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Hess’s Success in the Bakken and Key Efficiencies

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The Bakken

The Bakken Shale is Hess’s (HES) major growth engine. The company holds more than 0.5 million net acres in the core of the play. In the company’s 3Q17 earnings conference call, management noted that it has the capacity to grow production to approximately 175,000 boepd (barrels of oil equivalent per day) from 103,000 boepd.

Hess currently has four rigs operating in the Bakken, which are forecast to deliver annual oil production growth of 10%. According to Hess, a year ago, it would have taken six rigs to deliver the same production growth. Hess is currently considering up to two additional rigs in the Bakken in 2018, for a total of six rigs.

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Bakken efficiencies

The chart on the left shows Hess’s Bakken drilling performance in terms of days. The chart on the right shows its performance in terms of costs. Hess has improved its drilling performance by 70% since 2010, whereas its drilling costs have fallen 60% since 2010.

Hess believes the Bakken and Guyana form the cornerstone of its portfolio. As we discussed earlier, these regions are seen as low-cost and high-return growth assets.

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