A new completion design with 60 sliding sleeve stages and proppant loading of 140,000 pounds per stage is boosting EUR rates by as much as 15% in the Bakken shale play for Hess Corp. (NYSE: HES).

The improvement in both EUR and IP 180 productivity prompted Hess to increase the EUR estimate for its Bakken acreage to 2 billion barrels of oil equivalent (Bboe) from 1.7 Bboe, Greg Hill, president and COO of Hess, told analysts on an earnings call this week.

“Wells brought online in 2018 are expected to deliver an average EUR of greater than 1 million barrels of oil equivalent and generate returns of 40% to 50% at a $50 per barrel WTI,” Hill said. “In addition, we’ve increased by 25% the number of wells that can deliver a 15% return or higher at $50 per barrel WTI to 1,780 wells, which represents more than 60% of our remaining well inventory.”

The progress comes as the world braces for what could an average of 10.6 million barrels of day (MMbbl/d) of U.S. production this year, eclipsing the record of 9.6 MMbbl/d set in 1970, according to figures released by the U.S. Energy Information Administration.

Oil production from top-producing shale plays that include the Permian, Eagle Ford and Bakken—where Hess produced 110,000 boe/d during fourth-quarter 2017 (up 15% compared to a year ago)—are expected to play a role as companies step up drilling activity, oil prices rebound and OPEC holds its production steady.

Hess CEO John Hess said the company is on track to increase production in the Bakken to about 175,000 boe/d by 2021, up from about 105,000 boe/d in 2017.

“Through the application of geosteering, optimized spacing, higher stage counts and proppant loading, we have increased our well productivity by approximately 50% in the last two years,” Hess said. “These improvements, together with our low drilling and completion costs, have enabled us to generate returns that are competitive with any shale play in the United States.”

About 70% of Hess’ proved reserve additions of 397 million net barrels of oil equivalent for the quarter were from the Bakken, “reflecting new proved undeveloped reserves, improved prices and our enhanced completion designs,” Hill said.

But Hess hasn’t settled on this design; other completion techniques are being studied. The company is conducting some plug-and-perf pilots this year.

“Reason being is as the industry has continued to improve the limited entry perforating in particular on plug-and-perf is allowing a very large number of entry points with very good fracture control,” Hill told analysts on the company’s earning call Feb. 5. “So potentially there could be a move to that, but we need to get more experience under our belt.”

Plug-and-perf would be conducted outside the core, Hill added.

The New York-headquartered company also plans to add two rigs in the Bakken, bringing the count to six by fourth-quarter 2018. The higher rig count could grow production by 15% to 20% annually through 2020, Hess said, adding it is also expected to deliver average returns between 40% and 50% at $50/bbl WTI from wells brought online this year.

“We expect to drill approximately 120 wells and bring approximately 95 new wells online over the year, compared to 85 wells drilled and 68 wells brought online in 2017,” Hill said.

With more than 500,000 net acres in the core of the play, Hess is one of the top five acreage holders in the Bakken, considered one of the company’s two main growth engines—the other being its assets offshore Ghana where it is a partner in the prolific Stabroek Block where ExxonMobil (NYSE: XOM) has made six discoveries.

Yet despite Hess’ gains in the Bakken, where average production for 2018 is forecast at between 115,000 and 120,000 boe/d net, the company reported this week a loss of $2.68 billion for fourth-quarter 2017. This was down from a loss of $4.89 billion a year ago.

RELATED: Hess Posts 13th Straight Quarterly Loss; Shares Dive

Velda Addison can be reached at vaddison@hartenergy.com.

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