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Last week we reported on the possibility of a fourth Hess rig in the Bakken, based on comments at a recent investor conference. This week, we have more details to share about that possibility, after the company’s fourth quarter earnings call.

Hess plans to continue to run a three-rig program in the Bakken for 2022, and plans to bring 85 new wells online. In the first quarter, they expect to drill 22 wells and bring 10 new wells online. For the balance of the year, they plan to bring 25 wells online each quarter.

Depending on corporate cash flow needs and returns, Hess could add a fourth rig — but that is more likely to happen next year than this year.

“Assuming prices hold at this relatively high level,” Chief Executive Officer Greg Hill told analysts, “we would look to add that fourth rig next year, and by doing so, we could then take the Bakken to 200,000 barrels a day.”

Four rigs would “really maximize utilization of the infrastructure,” he added. “So that would be another objective, to fill that infrastructure up. And of course, you know guys, with this prices, the Bakken becomes, you know, this massive cash generator and, at that 200,000 barrels a day, even at $60 to $65, it generates about a billion dollars in free cash flow. So you an see the real cash firepower in the Bakken.”

Like Enerplus, Hess is also taking steps to protect its operation from inflation. They will use lean manufacturing and technology-driven efficiency gains to hold drilling costs flat from 2021 to 2022, at $5.8 million per well. That is $400,000 or 6 percent lower than those same costs in 2020.

Net Bakken production is expected to land between 165,000 to 170,000 barrels of oil equivalent per day. That’s a 6 to 9 percent increase over 2021. First quarter production is expected to average between 155,000 to 160,000 barrels of oil equivalent per day.

Free cash flow will be used to continue rapid debt repayment, and to return cash to shareholders. A framework with more details on that will be coming from the company soon.

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