By Eric Fox - August 1, 2012 | Tickers: CLR, GEOI, HES, KOG, MRO | 0 Comments

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Hess Corp. (NYSE: HES) has adjusted the companys capital budget for 2012 and expects to spend an extra billion dollars on the Bakken play in the last half of the year. The company is facing higher costs on drilling and completion services and more infrastructure spending.

Second Quarter of 2012

Hess reported average daily production of 55,000 barrels of oil equivalent (BOE) from the Bakken formation in the second quarter of 2012, up more than 100% from 25,000 BOE per day in the second quarter of 2011. The company expects production in 2012 to average between 54,000 and 58,000 BOE per day, down slightly from the original goal of 60,000 BOE per day set earlier in the year.

Bakken Overview

Hess has more than 800,000 net acres under lease prospective for the Bakken formation and plans to operate an average of 16 rigs here in 2012. The companys goal is to ramp up development and generate net production of 120,000 BOE per day from its properties by 2015.

Capital Spending Increase

The original investment plan that was set by Hess for 2012 called for $1.9 billion of capital spending on the Bakken during the year. This would have represented about 28% of its $6.8 billion exploratory and development spending in 2012.

Hess has now increased capital spending for 2012 to $8.5 billion and will put an extra $1 billion toward development and other spending in the Bakken. The $3 billion in capital spending here represents one of the largest investments in this area.

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Hess to Spend More in Bakken in 2012