Hess Corp. said its capital and exploratory budget will grow by 18% in 2017 compared with last year as it dives deeper into the oil patch, following similar moves from other shale drillers that have made investors wary.
The company also announced it will take more than $4.6 billion in charges in the fourth quarter. Hess stock fell 6.8% to $57.66 in morning trading.
Some producers, such as Devon Energy Corp. and Pioneer Natural Resources Co., have planned to boost spending on new wells as the price of crude oil has risen above $50-a-barrel territory, but investors have been wary that more drilling activity may be premature. Hess said Thursday it plans to spend $700 million this year on unconventional shale with plans to bring about 75 new wells online in the Bakken Shale in North Dakota and to increase its rig count there from two to six by year-end. The company also said it is funding pad construction in preparation for drilling in 2018.
Over all, the company said its 2017 capital and exploration budget will be $2.25 billion compared with $1.9 billion in 2016.
The company said its fourth quarter results, which it is slated to report later this month, will include a $3.8 billion charge to establish valuation allowances against net deferred tax assets, which Hess said would have no economic impact on the company. Hess will also take a $700 million charge related to deferred development of natural gas fields offshore the North West Shelf of Australia, and an additional $140 million for rig exit costs, loss on debt extinguishment, impairment of railcars, severance and other charges.
Hess also said a well offshore Guyana on the Stabroek Block discovered more than 95 feet of oil-bearing sandstone reservoirs, with further drilling planned later this year to determine the full potential of the discovery. An affiliate of Exxon Mobil Corp. holds 45% interest in the Stabroek Block, Hess Guyana Exploration Ltd. holds 30% interest and Cnooc Nexen Petroleum Guyana Ltd. holds 25% interest. Exxon Mobil shares edged down 0.4% to $86.46 in morning trading.
Write to Joshua Jamerson at email@example.com