US energy company
Hess Corporation
's (
HES
) 2013 capital and exploratory budget of $6.8 billion is 18%
lower than the 2012 capital and exploratory budget of $8.3
billion.
Hess intends to utilize most of the funds for exploration and
production. About $2.7 billion or 40% of the total has been
allocated for the exploitation of the Bakken Shale in North
Dakota, where the company intends to employ 14 rigs as well as
carry out appraisal work in the Utica Shale. The spending in
Utica has been hiked by 33% to reach $400 million.
For 2013, the company expects the development cost at Bakken to
be lower as more cost-efficient pad-based drilling methods have
lowered well costs. The company has thus assigned $2.2 billion
for Bakken, down 29% from 2012.
Another $1.85 billion or 28% of the budgeted amount has been set
aside for production expenditures. This includes drilling
production wells as well as water injection wells on Block G in
Equatorial Guinea, Valhall Field in Norway, the South Arne Field
in Denmark and at the Shenzi Field. A production well at the
Llano Field is also to be drilled in the deepwater Gulf of
Mexico.
Some $1.6 billion is expected to be spend for conventional
development, which comprises development drilling at the Tubular
Bells Field in the deepwater Gulf of Mexico, setting up of early
production system and front-end engineering and design for full
field development of North Malay Basin and continued development
of Block A-18 in the Joint Development Area in the Gulf of
Thailand.
Hess has earmarked $550 million for exploration that targets
further work on the Deepwater Tano/Cape Three Points block off
Ghana and includes shooting seismic and drilling exploration
wells on the Dinarta and Shakrok blocks in Iraqi Kurdistan.
Hess, which recently entered into an agreement with
Royal Dutch Shell plc
(
RDS.A
) to sell its interest in the Beryl area fields and the Scottish
Area Gas Evacuation System for about $525 million, holds a Zacks
Rank #3, which is equivalent to a Hold rating for a period of one
to three months. Longer term, we maintain our Neutral
recommendation.
HESS CORP (HES): Free Stock Analysis Report
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
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