NEW YORK – Hess Corp. has reported an exploration and production capital and exploratory budget of $2.4 billion for 2016, a 40% reduction from its 2015 actual spend of $4.0 billion.
The $2.4-billion budget is allocated as follows: $610 million (25%) for production, $820 million (34%) for developments, $500 million (21%) for exploration and appraisal activities, and $470 million (20%) for unconventional shale resources.
According to the operator, net production is forecast to average between 330,000 and 350,000 boe/d in 2016.
The company has allocated $375 million for production activities in the deepwater Gulf of Mexico, including the drilling and completion of a production well and completion of a water injection well at the Tubular Bells field (operator with 57.1%), a production well at the Conger field (operator with 37.5%), and a water injection well at the BHP-operated Shenzi field (Hess 28%).
In Europe, it has assigned $140 million to complete the current stage of the Phase 3 drilling campaign at the South Arne field (operator with 61.5%) offshore Denmark by the end of 1Q and for operations at the BP-operated Valhall field (Hess 64%) offshore Norway.
At the Carigali Hess-operated Joint Development Area in the Gulf of Thailand (Hess 50%), $50 million is allocated to complete the Booster Compression project and processing of new broadband seismic data.
For developments, the company has allotted $375 million to progress full field development of the North Malay basin project offshore Malaysia. Hess is the operator with 50% interest.
At the Stampede field in the deepwater Gulf of Mexico, $325 million is reserved to integrate hull and topsides, install subsea umbilicals, risers and flowlines, and begin drilling. It is the operator with 25% interest.
At the Esso Exploration and Production Guyana Ltd.-operated Liza oil field, the company has allotted $70 million pre-development activities. It has 30% interest in the field.
Also offshore Guyana, the company has assigned $250 million to drill up to four wells on the Stabroek block that include evaluating the Liza discovery, a drillstem test, and additional exploration activities.
It has allocated $175 million for drilling in the deepwater Gulf of Mexico including an appraisal well to delineate the Chevron-operated Sicily discovery (Hess 25%) and an exploration well at the ConocoPhillips-operated Melmar prospect (Hess 35%), a large Paleogene four-way structure in the Perdido Foldbelt.
Greg Hill, president and COO, stated: “We take a long-term view to managing our business and we will continue to invest in our growth projects and prospects, including exploration and appraisal activities.
“However, in response to the current low oil price environment, we have significantly decreased our 2016 capital and exploratory expenditures and we plan to reduce activity at all of our producing assets. Moreover, we will continue to pursue further cost reductions and efficiency gains across our portfolio.”