Hess Conference Call, Earning 4Q16, Seeking Alpha -- January 26, 2017

I posted some data points regarding Hess' plans for 2017 in the Bakken earlier this week. These are data points from the conference call, earnings 4Q16, over at Seeking Alpha:

Global:

• total global oil CAPEX spend, 2014: $700 billion
• total global oil CAPEX spend, 2016: $380 billion
• total global oil CAPEX spend anticipated for 2017: "modestly higher"
• implication: "this level of spend will not be enough to bring forward the necessary production over the next several years to meet future oil demand growth and offset production declines globally
• supply won't meet demand, due to OPEC, non-OPEC cuts, natural field declines
• increased US shale oil production can't make up that shortfall
• "leading to higher oil prices this year and into 2018"

Hess: four key areas

• the Bakken: will go from two rigs to six rigs over the course of 2017
• two offshore developments North Malay Basin and Stampede; on-line in 2017 and 2018, respectively
• world-class Liza and recent Payara oil discoveries in Guyana; Liza, first phase, mid-2017

Hess: spend

• 2017: CAPEX - $2.25 billion

Hess, production, global

• full year, 2016: 321,000 boe/d excluding Libya
• full year, 2017: slightly lower, 300 - 310,000 boe/d excluding Libya
• full year, 2018: strong production growth (Bakken, Valhall Field [Norway])
• late 2017, early 2018: 310,000 boe/d excluding Libya

Hess, production, Bakken

• 2016: 105,000 boe/d
• 2017: 100,000 boe/d

MLP IPO

• in 2017

Bakken operations

• anticipate average 13% uplift in EUR per well from 50-stage completions 
• 2017: forecast IP90s to average between 700 and 750 bopd, compared to 620 bopd in 2016
• 2016: from the Bakken, 105,000 boe/d, which met high end of guidance
• 2017: drill 80 new wells; bring 75 new wells on-line; $4.8 million/well (drill/complete)
• pilot study: 60-stage sliding sleeve may be approaching the technical limit and mechnaical design; now Hess wants to test technical limit of proppant (sand); will bring wells to $5.5 to $6 million
• IP180 uplift: hope to see 10% to 15%

Bakken operations, guidance

• $610 million for "Bakken operated"
• about $465 million of that for drilling and completion
• about $95 million is money spend for DUCs carried into 2018, and also pad building for future drilling
• $50 million for maintenance 

Well-to-well interference, from Q&A

Given our tight nine in eight spacing which is only about 500 feet between the wells, we are going to pilot those higher loading to find out where the optimum point might be to further increase value while not causing significant well to well interference. So when we know what is with the proppant loading that we have, we haven’t seen any significant well to well interference so that says you can probably get more proppant in the well and still be okay. So we are going to test the limits of that this year and see exactly how much that is. And so certainly on the sliding sleeve system, in terms of your question on where we are on technology, I think again as we approach 70 stages and got a lot number I think we are start to reach the technical limit there and next things will be proppant loading for us in the core of the core. But again that sliding sleeve system because it is so inexpensive and so efficient to install it is the highest optimum completion technique in the core of the core.

As you move outside the core which we will being testing that an in the later years 2018, 2019, data seems to indicate that maybe slickwater completions or even higher proppant loadings with plug and perf maybe the answer out there and that’s purely because there is a lot natural fracturing when you get out of core of the cores. So you are going to need more sand and more energy in the reservoir to connect all those fracture to that. So that’s kind of where I see it going.

Pricing

• it was hard to say for sure what prices Hess was expecting for WTI going forward, but it soundedlike melting up toward $60 by end of 2017, and toward $70 toward 2018 but it was not clearly stated and my bias may be showing.