Hess is back on track in the Bakken and has added a fourth drilling rig to its program, with an eye toward a steady growth to a long-term 200,000 barrels per day plateau.

That plateau “optimizes” efficiencies in the Bakken, company officials said during their most recent earnings call. It’s basically the level that tops up Hess Corporation’s Bakken infrastructure and keeps the takeaway tank full.

At $60 WTI, 200,000 barrels per day of Bakken production produces $1 billion in free cash flow, Hess President and Chief Operating Officer Greg Hill said during the company’s most recent earnings call.

“Obviously at the current price, that is much higher,” he added. “So it becomes this massive cash annuity, you know for the portfolio, that 200,000 barrels a day.”

The ramp-up to 200,000 will not happen all at once.

“We expect that third quarter (production) to be up 10 percent, the fourth quarter to be up 10 percent from that, and then you really see the fourth rig start to kick in, because we’ll start completing wells from that fourth rig in 2023,” Hill said. “So that’s why we’re saying we’ll have this steady increase trajectory to 200,000 barrels a day, which we expect to hit in 2024. It should be a smooth ramp from here.”

Bakken net production averaged around 155,000 for the first two quarters of the year, just slightly less than expected due to the back-to-back blizzards in April.

Guidance on well completion costs, meanwhile, has increased by $100,000, to $6.3 million per well for 2022.

“While we believe the industry is experiencing overall inflation of between 15 to 20 percent, our fun year drilling and completion costs are forecast to increase by about 8.5 percent year over year,” Hill said.

Hess drilled 20 wells and brought 19 new ones online in the second water. For the third, they pan to drill 25 wells and bring 20 online. By year end, the company plans to drill 95 wells, and bring 80 to 85 of them online.

The Bakken is Hess’ largest operated asset. They are not the largest producer or largest asset holder, but they have an industry-leading position in the nation’s No. 3 shale play with 460,000 net acres in what are considered core assets.

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