Hess Sees ‘Running Room’ In Gulf Of Mexico

Hart Energy | Velda Addison | December 13, 2018

Prolific production in the Permian Basin and large, play-opening discoveries offshore Guyana may regularly grab headlines, but companies like Hess Corp. (NYSE: HES) still see value in the U.S. Gulf of Mexico (GoM).

The New York-headquartered company said Dec. 12 it plans to drill an exploration well in the GoM next year at the Esox prospect, which is located near its Tubular Bells hub. The well will be the first exploration well in the GoM drilled by Hess in some time, Barbara Lowery-Yilmaz, senior vice president of exploration, said during an investor presentation.

If successful, the prospect could become another high-return tieback for the company, which brought its Stampede development online earlier this year. Lowery-Yilmaz described Esox, which sits six miles updip from the Royal Dutch Shell Plc (NYSE: RDS.A)-operated Kaikias Field, as a Miocene amplitude-supported subsalt prospect located in a shallower stratigraphic horizon than the producing zones of the Tubular Bells Field.

“It is gorgeous,” said Lowery-Yilmaz. “There are multiple stacked targets in Esox and … we’re drilling this well through one of the Tubular Bells slots, which again will improve our cycle time should we be successful.”

Existing infrastructure, falling costs, standardization and exploration prospects are among the attributes that make the region—still recovering from the market downturn that slowed investment and activity—attractive to some.

Earlier this year, Kosmos Energy Ltd. (NYSE: KOS), an Atlantic Margin-focused E&P, entered the GoM with its acquisition of deepwater player Deep Gulf Energy for about $1.23 billion in cash and stock; Fieldwood Energy LLC emerged from bankruptcy and bought Noble Energy Inc.’s (NYSE: NBL) GoM assets for $480 million cash; and Cox Oil Offshore LLC snapped up Energy XXI Gulf Coast Inc. for $322 million.

So far, the industry has found 26 billion barrels of oil to date in the proven, prolific oily basin, Lowery-Yilmaz said.

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