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Hess (HES) Seeks New Partner for Block 59 Offshore Suriname

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Hess Corporation (HES - Free Report) is currently looking for partner(s) to continue exploration at Block 59 offshore Suriname. This block was previously held by a consortium of ExxonMobil, Equinor and Hess, with each company owning a one-third share. However, in July 2024, ExxonMobil and Equinor transferred their ownership to Hess Corporation in a non-financial transaction.

According to Staatsolie, the state-owned oil company at Suriname, Hess Corporation has until July 2025 to find a new partner and proceed with the exploration activities at Block 59. Given the substantial capital requirements and the associated risks in deepwater exploration, seeking partners is crucial for advancing such projects.

The Surinamese oil company uses production sharing contracts (PSCs) to grant exploration and development rights to a foreign energy company. Under a PSC, the costs and risks associated with the exploration phase are fully borne by the company holding the contract. The PSC also allows a company to seek partners in a block or transfer its stake to another party.

The PSC for Block 59 was originally granted to the consortium of ExxonMobil, Equinor and Hess in 2019. The block covers an area of approximately 4,400 square kilometers and is located in water depths ranging from 2,000 to 3,600 meters at the extreme northwest of offshore Suriname.

Staatsolie believes that although Block 59 offers significant investment opportunities, it carries considerable risks due to its proximity to other promising deepwater discoveries in the greater Guyana-Suriname basin.

Zacks Rank and Key Picks

Currently, HES carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the energy sector are SM Energy (SM - Free Report) , The Williams Companies Inc. (WMB - Free Report) and MPLX LP (MPLX - Free Report) . SM Energy presently sports a Zacks Rank #1 (Strong Buy), while The Williams Companies and MPLX carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy is an upstream energy firm operating in the prolific Midland Basin and the South Texas regions. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.

The Williams Companies is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transporting natural gas and natural gas liquids. Boasting a widespread pipeline system of more than 33,000 miles, Williams is one of the largest domestic transporters of natural gas by volume. 

MPLX LP owns and operates a wide range of midstream assets. The partnership's midstream assets include oil and natural gas gathering systems and transportation pipelines for crude, natural gas and refined petroleum products. MPLX is least exposed to commodity price fluctuations as it generates stable fee-based revenues. Furthermore, it surpasses its industry peers in terms of distribution yield, reflecting its commitment to returning capital to its unitholders.


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