Gr eg Hill, Pr esident & COO Willisto n Ba sin Pe tro le um Co nfe re nc e , 2018 Ba c k to the Future : T he Ba kke n - a n Eng ine o f G ro wth
Forward-Looking Statements and Other Information This presentation contains projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the company’s current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved, and actual results could differ materially from those projected as a result of certain risk factors. A discussion of these risk factors is included in the company’s periodic reports filed with the Securities and Exchange Commission. We use certain terms in this presentation relating to reserves other than proved, such as unproved resources. Investors are urged to consider closely the disclosure relating to proved reserves in Hess’ Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system. 2
Outlook for Global Energy Demand is Robust ….global oil demand continues to grow but energy mix changes Global Demand for Energy Percentage of Primary Global Oil Demand Energy Demand Billion TOE ~100 MMBD 20 92 MMBD 15 42% Industry & PetroChem, 45% Buildings & Power, Other 10 58% 55% Road & Air 5 Transportation 0 2014 2020 2025 2030 2035 2040 1970 1980 1990 2000 2010 2020 2030 2040 Source: IEA WEO 2016 3
Investment Needed to Meet Global Demand …renewed investment & growth in U.S. shale, lacking elsewhere • Global investment in oil & gas insufficient to meet Global Annual Upstream Investment future demand and production declines $B ~40% 600 • Upstream industry investment down ~40% since 2014 600 $540 B 500 450 410 • OPEC financial reserves down ~30% 380 400 350 300 • Exploration spend depressed ; not expected to 200 recover 100 0 • Only U.S. shale has seen resurgence in capital 2014 2015 2017 2018 2016 investment; 75% increase since 2016 • $540 Billion investment p.a. needed to meet global oil and gas demand Source: IEA, IHS, Woodmac 4
All Sources Required to Meet Demand … demand growth requires supply from conventional and tight oil production US Crude Oil Production Global Oil Production Forecast Forecast* 14 120 4.25% 12 100 10 80 8 60 6 40 4 2 20 MMBD 0 MMBD 0 2016 2017 2018 2020 2025 2030 2035 2000 2015 2016 2025 2030 2035 2040 Tight oil Other Tight Oil Other * Assumes investment recovers to average $540B p.a. 5 Source: EIA, IEA
Southwest and Dakotas Drive U.S. Tight Oil Outlook …Southwest leads growth in U.S. tight oil production but Dakotas/Rocky Mountains second largest contributor over the next 3 decades Lower 48 Onshore Crude Oil Production by Region Source: U.S EIA 2018 Outlook 6
Back to the Bakken …Bakken positioned for long-term growth; renewed focus and interest in near term • Rig counts are increasing • Dramatic improvement in 30 day average initial production rates (IP) • Improving price differentials due to expanding infrastructure/market access • Over $5 billion in announced 2017 M&A • 2018 Bakken output set to exceed 2014 record - 1.23 MMBOED • Bakken to reach ~2.0 MMBDOE post 2030 7
Bakken Competitively Positioned …Permian faces headwinds Bakken – strong existing capability: • Significant existing takeaway capacity • Regulatory framework encouraging investment • Market connectivity capturing higher net backs Permian – faces near term challenges : • Geologic uncertainty (GoRs, sweet spots etc) • Availability of proppant, pressure pumping equipment • Infrastructure / roads / truck constraints • Workforce (frac crews / truckers) and pipeline capacity • High cost of entry ; rising development & operating costs 8
Hess: Bakken a Key Asset in High Graded Portfolio Cumulative Est. E&P Capital Allocation Growth Engines Cash Engines 2018 - 2020 Gulf of Mexico Cash Engines 20% Bakken Bakken Exploration 8% Malaysia 43% Guyana 29% Guyana Utica • Cash Costs <$10/BOE • ~70% of Cash Flow from Operations through 2020 • ~20% Production CAGR • ~20% of Capex through 2020 ¹ Includes exploration costs directly associated with Guyana and Suriname. ² Cash Engines include Deepwater Gulf of Mexico, Malaysia and Utica. 9 ³ Excludes exploration costs directly associated with Guyana and Suriname.
Hess Positioned to Leverage Bakken Growth Petroleum net imports/exports as a percentage of product supplied Divide Premier position in the Bakken Burke Tioga Rail Terminal - 554,000 net acres Kenmare Tioga Gas Plant - Net EUR: ~2.0 BBOE Williams - ~1.7 BBOE yet to produce Ramberg Terminal Facility Tioga Stanley - ~2,900 future operated drilling locations Williston Hawkeye Gas Facility Mountrail Hawkeye Oil Facility Growth engine for Hess portfolio New Town Keene Johnson’s Corner Header - Increasing rig count from 4 to 6 rigs in 2018 System Watford City Mercer - Growing production to ~175 Mboep/d by 2021 Little Missouri 4 McKenzie (under construction) - 2018 Bakken E&P Capex: ~$900MM Dunn Grassy Killdeer - 2018 net production: 115-120 Mboep/d Butte Buelah - Investing in midstream infrastructure to support Billings growth – doubling CAPEX to $300M in 2018 Hess Acreage 30 Miles Dickinson Stark 10
Hess Positioned to Leverage Bakken Growth More DSUs in the Core than any Other Operator Abundant Inventory of Economic Locations ~2,900 Future Operated Drilling Locations¹ % of Total Inventory & Implied Rig-Years vs WTI 400 (≥15% After -Tax IRR Threshold) 300 100% Three Forks (116 rig-yrs) No. of DSUs 97% Middle Bakken 87% (112 rig-yrs) 200 77% (102 rig-yrs) (89 rig-yrs) 61% (71 rig-yrs) 24% 100 (28 rig-yrs) $40 $50 $60 $70 $80 $90-100 0 WTI $/bbl Bakken Operators Source: NDIC and Hess analysis; DSU: 1,280 acre Drilling Spacing Unit 11 ¹ PF Jan 2018, assumes 25 wells/rig-year.
Bakken: Enhanced Completions Driving Higher EURs and Returns 2018 Bakken Drilling Program Avg. Well Cumulative Oil Forecast by Field MBO 120 Keene (Antelope/Blue Buttes) Stony Creek 100 East Nesson South 80 Capa Goliath Red Sky 60 Stony Creek 40 Capa 20 East Nesson - South 02468 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100 102 104 106 108 110 112 114 116 118 120 122 124 126 128 130 132 134 136 138 140 142 144 146 148 150 152 154 156 158 160 162 164 166 168 170 172 180 Days 174 176 178 180 Producing Days Keene (Antelope/Blue Buttes) East Nesson Keene Stony Creek South Capa EUR (MBOE) 1125 1110 925 970 Bakken oil cut expected IP180 (MBO) 115 105 100 95 to average in low 60% range for next several IRR @ $50 WTI (%) >50% 50% 40% 45% years ~40 ~25 ~20 ~10 2018 Wells Online 1 1 Includes ~25 limited entry plug and perf wells. 12
Midstream Infrastructure Supports Growth Midstream strategic infrastructure in the core of the Bakken Sorkness Wheelock TGP - Offers export optionality to Hess and Third Parties Ross - Optionality offered both north and south of the Missouri River Myrtle Silurian Significant capacity with room to grow Hawkeye Gas Processing and Gathering - Tioga Gas Plant (TGP) & Little Missouri 4 (LM4) Cherry Creek Blue Buttes - 350 MMcf/d gas processing capacity High Pressure Gas Infrastructure Map Oil Terminaling and Gathering Goliath - Ramberg Terminal Facility (RTF) & Johnson’s Corner TRT - Combined 382 MBbl/d of oil terminaling Red Sky RTF Stoney Creek Looking to the future East Nesson HOF - Aligned with Hess Upstream plan to grow to 175 Mboep/d Hawkeye - Continue to offer processing, terminaling, and export optionality for Hess and Third Parties to multiple end markets Cherry Creek Blue Buttes High Pressure Oil Infrastructure Map 13
Outlook for the Bakken …Bakken is a key growth engine for the U.S. & Hess • The world needs production from the Bakken • Bakken remains a premier shale play & investment opportunity • Renewed industry focus on Bakken - 2018 output set to exceed 2014 record of 1.23 mb/d - Improving price differentials due to expanding infrastructure / market access - Permian growing pains • Hess enhancing its industry leading Bakken position - Expanding production to meet demand growth - Investing in the Midstream to improved export optionality and connectivity to markets - Relentless focus on reducing costs and enhancing well productivity 14
Questions?
Recommend
More recommend
