Hess increase first sign the shale industry will boost spending this year
Jan 12 (Reuters) – Hess Corp budgeted $2.25 billion for exploration and production this year, higher than the $1.9 billion it spent in 2016, in one of the first signs that the shale industry will spend more in 2017 after years of declines.
Shares of the company, which also said it would record charges of more than $4.6 billion in the fourth quarter, were down nearly 6 per cent at $58.31 at market open on Thursday.
Barclays said on Monday it expects global oil and gas companies to raise exploration and production spending by 7 per cent this year.
Oil prices are recovering after a more than two-year slump, partly due to an agreement OPEC signed in November to curb supply.
Hess said it would deploy four more rigs in North Dakota’s Bakken field this year, develop a field in Guyana and restart drilling at the Valhall Field in Norway.
These moves are expected to help the company increase production by 8-12 per cent between the beginning of 2017 and year-end.
The company said it expects net production to average 300,000-310,000 barrels of oil equivalent per day (boe/d) in 2017, excluding Libya, with Bakken output accounting for almost a third of total production.
Hess had estimated 2016 production of 315,000-325,000 boe/d.
The company in a separate statement said drilling results from a third exploration well offshore Guyana had shown a new reservoir containing 100-150 million barrels of oil equivalent.
The charges to be included in fourth-quarter results include adjustments for tax valuation and deferred development of two natural gas fields, among others.
(Reporting by Swetha Gopinath and Komal Khettry in Bengaluru; Editing by Shounak Dasgupta)