Hess Corp. is bullish on the Bakken Shale, with North Dakota still the company's U.S. growth engine, the CEO said Thursday.
What makes the Bakken key to the company's long-term strategy, John Hess said during a conference call with analysts, is a "15-year inventory of high-return drilling locations" and a transition this year to plug and perforate completions from its previous 60-stage completion design. The company expects to increase the value of the assets by roughly $1 billion, he said.
Bakken production is expected to increase by 20% annually to 200,000 boe/d by 2021 from 1Q2019 levels of 130,000 boe/d.
At a $60/bbl West Texas Intermediate oil price, “that should generate $1 billion of free cash flow post-2020," he said.
COO Greg Hill said Hess still expects to drill 170 Bakken wells this year and bring 160 to completion. For the second quarter, the Bakken is expected to produce 135,000-140,000 boe/d, with an average of up to145,000 boe/d for the year, which would be 20% higher than in 2018.
A test well aimed at assessing open-flow potential recorded what management said could be the high initial production potential of any U.S. onshore well at 14,600 boe/d.
"Our current standard design involves 36 stages with about 280 entry points, but we know that can vary as we get out farther into the field," Hill said. "We really want to get more wells down in that area” from the Bakken core “to begin to understand and optimize what our completion designs will be."
Hess reported net income of $32 million (9 cents/share) for 1Q2019, versus a year-ago loss of $72 million (minus 27 cents).