U.S. oil producer Hess Corp. said on July 28 it planned to add a rig in North Dakota's Bakken basin in September, after topping estimates for second-quarter profit on a rebound in crude prices.
U.S. crude prices rose about 25% in the second quarter to trade at $70 at the end of June, as fuel demand recovered with the reopening of the economy.
Hess said its average realized prices for crude, excluding hedging, rose 22% sequentially to $64.27 a barrel in the quarter.
That helped it post an adjusted profit of 24 cents per share, compared with analysts’ estimates of 18 cents per share, according to Refinitiv IBES data.
But total production, excluding Libya, fell to 307,000 barrels of oil equivalent per day (boe/d), from 315,000 boe/d in the previous quarter.
Hess now expects 2021 net production, excluding Libya, to be about 295,000 boe/d—the upper end of the previous outlook of about 290,000 boe/d to 295,000 boe/d. Its exploration and production capex forecast was unchanged at $1.9 billion despite the planned addition of a third rig.
Despite the oil price jump, companies have been cautious with production increases due to pressure from shareholders who have punished output growth and favored returns in the form of dividends and buybacks.
Shares of Hess were trading at about 1.5% higher in premarket trade.
The maturing Bakken play continues to struggle with various challenges following the hit it took as a result of the pandemic. Producers now see it as a cash engine rather than a growth engine.
The oil producer said its average realized crude oil selling price, excluding hedges, surged to $52.52 per barrel in first-quarter 2021 from $39.45 in fourth-quarter 2020.
The company posted quarterly production of 307,422 barrels of oil equivalent per day (boe/d), 2.8% higher than the previous quarter.