Hess to Up Investment in Shale Oil, Will Take Hefty Charge
January 12 2017 - 12:20PM
Dow Jones News
By Joshua Jamerson
Hess Corp. said its capital and exploratory budget will grow by
18% in 2017 compared with last year as it dives deeper into the oil
patch, following similar moves from other shale drillers that have
made investors wary.
The company also announced it will take more than $4.6 billion
in charges in the fourth quarter. Hess stock fell 6.8% to $57.66 in
morning trading.
Some producers, such as Devon Energy Corp. and Pioneer Natural
Resources Co., have planned to boost spending on new wells as the
price of crude oil has risen above $50-a-barrel territory, but
investors have been wary that more drilling activity may be
premature. Hess said Thursday it plans to spend $700 million this
year on unconventional shale with plans to bring about 75 new wells
online in the Bakken Shale in North Dakota and to increase its rig
count there from two to six by year-end. The company also said it
is funding pad construction in preparation for drilling in
2018.
Over all, the company said its 2017 capital and exploration
budget will be $2.25 billion compared with $1.9 billion in
2016.
The company said its fourth quarter results, which it is slated
to report later this month, will include a $3.8 billion charge to
establish valuation allowances against net deferred tax assets,
which Hess said would have no economic impact on the company. Hess
will also take a $700 million charge related to deferred
development of natural gas fields offshore the North West Shelf of
Australia, and an additional $140 million for rig exit costs, loss
on debt extinguishment, impairment of railcars, severance and other
charges.
Hess also said a well offshore Guyana on the Stabroek Block
discovered more than 95 feet of oil-bearing sandstone reservoirs,
with further drilling planned later this year to determine the full
potential of the discovery. An affiliate of Exxon Mobil Corp. holds
45% interest in the Stabroek Block, Hess Guyana Exploration Ltd.
holds 30% interest and Cnooc Nexen Petroleum Guyana Ltd. holds 25%
interest. Exxon Mobil shares edged down 0.4% to $86.46 in morning
trading.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
January 12, 2017 12:05 ET (17:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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