Hess Expects Production to Increase by 8-12%
Oil exploration and production company, Hess Corp. (NYSE: HES), announced its capital and exploration budget for 2017, along with its update on 4Q 2016 earnings. The company announced that its Exploration & Production budget for current year would amount to $2.25 billion, higher than its budget of $1.9 billion last year. The higher budget is in lieu of higher spending related to additional rigs in the Bakken area, along with expected developmental activities in Guyana. Also, it mentioned plans to resume drilling at its Valhall field in Norway.
Out of the $2.25 billion, 31% is allocated toward unconventional shale resources, which amounts to $700 million. 17% of the budget is allocated for production, 37% is for developments, while remaining 15% is in lieu of exploration and appraisal activities to be carried out this year.
The company mentioned that it expects its production for 2017 to average in range of 300,000 and 310,000 barrels of oil equivalent per day (boepd). This production range excludes any production from Libya. On back of additional rigs in the Bakken area, the production is expected to increase this year by 8–12%.
The production from Bakken area individually is expected to be around 95,000–105,000 boepd. CEO John Hess stated that company’s budget for 2017 reflects its balanced approach toward its investments in short and long cycle growth options for the company, while maintaining its financial flexibility.
Company’s President, Mr. Greg Hill, noted that the company is excited for the year ahead, on back of recovery in crude oil prices. It also expects to increase its rig count from Bakken area from 2 to 6, at end of this year. The news was seen as positive by the investors, with stock soaring by 1.5% in the pre-market session of the announcement.
The stock currently trades at $58.49, with consensus price target presented by Street analysts of $65.29. The most bullish and bearish targets for stock are of $80.00 and $53.00, respectively.