New Bakken completion strategy paying off for Hess

By Patrick C. Miller | May 01, 2018

A new well completion strategy initiated by Hess Corp. in North Dakota’s Bakken shale led to a 12 percent production increase during the first quarter of 2018 over the same period a year ago.

Greg Hill, Hess chief operating officer, said the company’s 60-stage, 8.4-million-pound proppant completions in the Bakken showed a 15 to 20 percent uplift in both in initial production rates and estimated ultimate recoveries the previous 50-stage, 3.5-million- pound standard. First quarter production in the Bakken averaged 111,000 net barrels of oil equivalent per day (boepd).

“Because we were reaching the practical limits of the sliding sleeve system in terms of stage count, last year we began piloting limited-entry plug-and-perf completions, and initial results are encouraging,” Hill said. “This new limited entry technique allows us to more than double the number of distinct entry points in a 10,000-foot lateral while maintaining good fracture geometry control and should result in a further increase in initial production rates, estimated ultimate recoveries and, most importantly, net present value.”

Hill noted that Hess has only a small number of wells that have been on production 90 days or more, but the company is increasing the number of plug-and-perf operations in the Bakken. It plans to complete about 40 in 2018 and bring 25 of those online during the year.

For the second quarter, Hess expects production to average between 235,000 and 245,000 net boepd, excluding Libya. “We maintain our full year 2018 production guidance of 245,000 to 255,000 net barrels of oil equivalent per day,” Hill said. “Production is expected to grow steadily throughout the year, increasing to between 265,000 and 275,000 net barrels of oil equivalent per day in the fourth quarter, which represents a growth rate of over 15 percent between the first quarter and fourth quarter of 2018.”

The Bakken is Hess’ largest operated asset with more than 500,000 net acres in the play’s core. The company plans to add a fifth rig there in the third quarter and a sixth rig in the fourth quarter. The increased activity is expected to grow capital-efficient production from 105,000 boepd in 2017, up to 175,000 boepd by 2021, along with an increase in pre-cash flow generation.

In giving the first quarter report for 2018, Hess CEO John Hess said the company posted a net loss of $106 million (38 cents per share), down from a net loss of $324 million ($1.07 per share) in the same quarter a year ago. Compared to 2017, he said first quarter financial results primarily reflect higher crude oil selling prices and lower operating cost in depreciation, depletion and amortization.

“Our strategy reflects our view that shale alone will not be enough to meet the world’s oil demand growth and offset base production declines,” Hess said. “For the past several years, the industry has significantly under-invested in longer-cycle projects, which currently represent approximately 90 to 95 percent pf global oil supply. We have focused our portfolio on four key areas: offshore Guyana and the Bakken as our growth engines, with Malaysia and the deep-water Gulf of Mexico as our cash engines.”

Hess said the company delivered strong performance in the first quarter and continues to make significant progress in its strategy to grow its resource base in a capital-disciplined manner. He said this also includes moving down the cost curve to be resilient in a low-oil-price environment and be cash accretive at $50 per barrel Brent oil price post-2020.