- Hess reduced its budget to $1.9 billion, down 37% from the company’s original $3 billion budget.
- Net Bakken production to average 175,000 barrels of oil equivalent/day, down from 190,000 boe/d in the first quarter of 2020.
- Hess will now spend around $720 million this year on its Bakken operations.
- If oil prices stay low going into 2021, the Bakken rig count could be reduced further, down to zero, for a period of time.
- Chartered 3 VLCCs to store 2 million barrels each of May, June and July Bakken crude production.
Hess expands its 2020 spending cuts in response to low oil prices caused by the coronavirus pandemic, reports Platts.
2020 spending cuts
Hess said that the company is expanding its 2020 spending cuts in response to low oil prices caused by the coronavirus pandemic, with a focus on reducing rigs in the North Dakota Bakken Shale play and drilling activity offshore Guyana.
Reduced budget
Hess has further reduced its budget to $1.9 billion, down 37% from the company’s original $3 billion budget.
Bakken crude production
- Hess plans to reduce its Bakken rig count to one by the end of May.
- Expects net Bakken production to average 175,000 barrels of oil equivalent/day, down from 190,000 boe/d in the first quarter of 2020.
- Hess will now spend around $720 million this year on its Bakken operations.
Production down to zero
Chief Financial Officer John Rielly said during the company’s Q1 earnings call:
- The company will remain at one rig until West Texas Intermediate crude prices stabilize in the $50/b area.
- If oil prices stay low going into 2021, the Bakken rig count could be reduced further, down to zero, for a period of time.
NYMEX front-month crude was trading below $23.50/b around 1900 GMT Thursday.
Global net output
An increase in Bakken production helped drive the company’s global net output, 24% higher year on year to 344,000 boe/d in Q1.
Liza Field production
According to the company, the rise was driven by the Liza Field offshore Guyana, which commenced production in December 2019.
Liza Field output averaged 15,000 b/d in Q1, and is expected to reach 120,000 b/d in June.
VLCCs chartered for storage
Due to onshore storage shortage in the US, Hess has chartered 3 VLCCs to store 2 million barrels each of May, June and July Bakken crude production.
CEO John Hess said:
- This crude is expected to be sold in the fourth quarter of 2020.
- The crude will be sold to Asia.
VLCC rate spike
VLCC rates spiked in March and April on a rush to fix vessels, but have since fallen as activity has dried up.
US Gulf Coast to China
The US Gulf Coast to China VLCC rate was assessed by S&P Global Platts at $26.67/mt Wednesday, for instance, down from $73.15/mt on April 1.
Crude rates
Waterborne crude in transit
According to S&P Global Platts Analytics, between April 1 and April 30, waterborne crude in transit climbed 111 million barrels to 976 million barrels.
Crude on idled and laden vessels
Crude on idled and laden vessels climbed 97 million barrels to 246 million barrels.
US crude selling price
Total U.S. average selling prices for crude, including hedges, fell around 17% to $45.63 per barrel in the first quarter.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Platts
