Hess Corp. is in the final stages of a major sale to Chevron, with increased drilling and production in the Bakken region noted in the last quarter. Hess announced its fourth-quarter net production in the Bakken reached 194,000 barrels of oil equivalent per day (boe/d), a slight increase from the third quarter's 190,000 boe/d and a significant 23% rise from the 158,000 boe/d seen in the fourth quarter of the previous year. This growth is attributed to more drilling and the impact of the previous year's severe winter weather.
- Oil production in the Bakken averaged 89,000 barrels per day (bbl/d), slightly higher than the previous quarter's 87,000 bbl/d and a 20% increase from 74,000 bbl/d a year before.
- Hess operated four drilling rigs in the Bakken during this period, with plans to maintain this level of operation into 2024.
- The fourth quarter saw 33 new wells drilled, 30 completed, and 33 brought online, with Hess officials projecting Bakken production to average 200,000 boe/d by 2025, maintaining this level for almost a decade.
Chevron's planned $60 billion purchase of Hess Corp. should boost its U.S. production, especially with new operations in the Bakken shale area, expected by mid-2024. Chevron, already active in major areas like the Permian Basin and the Denver-Julesberg Basin, is also planning to sell its shares in the Duvernay Shale in Alberta, covering about 238,000 acres.
Huge Deal: Chevron to Offload Duvernay Assets
Chevron is planning to sell its 70% interest in Alberta's Duvernay shale, a key Canadian shale area spanning around 238,000 acres, with a daily production capacity of about 40,000 barrels of oil and gas. Valued at nearly $900 million, Chevron aimed to develop this region since 2017, resulting in 243 wells connected to production by the end of 2022. The 2022 output included 126 million cubic feet of natural gas and 17,500 barrels of liquids, using techniques like horizontal drilling and hydraulic fracturing.
This deal is part of Chevron's broader strategy to focus on more lucrative U.S. projects, aligning with its plan to divest up to $15 billion in assets by 2028. This strategy kicked into gear following the announcement of a $60 billion merger with Hess Corp. in October, expected to be completed by June 2024. Chevron is directing a significant portion of its 2024 budget, $14 billion, towards U.S. operations, particularly $5 billion to the Permian Basin projects.
Guyana's Oil Riches
Chevron's deal to buy Hess Corp. is largely about getting into Guyana, home to one of the biggest recent offshore oil finds. Hess owns a 30% share in the Stabroek Block in Guyana, which produced 128,000 barrels a day in the fourth quarter.
In November, the Prosperity FPSO project at Payara started, adding 14,000 barrels a day to Hess's production. Hess works with Exxon Mobil and CNOOC on this huge 6.6 million-acre block in Guyana.
Hess also has a strong presence offshore in the Gulf of Mexico, where it produced 30,000 barrels of oil equivalent a day in the last quarter. This shows Hess's strategic locations and how the Guyana operations are key for Chevron's future oil production.
Chevron Corp. Beats Records
Chevron Corp announced a significant 10.7% rise in its Permian Basin output, exceeding forecasts with a record 867,000 barrels daily in the fourth quarter. The company aims to hit 900,000 barrels daily by the end of the year and targets 1 million by 2025. This boost in production comes from faster drilling, longer wells, enhanced completions, and minimizing delays. Chevron is also focusing on additional improvements by adding a fracturing crew and applying successful techniques from its PDC Energy acquisition.
