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$HES completed the sale of its interests in offshore Equatorial Guinea to Kosmos Energy and Trident Energy for $650MM. These proceeds, along with cash on balance sheet, will enable to prefund $HES’ investment opportunity in Guyana, increase its rig count in the Bakken in 2018, return capital to shareholders and reduce debt.
Energy company $HES said it has sanctioned the phase-1 development of Liza Field located offshore Guyana. The company also announced positive results from the Liza-4 well. Gross discovered recoverable resources for the Stabroek Block, which includes Liza, are currently estimated to be 2-2.5Bil barrels of oil equivalent.
The BoD of $HES declared a quarterly cash dividend of $20 per share on its 8% Series A Mandatory Convertible Preferred Stock, which is equivalent to $1.00 per depositary share, each representing 1/20th interest in a share of Series A preferred stock. The dividend is payable on Aug. 1, 2017 to holders of record on July 15, 2017.
$HES is seeing some upward pressure on costs in the Bakken in the completion space and it is taking steps to minimize this. $HES is locking in the rig rates and pre-purchasing sand along with putting in place longer-term contracts both on the rigs and the pumping side. These steps should help deliver the 2017 program with minimal inflation.
$HES has $275MM of capital budgeted for the North Malay Basin and $425MM for Stampede, which is a total of $700MM of capital associated with these two assets for 2017. In 2018, the capital will go down for those assets combined plus cash flow will go up.
$HES is forecasting Capex in 2Q17 through 4Q17 to be higher than the 1Q17 levels. $HES is going to ramp up rigs in the Bakken from two rigs at the beginning of 2017 to six at 2017-end. The company is also forecasting an increased spend mid-year as it gets closer to the North Malay Basin startup in 3Q17. Capex is expected to be $2.25Bil for 2017.
$HES reported that pro forma net production, excluding Libya, was 307,000 barrels of oil equivalent per day (boepd) in 1Q17 compared to 350,000 boepd a year ago. Production volume was hurt by a reduced drilling program across the portfolio, natural field declines and lower entitlement in Asia.
$HES reported a lower loss in 1Q17, helped by the higher realized crude oil selling prices and lower costs. Net loss was $324MM or $1.07 per share compared with a net loss of $509MM or $1.72 per share in the year ago quarter. Total revenues and non-operating income improved 28% to $1.28Bil.
During FY17, $HES expects its E&P capital and exploratory expenditures are expected to be about $2.25Bil, up from $1.9Bil in FY16. Oil and gas production excluding Libya is expected to be in the range of 300,000 to 310,000 boepd compared to FY16 net production of 321,000 boepd.