Hess Corp. unveiled its fifth oil discovery off the coast of Ghana Wednesday, solidifying the company's role in the emerging oil province and giving investors cause for optimism after years of discouraging exploration results.
Hess has ramped up spending in recent years in order to fund an ambitious exploration program, but has been tarnished by a string of dry holes.
"One discovery after many years of poor results isn't really enough to turn the whole portfolio around, but it's still encouraging to see," said Morningstar analyst Stephen Simko. But, he noted, the company's finding and development costs remain high.
Investors seem pleased, with shares of Hess trading up 3.3% Wednesday morning at $52.24.
Hess has worked to reduce its exposure to risky exploration prospects, selling stakes in fields across the world as it aims to focus on high growth areas such as the Bakken formation in North Dakota. The company announced $2.4 billion in asset sales last month.
But the company is poised to profit from its recent discovery--it has a 90% working interest in offshore block where it said it encountered 245 net feet of oil pay in its 15,420 foot deep well. The Ghana National Petroleum Corp. has the remaining 10% interest.
The discovery also underscores Ghana's emergence as an attractive oil development. A number of major oil companies have been drilling for oil and gas off the shore of the oil-rich nation.
Hess is preparing to drill its next well in the block about 15 miles northeast of its latest find, and said more exploration activity and pre-development is planned in 2013.
Hess last month reported that third-quarter earnings rose 87%, due in part to asset-sale gains, while the oil-and-gas producer's revenue grew more than expected on improved selling prices and production.
Copyright (c) 2012 Dow Jones & Company, Inc.
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