U.S. oil and gas company Hess Corporation has revealed that its 2022 exploration and production budget will total $2.6 billion, of which approximately 80% will be allocated to Guyana and the Bakken.
The situation was similar last year, when Hess allocated more than 80% of its 2021 exploration and production budget to Guyana and the Bakken. However, the total budget was lower compared to this year and amounted to $1.9 billion.
Hess net production is forecast to average between 330,000 and 340,000 barrels of oil equivalent per day in 2022, excluding Libya. This compares with net production of approximately 310,000 barrels of oil equivalent per day in 2021, also excluding Libya. Bakken net production is expected to average between 165,000 and 170,000 barrels of oil equivalent per day in 2022.
Noting that the company’s capital program reflects discipline in investing in high-yield, low-cost opportunities, Hess Corporation CEO John Hess said, “The majority of our 2022 budget is allocated to Guyana, which is positioned to be one of the highest margin, lowest carbon-intensity oil developments in the world, and to the Bakken, our largest operated asset, where we have a strong inventory of future high-yield drilling locations.”
About $1.15 billion, or 44% of the $2.6 billion budget, will be allocated to production, $1 billion, or 39%, to offshore Guyana developments, and $450 million, or 17%, to exploration and appraisal activities.
On the production side, Hess will allocate $270 million to production activities in the Northern Peninsular Malaysia area it operates and in the joint Malaysia-Thailand development area (Hess 50%) in the Gulf of Thailand. The funds are for drilling and facilities as well as work that was previously deferred due to COVID-19 and low commodity prices.
Hess will also use $90 million for production activities in the Gulf of Mexico, including drilling a tie-in well in the Llano field (Hess 50%) and seismic data acquisition and processing.
In terms of development activities, Hess has allocated $25 million associated with the Liza Phase 1 development in the Stabroek block (Hess 30 percent), where production optimization work is planned in the first quarter of 2022. Earlier this month, ExxonMobil, as operator of the Stabroek block, revealed two other oil discoveries in the prolific block.
A further $190 million will be allocated to the Liza Phase 2 development, with a capacity of approximately 220,000 gross barrels of oil per day, with first production expected in the first quarter of 2022.
In addition, $400 million has been allocated for the Payara development, with a capacity of approximately 220,000 gross barrels of oil per day, and first production expected in 2024, and another $210 million will be used for the Yellowtail development, with a capacity of approximately 250,000 gross barrels of oil per day, and first production expected in 2025.
In addition, Hess has allocated $175 million primarily for initial engineering and design work for future phases of development on the Stabroek block.
Hess COO Greg Hill said the company’s focus in Guyana this year will be to advance the high-value oil developments in the Stabroek block, which have a Brent breakeven price of between $25 and $35 per barrel, and to continue the company’s active exploration and appraisal program.
Finally, in the exploration and appraisal segment, Hess will commit $450 million to drill approximately 12 exploration and appraisal wells in the Stabroek block in Guyana (Hess 30%), the Huron-1 well in the Green Canyon area of the Gulf of Mexico (Hess 40%) and the Zanderij-1 well in Block 42 in Suriname (Hess 33%). Also included are funds for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico, and for license acquisition.