Though Hess (HES -1.47%) recently reported a sharply higher fourth-quarter profit of $1.93 billion, or $5.76 a share, as compared to $374 million, or $1.10 a share, a year ago, the company's oil and gas production fell from 396,000 barrels of oil equivalent per day (boe/d) to 307,000 boe/d due largely to the loss of 72,000 boe/d of production from asset sales.

To make up for this lost production, Hess is depending on three key assets to help deliver production growth of 15% this year (excluding asset sales and Libya) -- North Dakota's Bakken shale, the Tubular Bells project in the Gulf of Mexico, and Norway's Valhall field. Let's take a closer look at each of them.

The Bakken
North Dakota's Bakken shale, where Hess commands 645,000 net acres, is undoubtedly its most prized asset. Hess' full-year 2013 Bakken production averaged 67,000 barrels of oil equivalent per day (boe/d), up 20% year over year, while its drilling and completion costs fell by more than 15% over the past year thanks to efficiency improvements from continuing delineation initiatives.

Company wells drilled in the fourth quarter of 2013 cost just $7.6 million per well, compared to $9 million per well in the fourth quarter of 2012, making Hess one of the lowest-cost operators in the region. Even Continental Resources (CLR), another world-class Bakken driller, spends around $8 million per well, while Whiting Petroleum (WLL) spends between $8-$8.5 million per well. Meanwhile, Kodiak Oil & Gas' (NYSE: KOG) well costs are notably higher -- between $9.7 million to $10.2 million per well -- because of that company's decision to use more expensive ceramic proppants.

This year, Hess plans to spend about $2.2 billion in the Bakken, which is more or less unchanged from last year's level of spending. However, it plans to do a lot more with the same amount of money, hoping to increase its rig count in the region from 14 to 17 and bring online 225 new operated wells this year, up from 168 last year. Given its strong performance over the past year, the company raised its net Bakken production peak guidance to 150,000 boe/d in 2018, up from a prior guidance of 120,000 boe/d in 2016.

Tubular Bells in the Gulf of Mexico
The second key near-term driver of Hess' growth is the Tubular Bells project in the Gulf of Mexico, which involves the development of the Tubular Bells deepwater oil and gas field, located roughly 135 miles southeast of New Orleans in water depths of approximately 4,300 feet. Hess serves as the project's operator with a 57.14% interest, while Chevron (CVX -0.90%) owns the remaining 42.86% interest.

The production facilities used to develop the field will consist of a subsea wet tree infrastructure tied to a three-level topside structure and supported by a design spar anchored by nine mooring lines. Production from Tubular Bells is expected to commence in the third quarter of this year at a rate of 25,000 boe/d net to Hess. Based on recent encouraging drilling results, Hess believes there is potential upside in both production and reserves from Tubular Bells.

Norway's Valhall field
The third key contributor to Hess' near-term growth is Norway's Valhall field, an oilfield located in the southern part of the Norwegian North Sea. It is operated by BP (BP -1.04%), which maintains a 35.9% interest, with Hess owning the remaining 64.1% interest.

As a long-lived asset, the field has generated a ton of free cash flow for Hess and should help it move toward its goal of becoming free cash flow positive after 2014. After a redevelopment project last year extended the field's life by 40 years, Hess believes it still has significant untapped potential both in terms of unbooked resources and production growth.  

This is important because if Hess can convert some of these unbooked resources to proved reserves, it could significantly boost the value of its acreage and allow the company to extract more oil and gas over the life of the field. With plans to bring three new wells online this year, Hess expects its net production from Valhall to average between 30,000-35,000 boe/d this year, up from 23,000 boe/d last year.

The bottom line
With a much more streamlined portfolio after numerous asset sales, Hess can concentrate its capital on a few lower-risk, higher-return resource plays where it has size and scale advantages. With the company targeting average annual production growth of 5%-8% through 2018, investors should keep a close eye on the results of its ongoing pilot programs testing tighter well spacing in the Bakken, which could help further reduce costs and boost the productive and resource potential of its acreage, as well as any announcements regarding potential delays or other issues at Tubular Bells and Valhall.