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Hess to Spend $2.85 B to Develop Bakken, Utica

Hess Corp. plans to spend $5.8 billion on capital expenditures (capex) in 2014, and will devote nearly half of that amount to developing its assets in the Bakken and Utica shales, with emphasis on the Bakken.

The New York-based company said it will spend $2.85 billion developing unconventional shale resources. Specifically, it plans to spend $2.2 billion in the Bakken in North Dakota, where it will operate 17 rigs and bring 225 new operated wells online. The company will also invest $350 million in major infrastructure projects, including the completion of the expansion of a gas processing plant at Tioga, ND, and associated pipeline and compression projects.

In the Utica, Hess said it plans to spend $550 million for drilling about 35 wells, primarily in the wet gas window of the play in Ohio.

Hess COO Greg Hill said that although the level of capex devoted to the Bakken is flat compared to 2013, the number of rigs deployed in the play would increase from 14 to 17 "as a result of lower well costs and decreased investments in infrastructure projects." He added that the company had decided to raise its Utica capex from $455 million in 2013 to "focus our activities on the appraisal and development of the wet gas window."

At $2.85 billion, unconventionals represent the largest slice of the capex pie at Hess for 2014. The company will spend $1.475 billion on production activities, followed by $925 million on development -- including $400 million for the development and start-up of the Tubular Bells Field in the deepwater Gulf of Mexico (see Daily GPI, Jan. 27, 2012; Oct. 26, 2011) -- and $550 million on exploration.

According to operational data for 3Q2013, the most recent quarter for which figures are available, Hess held 648,000 net acres in the Bakken. It also held 167,000 total net acres in the Utica, which includes 94,000 net acres 100% owned by Hess, and 73,000 net acres with its joint venture (JV) partner in the play, Consol Energy Inc. (see Shale Daily, Oct. 15, 2013). The JV is active in Ohio's Belmont, Harrison, Jefferson and Noble counties.

During 3Q2013, Hess net production averaged 71,000 boe/d in the Bakken, including 57,000 b/d of oil, 7,000 b/d of natural gas liquids (NGL) and 44 Mcf/d of natural gas. The company had 14 rigs deployed in the Bakken during the quarter and drilled 52 operated wells and completed 39 operated wells in the play.

In the Utica, the Hess-Consol JV deployed three rigs in the play during 3Q2013, while Hess deployed one there on its own. The JV drilled five wells in the Utica during the quarter, while Hess drilled two more.

Earlier this month, Hess filed paperwork with the U.S. Securities and Exchange Commission (SEC) to form Hess Retail Corp., a subsidiary for its convenience stores and gasoline fueling stations (see Daily GPI, Jan. 9). Hess plans to spin off the subsidiary and continue its transformation into a pure-play oil and gas exploration and production company.

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