Hess Announces Significant Reduction to 2020 Capital and Exploratory Budget
March 17 2020 - 08:00AM
Business Wire
Hess Corporation (NYSE:HES) today announced a revised $2.2
billion capital and exploratory budget for 2020, an $800 million
reduction from the previous budget of $3.0 billion. The company
also announced a new $1.0 billion three year term loan agreement.
These actions further strengthen the company’s cash position and
financial liquidity in response to the sharp decline in oil
prices.
“With 80% of our oil production hedged in 2020, our
significantly reduced capital and exploratory budget and our new
three year loan agreement, our company is well positioned for this
low price environment,” CEO John Hess said. “Our focus is on
preserving cash and protecting our world class investment
opportunity in Guyana.”
The reductions to the company’s 2020 capital budget will be
primarily achieved by shifting from a six rig program to one rig in
the Bakken, which is expected to be completed by the end of May.
Most discretionary exploration and offshore drilling activities,
excluding Guyana, will also be deferred.
On March 16, 2020, the company entered into a $1.0 billion three
year term loan agreement with JPMorgan Chase Bank, N.A. The term
loan contains provisions that require the company to reduce
JPMorgan’s initial funded amount, which the company intends to do
by syndicating the loan to other banks.
In 2020, approximately 80% of the company’s oil production is
hedged by put options, with 130,000 barrels a day at $55 per barrel
West Texas Intermediate put options and 20,000 barrels a day at $60
per barrel Brent put options. In addition, the company entered 2020
with more than $1.5 billion in cash and cash equivalents on its
balance sheet and has a $3.5 billion undrawn revolving credit
facility and no material debt maturities until 2027.
Net production for 2020 is now forecast to average between
325,000 and 330,000 barrels of oil equivalent per day, excluding
Libya, versus previous guidance of between 330,000 and 335,000
barrels of oil equivalent per day. The company’s Bakken net
production is forecast to average approximately 175,000 barrels of
oil equivalent per day in 2020, versus previous guidance of
approximately 180,000 barrels of oil equivalent per day.
Hess Corporation is a leading global independent energy company
engaged in the exploration and production of crude oil and natural
gas. More information on Hess Corporation is available at
http://www.hess.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Words such as “anticipate,” “estimate,” “expect,”
“forecast,” “guidance,” “could,” “may,” “should,” “would,”
“believe,” “intend,” “project,” “plan,” “predict,” “will,” “target”
and similar expressions identify forward-looking statements, which
are not historical in nature. Our forward-looking statements may
include, without limitation: our projected budget and capital and
exploratory expenditures; our plan to syndicate the loan; our
business strategy; our future financial and operational results;
and future economic and market conditions in the oil and gas
industry. Forward-looking statements are based on our current
understanding, assessments, estimates and projections of relevant
factors and reasonable assumptions about the future.
Forward-looking statements are subject to certain known and unknown
risks and uncertainties that could cause actual results to differ
materially from our historical experience and our current
projections or expectations of future results expressed or implied
by these forward-looking statements, including: fluctuations in
market prices of crude oil, natural gas liquids and natural gas and
competition in the oil and gas exploration and production industry;
our ability to fully syndicate the loan; potential disruption or
interruption of our operations due to catastrophic and other
events; reduced demand for our products, including as a result of
outbreaks of infectious diseases; the ability of our contractual
counterparties to satisfy their obligations to us; any limitations
on our access to capital or increase in our cost of capital,
including as a result of weakness in the oil and gas industry or
negative outcomes within commodity and financial markets; and other
factors described in Item 1A—Risk Factors in our Annual Report on
Form 10-K for the year ended December 31, 2019 and any additional
risks described in our other filings with the Securities and
Exchange Commission (SEC). Hess Corporation undertakes no
obligation to, and does not intend to, update these forward-looking
statements to reflect events or circumstances occurring after this
news release. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this news release.
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version on businesswire.com: https://www.businesswire.com/news/home/20200317005401/en/
For Hess Corporation Investors: Jay Wilson (212)
536-8940 jrwilson@hess.com
Media: Lorrie Hecker (212) 536-8250 lhecker@hess.com
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