U.S. Markets closed

Hess Stock Surging After Company Initiates Development of Massive Oil Discovery

Tom Terrarosa

Hess was leading the premarket movers Friday after the company announced it has sanctioned the first phase of development of the Liza Field, which it said is one of the industry's largest oil discoveries of the past decade, located on the Stabroek Block offshore Guyana. 

The company's stock was up around 4% in premarket trading Friday, likely helped up by rebounding oil prices. Shortly after 8:30 a.m. Friday, global benchmark Brent crude futures and West Texas Intermediate light sweet crude futures were up roughly 1% and 0.8% to $47.72 and $44.79, respectively.  

Other oil and gas stocks were moving up in the premarket as well with the commodity's resurgance. Marathon Oil , Chesapeake Energy , Freeport-McMoran and Transocean , which all frequently trade closely with oil's movements, were in the green early Friday. 

Hess said Friday that the first phase of a planned multiphase development of the Liza Field is expected to have a gross capital cost of approximately $3.2 billion for drilling and subsea infrastructure and will develop approximately 450 million barrels of oil, with first oil expected by 2020. 

Gross discovered recoverable resources for the Stabroek Block are now estimated to be between 2 billion and 2.5 billion barrels of oil equivalent, including Liza and other successful exploration wells on Liza Deep, Payara and Snoek.

Hess' expects its net share of the development cost to total $955 million, of which $110 million is already included in Hess' 2017 capital and exploratory budget. Of the remaining net development costs, about $250 million is expected in 2018 and $330 million in 2019. The balance will be paid between 2020 and 2021.

Exxon Mobil affiliate Esso Exploration and Production Guyana is operator of the oil assets and holds a 45% interest in the Stabroek Block. Hess affiliate Hess Guyana Exploration holds a 30% interest and CNOOC Nexen Petroleum Guyana, an affiliate of major Chinese oil producer CNOOC, holds a 25% stake.

EXCLUSIVE OFFER: See inside Jim Cramer’s multi-million dollar charitable trust portfolio to see the stocks he thinks could be potentially HUGE winners. Click here to see his holdings for FREE.