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Capitalized Exploratory Well Costs
9 Months Ended
Sep. 30, 2019
Capitalized Exploratory Well Costs [Abstract]  
Capitalized Exploratory Well Costs

 


6.  Capitalized Exploratory Well Costs

The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves during the nine months ended September 30, 2019 (in millions):

 

Balance at January 1, 2019

 

$

418

 

Additions to capitalized exploratory well costs pending the determination of proved reserves

 

 

148

 

Reclassifications to wells, facilities and equipment based on the determination of proved reserves

 

 

(25

)

Balance at September 30, 2019

 

$

541

 

The table above does not include well costs incurred and expensed during 2019 of $10 million associated with the Jill-1 well on License 6/16 (Hess 80%) in Denmark.  Reclassifications to wells, facilities and equipment based on the determination of proved reserves resulted from sanction of the second phase of development for the Liza Field, offshore Guyana.  Capitalized exploratory well costs capitalized for greater than one year following completion of drilling were $383 million at September 30, 2019 and primarily related to:  

Guyana: Approximately 50% of the capitalized well costs in excess of one year relates to nine successful exploration wells where hydrocarbons were encountered on the Stabroek Block (Hess 30%), offshore Guyana.  The operator plans further appraisal drilling for certain fields and is conducting pre-development planning for additional phases of development beyond the two existing sanctioned phases of development.

Gulf of Mexico: Approximately 30% of the capitalized well costs in excess of one year relates to the appraisal of the northern portion of the Shenzi Field (Hess 28%) in the Gulf of Mexico, where hydrocarbons were encountered in the fourth quarter of 2015.  Following exploration and appraisal drilling activities completed by the operator on adjacent blocks to the north of our Shenzi blocks, the operator has commenced acquiring 3D seismic for use in development planning of the northern portion of the Shenzi Field.

Joint Development Area (JDA):  Approximately 10% of the capitalized well costs in excess of one year relates to the JDA (Hess 50%) in the Gulf of Thailand, where hydrocarbons were encountered in three successful exploration wells drilled in the western part of Block A-18.  The operator has submitted a development plan concept to the regulator to facilitate commercial negotiations for an extension of the existing gas sales contract to include development of the western part of the Block.

Malaysia:  Approximately 10% of the capitalized well costs in excess of one year relates to the North Malay Basin (Hess 50%), offshore Peninsular Malaysia, where hydrocarbons were encountered in five successful exploration wells.  We are continuing to conduct subsurface evaluations for consideration in future phases of field development.