Hess Corporation Sets 2007 Capital and Exploratory Budget

Hess Corporation announced a $3.6 billion capital and exploratory expenditure budget for 2007. Approximately $3.5 billion is planned for Exploration and Production and $75 million for Marketing and Refining. Excluded from the 2007 program is the company's recently announced $378 million acquisition of a 28 percent interest in the Genghis Khan Field, in the deepwater Gulf of Mexico, which is expected to close within the next 30 days.

John B. Hess, Chairman and Chief Executive Officer, said, "Our 2007 Capital and Exploratory Budget focuses on attractive investment opportunities in support of our strategy to sustain profitable growth for our shareholders. This program reflects capital discipline and our commitment to maintaining a strong financial position."

The 2007 program of $3.5 billion targeted for Exploration and Production includes $1.4 billion for field developments, $1.2 billion for production projects, and $900 million for exploration activities.

Field developments in 2007 include:

  • Shenzi - a deepwater Gulf of Mexico oil and gas development (28 percent Hess working interest). In 2007, plans include the drilling of four development wells, continued construction of the Tension Leg Platform hull, topsides and mooring system, and subsea equipment installation.
  • Ujung Pangkah - a Hess operated oil and gas development in East Java, Indonesia (75 percent working interest). In 2007, the company will drill 10-12 wells and construct onshore and offshore facilities. Gas production from the Pangkah Field is on schedule to commence in the second quarter of 2007 and oil production is expected to begin in the second half of 2008.
  • Okume - a Hess operated offshore oil development in Equatorial Guinea (85 working interest). In 2007, investments will primarily be focused on completion of offshore production facilities and the drilling of 18 development wells.
  • JDA Phase 2 - a gas development in the Malaysia-Thailand Joint Development Area in the Gulf of Thailand (50 percent working interest). In 2007, investments will primarily be geared toward facilities expansion and development drilling associated with the commencement of Phase 2 production in early 2008.

Funds are also provided for development of the Residual Oil Zone (ROZ) at the Seminole-San Andres Unit in West Texas and the redevelopment of the Valhall Field in Norway.

Production expenditures of $1.2 billion are primarily for improving performance of existing fields located in the United States, the North Sea, Africa and Southeast Asia.

Exploration and exploitation expenditures are estimated to be about $900 million in 2007. Approximately $550 million is for drilling, including appraisal wells for the Pony and Tubular Bells discoveries in the deepwater Gulf of Mexico. The balance is for seismic acquisition and other activities.

Capital expenditures in 2007 for Marketing and Refining, at approximately $75 million, will fund expansion of the Hess retail network and the addition of convenience stores to existing retail facilities.

         2007 Estimated Capital and Exploratory Expenditures
                             ($ Millions)

By Segment:                            By Region:
-----------------------------          -------------------------------
Exploration and Production             Exploration and Production

Developments                  $1,400   United States           $1,290
Production                     1,200   Europe                     650
Exploration                      900   Africa                     600
                                       Asia and Other             960
Total Exploration and
 Production                   $3,500                           $3,500

Marketing and Refining            75

Corporate                         25

Total                         $3,600

Hess Corporation, with headquarters in New York, is a global, integrated energy company engaged in the exploration, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products.