Hess Corp. has set a $3.7 billion exploration and production budget for 2023, with more than 80% of funds allocated to its flagship Bakken Shale and Guyana operations. This would be up from the $2.7 billion budget for full-year 2022 that the firm forecasted in October.
New York City-based Hess is targeting average net production of 355,000-365,000 boe/d this year, including 165,000-170,000 boe/d in the Bakken and about 100,000 b/d of oil from Guyana, management said. Bakken net production averaged 166,000 boe/d in the third quarter of 2022, up 12% year/year.
“Our capital program reflects continued execution of our strategy to invest only in high return, low cost opportunities within our portfolio,” CEO John Hess said. “More than 80% of our 2023 budget is allocated to Guyana, which is positioned to be one of the highest margin, lowest carbon intensity oil developments in the world, and to the Bakken, our largest operated asset where we have a robust inventory of high return future drilling locations.”
COO Greg Hill added, “In the Bakken, we plan to operate a four rig program, which will enable us to maximize free cash flow generation, optimize our in-basin infrastructure and drive further reductions in our unit cash costs. In Guyana, our focus in 2023 will be on advancing our high value oil developments and continuing an active exploration and appraisal program on the Stabroek Block.”
As the Bakken matures and three-mile laterals become more prevalent, operators there now are increasingly targeting second and third-tier acreage, according to North Dakota’s top oil and gas regulator. About half the active drilling rigs in the state are now outside the core Bakken, said the Department of Mineral Resources’ Lynn Helms, oil and gas division director, earlier this month.
Hess’ $3.7 billion budget includes $1.45 billion (39%) for production, $1.7 billion (46%) for offshore Guyana developments and $550 million (15%) for exploration and appraisal activities, the company said.
The production portion includes $1.1 billion to fund the four-rig Bakken program. Hess is planning to drill about 110 gross operated wells in the onshore play and bring online about 110 wells in 2023. “Funds are also included for investment in nonoperated wells,” management said.
The production budget also includes $225 million for production activities at the North Malay Basin asset offshore Peninsular Malaysia, where Hess holds a 50% operating interest, and the Malaysia/Thailand Joint Development Area in the Gulf of Thailand (50% Hess working interest).
Another $125 million is earmarked for production activities in the Gulf of Mexico (GOM), including drilling two tieback wells and seismic acquisition and processing, Hess said.
The $1.7 billion Guyana portion of the budget includes $1.21 billion for developments on the Stabroek block at the Payara, Yellowtail and Uaru fields.
Payara is expected to come online by year-end with a gross oil production capacity of about 220,000 b/d, Hess said. Yellowtail is slated to come online in 2025 with gross production capacity of roughly 250,000 b/d, while the 250,000 b/d Uaru field is expected to begin flowing by the end of 2026.
Hess also has earmarked $150 million for its Gas to Energy project in Guyana, with first gas expected by the end of 2024, management said. Another $250 million would primarily go toward front end engineering and design work for future development phases on Stabroek.
Finally, the $550 million exploration and appraisal budget would fund the drilling of about 10 exploration and appraisal wells at Stabrok, two in the GOM and one offshore Newfoundland, Canada.
“Funds are also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico,” management said.
Hess is scheduled to hold its fourth-quarter and full-year 2022 earnings call on Wednesday, Jan. 25.
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