Hess plans to double its Bakken production by yearend

Paula Dittrick
OGJ Senior Staff Writer
 
HOUSTON, Jan. 28 -- Hess Corp. produced 20,000 boe/d from North Dakota’s Bakken oil play as of yearend 2010, and it expects to double production there by yearend 2011, executives said during an earnings conference call.

Greg Hill, president of Hess worldwide exploration and production, said the company plans to invest $1.8 billion, or 33% of its 2011 budget, on drilling and associated infrastructure to boost Bakken production to 40,000 boe/d.

John Hess, chairman and chief executive officer, forecast the company’s 2011 production could average 425,000 boe/d compared with 420,000 boe/d in the fourth quarter 2010, up from 415,000 boe/d for the fourth quarter 2009.

The company reported 2010 fourth-quarter net income of $58 million, or 18¢/share, compared with $358 million, or $1.10/share, for the same period last year.

Capital and exploratory expenditures, including acquisitions, reached $2.46 billion for the latest quarter compared with $992 million for the same period a year earlier. Hess reported a marketing and refining loss of $261 million in the fourth quarter 2010 compared with net income of $17 million for the same period of 2009.

The 2010 refining report included a $289 million aftertax charge to reduce the carrying value of the company’s equity investment in Hovensa LLC, which plans a partial shutdown of its 500,000-b/cd refinery at St. Croix, US Virgin Islands.

Petroleos de Venezuela SA and Hess jointly own Hovensa. Hess executives said the partial shutdown is expected to make Hovensa more competitive (OGJ Online, Jan. 26, 2011).

Hill said Hess has acquired 90,000 acres in the Eagle Ford oil and gas play in south Texas where it continues working to acquire more acreage.

International drilling
Hess and its partner Toreador Resources Corp. plan during to spud their first vertical well in France’s Paris basin during the first quarter. Plans call for drilling six wells, both vertical and horizontal, for shale oil there this year.

In China, Hess is working with Sinopec to study unconventional oil and gas plays.

“Last week, we signed two joint study agreements with Sinopec,” Hill said. Hess already had a memorandum of understanding with Petrochina to examine possibilities in Daqing field.

Off Brazil, Hess said the Sabia well found “noncommercial quantities of oil,” marking the second dry hole that Hess has drilled on Block BM-S-22. Fourth-quarter 2010 results included an after-tax charge of $72 million related to dry hole costs associated with Sabia and Azulao exploration wells.

Contact Paula Dittrick at paulad@ogjonline.com.

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