Hess allocates majority of 2022’s $2.6 billion E&P budget to Guyana, Bakken

Hess announced a 2022 E&P capital and exploratory budget of $2.6 billion, of which approximately 80% will be allocated to Guyana and the Bakken. Net production is forecast to average between 330,000 and 340,000 BOED in 2022, excluding Libya. Bakken net production is forecast to average between 165,000 and 170,000 BOED in 2022.

“Our capital program reflects our continued discipline in investing in high-return, low-cost opportunities within our portfolio,” CEO John Hess said. “The majority of our 2022 budget is allocated to Guyana, which is positioned to be one of the highest margin, lowest carbon intensity oil developments in the world, and to the Bakken, our largest operated asset where we have a robust inventory of high-return future drilling locations.”

“In the Bakken, we plan to operate a three-rig program, which will enable us to generate significant free cash flow, lower our unit cash costs and further optimize our infrastructure,” said Hess COO Greg Hill. “In Guyana, our focus in 2022 will be on advancing our high-value oil developments on the Stabroek Block, which have a Brent breakeven oil price of between $25 and $35 per barrel, and continuing our active exploration and appraisal program.”

The $2.6 billion budget is allocated as follows: $1,150 million (44%) for production, $1,000 million (39%) for offshore Guyana developments and $450 million (17%) for exploration and appraisal activities.

Production

• $790 million to fund a three-rig program in the Bakken. The company expects to drill approximately 90 gross operated wells and to bring online approximately 85 wells in 2022. Funds are also included for investment in non-operated wells.
• $270 million for production activities at North Malay Basin (Hess 50% and operator) offshore Peninsular Malaysia and the Malaysia/Thailand Joint Development Area (Hess 50%) in the Gulf of Thailand. Funds are included for drilling and facilities and also for work that was previously deferred due to COVID-19 and low commodity prices.
• $90 million for production activities in the Gulf of Mexico, including drilling one tieback well at the Llano Field (Hess 50%) and seismic acquisition and processing.

Developments

• $25 million associated with the Liza Phase 1 development on the Stabroek Block (Hess 30%), where production optimization work is planned in the Q1 2022.
• $190 million for the Liza Phase 2 development with a capacity of approximately 220,000 gross bbl/day of oil, and first production expected in Q1 2022.
• $400 million for the Payara development with a capacity of approximately 220,000 gross bbl/day of oil, and first production expected in 2024.
• $210 million for the Yellowtail development with a capacity of approximately 250,000 gross bbl/day of oil, and first production expected in 2025.
• $175 million primarily for front end engineering and design work for future development phases on the Stabroek Block.

Exploration and Appraisal

• $450 million to drill approximately 12 exploration and appraisal wells on the Stabroek Block in Guyana (Hess 30%), the Huron-1 well in the Green Canyon area of the Gulf of Mexico (Hess 40%) and the Zanderij-1 well on Block 42 in Suriname (Hess 33%). Funds are also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico, and for license acquisitions.