Hess Corp. entered an agreement on Oct. 5 to sell its interests in the Shenzi Field in the deepwater Gulf of Mexico (GoM) as the New York-based independent E&P company looks to funnel proceeds to its developments offshore Guyana.

BHP Group Ltd., the field’s operator, agreed to acquire the stake from Hess comprised of a 28% working interest for $505 million. The Shenzi Field produced an average of 11,000 net boe/d (90% oil) in the first eight months of 2020, according to the company release.

“Proceeds will be used to fund our world-class investment opportunity in Guyana,” CEO John Hess said in a statement on Oct. 5.

Guyana has been a key part of growth plans for Hess, which has said it would prioritize spending there as it looks to pull back elsewhere due to low oil prices.

On Sept. 8, Hess and partners, Exxon Mobil Corp. and CNOOC Ltd., said they had made their 18th discovery offshore Guyana. More recently, though, the companies announced the final investment decision for a $9 billion project to develop Guyana’s Payara Field.

In his statement on Oct. 5, Hess continued: “This sale is aligned with our strategy to preserve cash and preserve the long-term value of our assets in the current low oil price environment.”

Meanwhile, Anglo-Australian company BHP remains bullish on oil as it has profitable prospects for at least the next decade despite the plung in crude prices this year. In a separate release, Geraldine Slattery, BHP’s president of petroleum operations, noted the Shenzi acquisition not only adds production to the company’s portfolio but also grows its “high-margin barrels.”

“This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options,” Slattery said in a statement.

The Shenzi Field is located in the U.S. GoM, 120 miles off the Louisiana coast, in the deepwater Green Canyon area. The field was discovered in 2002 and achieved first oil in 2009.

Following close of the acquisition, expected before year-end 2020, BHP will own 72% working interest in the Shenzi Field. Repsol YPF owns the remaining 28% interest.

The Shenzi transaction will have an effective date of July 1.

Latham & Watkins LLP advised Hess in the transaction with a corporate deal team led by Houston partner Robin Fredrickson.

Offshore