Hess 2007 Annual Report Download - page 7

Exploration and Production
5
PRODUCTION
In 2007, production averaged 377,000 barrels of oil
equivalent per day, an increase of 5 percent from the
359,000 barrels of oil equivalent per day achieved in 2006.
The increase resulted from the ramp up of production at the
Okume Complex in Equatorial Guinea, the commencement
of natural gas production at Ujung Pangkah in Indonesia,
a full year of natural gas sales at Sinphuhorm, onshore
Thailand, and production growth in Russia and Azerbaijan.
In Equatorial Guinea, the company-operated Okume
Complex (Hess 85%), which started production in
December 2006, performed at the high end of
expectations throughout the year. Overall, reservoir
performance was better than originally forecast and the
facilities averaged a strong 97 percent uptime. In January
2008, gross production from the Okume Complex reached
its design capacity of 60,000 barrels of oil per day.
In Indonesia, the company-operated Ujung Pangkah Field
(Hess 75%) commenced natural gas production in April
2007 and ramped up to 100 million cubic feet per day
gross in the fourth quarter. Production of condensate
from Ujung Pangkah was also achieved in 2007 and is
expected to reach 3,000 net barrels of oil per day in 2008.
In the United States, our strategy of building on our
core position in the North Dakota Bakken Shale play is
proceeding well. In 2007, we drilled 32 wells and increased
our land holdings from 220,000 acres to 356,000 acres.
At year end, six rigs were drilling on our Bakken properties
and net production averaged near 5,000 barrels of oil per
day. We expect to continue our growth in 2008 with the
acquisition of additional acreage and by contracting for
additional drilling rigs.
In the United Kingdom North Sea, natural gas production
from the Atlantic (Hess 25%) and Cromarty (Hess 90%)
Fields added to our production growth. The Hess operated
Cromarty Field produced at a gross rate of approximately
95 million cubic feet per day during the first quarter of 2007,
and an election was made to shut in production during the
second and third quarters when natural gas prices were
lower. Full production resumed in October at seasonally
higher gas prices. This commercial strategy will be
considered again in 2008, depending on market conditions.
As part of our continued portfolio optimization, in 2007
we concluded the sale of our interests in the Scott and
Telford Fields in the North Sea.
DEVELOPMENT
In the deepwater Gulf of Mexico, we achieved first production
in October from the Genghis Khan oil and gas development
(Hess 28%) using a third party-owned production facility.
In January 2008, we completed a second production well
and we expect to drill and complete two additional wells
during the year. The Shenzi oil and gas development
(Hess 28%) continued to progress, achieving planned
milestones. Installation of the tendon piles for the Tension
Leg Platform (TLP) and hull fabrication were both completed
in 2007. Installation of equipment and additional develop-
ment drilling is expected to continue through 2008. We
expect first oil to be on schedule in mid-2009.
In the United States onshore, we continued to advance
construction at the company-operated development of the
Residual Oil Zone at the Seminole-San Andres Unit (Hess
34%) in West Texas, with engineering completion expected
in the first half of 2008. Currently the company is operating
four rigs in the field.