Hess Corporation (HES) held an earnings conference call on January 25, 2012, to discuss the company’s fourth quarter of 2011 and full year earnings. The company made several comments on its position in North Dakota that is prospective for the Bakken Shale.
Hess Corporation expects Bakken production to ramp up quickly over the next four years:
2011 – 30,000 barrels of oil equivalent (BOE) per day.
2012 – 60,000 BOE per day.
2015 – 120,000 BOE per day.
“In the Bakken oil shale play in North Dakota, we generated strong growth throughout the second half of the year and exited 2011 at a peak net rate of approximately 50,000 barrels of oil equivalent per day. We maintain our 60,000 barrels of oil equivalent per day forecast for the Bakken in 2012.”
“In 2012, we plan to invest about $1.9 billion and operate sixteen rigs with five dedicated hydraulic fracturing crews. We will continue be in the held by production mode of drilling this year, with most of the wells planned to be single laterals on 1280-acre spacing. This program will enable us to get the vast majority of our core acreage held by production by year-end 2012.”
“We will also continue to invest in infrastructure projects, including the Tioga Gas Plant expansion and our crude oil rail loading and storage facility, which will become operational in February. Net production from the Bakken in 2012 was forecast to average 60,000 barrels of oil equivalent per day or twice the 2011 average of 30,000 barrels of oil equivalent per day. We expect net Bakken production to further increase to 120,000 barrels of oil equivalent per day in 2015.”
“Production from the Bakken's fully recovered, and we're firmly on the growth ramp with production averaging about 38,000 barrels a day in the fourth quarter, which is an improvement of about 6 quarter-on-quarter…we achieved a new high peak rate of just over 50,000 barrels a day in mid-December.”
“So the (railroad) facility will be fully operational at the end of February. We've got nine train sets on location, which will give us an initial capacity to ship 54,000 barrels a day. Now just to kind of test the rail and all that kind of stuff, we did sell 500 train loads of Bakken crude and achieved some premium Gulf Coast sweet crude pricing.”