Hess capex includes Tioga plant expansion

New York-based Hess Corporation announced its 2011 capital and exploratory budget of $5.6 billion on Jan. 7, nearly all of which is targeted for exploration and production: $3.1 billion for production, $1.6 billion for developments, and $900 million for exploration.

Greg Hill, president of worldwide exploration and production, said, "More than 35% of our capital and exploratory expenditures in 2011 are devoted to unconventional oil projects. We have a balanced program that will underpin our long-term target of growing reserves and production by at least 3% per year."

Production expenditures of approximately $3.1 billion includes the Bakken oil shale in North Dakota, where Hess plans to operate 15 rigs and expand production facilities. Field development expenditures of $1.6 billion include expansion of the Tioga natural gas plant and construction of a crude oil rail loading and storage facility to support the development of the Bakken oil shale in North Dakota.

The $325 million Tioga plant expansion in northwestern North Dakota will increase capacity at the plant from 100 MMcf of natural gas daily to 250 MMcf per day.

The plant was built in 1954. Hess plans to start construction on the expansion project in March and complete it in late 2012.

In November, Hess announced plans to acquire an additional 167,000 net acres in the Bakken from privately-held TRZ Energy LLC for $1.05 billion in cash. The properties being acquired are located near Hess's existing acreage and have current net production of roughly 4,400 boe/d.

Williams diversifies with Bakken acquisition

Tulsa-based Williams Companies is diversifying its E&P interests with a recent acreage acquisition in North Dakota's Bakken Shale formation. According to the company, by 2013, nearly 25% of the company's E&P revenue streams are expected to be generated by oil production, up from 7% in 2010.

In the recent transaction, Williams has agreed to purchase roughly 85,800 net acres from private owners for $925 million. The acreage is located entirely on the Fort Berthold Indian Reservation, located in the Williston Basin of North Dakota.

The company estimates that these properties represent approximately 185 MMboe in total net reserves potential in the Middle Bakken and the Upper Three Forks formations. The deal was expected to close by year end 2010. Assets in the proposed transaction include 3,300 barrels per day of net oil production from 24 existing wells.

In addition to the purchase price, Williams expects to invest additional funds for drilling and development costs totaling approximately $60 million in 2010 and $200 million to $300 million in 2011.

Currently, there are three rigs operating on these properties. Williams expects to double the current level of drilling activity to six rigs by 2012 and expects the new leases to be producing more than 20,000 barrels per day by the end of 2012.

Continental Resources increases Bakken spending

Continental Resources Inc. expects to produce 20.6 million barrels of oil equivalent in 2011, an increase of 30% over expected production for 2010. The company's 2010 total production was about 15.8 MMboe.

"Our 2011 capital expenditures budget of $1.36 billion will support accelerated growth," said Harold Hamm, chairman and CEO. "We've committed 91% of 2011 capex, or $1.2 billion, to drilling, workovers, and facilities, which directly support production growth.

"Of this drilling-related capex, 92% will be invested in the Bakken Shale play in North Dakota and Montana and in the Woodford Shale play in Oklahoma," he said. "These two plays will be critical to driving our growth for the next five years."

Continental continued to add to its acreage positions in strategic, liquids-rich plays in 2010. The company now has 864,559 net acres leased in the Bakken Shale play, an increase of 47,707 net acres in the third quarter. In the Niobrara Shale play of Colorado and Wyoming, the company now has leased 73,000 net acres, an increase of 13,929 net acres in the third quarter of 2010.

Brigham announces 5 high-rate Bakken completions

Brigham Exploration Co. has completed 5 high-rate Bakken shale wells at an average early 24-hour peak flow back rate of 3,085 barrels of oil equivalent. As of late December, Brigham had completed 45 consecutive high frac stage, long lateral Bakken and Three Forks wells in North Dakota at an average early 24-hour peak flow back rate of 2,810 barrels of oil equivalent.

Brigham's accelerated development of its acreage in North Dakota and Montana is proceeding with 3 operated rigs drilling in Rough Rider, 3 operated rigs drilling in Ross, and 1 operated rig drilling in Richland County, Montana. Brigham's eighth operated rig is currently expected to arrive in May 2011.

Brigham currently has 2 wells flowing back, 2 wells fracing, and 8 wells waiting on completion. Brigham anticipates fracing the Swindle 16-9 #1H located in Roosevelt County, Montana early in the first quarter 2011. Shortly thereafter, Brigham will frac the Johnson 30-19 #1H, located in Richland County, Montana.

In the first quarter 2011, Brigham expects to add additional fracture stimulation capacity thereby providing access to two fully dedicated frac crews focused on completing Brigham operated horizontal wells in the basin. At that time, Brigham estimates that about 8 wells per month will be fracture stimulated and brought on line to production.

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