Hess Corp. on Oct. 26 reported higher than expected production during the third quarter which when coupled with higher commodity price realizations translated into strong quarterly results.
Hess’ net oil and gas production, excluding Libya, averaged 351,000 boe/d in third-quarter 2022, up 32% compared to third-quarter 2021, Hess announced Oct. 26 in a press release. The company’s average oil, NGL, and gas prices were $85.32/bbl, $35.44/bbl and $5.85/Mcf, respectively, all up compared to the prior-year quarter.
Oil was up the most, rising $22.15/bbl year-over-year, up 35%.
Hess’ adjusted net income was $583 million or $1.89 per common share compared with net income of $86 million or $0.28 per common share in the prior-year quarter, driven primarily by the higher production and commodity prices.
“A slight earnings per share driven by higher production, as realizations were roughly in line while operating expenditures exceeded expectations,” Wells Fargo equity analysts Roger D. Read and Lauren Hendrix Walker wrote Oct. 26 in a research report to clients.
“Cash flow from operations excluding working capital adjustments of $1.4 billion was ahead of our forecast of $1.34 billion and consensus of $1.35 billion. Two additional discoveries announced in Guyana further enhance the long-term visibility/cash flow profile. As an offset, we expect a little caution given the lower full-year 2022 production guidance following the production beat in [the] third quarter of 2022,” the analysts wrote.
New York-based Hess’ portfolio of assets in the U.S. in the Bakken and offshore Gulf of Mexico coupled with newly added advantaged barrels offshore Guyana will win over investors with low-cost low-carbon barrels for decades to come, according to the company.
Hess forecasts fourth-quarter production to reach 370,000 boe/d, excluding Libya, while the estimate for full-year 2022 is 325,000 boe/d. The full-year figure is below the 330,000 boe/d to 340,000 boe/d range initially revealed by the company in January 2022.
Hess’ E&P capital and exploratory spending will approximate $2.7 billion in 2022 with around 80% slated for projects in Guyana and Bakken, up slightly from its initial $2.6 billion forecast revealed earlier this year.
U.S. Bakken and GoM Production Bases
In the Bakken net production was 166,000 boe/d compared to 148,000 boe/d in the prior-year quarter, primarily due to “increased drilling and completion activity and a curtailment of production in the third quarter of 2021 resulting from a planned maintenance turnaround at the Tioga Gas Plant,” Hess said.
Hess added a fourth drilling rig in Bakken in July and during the third quarter drilled 20 wells, completed 20 wells and brought 22 new wells online.
Net production in Bakken is forecast to be between 165,000 boe/d and 170,000 boe/d in the fourth quarter and approximately 155,000 boe/d for full-year 2022, according to the company.
In the Gulf of Mexico, Hess said net production was 30,000 boe/d compared to 32,000 boe/d in the prior-year quarter.
Guyana’s Rising Production Profile
Hess’ net production from the Liza Destiny (Liza Phase I) and the Liza Unity (Liza Phase II) FPSO vessels offshore Guyana on the Stabroek Block totaled 98,000 bbl/d in the third quarter of 2022 compared to 32,000 bbl/d in the prior-year quarter.
Hess’ net production in Guyana from these first two developments is forecast to be 110,000 bbl/d in the fourth quarter, including approximately 20,000 bbl/d of tax barrels. For full-year 2022, net production in Guyana is forecast to be 77,000 bbl/d, including 7,000 bbl/d of tax barrels, Hess said.
Payara, the third offshore development will utilize the Prosperity FPSO with an expected capacity of 220,000 gross bbl/d. First production there is forecast at the end of 2023. Yellowtail, the fourth offshore development, was sanctioned in April 2022 and will utilize the One Guyana FPSO with an expected capacity of 250,000 gross bbl/d. First production there is forecast in 2025.
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Hess Reports Two More Finds Offshore Guyana
Hess and operator Exxon Mobil Corp. and partner CNOOC reported their eighth and ninth discoveries of this year offshore Guyana on the Stabroek with Yarrow-1 and Sailfin-1 exploratory wells, which add to the previously announced gross discovered recoverable resource estimate for the block of approximately 11 billion boe. The companies said the Banjo-1 exploration well, drilled during the third quarter, didn’t encounter commercial quantities of hydrocarbons.
Offshore Southeast Asia
Offshore Southeast Asia at North Malay Basin and JDA, Hess’ net production was 57,000 boe/d in the third quarter compared to 50,000 boe/d in the prior-year quarter, primarily due to higher buyer nominations, the company said.