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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite solid production numbers, particularly from North Dakota's prosperous Bakken Shale, oil and gas exploration and production company Hess Corporation (NYSE:HES) (New York, New York) reported weakened revenues and a net loss for third-quarter 2015 as low selling prices continued to show up in the company's balance books. In response, executives have announced sharp reductions in capital spending for 2016. Industrial Info is tracking $14.13 billion in active projects involving Hess.
Among the Hess projects tracked by Industrial Info is a $350 million natural gas drilling program for 2016 in the Bakken Shale. Hess plans to construct eight rigs to drill more than 120 new production wells, each with a vertical depth of 10,000 feet. Nabors Drilling USA (Hamilton, Bermuda) and Precision Drilling (Houston, Texas) are serving as contractors. The program is expected to begin in January and run through November next year.
Capital and exploratory expenditures for exploration and production (E&P) totaled $849 million in the third quarter, down from $1.37 billion in the same period last year; in Bakken Midstream, capital expenditures totaled $88 million, almost double the amount spent in third-quarter 2014.
Net losses for the quarter stood at $279 million, compared with net income of $1.01 billion in the same period last year. Total revenues stood at $1.69 billion, a 38.27% decrease. Hess reported the selling price of crude oil per barrel in third-quarter 2015 fell 53% to $45.66 from third-quarter 2014, while the natural gas selling price fell 28% to $4.02 per million cubic feet and the natural gas liquids (NGL) price fell a staggering 76% to $7.17 per barrel. Another major challenge was pension settlement charges, which totaled $13 million, and third-quarter 2014's $602 million after-tax gain from the selling of Hess' retail business, which negatively impacts comparability.
Nonetheless, Hess reported strong operational results for the quarter, with oil and gas production up 19% from the same period last year to 380,000 barrels of oil equivalent per day. The biggest player was the Bakken Shale operations, where net production jumped 31% to 113,000 barrels of oil equivalent per day; the company's Bakken Midstream segment enjoyed $16 million in net income, which was double that of third-quarter 2014. In July, Hess sold off half of its interest in Bakken Midstream for total after-tax cash proceeds of about $3 billion.
In other areas, net production in the Utica Shale averaged 28,000 barrels of oil equivalent per day in the third quarter, up from only 11,000 barrels in the same period last year, while the Gulf of Mexico saw net production of 83,000 barrels of oil equivalent per day, compared to 70,000 barrels.
Hess executives expect full-year E&P capital expenditures to total $4.1 billion. For 2016, E&P capital expenditures are expected to drop 27% to between $2.9 billion and $3.1 billion. Production in 2016 also is expected to drop to between 330,000 and 350,000 barrels of oil equivalent per day; the Bakken Shale operations looking at between 95,000 and 105,000 barrels, with the shale play's average rig count dropping from 8.5 to four.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Among the Hess projects tracked by Industrial Info is a $350 million natural gas drilling program for 2016 in the Bakken Shale. Hess plans to construct eight rigs to drill more than 120 new production wells, each with a vertical depth of 10,000 feet. Nabors Drilling USA (Hamilton, Bermuda) and Precision Drilling (Houston, Texas) are serving as contractors. The program is expected to begin in January and run through November next year.
Capital and exploratory expenditures for exploration and production (E&P) totaled $849 million in the third quarter, down from $1.37 billion in the same period last year; in Bakken Midstream, capital expenditures totaled $88 million, almost double the amount spent in third-quarter 2014.
Net losses for the quarter stood at $279 million, compared with net income of $1.01 billion in the same period last year. Total revenues stood at $1.69 billion, a 38.27% decrease. Hess reported the selling price of crude oil per barrel in third-quarter 2015 fell 53% to $45.66 from third-quarter 2014, while the natural gas selling price fell 28% to $4.02 per million cubic feet and the natural gas liquids (NGL) price fell a staggering 76% to $7.17 per barrel. Another major challenge was pension settlement charges, which totaled $13 million, and third-quarter 2014's $602 million after-tax gain from the selling of Hess' retail business, which negatively impacts comparability.
Nonetheless, Hess reported strong operational results for the quarter, with oil and gas production up 19% from the same period last year to 380,000 barrels of oil equivalent per day. The biggest player was the Bakken Shale operations, where net production jumped 31% to 113,000 barrels of oil equivalent per day; the company's Bakken Midstream segment enjoyed $16 million in net income, which was double that of third-quarter 2014. In July, Hess sold off half of its interest in Bakken Midstream for total after-tax cash proceeds of about $3 billion.
In other areas, net production in the Utica Shale averaged 28,000 barrels of oil equivalent per day in the third quarter, up from only 11,000 barrels in the same period last year, while the Gulf of Mexico saw net production of 83,000 barrels of oil equivalent per day, compared to 70,000 barrels.
Hess executives expect full-year E&P capital expenditures to total $4.1 billion. For 2016, E&P capital expenditures are expected to drop 27% to between $2.9 billion and $3.1 billion. Production in 2016 also is expected to drop to between 330,000 and 350,000 barrels of oil equivalent per day; the Bakken Shale operations looking at between 95,000 and 105,000 barrels, with the shale play's average rig count dropping from 8.5 to four.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
