Norwegian Aker BP (ticker: AKERBP) and Hess Corporation (ticker: HES) have completed the previously announced sale of Hess Norge to Aker BP for $2 billion, effective January 1, 2017.
Hess Norge owns interests in the Valhall (64.05%) and Hod (62.5%) fields in Norway. The two fields are producing a net 24 MBOEPD. Aker said that the two plays had a combined 3.8 billion barrels of oil in place. One billion of these barrels have already been produced, but at least 500 MMBOE more can be made. Purchasing Hess’s interests will give Aker complete ownership and control of development.
“We are high grading our portfolio by investing in our highest return assets and divesting mature, higher cost assets,” CEO John Hess said. “This strategy is enabling us to prefund our world-class opportunity in Guyana, return capital to shareholders and reduce debt, while at the same time significantly lowering our cash unit costs and bolstering our company’s balance sheet.”
Liza field
In October 2017, Hess had raised about $3.25 billion in cash from divestures. Most of it will be spent developing the Liza field with ExxonMobil (ticker: XOM) and CNOOC.
Phase 1’s development will cost $4.4 billion, spending approximately $370 million in 2017, $839 million in 2018 and $1.1 billion in 2019. The remaining $900 million will be spent in 2020 and 2021.
Liza field recap
- Initial discovery in May 2015, 120 miles offshore from Guyana, in 5,700 feet of water
- The Stabroek Area is 6.6 million acres in size, 1,150x the size of a standard GOM block
- Phase 1 will have 17 wells, 8 wells will produce oil, while 6 will inject water into the reservoir and three will inject gas
- Phase 1 peak production of 120 MBOPD, with the operation recovering 450 MMBO overall
- ExxonMobil is the operator of the Stabroek block, holding a 45% interest. Hess owns 30% and CNOOC owns 25%
