Hess Corporation recently announced that the New York-based company is reducing its 2015 capital and exploratory budget and will cut the number of rigs operating in the Bakken formation by nearly half. The company plans to spend $4.7 billion this year, down 16 percent from the $5.6 billion spent last year.
Of the total expenditures, $2.1 billion will be devoted to unconventional shale resources. Production will receive $1.2 billion, $1 billion will go to developments and $400 million is dedicated to exploration. In a statement, Hess CEO John Hess said, “Our company is well positioned to manage through the current price environment, with a strong balance sheet and resilient portfolio. Our 2015 budget reflects a disciplined approach to maintaining our financial strength and flexibility while preserving our long term growth options.”
Of the money allotted for unconventional development, $1.8 billion is slated to be spent on developments in North Dakota’s Bakken formation, down from the $2.2 billion spent last year. Roughly $1.45 billion will be devoted to drilling and completions, well pad facilities and low pressure gathering lines. Major infrastructure projects will receive an investment of $350 million. The remainder of funds for unconventional development, $290 million, will go toward drilling 20-25 wells in the core of the Utica formation’s wet gas window in Ohio.
Hess President and COO Greg Hill reports that in the Bakken formation, the company will operate an average of 9.5 rigs, which is down nearly half from last year’s operated rig count of 17. Also, this year the company will bring roughly 210 new operated wells online, down from the 238 wells brought online last year.
Hill said, “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. Substantially all our core acreage is held by production, which allows us to defer investment in the short term while maintaining the long term value and optionality of this important asset. As oil prices recover we will increase activity and production accordingly.”