Hess cuts 2015 budget by 16pc to $4.7bn

OREANDA-NEWS. Hess plans to spend \$4.7bn in 2015, a 16pc drop from the \$5.6bn spent in 2014, as the near 60pc plunge in crude prices prompts the US independent to cut back on drilling and focus on areas that offer the best returns.

The company will spend \$2.1bn on development of shale oil and gas resources, \$1.2bn on production, \$1bn on development and \$400,000 for exploration, it said.

Hess joins a growing list of US independents including Continental Resources and ConocoPhillips who have pared spending for 2015 as the fall in income squeezes cash flows. US producers have been particularly hard hit by the current downturn as shale oil is more expensive to extract. The US rig count has already fallen to the lowest in nearly four and a half years, and analysts expect more declines in coming months as spending cuts take effect.

Hess plans to spend \$1.8bn to develop its acreage in the Bakken shale, with about \$1.45bn going towards drilling and completion activities. The company plans to operate an average 9.5 rigs and bring about 210 new operated wells online, compared with 17 rigs and 238 operated wells bought online in 2014 in the Bakken in North Dakota.

"Hess has some of the best acreage in the Bakken, and we will continue to drill in the core of the play which offers the most attractive returns," chief operating officer Greg Hill said.

Hess will spend \$290mn to drill 20-25 gas wells in the Utica Shale area in Ohio.

As part of its production budget, \$300mn will go toward four production wells and the start of one water injection well at the South Arne Field in Denmark, which is 62pc owned by Hess in which the company is the operator, bring three production wells online and drill one new well at the Valhall Field in Norway. Hess holds a 64pc stake in them and BP is the operator.

The company will spend \$250mn to complete drilling of one production well and one water injection well, and for continued facilities work at the Tubular Bells Field in the deepwater Gulf of Mexico, in which Hess is the operator with a 57.1pc stake. It will spend \$300mn for fabrication and commence drilling at the Stampede Field in the US Gulf. Hess holds 25pc stake and is the operator. It will spend \$220mn to drill two production wells in Equatorial Guinea, in which Hess is the operator with an 85pc stake.

From its development budget, the company will spend \$600mn to install three wellhead platform jackets, and commence Phase 1 drilling for its North Malay Basin project in Malaysia. Hess has a 50pc stake and is the operator.