Hess Corp. plans to drill a Gulf of Mexico appraisal well up dip of the Huron exploration well that showed encouraging results.
In June, the operator encountered high-quality oil-bearing Miocene age reservoirs and established the existence of a working petroleum system, said Greg Hill, chief operating officer and president of exploration and production, on a call with investors July 27.
The well, drilled on Green Canyon Block 69 to a depth of 28,900 ft, targeted a new Miocene sub-salt fairway in Northern Green Canyon.
The company said the results were encouraging for two reasons. First, the company discovered “good, high-quality oil in good quality Miocene sands,” Hill said as part of the question-and-answer session. Second, the results point toward additional prospectivity in the Northern Green Canyon area where the company has “a very competitive leasehold position,” he continued.
Pre-drill estimates were not released, not were details about an oil-water contact, but the well is under evaluation and additional information could be released as the asset is appraised, Hill said.
Overall, the Gulf of Mexico remains an important part of the company’s portfolio—an important cash engine and a platform for growth, Hill said. Hess’s objective in the Gulf of Mexico “is to add a minimum sustained production cash flow through tieback opportunities and also selectively pursuing hub class exploration opportunities. If we can grow it, we want to,” he said.
The company has 80 lease blocks in the Gulf of Mexico after acquiring 60 in the last 5 or 6 years—a balance of high-return tiebacks and hub class new exploration prospects.
“Assuming those opportunities compete for capital, a good planning assumption for us going forward is that we would drill roughly two wells per year for the next several years that…focused on both those tiebacks and new hub class opportunities with Huron being the first out of the gate,” Hill said.
Hess is the operator at Huron with 40% working interest. Chevron and Shell each have 30%.
For second-quarter 2022, net production from the deepwater Gulf of Mexico averaged 29,000 boe/d compared to company guidance of about 30,000 boe/d. In the third quarter, the company expects Gulf of Mexico net production to average 25,000-35,000 boe/d reflecting planned downtime at Tubular Bells and a Penn State well being shut in due to a mechanical issue, the company said. The company expects the downtime to be partially offset by the planned start-up of the Lano 6 tieback in August, which logged 123 ft of high-quality Miocene pay.
For full year 2022, Hess expects Gulf of Mexico net production to be about 30,000 boe/d.
The company reported second-quarter 2022 net income of $667 million compared with $417 million in first-quarter 2022, or $404 million on an adjusted basis.
The exploration and production segment had net income of $723 million in second-quarter 2022 compared with $460 million in first-quarter 2022.
