Hess Corp. senior executives on Wednesday designated the Bakken Shale and overseas operations in Guyana as the two sweet spots for most of the company’s capital expenditures in 2020.
While third quarter global net production averaged 290,000 boe/d, compared with 279,000 boe/d in 3Q2018, Bakken 3Q2019 production averaged 163,000 boe/d, up 38%.
"The Bakken continues to be one of our growth engines," said CEO John Hess, who said he thinks the company is in a strong position with $1.9 billion in cash at the end of the most recent quarter.
"Our operations in the Bakken are on track to reach 200,000 boe/d by 2021," Hess said on an earnings conference call Wednesday. COO Greg Hill said production will remain at that level for a number of years as Hess plans to reduce its six-rig fleet in the Bakken to four rigs in 2021. "This will allow us to maintain production at the 200,000 boe/d level, resulting in a materially free cash flow position."
"Basically, we're all on track,” said Hill. “We're not seeing pressure on costs in North Dakota, so what we're concentrating on now is driving down those well costs."
Bakken production increased 12% sequentially with natural gas and natural gas liquids volumes also higher as a result of the startup of the Little Missouri Four gas processing plant. Hess expects to have brought online 155 new wells in the Bakken by the end of the year, down from a previous estimate of 160 wells, Hill said, citing adverse weather earlier in the year.
Drilling and completion costs continued to go down in the Bakken, averaging $6.7 million/well in the quarter, down from $7.3 million/well and $7 million/well in the first and second quarters, respectively. "We expect to achieve further reductions as we progress to our target drilling and completion costs of $6 million/well."
Hill said that Hess thinks the percentage of oil in Bakken production will stay around 60%.
The Bakken and offshore Guyana operations are in line to garner 75% of next year's $3 billion capex budget, Hess said.
In 3Q2019, the company reported a net loss of $205 million (minus 68 cents/share), compared with a net loss of $42 million (minus 18 cents) in the same period last year.