Hess Announces 2017 E&P Capital And Exploratory Budget

(RTTNews) - HessCorp. (HES) said that its 2017 E&P capital and exploratory budget will be $2.25 billion, compared to its 2016 actual spend of $1.9 billion. This includes increased capital for additional rigs in the Bakken, development activities at the world-class Liza Field in Guyana and restart of drilling at the Valhall Field in Norway.

The $2.25 billion budget is allocated as : $700 million (31 percent) for unconventional shale resources, $375 million (17 percent) for production, $825 million (37 percent) for developments and $350 million (15 percent) for exploration and appraisal activities.

Net 2017 production is forecast to average between 300,000 and 310,000 barrels of oil equivalent per day (boepd), excluding Libya. Production is expected to increase 8-12 percent from the beginning of 2017 to the end of the year as a result of additional rigs in the Bakken, restart of drilling at Valhall and start-up of North Malay Basin in the third quarter. Bakken net production in 2017 is forecast to average between 95,000 and 105,000 boepd.

The company's fourth quarter results will include a noncash charge of approximately $3.8 billion to establish valuation allowances against net deferred tax assets as of December 31, 2016, as required under accounting standards following a three-year cumulative loss.

During the quarter, the company made the decision to defer further development of the Equus natural gas fields on blocks WA-390-P and WA-474-P (Hess 100%) offshore the North West Shelf of Australia. As a result, fourth quarter 2016 results will include an after-tax charge of approximately $700 million to fully impair the carrying value of interests in Equus. Capital will be allocated to projects that generate higher returns for shareholders, including the Bakken and Guyana.

Fourth quarter 2016 results will also include additional after-tax charges affecting comparability of earnings of approximately $140 million for rig exit costs, loss on debt extinguishment, impairment of rail cars, severance and other charges.