Hess slashes E&P budget for 2016

U.S. oil company Hess Corporation announced today a 2016 E&P capital and exploratory budget of $2.4 billion, a 40 percent reduction from its 2015 actual spend of $4.0 billion and approximately 20 percent below preliminary 2016 guidance of $2.9-$3.1 billion provided in October.

The $2.4 billion budget is allocated as follows: $470 million (20 percent) for unconventional shale resources, $610 million (25 percent) for production, $820 million (34 percent) for developments and $500 million (21 percent) for exploration and appraisal activities.

Net production is forecast to average between 330,000 and 350,000 barrels of oil equivalent per day in 2016. Bakken net production is forecast to average between 95,000 and 105,000 barrels of oil equivalent per day in 2016. These production forecasts are unchanged from preliminary guidance provided in October.

“In 2016 Hess will remain focused on preserving the strength of our balance sheet, our top quartile operating capabilities and our long term growth options,” CEO John Hess said. “While we are well positioned to navigate the current low oil price environment with one of the strongest balance sheets and liquidity positions among our E&P peers, we are also well positioned to benefit from a recovery in prices, with a high quality portfolio that is leveraged to oil and offers attractive investment opportunities which will create long term value for our shareholders.”

Greg Hill, President and COO, stated: “We take a long term view to managing our business and we will continue to invest in our growth projects and prospects, including exploration and appraisal activities. However, in response to the current low oil price environment, we have significantly decreased our 2016 capital and exploratory expenditures and we plan to reduce activity at all of our producing assets. Moreover, we will continue to pursue further cost reductions and efficiency gains across our portfolio.”