Hess plugs over 80% of its 2020 E&P budget into Guyana, Bakken

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The Liza Unity is the second floating, production, storage and offloading unit for the Liza field development at Guyana’s Stabroek Block, which achieved first oil in December 2019. Hess has a 30% stake in the Stabroek Block.

Hess Corporation on Tuesday announced a $3 billion Exploration and Production capital and exploratory budget, of which more than 80% will be allocated to high return investments including Guyana.

In a press release, Hess said that the $3 billion budget is allocated as follows: $1.69 billion (56%) for production, $860 million (29%) for offshore Guyana developments and $450 million (15%) for exploration and appraisal activities.

The release said that Hess’ net production is forecast to average between 330,000 and 335,000 barrels of oil equivalent per day in 2020, excluding Libya.

“We continue to successfully execute our long term strategy, with the majority of our capital budget directed to Guyana and the Bakken — two of the highest return investment opportunities in our industry that will become significant, long term cash generators for our company,” CEO John Hess is quoted in the release as saying.

“We are well positioned to deliver industry leading cash flow growth while also achieving significant reductions in our unit costs, which will drive margin expansion and lower our breakeven oil price to below $40 per barrel Brent by 2025.”

Chief Operating Officer Greg Hill said, “Offshore Guyana, with the Liza Phase 1 development now on production, our focus in 2020 will be on the Liza Phase 2 development and on front end engineering design work to develop the Payara Field. We also will continue to invest in an active exploration and appraisal program in Guyana on both the Stabroek and Kaieteur Blocks and in the deepwater Gulf of Mexico.”

In terms of Stabroek Block developments, the release said that $100 million is associated with the Liza Phase 1 development offshore Guyana, $400 million for the Liza Phase 2 development, where first production is expected by mid-2022 and $360 million to progress development plans for the Payara Field, for which production is expected as early as 2023, “and for front end engineering and design work for future developments.”

The release said too that in terms of exploration and appraisal, $450 million is earmarked for drilling exploration and appraisal wells on the Stabroek and Kaieteur Blocks offshore Guyana (Hess 30% and 15%, respectively) and two exploration wells in the Gulf of Mexico. “Funds are also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico, and for license acquisitions,” the release said.

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