Hess Update In The Bakken -- CAPEX -- January 25, 2022

Updates

January 27, 2022: behind an NGI paywall, but a reader was kind enough to forward the article to me, this article provides a lot more granularity regarding Hess CAPEX for 2022 and the Bakken. Hess, as a Bakken operator, is tracked here. Some data points:

• goal: increase Bakken production 6 - 9% to 165,000 - 170,000 boe/d
• added a third rig last September (2021); a fourth rig is possible next year (2023)
• previously it had slashed its rig count from six to one (Covid)
• 4Q21 net production: 159,000 boepd, compared to 189,000 boepd in the prior-year quarter (due to lower drilling activity)
• company says it can generate "attractive returns" in the Bakken at $60/bbl-WTI
• plans to drill 90 Bakken wells in 2022; will bring 85 new wells on line
• well completion cost, all-in: $5.8 million, average; 6% lower than in 2020
• expects to see drilling/completion costs remaining flat in 2022
• previously posted, 2022 CAPEX:
• $2.6 billion; 80% for the Bakken and Guyana; 37% higher than in 2021
• FCF positive from Bakken, GOM, SE Asia, and Guyana in 2022
• financials:
• 4Q21:
• net income: $265 million (85 cents/share)
• 4Q20:
• net loss: $97 million (- 32 cents / share)
• full year, 2021:
• $559 million ($1.81/share)
• full year, 2020:
• a lost of $3.093 billion (-$10.15/share)
  

Original Post 

A year or so ago, maybe longer, I mentioned that Hess wells were getting remarkably better in the Bakken. Just saying.

Now, from SeekingAlpha:

• Hess announced a 2022 capex budget of $2.6b; net production is forecast to average ~335kb/d, with the Bakken delivering ~168kb/d; this forecast excludes Libya.
• The $2.6b budget is a 37% bump from last year's budget of $1.9b; within the $2.6b budget, Bakken spend is up 75% to $790m.
• In the Bakken, the company plans to run 3 rigs to achieve its 168kb/d production target, an increase of ~14% from Q3 levels of 148kb/d; Hess has been running 3 rigs in the Bakken since September of 2021; the company produced 198kb/d in the Bakken during 2020.
• Exxon operated Liza Phase 2 first production is expected in Q1 2022, in line with prior comments about "early 2022" delivery; Payara delivery is still scheduled for 2024.
• Hess will spend $450m on exploration and appraisal in Guyana, Suriname and GoM, with 12 wells coming this year; in 2021, Hess planned for $450m of spending on 12-15 exploration and appraisal wells.
• With CEO's of Conoco and Occidental in the press yesterday indicating an expectation for ~7% growth in US production this year, it's concerning to see operators in high-cost shale basins spending 75% more to drive 14% production growth.

I do believe there is a fallacy in this analyst's analysis. See if you can spot it. 

More granularity at businesswire.

• $790 million to fund a three rig program in the Bakken. The company expects to drill approximately 90 gross operated wells and to bring online approximately 85 wells in 2022. Funds are also included for investment in nonoperated wells.

• $25 million associated with the Liza Phase 1 development on the Stabroek Block (Hess 30%), where production optimization work is planned in the first quarter of 2022.

• $190 million for the Liza Phase 2 development with a capacity of approximately 220,000 gross barrels of oil per day, and first production expected in the first quarter of 2022.

From Casey Merriman: cash flow to cover the $790 million will come from start uip of Liza II off Guyana. See above.

Reuters: Hess raises production capital budget by 37%.