Hess Corp. – More Bakken production from fewer wells

Hess drilling, completion costs per well of $5.6 million in Q2 2015 down 24%

Hess Corp. says new production from the Bakken jumped by 49 per cent over the past year even though it drilled far fewer wells.

Hess

Photo: Shaun T. Polczer.

CEO John Hess said Wednesday that the 2015 forecast for the North Dakota shale oil formation would range from to 105,000-110,000 boep/d because of more efficient well completions, up from earlier estimates.

New York-based Hess cut the number of rigs operating in Q1 from 12 to eight because of sharply lower oil prices.

According to Hess, it brought 67 gross operated wells on production in the second quarter of 2015, bringing the year-to- date total to 137 wells.

Drilling and completion costs per operated well averaged $5.6 million in the second quarter of 2015, down 24 per cent from the year-ago quarter.

According to Platts, the price of Bakken crude from the Clearbrook, Minn. oil hub averaged $56.98/b in Q2, but dropped thus far in Q3, averaging $48.40/b and touching $44.31/b on Tuesday.

“We achieved strong operating performance in the quarter and delivered significant and immediate value to our shareholders with the sale of a 50 percent interest in our Bakken midstream assets,” Hess said in a media release.

Hess

John Hess, CEO of Hess Corporation.

“We remain confident that our financial strength, oil price resilient portfolio and proven operating capabilities position us well in the environment as well as for a future price recovery.”

In July 2015, Hess completed the sale of a 50 per cent interest in its Bakken Midstream assets to Global Infrastructure Partners for cash consideration of $2.7 billion, Hess said in its release. The joint venture incurred $600 million of debt in July with proceeds distributed equally to both partners, resulting in total after-tax cash proceeds net to Hess of approximately $3.0 billion.

These transactions will be reflected in the corporation’s third quarter results. As a result of the joint venture transaction, Hess has reported its Bakken-related midstream operations as a separate Midstream segment in its consolidated financial statements and will begin disclosing certain historical and forward-looking financial information for this segment.

 

Posted in: Energy Financial

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