U.S. integrated energy company,
) has reached an agreement with the London-listed oil and gas
exploration company Egdon Resources to acquire a considerable
stake in the Mairy permit onshore France.
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Per the deal, Hess will acquire an unencumbered 35% interest that
brings its total stake to 85% in the Mairy permit situated in the
eastern part of the Paris Basin in onshore France. In return,
Hess will carry well costs capped at a gross $10.25 million for
the Huiron-1 exploration well associated with Egdon's retained
15% share in the permit. Moreover, Hess intends to carry $0.5
million of additional general and administrative costs on the
The Huiron-1 exploration well will assess the probable oil and
gas potential of Jurassic, Rhaetian and older formations in the
eastern part of the basin. The drilling operation is expected to
take around 60 days.
We believe that Hess has a competitive advantage over its peers
based on improving fundamentals, commodity price leverage and
exposure to areas with high resource potential. We continue to
see an upstream momentum on the back of the company's large
inventory of exploration and development projects.
The company also remains upbeat on its U.S. shale acreage
position and expects its oil output in the region to double in
the next few years. The company said that its production will
rise in the coming five to seven years, backed by a pickup in
unconventional oil play activity across North Dakota to Texas.
Hess, which recently entered into an agreement with
Royal Dutch Shell plc
) 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.
While Hess is expected to perform in line with the broader
market, other companies in the sector which are expected to
perform well in the coming one to three months include
) with a Zacks Rank #2 (Buy) and
Royal Dutch Shell Plc
) with a Zacks Rank #1 (Strong Buy).