Oil and gas company Hess Corporation booked a loss for the first quarter of 2020 due to impairment charges resulting from the low oil price environment.
Hess on Thursday reported a net loss of $2.4 billion for 1Q 2020, including impairment and other after-tax charges of $2.3 billion resulting from the low price environment, compared with net income of $32 million in the first quarter of 2019.
Adjusted net loss was $182 million in the first quarter of 2020.
Oil and gas net production, excluding Libya, averaged 344,000 barrels of oil equivalent per day (boepd), up from 278,000 boepd in the first quarter of 2019.
The improved performance primarily resulted from a 46 per cent increase in Bakken production and the first full quarter of production at the Liza Field, offshore Guyana, which started production in December 2019.
E&P capital and exploratory expenditures were $631 million, compared with $542 million in the prior-year quarter.
Fresh capex cuts
Hess has further reduced its E&P capital and exploratory budget for 2020 to $1.9 billion, a 37 per cent reduction from the original budget of $3 billion.
This reduction will be achieved primarily by shifting from six rigs to one rig in the Bakken and deferring discretionary spending across the portfolio.
This includes a six to twelve-month deferral in the development of the Payara field and reduced 2020 drilling activity on the Stabroek Block offshore Guyana.
As a result of the unprecedented reduction in demand due to COVID-19, commercial storage in the United States is expected to reach capacity in the second quarter, which is requiring curtailments and shut-ins of production by the industry.
Hess has chartered three VLCCs to store 2 million barrels each of May, June, and July Bakken crude oil production that is expected to be sold in the fourth quarter of 2020.
Revised guidance
Hess’ oil and gas production for 2020, excluding Libya, is forecast to be approximately 320,000 boepd.
The company’s E&P capital and exploratory expenditures are projected to be $1.9 billion, $1.1 billion lower than the beginning of year guidance primarily reflecting a reduction in the Bakken rig count and deferral of capital in Guyana.