This is the westernmost bay of the Jokulfiord Area. It is framed with steep screes and precipitous cliffs and the lowland stripes are very limited. On the eastern side of its mouth is Mt Lasafjall and to the west is Mt Nongilsfjall. The abandoned farm Sletta is on the western side, quite some distance from the mouth and a lighthouse nearby. In the middle of the bay, on the western side, are two spits of land, Stekkeyri and Hesteyri. The Norwegian firm Brodrene Bull built its whaling station Hekla there in 1894 and the area was commonly called Heklueyri after that. The hamlet Hesteyri started developing in connection with those activities and when the Norwegians moved their operation to the eastern part of the country, the factory was changed to accommodate herring processing.
The herring fisheries came to an abrupt end in 1940 and the people started seeking livelihood elsewhere until the hamlet stood totally abandoned in 1952. The ruins of the factory are still very prominent and 12 houses are still maintained as summer residences. The trading company Asgeirsverzlun in Isafiord opened a branch in Hesteyri after it became an authorized trading post in 1881. Up in the slopes beyond the hamlet, a rare species of ferns, parsley fern (Cryptogramma crispa), was discovered. The increased activities attracted more and more people until the number of inhabitants had reached 80. The fisheries were operated with small, mainly six oared, open boats in the beginning and later motorized vessels took over. Hesteyri was the seat of a physician, the assembly place of the county and the centre for telecommunications during the last few years of its existence.