Hess hikes Beetaloo basin spending commitment

Hess Corp. has deployed two seismic crews in central Australia’s Beetaloo basin and has increased its planned capital expenditure to $57.5 million from $40 million, said Falcon Oil & Gas Ltd., Dublin.

Hess shot 470 line-km of 2D seismic in 2011 and 630 line-km so far in 2012 and is on track to complete the entire planned 3,600 line-km on EPs 76, 98, and 117 by the end of 2012, Falcon said.

Hess has until June 30, 2013, to commit to the drilling of five exploratory wells to earn a 62.5% interest in the three permits. This is a revised date agreed with Falcon that will allow Hess adequate time to complete the acquisition and processing of the 2D seismic.

Should Hess commit to the drilling, Falcon’s interest will reduce to 37.5%, but Falcon will be fully carried through the drilling of the five wells. Should Hess elect to proceed to the “development phase,” Hess has agreed to carry Falcon on the first development well up to a gross cost of $10 million (US).

The additional carry and later drilling election date depend on obtaining regulatory approval to extend the permits until Dec. 31, 2013.

Falcon retains 100% of EP99 and the 100,000 acres surrounding the Shenandoah well area, a well completed and tested in 2011. The Company has received expressions of interest from a number of third parties regarding a farmout on the combined 670,000 acre area.

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