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Hess announces Esox discovery in deepwater Gulf
GULF OF MEXICO
HESS announced on October 29 that it had made a discovery with the Esox-1 well offshore Louisiana in the deepwater Gulf of Mexico. The well was drilled in Mississippi Canyon Block 726 in around 4,609 feet (1,405 metres) of water. It encountered roughly 191 net feet (58 metres) of what Hess described as “high-quality” oil-bear- ing Miocene reservoirs.
Esox-1 is located around 6 miles (10km) east of the Tubular Bells platform, which Hess operates in partnership with Chevron – also its partner in the well. Hess holds 57.14% in both Tubular Bells and Esox, while Chevron owns the remaining 42.86% in each. Hess said it was plan- ning to tie Esox back to the platform.
“We are delighted with the success of the Esox well, which demonstrates the value of our infra- structure-led exploration [ILX] programme in the deepwater Gulf of Mexico,” Hess’ CEO, John Hess, said. “We expect the well to be producing in the first quarter of 2020. As a low cost tieback to existing infrastructure, Esox should generate strong financial returns.”
The discovery comes as exploration remains limited in the Gulf. A number of operators have turned their attention to shale instead, especially given the comparatively low cost of onshore developments, and the shorter timeframes necessary to bring them online. Some activity does continue in the Gulf, however, and ILX is a popular option, as it allows offshore operators to boost output from their existing facilities with- out the need for significant investment into new infrastructure.
The day after it announced the Esox discov- ery, Hess also reported its third-quarter results. Like other producers, the company continues to
struggle with low oil prices. It posted a net loss of $205mn, or $0.68 per share, in the quarter, compared with a net loss of $42mn, or $0.18 per share, in the third quarter of 2018. But the loss was considerably smaller than expected by ana- lysts, helping to boost Hess’ share price to above $69 by November 5.
The company’s net production from the Gulf was 59,000 barrels of oil equivalent per day (boepd), down from 71,000 boepd in the third quarter of 2018. This was primarily attributed to hurricane-related downtime that reduced net output during the quarter by around 6,000 boepd, as well as greater planned maintenance.
However, the company reported a produc- tion increase of 38% year on year in the Bakken, to 163,000 boepd from 118,000 boepd in the third quarter of 2018. Hess’ net Bakken oil pro- duction was up 26% to 96,000 barrels per day from 76,000 bpd a year ago. This was attributed primarily to higher drilling activity and new plug and perf completion design.
Hess’ overall net production also rose y/y during the third quarter. Excluding Libya, the company achieved net output of 290,000 boepd, up from net production of 279,000 boepd a year ago, or 269,000 boepd excluding assets sold.
Hess also continues to make progress in the Stabroek block offshore Guyana, which it is developing in partnership with ExxonMobil. The two companies announced a 14th discovery in the block during the third quarter of 2019 and the Liza Phase 1 development is now targeted to enter production in December, producing up to 120,000 bpd on a gross basis. A second-phase development has been sanctioned, and a third is pending government approvals.™
Esox would be tied back to Hess’ Tubular Bells platform.
Some activity does continue in the Gulf, however, andILXisa popular option.
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