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USA: Hess to Splash USD 6.8 Billion in 2012

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Hess Corporation, with headquarters in New York announced today a 2012 capital and exploratory budget of $6.8 billion, nearly all of which is targeted for Exploration and Production: $2.5 billion for unconventionals, $1.6 billion for production, $1.8 billion for developments and $800 million for exploration.

John B. Hess, Chairman and CEO, stated, “We believe that the investments we are making in unconventionals are lower risk and will generate long term profitable growth for shareholders. We expect to fund the majority of our 2012 program from internally generated cash flow and asset sales.”

Greg Hill, President of Worldwide Exploration and Production, said, “Our focus in 2012 will be on execution. We are committed to creating value and delivering sustainable growth in production and reserves from both our unconventional and conventional portfolios.”

Production expenditures of approximately $1.6 billion include:

  • Drilling production and water injection wells at Shenzi (Hess 28 percent), and drilling production wells at the Llano Field (Hess 50 percent) in the deepwater Gulf of Mexico
  • Drilling production wells on Block G (Hess 85 percent – operator) in Equatorial Guinea

Development expenditures of approximately $1.8 billion include:

  • Commencing development drilling at the Tubular Bells Field (Hess 57 percent – operator) in the deepwater Gulf of Mexico
  • Completion of field redevelopment and gas lift projects at the Valhall Field (Hess 64 percent) in Norway
  • Concluding appraisal activities and progressing front end engineering and design work at WA-390-P (Hess 100 percent – operator) offshore Western Australia
  • Progressing development of Block A-18 (Hess 50 percent) in the Joint Development Area (JDA) in the Gulf of Thailand, including wellhead platform installations and ongoing drilling activities

Exploration expenditures of approximately $800 million include:

  • Drilling exploration wells in Ghana, Indonesia, Brunei and the deepwater Gulf of Mexico
  • Acquiring seismic at the Dinarta and Shakrok Blocks (Hess 80 percent – operator) in Iraqi Kurdistan

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Hess to spend $2.3 billion to develop Gulf of Mexico oil field

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Hess Corp., the New York-based oil company, will develop its Tubular Bells deep-water field in the Gulf of Mexico at an estimated cost of $2.3 billion.

Production is expected to begin in 2014 and may peak at the equivalent of 45,000 barrels of oil a day, Hess said in a statement today. Subject to U.S. approval, Hess said it will own 57 percent of the field, with Chevron Corp. holding the remainder. BP Plc no longer owns a stake in the project.

Tubular Bells holds an estimated 120 million barrels of oil, Hess said. Plans call for three wells in the field, which lies as much as 4,600 feet (1,400 meters) below the surface about 135 miles southeast of New Orleans, the company said.

The field will be predominantly oil with “good, attractive returns, even though the costs per well have gone up a little bit with the new government regulations,” John Hess, chairman and chief executive officer of the company, said in a Sept. 8 speech.

The U.S. government imposed new drilling rules after a BP well in the Gulf last year had the biggest offshore oil spill in the nation’s history.

Hess fell 2 percent to $59.81 at 11:21 a.m. in New York. The shares have declined 22 percent this year.?

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