Operations Outline
Hess Corporation has a diversified upstream portfolio with assets across the globe. The company was producing 406,000 barrels of oil equivalent (BOE) per day as of the end of the third quarter of 2009, distributed as follows:
U.S. - 79,000
Europe -111,000
Africa - 125,000
Asia - 91,000
Hess Corporation has proved reserves of 1.4 billion barrels, about 70% of which are oil. The company has made a major effort to boost its reserves to production ratio over the last five years, increasing it from 7.4 years in 2003 to 10.1 years in 2008. The company is exhibiting stable long-term growth in production.
Unconventional Onshore
Hess Corporation has built up a large acreage position in the Bakken Shale, an unconventional resource play in North Dakota and Montana. The company has more than 500,000 net acres under lease, and current production is 10,000 BOE per day. Hess Corporation believes that it can get 80,000 BOE per day peak production out of its acreage here.
The company recently announced a $3.9 billion capital budget for 2010, and will increase its rig count in the Bakken Shale from three to eight by the end of 2010.
In the Marcellus Shale, Hess Corporation and Newfield Exploration (NYSE:NFX) are in a 50/50 joint venture to develop 140,000 acres in Pennsylvania. The first drilling will occur this year.
Gulf of Mexico
One of Hess' major projects is in the deepwater Gulf of Mexico at the Shenzi field. Shenzi is a Miocene era discovery, and Hess estimates the proved and probable reserves at 145 million BOE. This project started up production in March 2009, and is estimated to hit as much as 40,000 BOE per day net to Hess Corporation at the peak.
Hess Corporation has 28% of this project and plans on drilling several production wells in 2010. The operator of the Shenzi field is BHP Billiton (NYSE:BHP) with 44%, and Repsol YPF SA (NYSE:REP) owns the other 28%.
International
In Libya, Hess Corporation has a 100% working interest in an offshore area, and just reported a successful well there in December 2009. The A1-54/01 encountered gross pay of about 500 feet.
Australia is another active area for Hess, and the company has budgeted to drill 13 exploration wells in different areas there in 2010. Furthermore, Hess Corporation has two offshore blocks that are next to the Gorgon project being developed by Chevron (NYSE:CVX)
Bottom Line
Hess Corporation is well represented in most of the international and domestic areas of oil and gas exploration and development, and is accelerating its involvement in several high-growth shale plays in North America. (Drill down into financial statements to tap into the right companies and let returns flow. To learn more, read Unearth Profits In Oil Exploration And Production.)
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