Hess Corp. plans to spend $2.4 billion on exploration and production (E&P) in 2016, a 40% year/year cut and a 20% drop from the preliminary 2016 guidance of $2.9-3.1 billion the company provided in October.

New York-based Hess said Tuesday it will spend $470 million on unconventional shale resources, including $425 million to operate two rigs and bring 80 wells online in the Bakken Shale. The company said it plans to spend the other $45 million to drill five wells in the Utica Shale and bring 14 wells online in 1Q2016 before releasing its rig in the play.

Of the remainder of Hess’s $2.4 billion budget, $610 million will go to production, including drilling and completion activities in the offshore Gulf of Mexico as well as investments in overseas assets. The company said it will also spend $820 million for developments and $500 million for exploration and appraisal activities.

“In 2016 Hess will remain focused on preserving the strength of our balance sheet, our top-quartile operating capabilities and our long-term growth options,” CEO John Hess said. “While we are well positioned to navigate the current low oil price environment with one of the strongest balance sheets and liquidity positions among our E&P peers, we are also well positioned to benefit from a recovery in prices, with a high-quality portfolio that is leveraged to oil and offers attractive investment opportunities, which will create long-term value for our shareholders.”

In keeping with its preliminary guidance, Hess said it still forecasts net production to average 330,000-350,000 boe/d in 2016, with its Bakken production expected to average 95,000-105,000 boe/d.

E&Ps are heading into 2016 following a rough 2015 marked by depressed commodity prices with a recovery still frustratingly out of reach. But some recent projections have found a light at the end of the tunnel.

In its 2016 edition of The Outlook for Energy report, ExxonMobil Corp. said it expects natural gas to continue to gain market share through 2040 (see Daily GPI, Jan. 25). The oil major said it also expects demand for oil to continue to rise moving forward, both for transportation and as a petrochemical feedstock.

And the Energy Information Administration published a note Monday projecting Henry Hub to rebound to $3.22/MMBtu in 2017 after averaging $2.65/MMBtu in 2016 (see Shale Daily, Jan. 25).