Hess 2011 Annual Report Download - page 32

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subsidiary, increasing its ownership to 90%. As of December 31, 2011, this subsidiary had exploration and
production rights in 22 license areas. During 2012, the Corporation plans to continue drilling and to install gas
treatment facilities that are anticipated to start up in the fourth quarter of 2012.
France: The Corporation’s activities in France are conducted through an agreement with Toreador
Resources Corporation (Toreador), under which it can invest in an initial exploration phase and earn up to a 50%
working interest in, and become operator of, Toreador’s approximately 680,000 net acres in the Paris Basin. An
initial six exploration well program, which was scheduled to begin in 2011, was deferred due to a temporary drilling
moratorium requested by the government prior to the implementation of a law prohibiting hydraulic fracturing. In
2012, the Corporation anticipates drilling up to three conventional vertical wells and continuing geological and
geophysical analysis.
Africa
At December 31, 2011, 17% of the Corporation’s total proved reserves were located in Africa (Equatorial
Guinea 5%, Algeria 1% and Libya 11%). During 2011, 25% of the Corporation’s crude oil and natural gas
liquids production was from its African operations.
Equatorial Guinea: The Corporation is operator and owns an interest in Block G (Hess 85%) which
contains the Ceiba Field and Okume Complex. During 2012, the Corporation intends to drill additional
production wells at the Ceiba Field. Additional development drilling at the Okume Complex is planned to
commence during 2013.
Algeria: The Corporation has a 49% interest in a venture with the Algerian national oil company that
redeveloped three oil fields. The Corporation also has an interest in Bir El Msana (BMS) Block 401C (Hess
45%). In 2011, the Corporation sanctioned a small development project at the BMS Field.
Libya: The Corporation, in conjunction with its Oasis Group partners, has oil and gas production
operations in the Waha concessions in Libya (Hess 8%). The Corporation also owns a 100% interest in offshore
exploration Area 54 in the Mediterranean Sea, where two wells discovered hydrocarbons.
In response to civil unrest in Libya, a number of measures were taken by the international community in the
first quarter of 2011, including the imposition of economic sanctions. Production at the Waha Field was
suspended in the first quarter of 2011. As a consequence of the civil unrest and the sanctions, the Corporation
delivered force majeure notices to the Libyan government relating to the agreements covering its exploration and
production interests in order to protect its rights while it was temporarily prevented from fulfilling its obligations
and benefiting from the rights granted by those agreements. Production at the Waha Field restarted during the
fourth quarter of 2011 at levels that were significantly lower than those prior to the civil unrest. The
Corporation’s Libyan production averaged 23,000 barrels of oil equivalent per day (boepd) for the full year of
2010 and 4,000 boepd for 2011. The force majeure covering the Corporation’s production interests was
withdrawn at the end of the fourth quarter of 2011, as the economic sanctions were lifted. The force majeure
covering the Corporation’s offshore exploration interests remained in place at year-end but is expected to be
withdrawn in 2012. The Corporation had proved reserves of 166 million barrels of oil equivalent in Libya at
December 31, 2011. At December 31, 2011, the net book value of the Corporation’s exploration and production
assets in Libya was approximately $500 million.
Ghana: The Corporation holds a 90% interest and is operator in the Deepwater Tano Cape Three Points
License where the Corporation drilled an exploration well in 2011 that encountered an estimated 490 net feet of
oil and gas condensate pay over three separate intervals. The Corporation anticipates commencing additional
exploration drilling in the first quarter of 2012, subject to government approvals and rig availability.
Egypt:The Corporation owns an 80% interest in Block 1 offshore Egypt in the North Red Sea.
Asia
At December 31, 2011, 18% of the Corporation’s total proved reserves were located in the Asia region (JDA
8%, Indonesia 5%, Thailand 3%, Azerbaijan 1% and Malaysia 1%). During 2011, 5% of the Corporation’s crude
oil and natural gas liquids production and 71% of its natural gas production were from its Asian operations.
Joint Development Area of Malaysia/Thailand (JDA): The Corporation owns an interest in Block A-18
of the JDA (Hess 50%) in the Gulf of Thailand. In 2011, the operator continued development drilling and
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