Latest update November 5th, 2024 1:00 AM
Hess selling off more int’l assets to focus on “crown jewel” in Guyana
Kaieteur News – American oil explorer and producer, Hess Corporation, announced yesterday that it has entered into an agreement to sell its Little Knife and Murphy Creek acreage interests in the Bakken, North Dakota, to Enerplus Corporation, a Canadian energy giant, for US$312 million, effective March 1, 2021.
Once the deal is closed, the cash injection will help the company to continue its focus on the Stabroek Block, the “crown jewel” in its portfolio of assets. In the Stabroek Block, Hess holds a 30 percent working interest, while CNOOC/NEXEN holds 25 percent. ExxonMobil carries the remaining interest, thereby making it the Operator.
Hess Corporation’s CEO, John Hess.
Hess noted that the sale to the Canadian firm consists of approximately 78,700 net acres, which are located in the southernmost portion of its Bakken position and not connected to its Midstream infrastructure. It further noted that net production from this acreage averaged 4,500 barrels of oil equivalent per day in the first quarter of 2021.
Following the announcement yesterday, Chief Executive Officer of Hess, John Hess, noted that Bakken is a core asset in the company’s portfolio, while adding that “the sale of Little Knife and Murphy Creek acreage – the majority of which we were not planning to drill before 2026 – brings material value forward and further strengthens our cash and liquidity position.”
The sale is expected to close in May 2021, subject to customary closing conditions.
Last month, Kaieteur News would have reported that Hess had entered into an agreement with another firm, Ineos Exploration and Production Company, to sell its subsidiary, Hess Denmark ApS, which holds a 61.5% interest in the South Arne Field. The asset has been sold for a total consideration of US$150 million, effective January 1, 2021. The sale is expected to close in the third quarter of 2021, subject to government approvals and customary closing conditions.
Following the announcement, the company’s Chief Executive Officer had said, “The sale of our Denmark asset enables us to further focus our portfolio and strengthen our cash and liquidity position. Proceeds will be used to fund our world class investment opportunity in Guyana.”
It should be noted that Hess has been active in the Danish North Sea since becoming the operator of the South Arne field in 1994. South Arne, located about 150 miles west of Esbjerg, has produced oil and gas since 1999, and uses horizontal production and water-injection wells to optimise production from chalk reservoirs. According to Hess’ website, the South Arne Field had produced an average of 5,800 barrels of oil equivalent per day net to Hess in the fourth quarter of 2020.
As it relates to the Stabroek Block, Hess Corporation, CNOOC/NEXEN and the Operator of the concession, ExxonMobil, have announced that plans are moving apace to bring a fourth project plan to the government by year-end, while a fifth development is already under consideration. Further to this, the joint venture partners had said that by 2027, it could have a sixth oil development project in the Stabroek Block.
Rystad Energy, an energy research and business intelligence company, was one of the first industry stakeholders to project that ExxonMobil would be able to place one FPSO offshore Guyana every year for the next 10 years. If these projections pan out, the 10th vessel will start producing in 2031.
By the end of the first year, after the 10th FPSO is placed, ExxonMobil would have wiped out 4.14 billion barrels of oil, leaving a little over three billion barrels. In the following years, it will produce about 730 million barrels of oil in each year. By 2036, there would be nothing left.
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