Hess Corporation (HES) held a conference call on July 29, 2010, to discuss the company’s earnings report for the second quarter of 2010. The company made comments on its activities in several plays, including the Bakken Shale.
Hess Corporation just announced the purchase of American Oil and Gas (AEZ), which will add 85,000 net acres to the company’s position in the Bakken Shale. The new acreage is close to the Tioga Gas Plant, and is mostly undeveloped.
Hess Corporation will run a three rig program to convert as much of its total acreage to held by production. The company has been targeting production from the Bakken Shale of 80,000 barrels oil equivalent per day by 2015, and the recent purchase will be accretive to that total.
“Net production from the Bakken is currently more than 16,000 barrels of oil equivalent per day, and we remain on track to exit this year at a net rate of about 20,000 barrels of oil equivalent per day. We added three additional rigs during the second quarter, and currently have eight rigs dedicated to drilling Bakken wells.”
“We have locked in most of our -- probably about 90% of our drilling and completion costs in the Bakken here for the next five years.”
“We currently are developing (the Bakken Shale) on the 1,280-acre spacing mode using dual laterals…our costs are averaging $10 million to $11 million each. EURs are 1 million barrels per well and our 30-day average IP rate's around the order of 400 to 500 barrels per lateral, so you effectively double that for a dual lateral.”