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hess increases spending - mrm investors happy

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    * Hess to spend $1 bln more on production next year


    * To be involved in 13 exploration wells off W.Australia

    * Hess shares up 1 pct (Adds details on Australia, Chevron find, updates shares)

    By Braden Reddall

    SAN FRANCISCO, Dec 14 (Reuters) - U.S. oil producer and refiner Hess Corp (HES.N) increased its 2010 capital spending plans by 22 percent, devoting $1 billion more to production alone and reversing much of the reduction made this year.

    Hess said on Monday its 2010 capital and exploratory budget would be $3.9 billion, with $2.4 billion for production, $600 million for developments and $850 million for exploration.

    "We are fortunate to have a strong portfolio of attractive investment opportunities," Chief Executive John Hess said in a statement, adding he expected to fund 2010 spending from internally generated cash flow.

    Hess had set aside $3.2 billion for 2009 capital spending, down sharply from $4.4 billion the previous year.

    In 2010, production expenditures will go toward projects, including North Dakota's Bakken Shale, where Hess will boost its rig count to eight next year from three now, and projects in Equatorial Guinea, the Gulf of Mexico, Britain and Norway.

    Hess will also expand production at its Tioga gas plant in North Dakota, underlining a broader push for U.S. natural gas that drove Exxon Mobil Corp's (XOM.N) $30 billion takeover of XTO Energy Inc (XTO.N), announced on Monday. [ID:nN14126206]

    New York-based Hess said its spending plans were consistent with growing both reserves and production by 3 percent a year.

    Development spending included work in Norway, Indonesia and the deepwater Gulf of Mexico. Exploration money would go toward exploration wells in Brazil and Australia and activities in Ghana, Indonesia and the deepwater Gulf of Mexico, it added.

    The wells in the Northwest Shelf of Australia include five on its WA-390-P permit and eight more on WA-404-P, which Hess shares with operator Woodside Petroleum Ltd (WPL.AX).

    Those are in the same region where Chevron Corp (CVX.N) announced on Monday another natural gas discovery to underpin the $37 billion Gorgon gas project nearby. [ID:nWNBB0911]

    Including investments in Gorgon, Chevron's own capital and exploratory budget for 2010 is 5 percent smaller than the San Ramon, California-based company's budget for this year. [ID:nN10201793]

    Hess shares were up 1 percent at $56.21 in late trading on the New York Stock Exchange, while Chevron was 0.8 percent lower at $77.13. (Reporting by Braden Reddall, editing by Maureen Bavdek)

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