Hess Corp (HES) reported earnings for the fourth quarter of 2010 and held a conference call with the investment community to discuss the results. The company disclosed additional data on its operations in the Williston Basin that are prospective for the Bakken formation. Hess Corp is planning a huge investment in the play in 2011.
2011 Capital Budget
“In 2011, we plan to invest about $1.8 billion in the Bakken oil shale play in North Dakota, where we currently hold more than 900,000 net acres. On average, we expect to have 18 rigs operating in 2011.
“We will also continue to invest in infrastructure, including the construction of a new crude oil rail loading and storage terminal, which is expected to be completed in the first half of 2012. We are expanding our Tioga Gas Plant to 250 million cubic feet per day from 100 million cubic feet per day, with completion expected in the second half of 2011.”
“In 2010, net Bakken production averaged 15,000 barrels of oil equivalent per day, and we exited the year at our target rate of 20,000 barrels of oil equivalent per day, excluding production from the American Oil & Gas and TRZ Energy acreage. In 2011, net production is expected to average about 40,000 barrels of oil equivalent per day. Later this year, after we have drilled some additional wells and analyzed the data on the American Oil & Gas and TRZ acreage, we will update our longer-term production forecast.”
“The dual-lateral wells are costing us between $11 million and $11.5 million, and single-laterals between $7 million and $7.5 million. EURs are in the order of about 500,000 barrels per lateral, and our 30-day average initial production rate for 18-stage wells are in the 400 to 500 barrels per lateral range. Now we recently revised our base completion design to 22 stages, so those initial production rates are going to go up.”