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Hess Experiences Bakken Weather Delays, Ups Frac Stages to 38


The following is my quarterly, obligatory Hess Bakken update.  After all, they are spending about ~$4B in the Bakken this year and acquired a significant amount of acreage entering 2011.

Judging by the permits, it appears Hess is actively developing a large part of it’s acreage as opposed to focusing on a few sweetspots.  I am not sure what the leasehold situation is but I imagine that plays some sort of role.  During the conference call Hess did mention that their newly acquired acreage may in fact be better than their legacy Bakken position.

They are operating 18 rigs this year and exited the 2Q at 25 Mboe/D.  Hess, along with many other Bakken operators, reported significant delays thus far this year due to the weather.  I live a long way from ND and the midwest in general but apparently the harsh winter combined with heavy spring flooding have wreaked havoc on oil and gas activity.

On the engineering front, Hess has changed it’s frac design to 38 stages.  This includes 22 sliding sleeves, and 16 plug and perfs.  9 wells have been completed this way with 30-day average IPs of 1000 BOPD.  Hess still projects EURs of 550 Mboe.  Average drill time is down to 34 days and 7 or so to complete.

Hess will spend $400MM in Bakken midstream transport this year.  Current takeaway capacity with Tesoro is 30,000 BO/D.

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