 billion capex budget for 2018.
Broken down by region, Hess plans to spend $835 million in South America, $150 million in Asia and $45 million in other regions, along with the $1.87 billion planned for the United States. Roughly 75% of the company’s total 2019 budget will go to high return growth assets in the Bakken and Guyana, management said.
The company is forecasting total net production in 2019 of 270,000-280,000 boe/d, excluding Libya, up from 245,000 boe/d in 2018 pro forma for the sale of joint venture interests in the Utica Shale.
“Our capital and exploratory expenditure program is designed to deliver strong returns, production growth and significant future free cash flow,” CEO John Hess said. “As we focus spending on our high return investment opportunities, we will continue to reduce our unit costs to drive margin expansion and improve profitability.”
With $1.425 billion earmarked for production activities in the Bakken, including an increase to six rigs from a 2018 average of 4.8 rigs, the E&P expects to drill around 170 new wells (up 42% year/year) and bring online 160 wells in 2019, with funds also set aside for investing in non-operated wells.
COO Greg Hill said in the Bakken the company plans to “complete the transition to higher intensity plug and perf completions, which is expected to generate a significant uplift in net present value and initial production rates while also increasing the estimated ultimate recovery of oil and natural gas.”
The 2019 budget also includes $290 million for production operations in the deepwater Gulf of Mexico. This includes further development of the Stampede Field, operated and 25%-owned by Hess, as well as tieback opportunities at the Llano (50% owned) and Tubular Bells (57%-owned and operated) fields.
Rounding out 2019 production spending, Hess has $150 million planned for activities in the Gulf of Thailand at North Malay Basin and the Malaysia/Thailand Joint Development Area.
For development in 2019, $260 million will go to investments in Liza Phase 1 in Guyana, with first production expected by 2020. Hess plans to spend $310 million on development for Liza Phase 2, management said.
Meanwhile, $440 million will go to drilling exploration and appraisal wells on the Stabroek Block offshore Guyana, with funds also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico, as well as for license acquisitions, according to management.