Saturday, July 2, 2022

Hess upbeat on earnings as drill campaigns move forward at Stabroek Block

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OilNOW
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American exploration and production multinational, Hess Corporation, reported on Wednesday said that it had a net income of US$265 million, or US$0.85 per share, in the fourth quarter of 2021, compared with a net loss of US$97 million, or US$0.32 per share, in the fourth quarter of 2020.

On an adjusted basis, the company said it incurred a net loss in the prior-year quarter of US$176 million, or US$0.58 per share. It said the improvement in adjusted after-tax results compared with the prior-year period was primarily due to higher realized selling prices in the fourth quarter of 2021.

Chief Executive Officer (CEO), John Hess was keen to note that this year marks an inflection point in the execution of the company’s strategy. Hess said, “We have built a differentiated portfolio offering a unique value proposition – delivering durable cash flow growth that enables us to continue to invest in some of the highest return projects in the industry and to start growing our cash returns to our shareholders.”

With respect to exploration and production (E&P) net income, Hess said this was US$309 million in the fourth quarter of 2021, compared with a net loss of US$39 million in the fourth quarter of 2020. On an adjusted basis, E&P’s net loss in the prior-year quarter was US$118 million.

Furthermore, it was noted that the corporation’s average realized crude oil selling price, including the effect of hedging, was US$71.04 per barrel in the fourth quarter of 2021, compared with US$45.32 per barrel in the prior-year quarter. The average realized natural gas liquids (NGL) selling price in the fourth quarter of 2021 was US$36.47 per barrel, compared with US$15.80 per barrel in the prior-year quarter, while the average realized natural gas selling price was US$4.77 per mcf, compared with US$3.35 per mcf in the fourth quarter of 2020.

With respect to its Guyana operations, Hess told shareholders that Stabroek Block operator, ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), scored two significant discoveries at Fangtooth and Lau Lau.

The Fangtooth-1 well encountered approximately 164 feet of high-quality oil-bearing sandstone reservoirs and confirms the deeper exploration potential of the Stabroek Block. The well was drilled in 6,030 feet of water and is located approximately 11 miles northwest of the Liza Field.

The Lau Lau-1 well encountered approximately 315 feet of high-quality hydrocarbon bearing sandstone reservoirs. The well was drilled in 4,793 feet of water and is located approximately 42 miles southeast of the Liza Field.

As for the corporation’s net production from the Liza Destiny floating production, storage and offloading vessel (FPSO), this was 31,000 bopd in the fourth quarter of 2021 compared with 26,000 bopd in the prior-year quarter.

On October 25, 2021, Hess reminded that the Liza Unity FPSO, with an expected capacity of 220,000 gross bopd, arrived at the Stabroek Block and startup of Phase 2 of the Liza Field development remains on track for the first quarter of 2022.

It said the third development, Payara, will utilize the Prosperity FPSO with an expected capacity of 220,000 gross bopd. First oil is expected in 2024.

Furthermore, Hess disclosed that the fourth development, Yellowtail, was submitted to the government of Guyana for approval in the fourth quarter. Pending government approval and project sanctioning, the project is expected to have a capacity of 250,000 gross bopd with first oil anticipated in 2025.

Hess said, “We expect to have at least six FPSOs on the Stabroek Block in 2027, with the potential for up to 10 FPSOs to develop the current discovered recoverable resource base.”

Following the completion of the Fangtooth-1 well, OilNOW understands that the Stena DrillMAX will begin drilling at the Tarpon prospect. Following the completion of the Lau Lau-1 well, the Noble Don Taylor began drilling at the Barreleye prospect.

It was also noted during the earnings call that the Stena Carron completed drill stem tests on the Longtail-2, Whiptail-2 and Turbot-2 wells, and is currently performing a drill stem test on the Tilapia-1 well. The Noble Sam Croft, the Noble Bob Douglas and the Noble Tom Madden are currently drilling and completing development wells at Liza Phase 2 and the Payara Field.

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