Jan 25, 2023 News
– To invest 80% of its revenue in country, USA this year
By Kiana Wilburg reporting from Trinidad and Tobago
Kaieteur News – American oil producer, Hess Corporation announced yesterday that its 2023 capital and exploratory budget totals US$3.7 billion. Importantly, more than 80% of it will go to its high-quality, profit-making assets in Guyana and the USA.
In fact, Hess said US$1.45 billion (39%) will go to keep production activities going, US$1.7 billion (46%) will be for offshore Guyana developments and US$550 million (15%) will go to exploration and appraisal activities.
Expounding on how the revenues will be spent in Guyana, Hess said US$90 million will be plugged into the Liza Phase One and Phase Two developments on the Stabroek Block offshore Guyana. Both projects are currently operating at a combined gross production capacity of more than 30,000 barrels of oil per day (bopd).
The company said too that US$1.21 billion has been allocated for the developments on the Stabroek Block, specifically at its Payara, Yellowtail and Uaru fields. It should be noted that Payara, the third project in the Stabroek Block, is on track to come online in 2023 with a gross production capacity of approximately 220,000 bopd. Hess previously noted that from two oil ships alone, specifically the Liza Unity and the Prosperity, it would make a clean US$2B. It also gets a handsome take home from revenues earned from the Liza Destiny which operates at the Liza Phase One Project.
Additionally, Hess said Guyana’s Yellowtail Project is expected to come online in 2025 with a gross production capacity of approximately 250,000 bopd. It said the money will be invested to ensure all timelines for this development are adhered to. Meanwhile, Uaru is expected to come online at the end of 2026 with a gross production capacity of approximately 250,000 bopd. That project is still being scrutinized by local authorities. The process for a sixth development has been initiated too.
Additionally, Hess said US$250 million was allotted for front-end engineering and design work for future development phases on the Stabroek Block.
Significantly, Hess said US$150 million is set aside for the Gas to Energy project with first gas expected by year-end 2024. Kaieteur News previously reported that Hess, along with CNOOC Petroleum Guyana Limited and operator of the Stabroek Block, Esso Exploration and Production Guyana Limited (EEPGL), are helping the Guyana government with the project. They are responsible for building the pipeline that will transport about 50 million standard cubic feet of gas from the Liza Phase One and Liza Phase Two projects to onshore facilities that will be built at the Wales Development Zone. The partners have said the pipeline will cost approximately US$1.3B.
In terms of expenditure for exploration and appraisal, Hess said US$550 million will be used to drill approximately 10 exploration and appraisal wells on the Stabroek Block, two wells in the Gulf of Mexico, and one well offshore Newfoundland, Canada. Funds are also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico.
In terms of its budget to boost production activities, Hess said US$1.1 billion will be used to fund a four rig programme in the Bakken, USA. The company also expects to drill approximately 110 gross operated wells and to bring online approximately 110 wells in 2023. Funds are also included for investment in nonoperated wells.
Additionally, Kaieteur News understands that US$225 million has been allotted for production activities at the North Malay Basin where Hess has a 50% stake as well as the Malaysia/Thailand Joint Development Area in the Gulf of Thailand.
Hess also noted that US$125 million for production activities in the Gulf of Mexico, including drilling two tieback wells and seismic acquisition and processing.
“Our capital programme reflects continued execution of our strategy to invest only in high return, low-cost opportunities within our portfolio,” Chief Executive Officer (CEO) John Hess said in a statement yesterday.
He added, “More than 80% of our 2023 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.”
As for Chief Operating Officer Greg Hill, he was keen to note that in the Bakken, Hess plans to operate a four-rig programme, which will enable it to maximize free cash flow generation, optimize our in-basin infrastructure and drive further reductions in its unit cash costs. In Guyana, Hill said the company’s focus in 2023 will be on advancing high-value oil developments and continuing an active exploration and appraisal programme on the Stabroek Block.
As it stands, Hess’ net production in the Bakken is forecast to average between 165,000 and 170,000 barrels of oil equivalent per day while its Guyana net production is forecast to average approximately 100,000 barrels of oil per day in 2023. Net production is therefore forecast to average between 355,000 and 365,000 barrels of oil equivalent per day in 2023.
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