Hess today announced a 2021 exploration & production capital and exploratory budget of $1.9 billion, of which more than 80% will be allocated to Guyana and the Bakken.
The company said in a statement that it forecasts net production from its operations to average approximately 310,000 BOED in 2021, excluding Libya. Bakken net production is forecast to average approximately 170,000 BOED in 2021. This forecast includes the impact of operating a two-rig program beginning in Q1 and a planned 45-day turnaround and expansion tie-in at the Tioga Gas Plant in Q3, which is expected to reduce full year 2021 Bakken net production by approximately 7,500 BOED.
“Our capital program reflects our disciplined approach in the current oil price environment to preserve cash, core capabilities and the long-term value of our assets,” CEO John Hess said. “The majority of our 2021 budget is allocated to Guyana, where our three sanctioned oil developments have a Brent breakeven oil price of between $25 and $35 per barrel, and to the Bakken, where we have a large inventory of future drilling locations that generate attractive financial returns at current prices. By investing only in high-return, low-cost opportunities, we have built a differentiated portfolio of assets that we believe will provide industry-leading cash flow growth over the course of the decade.”
Hess said it plans to add a second rig to its Bakken operations during Q1 2021, which will allow the company to sustain production and cash flow generation from the region. Offshore Guyana, the company’s focus this year will be on advancing two sanctioned developments to first oil – Liza Phase 2 in early 2022 and Payara in 2024 – as well as front-end engineering and design work for future development phases on the Stabroek Block. Hess will continue to invest in an active exploration and appraisal program, with 12-15 wells planned on the Stabroek Block.
The $1.9 billion budget is allocated as follows: $670 million (35%) for production, $780 million (41%) for offshore Guyana developments and $450 million (24%) for exploration and appraisal activities.
- $450 million to fund a two-rig program in the Bakken. The company expects to drill approximately 55 gross operated wells and to bring online approximately 45 wells in 2021. Funds are also included for investment in non-operated wells.
- $165 million for production activities at North Malay Basin (Hess 50% ownership and operator) and the Malaysia/Thailand Joint Development Area (Hess 50%) in the Gulf of Thailand.
- $25 million associated with the Liza Phase 1 development on the Stabroek Block in Guyana (Hess 30%), where production reached nameplate capacity of 120,000 gross barrels of oil per day in December 2020.
- $450 million for the Liza Phase 2 development with a capacity of up to 220,000 gross barrels of oil per day, with first production expected in early 2022.
- $235 million for the Payara development with a capacity of up to 220,000 gross barrels of oil per day, with first production expected in 2024.
- $70 million primarily for front-end engineering and design work for future development phases on the Stabroek Block.
Exploration and appraisal
- $450 million to drill 12-15 exploration and appraisal wells on the Stabroek Block in Guyana (Hess 30%). Funds are also included for well planning on Block 42 in Suriname (Hess 33.3%), seismic acquisition and processing in Guyana and the deepwater Gulf of Mexico and for license acquisitions.