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Hess Corporation (HES - Analyst Report) has struck oil at the exploratory well on the Deepwater Tano/Cape Three Points block offshore Ghana. This marks the seventh successful drilling by Hess in the block.

The exploratory well − Pecan North-1 − encountered approximately 40 feet of net oil pay in the Turonian-aged reservoir. The well was drilled by the Stena Drillmax drillship in water depth of 7,411 feet about 7 miles northeast of the Pecan-1 well.

The U.S. explorer has already seen successful results with respect to drilling time and cost per foot. For the last three wells, the gross costs averaged $40 million per well, including case logging.

Ghana has enormous energy potential. British energy explorer, Tullow Oil plc, announced the start-up of production with about 16,500 barrels of oil per day from Phase 1A of Ghana's offshore Jubilee field in December last year.

Hess now plans to propose the appraisal for its various discoveries to the country’s government for consent on or before Jun 2, 2013. The company has already initiated pre-development studies on the block. Hess enjoys the operatorship of the block with a 90% working interest. Ghana National Petroleum Corp. holds the remaining 10% equity interest and will remain through the production phase of the license.

Earlier this year, Hess earmarked $550 million for exploration that targets further work on the Deepwater Tano/Cape Three Points block off Ghana, and includes shooting seismic and drilling exploration wells on the Dinarta and Shakrok blocks in Iraqi Kurdistan.

This new oil find establishes Hess’ hold in the emerging oil rich region. In the recent past, the company accelerated its spending to finance its massive exploration program, which has also witnessed a couple of dry holes. In order to reduce its exposure to risky areas, Hess is focusing on its new strategy of engaging in high-impact exploration areas.

Hess retains a Zacks Rank #3 (short-term Hold rating). However, there are other stocks in the oil and gas industry that appear promising. These include Range Resources Corporation (RRC - Analyst Report) with a Zacks Rank #1 (Strong Buy), and Breitburn Energy Partners L.P. (BBEP - Snapshot Report) and Hyperdynamics Corporation with Zacks Rank #2 (Buy).

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