Hess 2014 Annual Report Download - page 21

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per day of crude oil into an interconnecting pipeline for transportation to the Tioga Rail Terminal and to multiple third-party
pipelines and storage facilities.
In 2014, the Corporation formed Hess Midstream Partners LP to own, operate, develop and acquire a diverse set of
midstream assets to provide fee-based services to both Hess and third party crude oil and natural gas producers. Hess
Midstream Partners LP filed a registration statement on Form S-1 in September 2014 and expects to complete an initial
public offering of its securities in 2015. The assets to be held by Hess Midstream Partners LP at the time of its initial public
offering are expected to include a 30% economic interest in Hess TGP Operations LP (owner of the Tioga Gas Plant), a 50%
economic interest in Hess North Dakota Export Logistics Operations LP (owner of the Tioga rail terminal, Ramberg truck
facility and crude oil rail cars), and a 100% interest in Hess Mentor Storage Holdings LLC (owner of a 328,000 barrel
propane storage cavern with a rail and truck transloading facility).
The Corporation also owned a 50% undivided working interest in approximately 45,000 net acres in the wet gas area of the
Utica Basin of Ohio. During 2014, a total of 38 wells were drilled, 36 wells were completed and 39 wells were brought on
production as the Corporation transitioned from appraisal to early development activities. In 2015, the Corporation and its
joint venture partner plan to execute a two rig drilling program that will allow for 20 to 25 wells to be drilled and for 25 to 30
wells to be brought online. Net production is forecast to be in the range of 15,000 boepd to 20,000 boepd in 2015. During
2014, the Corporation sold approximately 77,000 net acres of its 100% owned acreage in the dry gas area of the Utica shale
play for cash proceeds of approximately $1,075 million.
In the Permian Basin, the Corporation operates and holds a 34% interest in the Seminole-San Andres Unit. In 2013, the
Corporation sold its interests in the Eagle Ford shale play in Texas.
Offshore: The Corporation’s production offshore in the Gulf of Mexico was principally from the Shenzi (Hess 28%),
Llano (Hess 50%), Conger (Hess 38%), Baldpate (Hess 50%), Tubular Bells (Hess 57%), Hack Wilson (Hess 25%) and Penn
State (Hess 50%) fields.
At the Hess operated Tubular Bells Field, the Corporation achieved first production in November 2014 following
completion of construction, installation and commissioning of offshore production facilities and subsea equipment.
Three wells are currently producing with a fourth production well expected to be completed in 2015.
At the BHP Billiton Petroleum operated Shenzi Field, development drilling continued during 2014 with the completion of
one production well. A continuous drilling program is planned through 2016.
The Corporation is operator and holds a 25% interest in the Stampede offshore development project on Green Canyon
Blocks 468, 511 and 512 in the Gulf of Mexico. In 2014, the co-owners of the project sanctioned the field development and
committed to two deepwater drilling rigs that are expected to commence drilling operations in the fourth quarter of 2015 and
the first quarter of 2016. Construction of production facilities and subsea equipment is underway with first production from
the field targeted for 2018.
The Corporation holds a 25% interest in the Sicily prospect in the deepwater Gulf of Mexico. The operator, Chevron, has
commenced drilling of an exploration well with the objective of reaching target depth in the third quarter of 2015.
At December 31, 2014, the Corporation had interests in 177 deepwater blocks in the Gulf of Mexico, of which 148 were
exploration blocks comprising approximately 550,000 net undeveloped acres, with an additional 66,000 net acres held for
production and development operations. During 2014, the Corporation’s interests in 45 leases, comprising approximately
175,000 net undeveloped acres, either expired or were relinquished. In the next three years, an additional 81 exploration
leases, comprising approximately 280,000 net undeveloped acres, are due to expire.
Europe
At December 31, 2014, 23% of the Corporation’s total proved reserves were located in Europe (Norway 20% and
Denmark 3%). During 2014, 16% of the Corporation’s crude oil and natural gas liquids production and 7% of its natural gas
production were from European operations. In 2013, the Corporation completed the sale of its Russian subsidiary,
Samara-Nafta, and sold its interests in the Beryl fields, completing its exit from producing operations in the UK North Sea. In
2012, the Corporation sold its interests in the Bittern and Schiehallion fields in the UK North Sea.