(Updates share price and adds details on Guyana timeline, paragraphs 4,)
HOUSTON, March 8 (Reuters) - Oil producer Hess Corp on Thursday disclosed plans to buy back an additional $1 billion in shares by the end of 2018, averting a second tangle with activist hedge fund Elliott Management on the eve of nominations for the Hess board.
The new buyback would bring its total repurchase plan to $1.5 billion since late last year. It includes an accelerated share repurchase of $500 million. In that arrangement, generally the company will buy its shares from an investment bank.
The oil and gas producer said it would also add two new drilling rigs to its North Dakota operations and look to lower operating costs at its biggest production area.
Hess shares dipped 13 cents to $46.61 in Thursday afternoon trading on the New York Stock Exchange.
Hess did not mention Elliott in its disclosure, but the company's CEO said the greater buybacks would not hurt plans for heavy future investments in Guyana. Nominations for its board close on Friday.
"We can expand the buyback authorization without compromising our ability to fund this world-class investment," Chief Executive Officer John Hess said in a statement.
Elliott, which owns more than 6 percent of Hess, said it supports the buyback and praised Hess's plans to review its operations ahead of the Guyana project.
"We are encouraged that the company has indicated that they are committed to closing the value gap and will be dynamic in exploring further steps to do so" before beginning to produce oil from the project in Guyana, Elliott said in a statement. Exxon Mobil Corp, operator of the Guyana project, expects oil production there to begin by March 2020.
In December, Elliott criticized what it called "continuing underperformance" at Hess, which has not made a profit since 2014, when its stock price was more than double current levels. Elliott expects to stay actively invested and to track changes at Hess, according to a person familiar with the fund's plans.
Hess's oil and natural gas production has dropped 7 percent in three years due largely to maturing operations in North Dakota. Rivals have bounced back faster from the industry downturn.
BACK IN THE RING
Elliott, the hedge fund led by billionaire Paul Singer, pushed for changes at Hess in 2013. Just ahead of the annual shareholder meeting in May 2013, Hess conceded to an agreement that added three Elliott appointees to the board, while Elliott supported five directors from Hess's slate. John Hess remained CEO but yielded his role as chairman. (Reporting By Jessica Resnick-Ault with additional reporting by Ernest Scheyder; Editing by David Gregorio)