Energy company Hess has decreased its capital and exploration budget, and taken a billion-dollar loan. It says these moves strengthen its position and financial liquidity in response to the recent oil prices crash.
On Tuesday, Hess announced it had revised its projected 2020 capital and exploratory budget down by $800m. It will now spend $2.2bn this year, instead of the expected $3bn.
It has also announced a $1bn three-year loan agreement with JPMorgan Chase Bank.
To make the majority of savings, a six rig drilling programme in Bakken, US, will move to using one rig. It is expected to be completed by the end of May this year.
Net production in Bakken this year is set for around 175,000 barrels of oil equivalent per day (boepd) this year. Previously, guidance said it would produce more than 180,000 boepd.
Focus on Guyana
As well as these measures, Hess will push back most discretionary exploration and offshore drilling. Its main exception is in developing wells in Guyana.
Hess Corporation CEO John Hess said: “With 80% of our oil production hedged in 2020, our significantly reduced capital and exploratory budget and our new three year loan agreement, our company is well positioned for this low price environment.
“Our focus is on preserving cash and protecting our world class investment opportunity in Guyana.”
Overall net production of the company for this year is forecast to be between 325,000 to 330,000 barrels per day (bpd). This is a downward revision from previous guidance of between 330,000 to 335,000 bpd.
Hess is a partner in the Stabroek Block offshore Guyana. This is operated by Exxon Mobil, who recently made a 16th oil discovery there.
In April 2018, Hess subsidiary Hess Guyana (Block B) Exploration signed an acquisition agreement with Esso Exploration and Production Guyana to purchase a 15% participating interest in the Kaieteur Block.