Hess Posts Lower-Than-Forecast Loss, Helped By Cost Cuts
WILLISTON, N.D., April 29 (Reuters) - Oil and natural gas producer Hess Corp posted a quarterly loss on Wednesday that beat Wall Street's expectations, as cost cuts helped offset plunging crude oil prices.
The company kept producing at a prolific pace, however, most notably at its powerhouse Bakken wells in North Dakota.
Worth nearly a third of the company's daily oil output, the Bakken is where executives have constantly slashed spending, relying on what they tout as geological prowess and technological enhancements to pump 70 percent more oil than the same period last year.
"Our Bakken team continues to drive costs lower," Chief Executive John Hess told investors on a conference call, highlighting a 9 percent drop in the cost of each well.
Hess and other executives stressed that cost cuts came from efficient operations and renegotiated contracts with vendors - which they say have saved $550 million so far this year - and downplayed any link to save cash amid cheap oil prices.
Indeed, Hess cut its 2015 capital budget by $300 million, now planning to spend $4.4 billion this year, saying, effectively, that it would bank the savings by convincing Halliburton Co and others to charge less.
The strategy relies heavily on the Bakken wells to continue pumping at a constant pace or else Hess runs the risk of contributing to a steep drop in U.S. crude output later this year, concerns which top industry leaders shared with Reuters last month.
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