Oil producers Hess, Conoco raise 2019 production outlooks

(Reuters) - Hess Corp and ConocoPhillips expect to produce more oil in 2019 than last year without altering their exploration budget in a big way, the two oil and gas producers said on Monday.

Conoco will spend more on Alaska and Canada than before in the next year, while keeping expenses in continental United States, which includes the costly and crowded Permian Basin, largely unchanged.

Pipelines in the basin are running at full capacity, while unprecedented drilling has resulted in labor shortage.

Conoco said it will spend $1.2 billion on Alaska from its total capital expenditure of $6.1 billion in 2019, partly a result of a recently sanctioned oil project there. In 2018, the company expects to spend less than $1 billion in the region.

Meanwhile, Hess said the lion’s share of its $2.9 billion capital expenditure in 2019 will be used for exploration in Guyana and in the Bakken shale region of eastern Montana and western North Dakota.

The company’s spending in Guyana largely focuses on production from its offshore discoveries in partnership with Exxon Mobil that now total more than 5 billion barrels of oil equivalent per day (boep/d).

The raised production forecasts come as global oil markets struggle with oversupply, resulting in producer group OPEC and other key exporters agreeing to cut their crude output from January.

U.S. production, however, is expected to rise to a record high of 10.9 million bpd in 2018 and 12.1 million bpd in 2019.

For Hess, production is expected to range between 270,000 and 280,000 boep/d, excluding Libya, up from the 255,000 boep/d it expects in 2018, while ConocoPhillips was aiming to produce 2.0-2.6 percent more oil and gas next year.

“As we focus spending on our high return investment opportunities, we will continue to reduce our unit costs to drive margin expansion and improve profitability,” Hess Corp Chief Executive Officer John Hess said in a statement.

Last week, oil major Chevron Corp increased its spending budget for the first time in four years. The company said it plans to spend more on shale production next year, as well as in refining and chemicals.

Reporting by Laharee Chatterjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur