U.S. independent Hess Corporation (HES) has decided to immediately rectify all problems pointed out by a safety audit of its work on the Valhall field, off Norway.
As a partner in the BP plc (BP) operated field, the company is taking action following the audit by Norway’s Petroleum Safety Authority (PSA) that recognized alleged weakness in its management.
The audit by the PSA revealed regulatory violation related to Hess’ management and documentation systems, as well as handling of risks. Hess has received an order from the agency with a deadline of May 1 for the implementation of actions necessary to improve its performance.
In response to this order from PSA, Hess issued a statement that it is working closely with the former to ensure that the shortcomings are fixed and complied with the PSA’s timeline. The company has also agreed to meet Norwegian regulations.
Hess is executing a transition from an integrated oil and gas company to a predominantly E&P entity, thereby shifting its growth approach from high-impact exploration to lower-risk unconventionals and a smaller, more focused exploration portfolio.
It is expected that unconventional oil (including sources like oil shales or coal-based liquid supplies) and gas extraction (using non-traditional techniques) will play important roles in the world energy mix in the long run. After building up position in the North American Bakken oil field for unconventional oil, Hess is pursuing unconventional gas in the Marcellus Shale play. Hess’ smaller exposure to Eagle Ford and Utica Shale as well as several global development projects (such as Ghana, Brunei, North Sea, Gulf of Mexico, Southeast Asia and Kurdistan) are likely to be the growth drivers.
Hess carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include Cheniere Energy Partners L.P. (CQP) and CNOOC Ltd. (CEO). Both stocks hold a Zacks Rank #1 (Strong Buy).
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