Hess Increases Budget With Most Going To Guyana And Bakken

U.S. oil and gas company Hess Corporation has stated that its 2022 Exploration & Production capital and exploratory budget of $2.6 billion will mostly be allocated to Guyana and the Bakken.

Hess said that net production is forecast to average between 330,000 and 340,000 barrels of oil equivalent per day in 2022, excluding Libya. Bakken net production is forecast to average between 165,000 and 170,000 barrels of oil equivalent per day in 2022.

“Our capital program reflects our continued discipline in investing in high return, low-cost opportunities within our portfolio,” CEO John Hess claimed.

“The majority of our 2022 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,” he added.

Of the $2.6 billion budget, $1.15 billion or 44 percent will be spent for production, $1 billion or 39 percent will go to developments offshore Guyana, while 450 million – 17 percent – for exploration and appraisal activities. This is quite a rise when compared to 2021 as last year's budget totaled $1.9 billion.

“In the Bakken, we plan to operate a three-rig program, which will enable us to generate significant free cash flow, lower our unit cash costs and further optimize our infrastructure. In Guyana, our focus in 2022 will be on advancing our high-value oil developments on the Stabroek Block, which have a Brent breakeven oil price of between $25 and $35 per barrel and continuing our active exploration and appraisal program,” COO Greg Hill said.

As for the three-rig program in the Bakken, worth $790 million, Hess expects to drill approximately 90 gross operated wells and to bring online approximately 85 wells in 2022. Funds are also included for investment in non-operated wells.

The remaining money for production will be allocated to two major areas. Namely, $270 million will go to production activities at North Malay Basin, where Hess owns 50 percent and is the operator, offshore Peninsular Malaysia, and the Malaysia/Thailand Joint Development Area in the Gulf of Thailand.

Funds are included for drilling, facilities, and for work that was previously deferred due to Covid-19 and low commodity prices.

The remaining $90 million for production activities will go to the Gulf of Mexico, including drilling one tieback well at the Llano Field, 50 percent owned by Hess, and seismic acquisition and processing.

Development money will be split between five major projects. Some $25 million will go to the Liza Phase 1 development on the Stabroek Block, where production optimization work is planned in the first quarter of 2022.

Liza Phase 2 development, with a capacity of approximately 220,000 gross barrels of oil per day, was allocated $190 million. First production is expected in the first quarter of 2022.

More than double that – $400 million – Hess will give to the Payara development with a capacity of approximately 220,000 gross barrels of oil per day, and first production expected in 2024.

The Yellowtail development, with a capacity of approximately 250,000 gross barrels of oil per day, will receive $210 million. First production from the project is expected in 2025.