Hess has announced that it is increasing its capital and exploration budget for 2017. The New York-based independent said on January 12 that its capital expenditure budget for the year totalled US$2.25 billion, compared with US$1.9 billion spent in 2016.
The budget, Hess said, included US$700 million, or 31%, allocated to unconventional resources. What Hess termed developments accounted for US$825 million or 37% of the budget, while 17% or US$375 million was allocated to production. Exploration and appraisal activities will account for US$350 million, or 15%, of the budget.
Hess said that the capex increase would go towards activities such as adding rigs in the Bakken play, development at the Liza field in Guyana and the restart of drilling at the Valhall field in Norway.
Thanks to the additional Bakken rigs, the restart of drilling at Valhall and the start-up of the North Malay Basin in the third quarter of the year, Hess anticipates that its production will rise by 8-12% over the course of 2017. It has projected its net 2017 output to average 300,000-310,000 boepd, excluding production in Libya. Hess’ Bakken production alone is anticipated to average 95,000-105,000 boepd this year.
“Our 2017 budget reflects our balanced approach to investing in short cycle and long cycle growth options while maintaining our financial flexibility,” Hess’ CEO, John Hess, said. He noted that, along with its Bakken position, Hess’ offshore developments at the North Malay Basin and Stampede in the US Gulf of Mexico would be “significant cash generators” for the company in 2017 and 2018 respectively. The Liza discovery is also on track for sanction this year. The company said.
“With oil prices starting to recover, we will ramp up our Bakken rig count from two currently to six by year end,” Hess’ president and chief operating officer, Greg Hill, said. “We plan to resume drilling at the Valhall field from the existing platform rig and we will continue to progress our two offshore developments to first production, which will add a combined 35,000 boepd once online.”