Hess discovers oil in Gulf of Mexico, increases full-year production guidance

Hess Corp. plans to develop a new discovery in the US Gulf of Mexico and has increased its full-year 2023 production guidance on strong operational performance.

The oil discovery at the Pickerel-1 exploration well was noted in the company’s quarterly earnings report on July 26.

The Hess-operated well (100%), in Mississippi Canyon Block 727, encountered about 90 ft of net pay in high quality, oil bearing, Miocene-age reservoir. Plans are to develop the offshore discovery through a tieback to its Tubular Bells production platform. First oil is expected in mid-2024.

The company also noted an upward revision to its full year 2023 net production guidance to 385,000-390,000 boe/d from 365,000-375,000 boe/d. Hess said the increase is primarily due to strong operational performance and the expected startup of the ExxonMobil-operated Payara development offshore Guyana early in this year’s fourth quarter. The Prosperity FPSO has an initial production capacity of around 220,000 b/d of oil and an overall storage volume of 2 million bbl.

Net production for Guyana for full year 2023 is expected to be 115,000 b/d of oil, up from previous guidance of 105,000-110,000 b/d of oil.

Bakken net production is forecast to be 175,000-180,000 boe/d for full year 2023, up from previous guidance of 165,000-170,000 boe/d.

Operations

Net production was 387,000 boe/d in second-quarter 2023, up 28% from second-quarter 2022 net production of 303,000 boe/d, proforma for asset sold, primarily due to higher production in Guyana and the Bakken.

Net Bakken production was 181,000 boe/d, up 29% from 140,000 boe/d in the same quarter in 2022, reflecting increased drilling and completion activity, higher NGL and natural gas volumes received under percentage of proceeds contracts due to lower commodity prices, and higher uptime after weather related shut-ins in the prior year quarter. During the quarter, Hess drilled 32 wells, completed 28 wells, and brought 30 new wells online.

Guyana net production was 110,000 b/d of oil, compared with 67,000 b/d of oil in the prior-year quarter. At the Stabroek block (Hess 30%), net production from the Liza Destiny and the Liza Unity FPSOs totaled 110,000 b/d of oil in the quarter, compared with 67,0002 b/d of oil in the prior-year quarter.

In the US Gulf of Mexico, Hess had net production of 32,000 boe/d, compared with 29,000 boe/d in the prior-year quarter.

Offshore Southeast Asia, Hess had net production at North Malay basin and JDA of 64,000 boe/d in second-quarter 2023 compared with 67,000 boe/d in second-quarter 2022.

Offshore Canada, operator BP Canada drilled the Ephesus exploration well offshore Newfoundland (Hess 25%) in the quarter. The well did not encounter commercial quantities of hydrocarbons.

Financials

Hess had net income of $119 million in second-quarter 2023, compared with net income of $667 million in second-quarter 2022. On an adjusted basis, Hess reported net income of $201 million.

Exploration and production (E&P) net income was $155 million in the quarter, compared with $723 million in second-quarter 2022. On an adjusted basis, E&P second-quarter 2023 net income was $237 million.

E&P capital and exploratory expenditures were $933 million in the quarter, compared with $622 million in second-quarter 2022.