Advertisement

Hess goes on divestment streak to fund mega oil field

Company dumps billions of dollars worth of global assets in a bet on an opportunity though to be one of the bigger offshore finds in recent years.

By
Daniel J. Graeber
Hess Corp. unloads chunks of its global portfolio in an effort to raise capital for the development of the Liza field off the coast of Guyana. File photo by Maryam Rahmanian/UPI.
Hess Corp. unloads chunks of its global portfolio in an effort to raise capital for the development of the Liza field off the coast of Guyana. File photo by Maryam Rahmanian/UPI. | License Photo

Oct. 24 (UPI) -- The more than $2 billion in divestments from Norway and Equatorial Guinea will help Hess Corp. develop its opportunities offshore Guyana, the company said.

"Proceeds from these asset sales, along with cash on the balance sheet, will prefund development of our world class investment opportunity in offshore Guyana, where we have participated in one of the world's largest oil discoveries of the past decade," CEO John Hess said in a statement.

Advertisement

Hess and its partner, Exxon Mobil, announced a final investment decision for the Liza oil prospect offshore Guyana in June. The companies put the reserve estimate for the broader area offshore Guyana as high as 2.75 billion barrels of oil equivalent, 10 percent higher than initially thought. The development cost of $3.2 billion is considered relatively low for a field that could yield 450 million barrels of oil after first oil is on stream by 2020.

Hess said earlier this year that Liza has "attractive" economics with oil prices as low as $40 per barrel. After lingering in the mid-$40 range for most of the latter portion of the first half of the year, Brent crude oil was trading near $57 per barrel early Tuesday.

Advertisement
RELATED Hess: Taxes mask improvements in the second quarter

Hess on Tuesday said it was selling off its oil and gas interests in Norway for $2 billion and was now in the process of a similar move in Denmark in an effort to fund work in Guyana. To Norwegian energy player Aker BP, Hess sold its stake in the Valhall and Hod fields, which put an average 26,000 barrels of oil equivalent per day in its portfolio for the first six months of the year.

Norway is one of the larger regional oil and gas producers, sending nearly everything it produces offshore to the European market. Aker BP, a merger of Norwegian energy companies and a subsidiary of BP, reported total third quarter production of 131.1 million barrels of oil equivalent per day, down 8 percent from the same period last year.

Hess announced intentions to sell its 61.5 percent stake in the South Arne field in Denmark. The field yielded an average 11,000 barrels of oil equivalent per day during the first six months of the year. The largest offshore gas field in Denmark is slated to close next year.

RELATED Losses for Hess Corp. continue, but downturn less severe

On Monday, the company announced it was selling its 85 percent interest in reserves offshore Equatorial Guinea to Kosmos Energy and Trident Energy for $650 million to fund Liza development. Net production there was 28,000 barrels of oil per day.

Advertisement

"Our investment in Guyana will position our company to deliver a decade plus of returns-driven growth and increasing cash generation to our shareholders," the CEO said.

RELATED Guyana emerging as a new oil frontier

Latest Headlines