Hess raises 2020 budget to $3 billion, puts focus on Guyana and Bakken

U.S. oil and gas company Hess Corporation has decided to raise its yearly budget to $3 billion with plans to use more than 80% of it on high return investments in Guyana and the Bakken.

Hess’ budget for 2019 was $2.9 billion, which was also an increase compared to the company’s budget in 2018 that totaled $2.1 billion.

In an update on Tuesday Hess said that its net production was forecast to average between 330,000 and 335,000 barrels of oil equivalent per day in 2020, excluding Libya. Bakken net production is forecast to average approximately 180,000 barrels of oil equivalent per day in 2020.

“We continue to successfully execute our long term strategy, with the majority of our capital budget directed to Guyana and the Bakken — two of the highest return investment opportunities in our industry that will become significant, long term cash generators for our company,” CEO John Hess said.

“We are well positioned to deliver industry leading cash flow growth while also achieving significant reductions in our unit costs, which will drive margin expansion and lower our breakeven oil price to below $40 per barrel Brent by 2025.”

Chief Operating Officer Greg Hill said: “Offshore Guyana, with the Liza Phase 1 development now on production, our focus in 2020 will be on the Liza Phase 2 development and on front end engineering design work to develop the Payara Field. We also will continue to invest in an active exploration and appraisal program in Guyana on both the Stabroek and Kaieteur Blocks and in the deepwater Gulf of Mexico.”

From the $3 billion budget, Hess allocated $1.69 billion (56%) for production, $860 million (29%) for offshore Guyana developments, and $450 million (15%) for exploration and appraisal activities.

Relevant in production, Hess has set aside $135 million for production operations in the deepwater Gulf of Mexico, including development of the Esox-1 tieback (Hess 57.14% and operator).

In addition, the company has earmarked $170 million for production activities at North Malay Basin (Hess 50% and operator) and the Malaysia/Thailand Joint Development Area (Hess 50%) in the Gulf of Thailand.

In developments, Hess has set aside $100 million associated with the Liza Phase 1 development offshore Guyana (Hess 30%), where first production was achieved in December 2019.

Hess booked another $400 million for the Liza Phase 2 development, where first production is expected by mid-2022.

Furthermore, the company will use $360 million to progress development plans for the Payara field, where production is expected as early as 2023, and for front end engineering and design work for future developments.

In the E&P part of business, $450 million to drill exploration and appraisal wells on the Stabroek and Kaieteur Blocks offshore Guyana (Hess 30% and 15%, respectively) and two exploration wells in the Gulf of Mexico.

Funds are also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico, and for license acquisitions.

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