Hess to Spend $2.85 Billion to Develop Shale Resources
As part of a $5.8 billion budget for global exploration and production in 2014, Hess Corp. announced plans to invest $2.85 billion in developing its unconventional shale resources in the Bakken and Utica shale formations.
The company’s budget for these assets represents 49 percent of its overall budget for exploration and production activities. Of the $2.85 billion, $1.475 billion will be spent on production, $925 million for developments and $550 million for exploration.
“Our expenditures in the Bakken are planned to be $2.2 billion in 2014, flat with 2013,” said Greg Hill, president and chief operating officer of Hess. “However, as a result of lower well costs and decreased investments in infrastructure projects we plan to operate 17 rigs versus 14 last year and to bring 225 new operated wells online in 2014 compared to 168 in 2013. In addition, we plan to increase our expenditures in the emerging Utica shale play to $550 million from $455 million last year, as we focus our activities on the appraisal and development of the wet gas window.”
As part of its plans for the Bakken, Hess plans to invest $350 million on major infrastructure projects, including the completion the Tioga Gas Plant expansion and associated pipeline and compression projects.
The company plans to spend $550 million for drilling approximately 35 wells in the wet gas window of the Utica shale play in Ohio.
On Jan. 29, shortly after the company released its exploration and production budget for 2014, Hess Corp. announced an agreement to sell approximately 74,000 acres of its dry gas acreage in the Utica shale to an undisclosed third party for $924 million. Approximately two-thirds of these proceeds are expected at the end of the first quarter of this year, with the balance to be received in the third quarter.
Proceeds from these sales will be used for additional share repurchases as they are in excess of those associated with the divestiture program announced by the company on March 4 of last year.
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