Hess Corporation (NYSE:HES) has on Friday announced that, effective April 1, it entered into an agreement to sell its joint venture interests in the Utica shale play in eastern Ohio to Ascent Resources – Utica, LLC for net cash consideration of approximately $400 million.
“We continue to focus our portfolio by divesting lower-return, non-core assets as part of our strategy to deliver long-term value to shareholders,” CEO John Hess is quoted by BUSINESS WIRE as saying.
“Proceeds from this transaction will be used to invest in our higher-return growth opportunities in Guyana and the Bakken, and to fund the company’s previously announced share repurchase programme,” he revealed.
According to BUSINESS WIRE, the divestiture consists of approximately 39,000 net acres, including 26,000 net undeveloped acres. For full year 2018, net production is forecast to average 14,000 barrels of oil equivalent per day, of which approximately 70 percent is expected to be residue gas. Hess holds a 50 percent working interest as part of a joint venture with CNX Resources (NYSE: CNX).
The agreement is subject to the customary closing conditions and adjustments, and closure is expected by end of the third quarter 2018.
Hess has also announced that it has decided to retain its interests in Denmark, where the company holds a 61.5 percent interest in the South Arne Field, and is the operator. The offers received in a previously announced sale process did not meet the company’s value expectations.
In the normal course of business, the company will continue to look at strategic options for this asset. Esso Exploration and Production Guyana Limited is the operator, and holds a 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd, Hess Corporation’s subsidiary, holds a 30 per cent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 per cent interest.
The Stabroek Block is 6.6 million acres.
Since ExxonMobil’s 2015 oil find, Guyana has attracted international attention and has precipitated intense sensitisation exercises. In May 2015, Exxon confirmed that more than 295 feet of high-quality, oil-bearing sandstone reservoirs were encountered at its Liza 1 exploration well.
In late June 2016, Exxon’s drilling results at Liza 2 revealed more than 58 metres of oil-bearing sandstone reservoirs in Upper Cretaceous formations. The well was drilled to 5475 metres at 1692 metres water depth. Drilling results confirmed recoverable resources to be between 800 million and 1.4 billion barrels of oil equivalent.
The company has announced that it made its third significant discovery in its drilling explorations offshore Guyana. Its partner, Hess Corporation, has noted that the Liza 3 exploratory well’s net value could be US$6.2 billion, based on calculations from the Bank of Montreal (BMO) Capital Markets.
Drilling on Payara began on November 12, 2016, with initial total depth reached on December 2, 2016. In January of 2017, the oil giant announced it had struck some 95 feet of oil reservoirs in its Payara-1 well, targeting the same type of reservoirs as the well’s Liza counterpart.
Oil was discovered in the Turbot-1 well in October of 2017. According to the oil company, following the discovery, the well reservoir was 75 feet deep. Drilling has been ongoing at the Turbot well since August 2017.
More oil was found at the Pacora-1 drill site, some 107 miles from the coast of Guyana.
On June 20, 2018 the company announced another oil discovery following drilling at the Longtail-1 exploration well in the Stabroek Block offshore Guyana.
This is ExxonMobil’s eighth oil discovery offshore Guyana. The company said in a statement that the well encountered has approximately 256 feet (78 metres) of high-quality, oil-bearing sandstone reservoir.
Guyana will officially begin oil production in 2020.
