Hess Sees Oil Output Driven By Bakken, Offshore Guyana Projects

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(Reuters, 12.Dec.2018) — U.S. oil and gas producer Hess Corp. said Dec. 12 it expects output of barrels of oil equivalent to grow more than 10% per year compounded through 2025, citing higher growth opportunities at its Bakken shale and offshore Guyana projects.

Hess projects higher margins will drive compound annual cash flow growth of 20% through 2025, it announced ahead of a meeting with Wall Street investors.

The company shrugged off a recent dip in oil prices and said it was moving from growth and investment mode to one where all of its major assets will start producing free cash flow. “We are at a transformative inflection point,” CEO John Hess said during the investor meeting on Dec. 12, broadcast over the internet.

Hess boosted the production forecast for its Bakken shale field in North Dakota to 200,000 barrels of oil equivalent per day(boe/d) by 2021, from 175,000 boe/d. The shale acreage, the jewel in the crown of the company’s onshore production, will produce $5 billion in free cash flow between 2019 and 2025.

Hess expects the first production from the offshore Guyana discovery to be tapped in 2020, and said the region had the potential to produce more than 750,000 boe/d by 2025. Hess is working with Exxon Mobil Corp. on fields projected to hold up to 5 billion barrels of recoverable oil and gas.

Guyana through 2025 will generate $4 billion free cash flow for Hess, said Greg Hill, president and COO at the company.

The New York-based company earlier this week set a 2019 capital budget of $2.9 billion, up 38% from this year’s projected spending plan. The budget reflects “peak” spending for the first phase of offshore Guyana oil discoveries.

Hess stock was down a fraction at $51.96 a share in afternoon trading on Dec. 12. The stock is up about 12% year to date.

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