UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, ~~2020~~2021


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-1204

HESS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE

(State or Other Jurisdiction of Incorporation or Organization)

13-4921002

(I.R.S. Employer Identification Number)

1185 AVENUE OF THE AMERICAS, NEW YORK, NY

(Address of Principal Executive Offices)

10036

(Zip Code)

(Registrant’s Telephone Number, Including Area Code is (212) 997-8500)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	HES	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

At September 30, ~~2020,~~2021, there were ~~307,077,424~~309,726,894 shares of Common Stock outstanding.

HESS CORPORATION

Form 10-Q

TABLE OF CONTENTS


Item No.	Item No.		Page Number	Item No.		Page Number
		PART I - FINANCIAL INFORMATION			PART I - FINANCIAL INFORMATION
1.	1.	Financial Statements (Unaudited)		1.	Financial Statements (Unaudited)
		Consolidated Balance Sheet at September 30, 2020, and December 31, 2019	2		Consolidated Balance Sheet at September 30, 2021, and December 31, 2020	2
		Statement of Consolidated Income for the Three and Nine Months Ended September 30, 2020, and 2019	3		Statement of Consolidated Income for the Three and Nine Months Ended September 30, 2021, and 2020	3
		Statement of Consolidated Comprehensive Income for the Three and Nine Months Ended September 30, 2020, and 2019	4		Statement of Consolidated Comprehensive Income for the Three and Nine Months Ended September 30, 2021, and 2020	4
		Statement of Consolidated Cash Flows for the Nine Months Ended September 30, 2020, and 2019	5		Statement of Consolidated Cash Flows for the Nine Months Ended September 30, 2021, and 2020	5
		Statement of Consolidated Equity for the Three and Nine Months Ended September 30, 2020, and 2019	6		Statement of Consolidated Equity for the Three and Nine Months Ended September 30, 2021, and 2020	6
		Notes to Consolidated Financial Statements (Unaudited)	7		Notes to Consolidated Financial Statements (Unaudited)	7
		Note 1 - Basis of Presentation	7		Note 1 - Basis of Presentation	7
		Note 2 - Inventories	7		Note 2 - Inventories	7
		Note 3 - Property , Plant and Equipment	7		Note 3 - Property, Plant and Equipment	7
		Note 4 - Hess Midstream LP	8		Note 4 - Hess Midstream LP	8
		Note 5 - Debt	8		Note 5 - Accrued Liabilities	8
		Note 6 - Revenue	9		Note 6 - Debt	8
		Note 7 - Severance Costs	10		Note 7 - Revenue	9
		Note 8 - Impairment	10		Note 8 - Impairment and Other	10
		Note 9 - Retirement Plans	10		Note 9 - Retirement Plans	10
		Note 10 - Weighted Average Common Shares	11		Note 10 - Weighted Average Common Shares	10
		Note 11 - Guarantees and Contingencies	11		Note 1 1 - Guarantees and Contingencies	11
		Note 12 - Segment Information	13		Note 1 2 - Segment Information	13
		Note 13 - Financial Risk Management Activities	14		Note 1 3 - Financial Risk Management Activities	14
		Note 1 4 - Subsequent Event s	15		Note 1 4 - Subsequent Events	16

2.	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
3.	3.	Quantitative and Qualitative Disclosures about Market Risk	32	3.	Quantitative and Qualitative Disclosures about Market Risk	33
4.	4.	Controls and Procedures	32	4.	Controls and Procedures	33

		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	Legal Proceedings	33	1.	Legal Proceedings	34
1A.		Risk Factors	33
6.	6.	Exhibits	34	6.	Exhibits	35
		Signatures	35		Signatures	36

Unless the context indicates otherwise, references to “Hess”, the “Corporation”, “Registrant”, “we”, “us”, “our” and “its” refer to the consolidated business operations of Hess Corporation and its subsidiaries.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020

		(In millions, except share amounts)					(In millions, except share amounts)
Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,285	$	1,545	Cash and cash equivalents	$	2,419	$	1,739
Accounts receivable:	Accounts receivable:					Accounts receivable:
From contracts with customers	From contracts with customers	551		940		From contracts with customers	930		710
Joint venture and other	Joint venture and other	148		230		Joint venture and other	164		150

Inventories	Inventories	422		261		Inventories	262		378
Assets held for sale		483		0
Other current assets	Other current assets	247		180		Other current assets	117		104
Total current assets	Total current assets	3,136		3,156		Total current assets	3,892		3,081
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Total — at cost	Total — at cost	30,166		35,820		Total — at cost	30,560		30,519
Less: Reserves for depreciation, depletion, amortization and lease impairment	Less: Reserves for depreciation, depletion, amortization and lease impairment	15,931		19,006		Less: Reserves for depreciation, depletion, amortization and lease impairment	16,606		16,404
Property, plant and equipment — net	Property, plant and equipment — net	14,235		16,814		Property, plant and equipment — net	13,954		14,115
Operating lease right-of-use assets — net	Operating lease right-of-use assets — net	324		447		Operating lease right-of-use assets — net	364		426
Finance lease right-of-use assets — net	Finance lease right-of-use assets — net	175		299		Finance lease right-of-use assets — net	150		168
Goodwill	Goodwill	360		360		Goodwill	360		360
Deferred income taxes	Deferred income taxes	67		80		Deferred income taxes	26		59
Other assets	Other assets	672		626		Other assets	744		612
Total Assets	Total Assets	$	18,969	$	21,782	Total Assets	$	19,490	$	18,821
Liabilities	Liabilities					Liabilities
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	200	$	411	Accounts payable	$	210	$	200
Accrued liabilities	Accrued liabilities	1,074		1,803		Accrued liabilities	1,578		1,251
Taxes payable	Taxes payable	45		97		Taxes payable	359		81
Current maturities of long-term debt		8		0
Current portion of long-term debt						Current portion of long-term debt	514		10
Current portion of operating and finance lease obligations	Current portion of operating and finance lease obligations	99		199		Current portion of operating and finance lease obligations	88		81
Total current liabilities	Total current liabilities	1,426		2,510		Total current liabilities	2,749		1,623
Long-term debt	Long-term debt	8,280		7,142		Long-term debt	7,993		8,286
Long-term operating lease obligations	Long-term operating lease obligations	334		353		Long-term operating lease obligations	410		478
Long-term finance lease obligations	Long-term finance lease obligations	224		238		Long-term finance lease obligations	205		220
Deferred income taxes	Deferred income taxes	316		415		Deferred income taxes	346		342
Asset retirement obligations	Asset retirement obligations	932		897		Asset retirement obligations	838		894
Other liabilities and deferred credits	Other liabilities and deferred credits	575		521		Other liabilities and deferred credits	693		643
Total Liabilities	Total Liabilities	12,087		12,076		Total Liabilities	13,234		12,486
Equity	Equity					Equity
Hess Corporation stockholders’ equity:	Hess Corporation stockholders’ equity:					Hess Corporation stockholders’ equity:
Common stock, par value $1.00; Authorized — 600,000,000 shares	Common stock, par value $1.00; Authorized — 600,000,000 shares					Common stock, par value $1.00; Authorized — 600,000,000 shares
Issued — 307,077,424 shares (2019: 304,955,472)		307		305
Issued — 309,726,894 shares (2020: 306,980,092)						Issued — 309,726,894 shares (2020: 306,980,092)	310		307
Capital in excess of par value	Capital in excess of par value	5,668		5,591		Capital in excess of par value	5,903		5,684
Retained earnings	Retained earnings	304		3,535		Retained earnings	192		130
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(363)		(699)		Accumulated other comprehensive income (loss)	(796)		(755)
Total Hess Corporation stockholders’ equity	Total Hess Corporation stockholders’ equity	5,916		8,732		Total Hess Corporation stockholders’ equity	5,609		5,366
Noncontrolling interests	Noncontrolling interests	966		974		Noncontrolling interests	647		969
Total Equity	Total Equity	6,882		9,706		Total Equity	6,256		6,335
Total Liabilities and Equity	Total Liabilities and Equity	$	18,969	$	21,782	Total Liabilities and Equity	$	19,490	$	18,821

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions, except per share amounts)									(In millions, except per share amounts)
Revenues and Non-Operating Income	Revenues and Non-Operating Income									Revenues and Non-Operating Income
Sales and other operating revenues	Sales and other operating revenues	$	1,159	$	1,580	$	3,346	$	4,812	Sales and other operating revenues	$	1,759	$	1,159	$	5,236	$	3,346
Gains on asset sales, net		0		0		8		22
Gains (losses) on asset sales, net										Gains (losses) on asset sales, net	29		—		29		8
Other, net	Other, net	17		(65)		33		(23)		Other, net	23		17		63		33
Total revenues and non-operating income	Total revenues and non-operating income	1,176		1,515		3,387		4,811		Total revenues and non-operating income	1,811		1,176		5,328		3,387
Costs and Expenses	Costs and Expenses									Costs and Expenses
Marketing, including purchased oil and gas	Marketing, including purchased oil and gas	221		423		655		1,308		Marketing, including purchased oil and gas	522		221		1,362		655
Operating costs and expenses	Operating costs and expenses	308		321		905		872		Operating costs and expenses	333		308		913		905
Production and severance taxes	Production and severance taxes	34		47		92		132		Production and severance taxes	42		34		123		92
Exploration expenses, including dry holes and lease impairment	Exploration expenses, including dry holes and lease impairment	71		50		291		127		Exploration expenses, including dry holes and lease impairment	36		71		117		291
General and administrative expenses	General and administrative expenses	84		90		275		266		General and administrative expenses	76		84		254		275
Interest expense	Interest expense	118		90		350		285		Interest expense	125		118		360		350
Depreciation, depletion and amortization	Depreciation, depletion and amortization	518		544		1,588		1,536		Depreciation, depletion and amortization	349		518		1,130		1,588
Impairment		0		0		2,126		0
Impairment and other										Impairment and other	—		—		147		2,126
Total costs and expenses	Total costs and expenses	1,354		1,565		6,282		4,526		Total costs and expenses	1,483		1,354		4,406		6,282
Income (Loss) Before Income Taxes	Income (Loss) Before Income Taxes	(178)		(50)		(2,895)		285		Income (Loss) Before Income Taxes	328		(178)		922		(2,895)
Provision (benefit) for income taxes	Provision (benefit) for income taxes	5		116		(83)		342		Provision (benefit) for income taxes	143		5		388		(83)
Net Income (Loss)	Net Income (Loss)	(183)		(166)		(2,812)		(57)		Net Income (Loss)	185		(183)		534		(2,812)
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	60		46		184		129		Less: Net income (loss) attributable to noncontrolling interests	70		60		240		184
Net Income (Loss) Attributable to Hess Corporation	Net Income (Loss) Attributable to Hess Corporation	(243)		(212)		(2,996)		(186)		Net Income (Loss) Attributable to Hess Corporation	$	115	$	(243)	$	294	$	(2,996)
Less: Preferred stock dividends		0		0		0		4
Net Income (Loss) Attributable to Hess Corporation Common Stockholders		$	(243)	$	(212)	$	(2,996)	$	(190)

Net Income (Loss) Attributable to Hess Corporation Per Common Share:	Net Income (Loss) Attributable to Hess Corporation Per Common Share:									Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic	Basic	$	(0.80)	$	(0.70)	$	(9.83)	$	(0.63)	Basic	$	0.37	$	(0.80)	$	0.96	$	(9.83)
Diluted	Diluted	$	(0.80)	$	(0.70)	$	(9.83)	$	(0.63)	Diluted	$	0.37	$	(0.80)	$	0.95	$	(9.83)
Weighted Average Number of Common Shares Outstanding:	Weighted Average Number of Common Shares Outstanding:									Weighted Average Number of Common Shares Outstanding:
Basic	Basic	305.0		302.5		304.7		300.7		Basic	308.1		305.0		307.1		304.7
Diluted	Diluted	305.0		302.5		304.7		300.7		Diluted	309.9		305.0		309.1		304.7
Common Stock Dividends Per Share	Common Stock Dividends Per Share	$	0.25	$	0.25	$	0.75	$	0.75	Common Stock Dividends Per Share	$	0.25	$	0.25	$	0.75	$	0.75

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Net Income (Loss)	Net Income (Loss)	$	(183)	$	(166)	$	(2,812)	$	(57)	Net Income (Loss)	$	185	$	(183)	$	534	$	(2,812)
Other Comprehensive Income (Loss):	Other Comprehensive Income (Loss):									Other Comprehensive Income (Loss):
Derivatives designated as cash flow hedges	Derivatives designated as cash flow hedges									Derivatives designated as cash flow hedges
Effect of hedge (gains) losses reclassified to income	Effect of hedge (gains) losses reclassified to income	(143)		(2)		(435)		(3)		Effect of hedge (gains) losses reclassified to income	64		(143)		179		(435)
Income taxes on effect of hedge (gains) losses reclassified to income	Income taxes on effect of hedge (gains) losses reclassified to income	0		0		0		0		Income taxes on effect of hedge (gains) losses reclassified to income	—		—		—		—
Net effect of hedge (gains) losses reclassified to income	Net effect of hedge (gains) losses reclassified to income	(143)		(2)		(435)		(3)		Net effect of hedge (gains) losses reclassified to income	64		(143)		179		(435)
Change in fair value of cash flow hedges	Change in fair value of cash flow hedges	(44)		12		732		(334)		Change in fair value of cash flow hedges	(40)		(44)		(271)		732
Income taxes on change in fair value of cash flow hedges	Income taxes on change in fair value of cash flow hedges	0		0		0		0		Income taxes on change in fair value of cash flow hedges	—		—		—		—
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	(44)		12		732		(334)		Net change in fair value of cash flow hedges	(40)		(44)		(271)		732
Change in derivatives designated as cash flow hedges, after taxes	Change in derivatives designated as cash flow hedges, after taxes	(187)		10		297		(337)		Change in derivatives designated as cash flow hedges, after taxes	24		(187)		(92)		297
Pension and other postretirement plans	Pension and other postretirement plans									Pension and other postretirement plans
(Increase) reduction in unrecognized actuarial losses	(Increase) reduction in unrecognized actuarial losses	0		(239)		4		(257)		(Increase) reduction in unrecognized actuarial losses	—		—		3		4
Income taxes on actuarial changes in plan liabilities	Income taxes on actuarial changes in plan liabilities	0		0		0		0		Income taxes on actuarial changes in plan liabilities	—		—		—		—
(Increase) reduction in unrecognized actuarial losses, net	(Increase) reduction in unrecognized actuarial losses, net	0		(239)		4		(257)		(Increase) reduction in unrecognized actuarial losses, net	—		—		3		4
Amortization of net actuarial losses	Amortization of net actuarial losses	11		101		35		124		Amortization of net actuarial losses	16		11		48		35
Income taxes on amortization of net actuarial losses	Income taxes on amortization of net actuarial losses	0		0		0		0		Income taxes on amortization of net actuarial losses	—		—		—		—
Net effect of amortization of net actuarial losses	Net effect of amortization of net actuarial losses	11		101		35		124		Net effect of amortization of net actuarial losses	16		11		48		35
Change in pension and other postretirement plans, after taxes	Change in pension and other postretirement plans, after taxes	11		(138)		39		(133)		Change in pension and other postretirement plans, after taxes	16		11		51		39
Other Comprehensive Income (Loss)	Other Comprehensive Income (Loss)	(176)		(128)		336		(470)		Other Comprehensive Income (Loss)	40		(176)		(41)		336
Comprehensive Income (Loss)	Comprehensive Income (Loss)	(359)		(294)		(2,476)		(527)		Comprehensive Income (Loss)	225		(359)		493		(2,476)
Less: Comprehensive income (loss) attributable to noncontrolling interests	Less: Comprehensive income (loss) attributable to noncontrolling interests	60		46		184		129		Less: Comprehensive income (loss) attributable to noncontrolling interests	70		60		240		184
Comprehensive Income (Loss) Attributable to Hess Corporation	Comprehensive Income (Loss) Attributable to Hess Corporation	$	(419)	$	(340)	$	(2,660)	$	(656)	Comprehensive Income (Loss) Attributable to Hess Corporation	$	155	$	(419)	$	253	$	(2,660)

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020

		(In millions)					(In millions)
Cash Flows From Operating Activities	Cash Flows From Operating Activities					Cash Flows From Operating Activities
Net income (loss)	Net income (loss)	$	(2,812)	$	(57)	Net income (loss)	$	534	$	(2,812)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gains) losses on asset sales, net	(Gains) losses on asset sales, net	(8)		(22)		(Gains) losses on asset sales, net	(29)		(8)
Depreciation, depletion and amortization	Depreciation, depletion and amortization	1,588		1,536		Depreciation, depletion and amortization	1,130		1,588
Impairment		2,126		0
Impairment and other						Impairment and other	147		2,126
Exploratory dry hole costs	Exploratory dry hole costs	166		10		Exploratory dry hole costs	11		166
Exploration lease and other impairment	Exploration lease and other impairment	48		14		Exploration lease and other impairment	15		48
Pension settlement loss	Pension settlement loss	0		88		Pension settlement loss	5		—
Stock compensation expense	Stock compensation expense	63		66		Stock compensation expense	61		63
Noncash (gains) losses on commodity derivatives, net	Noncash (gains) losses on commodity derivatives, net	187		87		Noncash (gains) losses on commodity derivatives, net	152		187
Provision (benefit) for deferred income taxes and other tax accruals	Provision (benefit) for deferred income taxes and other tax accruals	(87)		(5)		Provision (benefit) for deferred income taxes and other tax accruals	79		(87)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(Increase) decrease in accounts receivable	539		(129)		(Increase) decrease in accounts receivable	(533)		539
(Increase) decrease in inventories	(Increase) decrease in inventories	(161)		(44)		(Increase) decrease in inventories	97		(161)
Increase (decrease) in accounts payable and accrued liabilities	Increase (decrease) in accounts payable and accrued liabilities	(681)		(127)		Increase (decrease) in accounts payable and accrued liabilities	169		(681)
Increase (decrease) in taxes payable	Increase (decrease) in taxes payable	(52)		22		Increase (decrease) in taxes payable	278		(52)
Changes in other operating assets and liabilities	Changes in other operating assets and liabilities	(69)		(83)		Changes in other operating assets and liabilities	(125)		(69)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	847		1,356		Net cash provided by (used in) operating activities	1,991		847
Cash Flows From Investing Activities	Cash Flows From Investing Activities					Cash Flows From Investing Activities
Additions to property, plant and equipment - E&P	Additions to property, plant and equipment - E&P	(1,577)		(1,720)		Additions to property, plant and equipment - E&P	(1,118)		(1,577)
Additions to property, plant and equipment - Midstream	Additions to property, plant and equipment - Midstream	(246)		(284)		Additions to property, plant and equipment - Midstream	(120)		(246)
Payments for Midstream equity investments		0		(33)
Proceeds from asset sales, net of cash sold	Proceeds from asset sales, net of cash sold	11		22		Proceeds from asset sales, net of cash sold	427		11
Other, net	Other, net	(2)		(3)		Other, net	(4)		(2)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(1,814)		(2,018)		Net cash provided by (used in) investing activities	(815)		(1,814)
Cash Flows From Financing Activities	Cash Flows From Financing Activities					Cash Flows From Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less	Net borrowings (repayments) of debt with maturities of 90 days or less	146		176		Net borrowings (repayments) of debt with maturities of 90 days or less	(32)		146
Debt with maturities of greater than 90 days:	Debt with maturities of greater than 90 days:					Debt with maturities of greater than 90 days:
Borrowings	Borrowings	1,000		0		Borrowings	750		1,000
Repayments	Repayments	0		(8)		Repayments	(508)		—
Proceeds from sale of Class A shares of Hess Midstream LP						Proceeds from sale of Class A shares of Hess Midstream LP	70		—
Payments on finance lease obligations	Payments on finance lease obligations	(6)		(47)		Payments on finance lease obligations	(7)		(6)
Common stock acquired and retired		0		(25)
Cash dividends paid	Cash dividends paid	(233)		(241)		Cash dividends paid	(234)		(233)
Employee stock options exercised						Employee stock options exercised	75		15
Noncontrolling interests, net	Noncontrolling interests, net	(194)		(41)		Noncontrolling interests, net	(589)		(194)
Other, net	Other, net	(6)		17		Other, net	(21)		(21)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	707		(169)		Net cash provided by (used in) financing activities	(496)		707
Net Increase (Decrease) in Cash and Cash Equivalents	Net Increase (Decrease) in Cash and Cash Equivalents	(260)		(831)		Net Increase (Decrease) in Cash and Cash Equivalents	680		(260)
Cash and Cash Equivalents at Beginning of Year	Cash and Cash Equivalents at Beginning of Year	1,545		2,694		Cash and Cash Equivalents at Beginning of Year	1,739		1,545
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period	$	1,285	$	1,863	Cash and Cash Equivalents at End of Period	$	2,419	$	1,285

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED EQUITY (UNAUDITED)


		Mandatory Convertible Preferred Stock		Common Stock		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Hess Stockholders' Equity		Noncontrolling Interests		Total Equity			Common Stock		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Hess Stockholders' Equity		Noncontrolling Interests		Total Equity

		(In millions)
For the Three Months Ended September 30, 2021																		For the Three Months Ended September 30, 2021
Balance at July 1, 2021																		Balance at July 1, 2021	$	310	$	5,859	$	155	$	(836)	$	5,488	$	1,044	$	6,532
Net income (loss)																		Net income (loss)	—		—		115		—		115		70		185
Other comprehensive income (loss)																		Other comprehensive income (loss)	—		—		—		40		40		—		40
Share-based compensation																		Share-based compensation	—		16		—		—		16		—		16
Dividends on common stock																		Dividends on common stock	—		—		(78)		—		(78)		—		(78)
Repurchase of Class B units of Hess Midstream Operations LP																		Repurchase of Class B units of Hess Midstream Operations LP	—		28		—		—		28		(390)		(362)
Noncontrolling interests, net																		Noncontrolling interests, net	—		—		—		—		—		(77)		(77)
Balance at September 30, 2021																		Balance at September 30, 2021	$	310	$	5,903	$	192	$	(796)	$	5,609	$	647	$	6,256
For the Three Months Ended September 30, 2020	For the Three Months Ended September 30, 2020																	For the Three Months Ended September 30, 2020
Balance at July 1, 2020	Balance at July 1, 2020	$	0	$	307	$	5,650	$	625	$	(187)	$	6,395	$	971	$	7,366	Balance at July 1, 2020	$	307	$	5,650	$	625	$	(187)	6,395		$	971	$	7,366
Net income (loss)	Net income (loss)	—		—		—		(243)		—		(243)		60		(183)		Net income (loss)	—		—		(243)		—		(243)		60		(183)
Other comprehensive income (loss)	Other comprehensive income (loss)	—		—		—		—		(176)		(176)		—		(176)		Other comprehensive income (loss)	—		—		—		(176)		(176)		—		(176)
Share-based compensation	Share-based compensation	—		0		18		0		—		18		—		18		Share-based compensation	—		18		—		—		18		—		18
Dividends on common stock	Dividends on common stock	—		—		—		(78)		—		(78)		—		(78)		Dividends on common stock	—		—		(78)		—		(78)		—		(78)
Noncontrolling interests, net	Noncontrolling interests, net	—		—		—		—		—		—		(65)		(65)		Noncontrolling interests, net	—		—		—		—		—		(65)		(65)
Balance at September 30, 2020	Balance at September 30, 2020	$	0	$	307	$	5,668	$	304	$	(363)	$	5,916	$	966	$	6,882	Balance at September 30, 2020	$	307	$	5,668	$	304	$	(363)	$	5,916	$	966	$	6,882
For the Three Months Ended September 30, 2019
Balance at July 1, 2019		$	0	$	304	$	5,513	$	4,125	$	(648)	$	9,294	$	1,237	$	10,531
For the Nine Months Ended September 30, 2021																		For the Nine Months Ended September 30, 2021
Balance at January 1, 2021																		Balance at January 1, 2021	$	307	$	5,684	$	130	$	(755)	5,366		$	969	$	6,335
Net income (loss)	Net income (loss)	—		—		—		(212)		—		(212)		46		(166)		Net income (loss)	—		—		294		—		294		240		534
Other comprehensive income (loss)	Other comprehensive income (loss)	—		—		—		—		(128)		(128)		—		(128)		Other comprehensive income (loss)	—		—		—		(41)		(41)		—		(41)
Share-based compensation	Share-based compensation	—		1		30		—		—		31		—		31		Share-based compensation	3		135		—		—		138		—		138
Dividends on common stock	Dividends on common stock	—		—		—		(77)		—		(77)		—		(77)		Dividends on common stock	—		—		(232)		—		(232)		—		(232)
Sale of Class A shares of Hess Midstream LP																		Sale of Class A shares of Hess Midstream LP	—		56		—		—		56		41		97
Repurchase of Class B units of Hess Midstream Operations LP																		Repurchase of Class B units of Hess Midstream Operations LP	—		28		—		—		28		(390)		(362)
Noncontrolling interests, net	Noncontrolling interests, net	—		—		—		—		—		—		(14)		(14)		Noncontrolling interests, net	—		—		—		—		—		(213)		(213)
Balance at September 30, 2019		$	0	$	305	$	5,543	$	3,836	$	(776)	$	8,908	$	1,269	$	10,177
Balance at September 30, 2021																		Balance at September 30, 2021	$	310	$	5,903	$	192	$	(796)	$	5,609	$	647	$	6,256
For the Nine Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020																	For the Nine Months Ended September 30, 2020
Balance at January 1, 2020	Balance at January 1, 2020	$	0	$	305	$	5,591	$	3,535	$	(699)	$	8,732	$	974	$	9,706	Balance at January 1, 2020	$	305	$	5,591	$	3,535	$	(699)	8,732		$	974	$	9,706
Net income (loss)	Net income (loss)	—		—		—		(2,996)		—		(2,996)		184		(2,812)		Net income (loss)	—		—		(2,996)		—		(2,996)		184		(2,812)
Other comprehensive income (loss)	Other comprehensive income (loss)	—		—		—		—		336		336		—		336		Other comprehensive income (loss)	—		—		—		336		336		—		336
Share-based compensation	Share-based compensation	—		2		77		(5)		—		74		—		74		Share-based compensation	2		77		(5)		—		74		—		74
Dividends on common stock	Dividends on common stock	—		—		—		(230)		—		(230)		—		(230)		Dividends on common stock	—		—		(230)		—		(230)		—		(230)
Noncontrolling interests, net	Noncontrolling interests, net	—		—		—		—		—		—		(192)		(192)		Noncontrolling interests, net	—		—		—		—		—		(192)		(192)
Balance at September 30, 2020	Balance at September 30, 2020	$	0	$	307	$	5,668	$	304	$	(363)	$	5,916	$	966	$	6,882	Balance at September 30, 2020	$	307	$	5,668	$	304	$	(363)	$	5,916	$	966	$	6,882
For the Nine Months Ended September 30, 2019
Balance at January 1, 2019		$	1	$	291	$	5,386	$	4,257	$	(306)	$	9,629	$	1,259	$	10,888
Net income (loss)		—		—		—		(186)		—		(186)		129		(57)
Other comprehensive income (loss)		—		—		—		—		(470)		(470)		—		(470)
Preferred stock conversion		(1)		12		(11)		—		—		0		—		0
Share-based compensation		—		2		90		—		—		92		—		92
Dividends on preferred stock		—		—		—		(4)		—		(4)		—		(4)
Dividends on common stock		—		—		—		(231)		—		(231)		—		(231)
Sale of water business to Hess Infrastructure Partners		—		—		78		—		—		78		(78)		0
Noncontrolling interests, net		—		—		—		—		—		—		(41)		(41)
Balance at September 30, 2019		$	0	$	305	$	5,543	$	3,836	$	(776)	$	8,908	$	1,269	$	10,177

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the consolidated results of operations for the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and consolidated cash flows for the nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by generally accepted accounting principles (GAAP) in the United States have been condensed or omitted from these interim financial statements. These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

~~In the first quarter of 2020, we adopted Accounting Standards Update (ASU) 2016-13,~~ ~~Financial Instruments – Credit Losses.~~ This ASU makes changes to the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments. The standard requires the use of a forward-looking "expected loss" model compared with the prior "incurred loss" model. We calculate expected credit losses for our receivables using the probability of default and the expected loss given default. Historical data, current market conditions, and forecasts of future economic conditions are used to determine the probability of default and the expected loss given default. The adoption of this ASU did not have a material impact to our financial statements.2020.

2. Inventories

Inventories consisted of the following:


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020

		(In millions)					(In millions)
Crude oil and natural gas liquids	Crude oil and natural gas liquids	$	241	$	92	Crude oil and natural gas liquids	$	76	$	226
Materials and supplies	Materials and supplies	181		169		Materials and supplies	186		152
Total Inventories	Total Inventories	$	422	$	261	Total Inventories	$	262	$	378

~~We chartered 3 very large crude carriers (VLCCs) and have loaded a total of 6.3 million barrels of Bakken~~At December 31, 2020, crude oil ~~during~~inventories included $164 million associated with the second and third quarters of this year for sale in Asian markets. The first VLCC cargo of 2.1 million barrels was sold in September and cash proceeds were received in October. At September 30, 2020, we have a totalcost of 4.2 million barrels of crude oil ~~loaded~~transported and stored on 2 chartered very large crude carriers (VLCCs) for sale in Asian markets. The 2 VLCC cargos were sold in the ~~second and third VLCCs, and crude oil inventories include $147 million associated with the cost~~first quarter of ~~these volumes.~~2021.

In the first quarter of 2020, we recognized charges of $53 million ($52 million after income taxes) ~~recorded~~ in Marketing, including purchased oil and gas to reflect crude oil inventories at net realizable value.

3. Property, Plant and Equipment

~~Assets Held~~Dispositions:

In August 2021, we completed the sale of our interests in Denmark for ~~Sale:~~ net cash consideration of approximately $130 million, after closing adjustments, and recognized a pre-tax gain of $29 million ($29 million after income taxes).

~~On October 5, 2020,~~In April 2021, we ~~entered into an agreement to sell~~completed the sale of our ~~28% working interest~~Little Knife and Murphy Creek nonstrategic acreage interests in the ~~Shenzi Field~~Bakken for net cash consideration of $297 million, after closing adjustments. The sale included approximately 78,700 net acres, which are located in the ~~deepwater Gulf~~southernmost portion of ~~Mexico for total consideration~~the Corporation's Bakken position. The acreage constituted part of ~~$505 million, subject to customary adjustments, with an effective date of July 1, 2020.~~ ~~See Note 14. Subsequent Events. At September 30, 2020, property, plant~~a larger amortization base and ~~equipment totaling $483 million and asset retirement obligations totaling $79 million associated with~~ the ~~Shenzi Field were presented~~sale was treated as ~~Assets held for sale~~ ~~and as liabilities held for sale within~~ ~~Accrued Liabilities,~~ ~~respectively, in our~~ ~~Consolidated Balance Sheet.~~

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

a normal retirement. Accordingly, no gain or loss was recognized upon sale.

Capitalized Exploratory Well Costs:

The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves during the nine months ended September 30, ~~2020~~2021 (in millions):


Balance at January 1, ~~2020~~2021	$	~~584~~459
Additions to capitalized exploratory well costs pending the determination of proved reserves	96
~~Reclassifications to wells, facilities and equipment based on the determination of proved reserves~~	~~(80)~~
~~Capitalized exploratory well costs charged to expense~~	~~(125)~~162
Balance at September 30, ~~2020~~2021	$	~~475~~621

In September, we sanctioned the development plan for the Payara Field on the Stabroek Field, Offshore Guyana and reclassified well costs totaling $80 million to wells, facilities and equipment based on the determination of proved reserves. In the first quarter of 2020, the Corporation expensed previously capitalized well costs of $125 million, primarily related to the northern portion of the Shenzi Field (Hess 28%) in the Gulf of Mexico due to reprioritization of the Corporation’s forward capital program in response to the significant decline in crude oil prices. The table above does not include $41 million of well costs incurred and expensed during the first nine months of 2020.

Capitalized exploratory well costs capitalized for greater than one year following completion of drilling were ~~$329~~$451 million at September 30, ~~2020~~2021 and primarily related to:

Guyana: Approximately ~~80%~~90% of the capitalized well costs in excess of one year relate to successful exploration wells where hydrocarbons were encountered on the Stabroek Block (Hess 30%), offshore Guyana. The operator plans further appraisal drilling ~~for certain fields~~ and is conducting pre-development planning for additional phases of development beyond the three ~~existing~~previously sanctioned ~~phases of development.~~development projects on the Block.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Joint Development Area (JDA): Approximately ~~10%~~5% of the capitalized well costs in excess of one year relates to the JDA (Hess 50%) in the Gulf of Thailand, where hydrocarbons were encountered in 3 successful exploration wells drilled in the western part of Block A-18. The operator has submitted a development plan concept to the regulator to facilitate ongoing commercial negotiations for an extension of the existing gas sales contract to include development of the western part of the Block.

Malaysia: Approximately ~~10%~~5% of the capitalized well costs in excess of one year relate to the North Malay Basin (Hess 50%), offshore Peninsular Malaysia, where hydrocarbons were encountered in 51 successful exploration ~~wells.~~well. Subsurface evaluation and pre-development studies ~~for future phases of development~~ are ongoing.

4. Hess Midstream LP

In March 2021, the Corporation received net proceeds of $70 million from the public offering of 3.45 million Hess-owned Class A shares of Hess Midstream LP. The transaction resulted in an increase in Capital in Excess of Par of $56 million and Noncontrolling Interests of $41 million including $14 million from the change in ownership and $27 million from the recognition of a deferred tax asset due to an increase in tax basis of Hess Midstream LP's investment in Hess Midstream Operations LP (HESM Opco).

In August 2021, HESM Opco, a consolidated subsidiary of Hess Midstream LP, repurchased 31.25 million HESM Opco Class B units held by a subsidiary of Hess Corporation and an affiliate of General Infrastructure Partners (GIP) for $750 million. HESM Opco issued $750 million in aggregate principal amount of 4.250% fixed-rate senior unsecured notes due 2030 in a private offering to finance the repurchase. The transaction resulted in an increase in Capital in Excess of Par and a decrease in Noncontrolling Interests of $28 million, and an increase in deferred tax assets and Noncontrolling Interests of $15 million due to a decrease in the book basis of Hess Midstream LP's investment in HESM Opco. The $375 million paid to GIP reduced Noncontrolling Interests. The Corporation owned an approximate 45% interest in Hess Midstream LP, on a consolidated basis, at September 30, 2021. See Note 14, Subsequent Events.

At September 30, ~~2020~~2021 Hess Midstream LP, ~~(Hess Midstream),~~ a variable interest entity that is fully consolidated by Hess Corporation, had liabilities totaling ~~$2,031~~$2,753 million (December 31, ~~2019: $1,941~~2020: $2,026 million) that are on a nonrecourse basis to Hess Corporation, while Hess Midstream LP assets available to settle the obligations of Hess Midstream LP include cash and cash equivalents totaling $3 million (December 31, ~~2019:~~2020: $3 million) ~~and~~, property, plant and equipment with a carrying value of ~~$3,103~~$3,118 million (December 31, ~~2019: $3,010~~2020: $3,111 million) and an equity-method investment in the Little Missouri 4 gas processing plant of $102 million (December 31, 2020: $108 million).

5. Accrued Liabilities

Accrued Liabilities consisted of the following:


	September 30, 2021		December 31, 2020

	(In millions)
Accrued operating and marketing expenditures	$	511	$	325
Accrued capital expenditures	381		345
Accrued payments to royalty and working interest owners	232		170
Current portion of asset retirement obligations	193		105
Accrued interest on debt	101		126
Accrued compensation and benefits	97		117
Other accruals	63		63
Total Accrued Liabilities	$	1,578	$	1,251

6. Debt

In July 2021, we repaid $500 million principal amount of Hess Corporation's $1 billion term loan, which matures in March 2023. The remaining $500 million has been classified as Current portion of long-term debt in our Consolidated Balance Sheet at September 30, 2021 due to management's intent to repay the remaining $500 million within the next twelve months.

In ~~the first quarter~~August 2021, HESM Opco issued $750 million in aggregate principal amount of 2020, we entered into a $1.0 billion three year term loan agreement with a maturity date of March 16, 2023. Borrowings under the term loan generally bear interest at LIBOR plus an applicable margin of 2.25%. The applicable margin varies based on the credit rating of the Corporation’s4.250% fixed-rate senior unsecured ~~long-term debt, and will increase~~notes due 2030 in a private offering to finance the repurchase of 31.25 million HESM Opco Class B units held by ~~0.25% on each anniversary~~a subsidiary of the term loan. The term loan agreement contains customary representations, warranties and covenants, including the same financial covenant as our revolving credit facility which limits the ratio of Total Consolidated Debt to Total Capitalization (as such terms are defined in the revolving credit facility and term loan agreements) of theHess Corporation and ~~its consolidated subsidiaries to 65%, and customary events~~an affiliate of ~~default. At September 30, 2020, outstanding borrowings were $1.0 billion under the term loan agreement.~~GIP.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6.7. Revenue

Revenue from contracts with customers on a disaggregated basis was as follows:


		Exploration and Production												Midstream		Eliminations		Total			Exploration and Production										Midstream		Eliminations		Total
		United States		Guyana		Malaysia & JDA		Denmark		Libya		E&P Total									United States		Guyana		Malaysia & JDA		Other (a)		E&P Total

		(In millions)																			(In millions)
Three Months Ended September 30, 2021																				Three Months Ended September 30, 2021
Sales of our net production volumes:																				Sales of our net production volumes:
Crude oil revenue																				Crude oil revenue	$	654	$	214	$	2	$	104	$	974	$	—	$	—	$	974
Natural gas liquids revenue																				Natural gas liquids revenue	143		—		—		—		143		—		—		143
Natural gas revenue																				Natural gas revenue	77		—		143		2		222		—		—		222
Sales of purchased oil and gas																				Sales of purchased oil and gas	457		4		—		23		484		—		—		484
Intercompany revenue																				Intercompany revenue	—		—		—		—		—		304		(304)		—
Total revenues from contracts with customers																				Total revenues from contracts with customers	1,331		218		145		129		1,823		304		(304)		1,823
Other operating revenues (b)																				Other operating revenues (b)	(51)		(9)		—		(4)		(64)		—		—		(64)
Total sales and other operating revenues																				Total sales and other operating revenues	$	1,280	$	209	$	145	$	125	$	1,759	$	304	$	(304)	$	1,759
Three Months Ended September 30, 2020	Three Months Ended September 30, 2020																			Three Months Ended September 30, 2020
Sales of our net production volumes:	Sales of our net production volumes:																			Sales of our net production volumes:
Crude oil revenue	Crude oil revenue	$	471	$	80	$	13	$	11	$	0	$	575	$	0	$	—	$	575	Crude oil revenue	$	471	$	80	$	13	$	11	$	575	$	—	$	—	$	575
Natural gas liquids revenue	Natural gas liquids revenue	68		0		0		0		0		68		0		—		68		Natural gas liquids revenue	68		—		—		—		68		—		—		68
Natural gas revenue	Natural gas revenue	34		0		116		1		0		151		0		—		151		Natural gas revenue	34		—		116		1		151		—		—		151
Sales of purchased oil and gas	Sales of purchased oil and gas	220		1		0		0		0		221		0		—		221		Sales of purchased oil and gas	220		1		—		—		221		—		—		221
Intercompany revenue	Intercompany revenue	0		0		0		0		0		0		264		(264)		—		Intercompany revenue	—		—		—		—		—		264		(264)		—
Total revenues from contracts with customers	Total revenues from contracts with customers	793		81		129		12		0		1,015		264		(264)		1,015		Total revenues from contracts with customers	793		81		129		12		1,015		264		(264)		1,015
Other operating revenues (a)		125		18		0		1		0		144		0		0		144
Other operating revenues (b)																				Other operating revenues (b)	125		18		—		1		144		—		—		144
Total sales and other operating revenues	Total sales and other operating revenues	$	918	$	99	$	129	$	13	$	0	$	1,159	$	264	$	(264)	$	1,159	Total sales and other operating revenues	$	918	$	99	$	129	$	13	$	1,159	$	264	$	(264)	$	1,159
Three Months Ended September 30, 2019
Nine Months Ended September 30, 2021																				Nine Months Ended September 30, 2021
Sales of our net production volumes:	Sales of our net production volumes:																			Sales of our net production volumes:
Crude oil revenue	Crude oil revenue	$	749	$	0	$	22	$	31	$	122	$	924	$	0	$	—	$	924	Crude oil revenue	$	2,200	$	529	$	51	$	355	$	3,135	$	—	$	—	$	3,135
Natural gas liquids revenue	Natural gas liquids revenue	46		0		0		0		0		46		0		—		46		Natural gas liquids revenue	406		—		—		—		406		—		—		406
Natural gas revenue	Natural gas revenue	34		0		160		2		5		201		0		—		201		Natural gas revenue	251		—		484		6		741		—		—		741
Sales of purchased oil and gas	Sales of purchased oil and gas	381		0		3		0		23		407		0		—		407		Sales of purchased oil and gas	1,054		12		—		68		1,134		—		—		1,134
Intercompany revenue	Intercompany revenue	0		0		0		0		0		0		215		(215)		—		Intercompany revenue	—		—		—		—		—		887		(887)		—
Total revenues from contracts with customers	Total revenues from contracts with customers	1,210		0		185		33		150		1,578		215		(215)		1,578		Total revenues from contracts with customers	3,911		541		535		429		5,416		887		(887)		5,416
Other operating revenues (a)		2		0		0		0		0		2		0		0		2
Other operating revenues (b)																				Other operating revenues (b)	(145)		(19)		—		(16)		(180)		—		—		(180)
Total sales and other operating revenues	Total sales and other operating revenues	$	1,212	$	0	$	185	$	33	$	150	$	1,580	$	215	$	(215)	$	1,580	Total sales and other operating revenues	$	3,766	$	522	$	535	$	413	$	5,236	$	887	$	(887)	$	5,236
Nine Months Ended September 30, 2020	Nine Months Ended September 30, 2020																			Nine Months Ended September 30, 2020
Sales of our net production volumes:	Sales of our net production volumes:																			Sales of our net production volumes:
Crude oil revenue	Crude oil revenue	$	1,390	$	149	$	16	$	61	$	0	$	1,616	$	0	$	—	$	1,616	Crude oil revenue	$	1,390	$	149	$	16	$	61	$	1,616	$	—	$	—	$	1,616
Natural gas liquids revenue	Natural gas liquids revenue	159		0		0		0		0		159		0		—		159		Natural gas liquids revenue	159		—		—		—		159		—		—		159
Natural gas revenue	Natural gas revenue	104		0		344		5		2		455		0		—		455		Natural gas revenue	104		—		344		7		455		—		—		455
Sales of purchased oil and gas	Sales of purchased oil and gas	679		2		0		0		0		681		0		—		681		Sales of purchased oil and gas	679		2		—		—		681		—		—		681
Intercompany revenue	Intercompany revenue	0		0		0		0		0		0		825		(825)		—		Intercompany revenue	—		—		—		—		—		825		(825)		—
Total revenues from contracts with customers	Total revenues from contracts with customers	2,332		151		360		66		2		2,911		825		(825)		2,911		Total revenues from contracts with customers	2,332		151		360		68		2,911		825		(825)		2,911
Other operating revenues (a)		368		51		1		15		0		435		0		0		435
Other operating revenues (b)																				Other operating revenues (b)	368		51		1		15		435		—		—		435
Total sales and other operating revenues	Total sales and other operating revenues	$	2,700	$	202	$	361	$	81	$	2	$	3,346	$	825	$	(825)	$	3,346	Total sales and other operating revenues	$	2,700	$	202	$	361	$	83	$	3,346	$	825	$	(825)	$	3,346
Nine Months Ended September 30, 2019
Sales of our net production volumes:
Crude oil revenue		$	2,193	$	0	$	67	$	98	$	343	$	2,701	$	0	$	—	$	2,701
Natural gas liquids revenue		162		0		0		0		0		162		0		—		162
Natural gas revenue		109		0		494		7		17		627		0		—		627
Sales of purchased oil and gas		1,246		0		3		0		67		1,316		0		—		1,316
Intercompany revenue		0		0		0		0		0		0		595		(595)		—
Total revenues from contracts with customers		3,710		0		564		105		427		4,806		595		(595)		4,806
Other operating revenues (a)		6		0		0		0		0		6		0		0		6
Total sales and other operating revenues		$	3,716	$	0	$	564	$	105	$	427	$	4,812	$	595	$	(595)	$	4,812

(a)Other includes our interests in Denmark and Libya.

(b)Includes gains (losses) on commodity derivatives.

There have been no significant changes to contracts with customers or composition thereof during the nine months ended September 30, ~~2020.~~2021. Generally, we receive payments from customers on a monthly basis, shortly after the physical delivery of the crude oil, natural gas liquids, or natural gas.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~7. Severance Costs~~8. Impairment and Other

In June 2021, the ~~third quarter~~U.S. Bankruptcy Court approved the bankruptcy plan for Fieldwood Energy LLC (Fieldwood) which includes transferring abandonment obligations of ~~2020, we recognized~~Fieldwood to predecessors in title of certain of its assets, who are jointly and severally liable for the obligations. The results for the nine months ended September 30, 2021 include a charge of ~~$27~~$147 million ~~and made payments of $11~~($147 million ~~for employee termination benefits incurred related to cost reduction initiatives. The charge is reported~~after income taxes) in ~~Operating costs and expenses~~ ~~($20 million),~~ ~~General and administrative expenses~~ ~~($6 million) and~~ ~~Exploration expenses, including dry holes and lease impairment~~ ~~($1 million)~~connection with total estimated abandonment obligations in the West Delta 79/86 Field (West Delta Field), which we sold to a Fieldwood predecessor in 2004. See ~~Statement of Consolidated Income~~Note 11, Guarantees and Contingencies. ~~Accrued employee termination benefits of $16 million at September 30,~~

First quarter 2020 ~~are expected~~results include noncash impairment charges totaling $2.1 billion ($2.0 billion after income taxes) related to ~~be largely paid by the end of the year.~~

~~8. Impairment~~

~~Oil and Gas Properties:~~

~~As a result of the significant decline in crude oil prices due to the global economic slowdown from the coronavirus (COVID-19) pandemic, we reviewed~~ our oil and gas properties within the Exploration and Production operating segment for impairment in the first quarter of 2020. We recognized pre-tax impairment charges in the first quarter of 2020 to reduce the carrying value of our oil and gas properties and certain related right-of-use assets at ~~the~~ North Malay Basin in Malaysia, ~~by $755 million ($755 million after income taxes),~~ the South Arne Field in Denmark, ~~by $670 million ($594 million after income taxes),~~ and the Stampede and Tubular Bells fields in the Gulf of Mexico, ~~the Stampede Field by $410 million ($410 million after income taxes) and the Tubular Bells Field by $270 million ($270 million after income taxes)~~ primarily as a result of a lower long-term crude oil price outlook. The impairment charges were based on estimates of fair value at March 31, 2020 determined by discounting internally developed future net cash flows, a Level 3 fair value measurement. The total of the fair value estimates was approximately $1.05 billion. Significant inputs used in determining the discounted future net cash flows include future prices, projected production volumes using risk adjusted oil and gas reserves, and discount rates. The future pricing assumptions used were based on forward strip crude oil prices as of March 31, 2020 for the remainder of 2020 through 2022, and $50 per barrel for WTI ($55 per barrel for Brent) in 2023 and thereafter to the end of field life. The weighted average crude oil benchmark price based on total projected crude oil volumes for the impaired assets was $48.82 per barrel. A discount rate of 10% was used in each of the fair value measurements which represents the estimated discount rate a market participant would use. We determined the discount rate by considering the weighted average cost of capital for a group of peer companies.

Other ~~Assets:~~

~~In the first quarter of 2020, we recognized impairment~~ charges totaling $21 million pre-tax ($20 million after income taxes) related to drilling rig right-of-use assets in the Bakken and surplus materials and supplies.

9. Retirement Plans

Components of net periodic pension cost consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Service cost	Service cost	$	14	$	12	$	42	$	33	Service cost	$	13	$	14	$	40	$	42
Interest cost (a)	Interest cost (a)	19		23		56		71		Interest cost (a)	14		19		42		56
Expected return on plan assets (a)	Expected return on plan assets (a)	(45)		(45)		(135)		(135)		Expected return on plan assets (a)	(49)		(45)		(148)		(135)
Amortization of unrecognized net actuarial losses (a)	Amortization of unrecognized net actuarial losses (a)	11		13		35		36		Amortization of unrecognized net actuarial losses (a)	15		11		43		35
Settlement loss (a)	Settlement loss (a)	0		88		0		88		Settlement loss (a)	1		—		5		—
Pension (income) expense (a)	Pension (income) expense (a)	$	(1)	$	91	$	(2)	$	93	Pension (income) expense (a)	$	(6)	$	(1)	$	(18)	$	(2)

(a) Net non-service pension cost included in Other, net in the Statement of Consolidated Income for the three and nine months ended September 30, ~~2020~~2021 was income of $19 million and $58 million, respectively, compared with income of $15 million and $44 ~~million, respectively, compared with an expense of $79 million and $60~~ million for the three and nine months ended September 30, ~~2019,~~2020, respectively.

In the third quarter of 2019, the trust for the Hess Corporation Employees’ Pension Plan (the Plan) purchased a single premium annuity contract at a cost of approximately $250 million using assets of the Plan to settle and transfer certain of its obligations to a third party. The settlement transaction resulted in a noncash charge of $88 million to recognize unamortized pension actuarial losses.

~~To preserve cash in 2020, we are minimizing non-required cash contributions to funded pension plans. In 2020,~~2021, we expect to contribute approximately $2$10 million to our funded pension plans.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

10. Weighted Average Common Shares

The Net income (loss) and weighted average number of common shares used in the basic and diluted earnings per share computations were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Net income (loss) attributable to Hess Corporation Common Stockholders:
Net income (loss) attributable to Hess Corporation:										Net income (loss) attributable to Hess Corporation:
Net income (loss)	Net income (loss)	$	(183)	$	(166)	$	(2,812)	$	(57)	Net income (loss)	$	185	$	(183)	$	534	$	(2,812)
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	60		46		184		129		Less: Net income (loss) attributable to noncontrolling interests	70		60		240		184
Less: Preferred stock dividends		0		0		0		4
Net income (loss) attributable to Hess Corporation Common Stockholders		$	(243)	$	(212)	$	(2,996)	$	(190)
Net income (loss) attributable to Hess Corporation										Net income (loss) attributable to Hess Corporation	$	115	$	(243)	$	294	$	(2,996)
Weighted average number of common shares outstanding:	Weighted average number of common shares outstanding:									Weighted average number of common shares outstanding:
Basic	Basic	305.0		302.5		304.7		300.7		Basic	308.1		305.0		307.1		304.7
Effect of dilutive securities	Effect of dilutive securities									Effect of dilutive securities
Restricted common stock	Restricted common stock	0		0		0		0		Restricted common stock	0.6		—		0.6		—
Stock options	Stock options	0		0		0		0		Stock options	0.3		—		0.5		—
Performance share units	Performance share units	0		0		0		0		Performance share units	0.9		—		0.9		—
Diluted	Diluted	305.0		302.5		304.7		300.7		Diluted	309.9		305.0		309.1		304.7

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the number of antidilutive shares excluded from the computation of diluted shares:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2021	2020	2021	2020
Restricted common stock	Restricted common stock	2,080,613	2,074,913	2,089,778	2,272,234	Restricted common stock	47,215	2,080,613	78,889	2,089,778
Stock options	Stock options	4,424,867	4,694,684	4,301,311	4,819,205	Stock options	705,557	4,424,867	790,155	4,301,311
Performance share units	Performance share units	1,083,543	1,858,050	1,124,022	1,663,432	Performance share units	—	1,083,543	26,405	1,124,022
Common shares from conversion of preferred stock		0	0	0	1,295,823

During the nine months ended September 30, ~~2020,~~2021, we granted ~~1,120,836~~779,167 shares of restricted stock ~~(2019: 959,168)~~(2020: 1,120,836), ~~307,999~~205,155 performance share units ~~(2019: 234,866)~~(2020: 307,999) and ~~686,639~~319,295 stock options ~~(2019: 526,968)~~(2020: 686,639).

11. Guarantees and Contingencies

We are subject to loss contingencies with respect to various claims, lawsuits and other proceedings. A liability is recognized in our consolidated financial statements when it is probable that a loss has been incurred and the amount can be reasonably estimated. If the risk of loss is probable, but the amount cannot be reasonably estimated or the risk of loss is only reasonably possible, a liability is not accrued; however, we disclose the nature of those contingencies. We cannot predict with certainty if, how or when existing claims, lawsuits and proceedings will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek indeterminate damages.

We, along with many companies that have been or continue to be engaged in refining and marketing of gasoline, have been a party to lawsuits and claims related to the use of methyl tertiary butyl ether (MTBE) in gasoline. A series of similar lawsuits, many involving water utilities or governmental entities, were filed in jurisdictions across the U.S. against producers of MTBE and petroleum refiners who produced gasoline containing MTBE, including us. The principal allegation in all cases was that gasoline containing MTBE was a defective product and that these producers and refiners are strictly liable in proportion to their share of the gasoline market for damage to groundwater resources and are required to take remedial action to ameliorate the alleged effects on the environment of releases of MTBE. The majority of the cases asserted against us have been settled. There are 3 remaining active cases, filed by Pennsylvania, Rhode Island, and Maryland. In June 2014, the Commonwealth of Pennsylvania filed a lawsuit alleging that we and all major oil companies with operations in Pennsylvania, have damaged the groundwater by introducing thereto gasoline with MTBE. The Pennsylvania suit has been forwarded to the existing MTBE multidistrict litigation pending in the Southern District of New York. In September 2016, the State of Rhode Island also filed a lawsuit alleging that we and other major oil companies damaged the groundwater in Rhode Island by introducing thereto gasoline with MTBE. The suit filed in Rhode Island is proceeding

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

in ~~Federal~~federal court. In December 2017, the State of Maryland filed a lawsuit alleging that we and other major oil companies damaged the groundwater in Maryland by introducing thereto gasoline with MTBE. The suit, filed in Maryland state court, was served on us in January 2018 and has been removed to ~~Federal~~federal court by the defendants.

In September 2003, we received a directive from the New Jersey Department of Environmental Protection (NJDEP) to remediate contamination in the sediments of the Lower Passaic River. The NJDEP is also seeking natural resource damages. The directive, insofar as it affects us, relates to alleged releases from a petroleum bulk storage terminal in Newark, New Jersey we previously owned. We and over 70 companies entered into an Administrative Order on Consent with the ~~Environmental Protection Agency (EPA)~~EPA to study the same contamination; this work remains ongoing. We and other parties settled a cost recovery claim by the State of New Jersey and agreed with the EPA to fund remediation of a portion of the site. On March 4, 2016, the EPA issued a Record of Decision (ROD) in respect of the lower eight miles of the Lower Passaic River, selecting a remedy that includes bank-to-bank dredging at an estimated cost of $1.38 billion. The ROD does not address the upper nine miles of the Lower Passaic River or the Newark Bay, which may require additional remedial action. In addition, the ~~Federal~~federal trustees for natural resources have begun a separate assessment of damages to natural resources in the Passaic River. Given that the EPA has not selected a final remedy for the entirety of the Lower Passaic River or the Newark Bay, total remedial costs cannot be reliably estimated at this time. Based on currently known facts and circumstances, we do not believe that this matter will result in a significant liability to us because our former terminal did not store or use contaminants which are of concern in the river sediments and could not have contributed contamination along the river’s length. Further, there are numerous other parties who we expect will bear the cost of remediation and damages.

In March 2014, we received an Administrative Order from the EPA requiring us and 26 other parties to undertake the Remedial Design for the remedy selected by the EPA for the Gowanus Canal Superfund Site in Brooklyn, New York. Our alleged liability derives from our former ownership and operation of a fuel oil terminal and connected shipbuilding and repair facility adjacent to the Canal. The remedy selected by the EPA includes dredging of surface sediments and the placement of a cap over the deeper sediments throughout the Canal and in-situ stabilization of certain contaminated sediments that will remain in place below the cap. The EPA’s original estimate was that this remedy would cost $506 million; however, the ultimate costs that will be incurred in connection with the design and implementation of the remedy remain uncertain. We have complied with the EPA’s March 2014 Administrative Order

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

and contributed funding for the Remedial Design based on an allocation of costs among the parties determined by a third-party expert. In January 2020, we received an additional Administrative Order from the EPA requiring us and several other parties to begin Remedial Action along the uppermost portion of the Canal. We intend to comply with this Administrative Order. The remediation work ~~is anticipated to begin~~began in the fourth quarter of 2020. ~~The~~Based on currently known facts and circumstances, we do not believe that this matter will result in a significant liability to us, and the costs will continue to be allocated amongst the parties, as they were for the Remedial Design.

From time to time, we are involved in other judicial and administrative proceedings relating to environmental matters. We periodically receive notices from the EPA that we are a “potential responsible party” under the Superfund legislation with respect to various waste disposal sites. Under this legislation, all potentially responsible parties may be jointly and severally liable. For any site for which we have received such a notice, the EPA’s claims or assertions of liability against us relating to these sites have not been fully developed, or the EPA’s claims have been settled or a settlement is under consideration, in all cases for amounts that are not material. Beginning in 2017, certain states, municipalities and private associations in California, Delaware, Maryland, Rhode Island and South Carolina separately filed lawsuits against oil, gas and coal producers, including us, for alleged damages purportedly caused by climate change. These proceedings include claims for monetary damages and injunctive relief. Beginning in 2013, various parishes in Louisiana filed suit against approximately 100 oil and gas companies, including us, alleging that the companies’ operations and activities in certain fields violated the State and Local Coastal Resource Management Act of 1978, as amended, and caused contamination, subsidence and other environmental damages to land and water bodies located in the coastal zone of Louisiana. The plaintiffs seek, among other things, the payment of the costs necessary to clear, re-vegetate and otherwise restore the allegedly impacted areas. The ultimate impact of ~~these~~such climate and other aforementioned environmental proceedings, and of any related proceedings by private parties, on our business or accounts cannot be predicted at this time due to the large number of other potentially responsible parties and the speculative nature of clean-up cost ~~estimates but is~~estimates.

In August 2020, Fieldwood and related entities filed for bankruptcy relief under Chapter 11 of the U.S. Bankruptcy Code. Fieldwood’s Bankruptcy Plan, which was approved by the U.S. Bankruptcy Court in June 2021, includes the abandonment of certain assets, including seven offshore Gulf of Mexico leases and related facilities in the West Delta Field that were formerly owned by us and sold to a Fieldwood predecessor in 2004, and the discharge of Fieldwood’s obligation to decommission these facilities. As a result, in October 2021 we received decommissioning orders from the Bureau of Safety and Environmental Enforcement (BSEE) requiring us to decommission certain wells and related facilities located on two of the seven West Delta leases. We expect to receive additional decommissioning orders on the other West Delta leases in the near future and are actively engaged with the BSEE to agree on the scope and timing of decommissioning activities. Our decommissioning obligation derives from our former ownership of the facilities. We intend to seek contribution from other parties that owned an interest in the facilities. As of September 30, 2021, we have a loss contingency accrual of $147 million ($147 million after income taxes) representing total estimated abandonment obligations in the West Delta Field. Potential recoveries from other parties that previously owned an interest in the West Delta Field have not ~~expected to be material.~~been recognized as of September 30, 2021.

~~From time to time, we~~We are also involved in other judicial and administrative proceedings from time to time in addition to the matters described above, including ~~proceedings relating~~claims related to ~~other environmental matters.~~post-production deductions from royalty payments. We may also be exposed to future decommissioning liabilities for divested assets in the event the current or future owners are determined to be unable to perform such actions, whether due to bankruptcy or otherwise. We cannot predict with certainty if, how or when such proceedings will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters before a loss or range of loss can be reasonably estimated for any proceeding.

Subject to the foregoing, in management’s opinion, based upon currently known facts and circumstances, the outcome of lawsuits, claims and proceedings, including the matters disclosed above, is not expected to have a material adverse effect on our financial condition, results of operations or cash flows. However, we could incur judgments, enter into settlements, or revise our opinion regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations in the period in which the amounts are accrued and our cash flows in the period in which the amounts are paid.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. Segment Information

We currently have 2 operating segments, Exploration and Production and Midstream. All unallocated costs are reflected under Corporate, Interest and Other. The following table presents operating segment financial data:

Exploration and Production Midstream Corporate, Interest and Other Eliminations Total
(In millions)
For the Three Months Ended September 30, 2020
Sales and Other Operating Revenues - Third parties $ 1,159 $ 0 $ — $ — $ 1,159
Intersegment Revenues 0 264 — (264) —
Sales and Other Operating Revenues $ 1,159 $ 264 $ — $ (264) $ 1,159
Net Income (Loss) attributable to Hess Corporation $ (182) $ 56 $ (117) $ 0 $ (243)
Depreciation, Depletion and Amortization 478 40 0 0 518
Provision (Benefit) for Income Taxes 6 1 (2) 0 5
Capital Expenditures 301 66 0 0 367
For the Three Months Ended September 30, 2019
Sales and Other Operating Revenues - Third parties $ 1,580 $ 0 $ — $ — $ 1,580
Intersegment Revenues 0 215 — (215) —
Sales and Other Operating Revenues $ 1,580 $ 215 $ — $ (215) $ 1,580
Net Income (Loss) attributable to Hess Corporation $ (60) $ 39 $ (191) $ 0 $ (212)
Depreciation, Depletion and Amortization 507 36 1 0 544
Provision (Benefit) for Income Taxes 116 0 0 0 116
Capital Expenditures 624 112 0 0 736
For the Nine Months Ended September 30, 2020
Sales and Other Operating Revenues - Third parties $ 3,346 $ 0 $ — $ — $ 3,346
Intersegment Revenues 0 825 — (825) —
Sales and Other Operating Revenues $ 3,346 $ 825 $ — $ (825) $ 3,346
Net Income (Loss) attributable to Hess Corporation $ (2,802) $ 168 $ (362) $ 0 $ (2,996)
Depreciation, Depletion and Amortization 1,469 117 2 0 1,588
Impairment 2,126 0 0 0 2,126
Provision (Benefit) for Income Taxes (82) 5 (6) 0 (83)
Capital Expenditures 1,338 202 0 0 1,540
For the Nine Months Ended September 30, 2019
Sales and Other Operating Revenues - Third parties $ 4,812 $ 0 $ — $ — $ 4,812
Intersegment Revenues 0 595 — (595) —
Sales and Other Operating Revenues $ 4,812 $ 595 $ — $ (595) $ 4,812
Net Income (Loss) attributable to Hess Corporation $ 117 $ 111 $ (414) $ 0 $ (186)
Depreciation, Depletion and Amortization 1,430 105 1 0 1,536
Provision (Benefit) for Income Taxes 342 0 0 0 342
Capital Expenditures 1,764 308 0 0 2,072

~~Identifiable assets by operating segment were as follows:~~


	Exploration and Production		Midstream		Corporate, Interest and Other		Eliminations		Total

	(In millions)
For the Three Months Ended September 30, 2021
Sales and Other Operating Revenues - Third parties	$	1,759	$	—	$	—	$	—	$	1,759
Intersegment Revenues	—		304		—		(304)		—
Sales and Other Operating Revenues	$	1,759	$	304	$	—	$	(304)	$	1,759

Net Income (Loss) attributable to Hess Corporation	$	178	$	61	$	(124)	$	—	$	115
Depreciation, Depletion and Amortization	308		41		—		—		349
Provision (Benefit) for Income Taxes	140		3		—		—		143
Capital Expenditures	469		59		—		—		528
For the Three Months Ended September 30, 2020
Sales and Other Operating Revenues - Third parties	$	1,159	$	—	$	—	$	—	$	1,159
Intersegment Revenues	—		264		—		(264)		—
Sales and Other Operating Revenues	$	1,159	$	264	$	—	$	(264)	$	1,159

Net Income (Loss) attributable to Hess Corporation	$	(182)	$	56	$	(117)	$	—	$	(243)
Depreciation, Depletion and Amortization	478		40		—		—		518
Provision (Benefit) for Income Taxes	6		1		(2)		—		5
Capital Expenditures	301		66		—		—		367
For the Nine Months Ended September 30, 2021
Sales and Other Operating Revenues - Third parties	$	5,236	$	—	$	—	$	—	$	5,236
Intersegment Revenues	—		887		—		(887)		—
Sales and Other Operating Revenues	$	5,236	$	887	$	—	$	(887)	$	5,236

Net Income (Loss) attributable to Hess Corporation	$	461	$	212	$	(379)	$	—	$	294
Depreciation, Depletion and Amortization	1,007		122		1		—		1,130
Impairment and other	147		—		—		—		147
Provision (Benefit) for Income Taxes	379		9		—		—		388
Capital Expenditures	1,145		129		—		—		1,274
For the Nine Months Ended September 30, 2020
Sales and Other Operating Revenues - Third parties	$	3,346	$	—	$	—	$	—	$	3,346
Intersegment Revenues	—		825		—		(825)		—
Sales and Other Operating Revenues	$	3,346	$	825	$	—	$	(825)	$	3,346

Net Income (Loss) attributable to Hess Corporation	$	(2,802)	$	168	$	(362)	$	—	$	(2,996)
Depreciation, Depletion and Amortization	1,469		117		2		—		1,588
Impairment and other	2,126		—		—		—		2,126
Provision (Benefit) for Income Taxes	(82)		5		(6)		—		(83)
Capital Expenditures	1,338		202		—		—		1,540

September 30,
2020 December 31,
2019
(In millions)
Exploration and Production $ 14,005 $ 16,790
Midstream 3,594 3,499
Corporate, Interest and Other 1,370 1,493
Total $ 18,969 $ 21,782

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Identifiable assets by operating segment were as follows:


	September 30, 2021		December 31, 2020

	(In millions)
Exploration and Production	$	13,648	$	13,688
Midstream	3,627		3,599
Corporate, Interest and Other	2,215		1,534
Total	$	19,490	$	18,821

13. Financial Risk Management Activities

In the normal course of our business, we are exposed to commodity risks related to changes in the prices of crude oil and natural ~~gas as well as changes in interest rates and foreign currency values.~~gas. Financial risk management activities include transactions designed to reduce risk in the selling prices of the crude oil or natural gas we produce or by reducing our exposure to foreign currency or interest rate movements. Generally, futures, swaps or option strategies may be used to fix the forward selling price, ofor establish a floor price or a range banded with a floor and ceiling price, for a portion of our crude oil or natural gas production. ~~Swaps may also be used to fix the difference between current selling prices and forward selling prices in periods of contango for crude oil production that will be stored and sold in the future.~~ Forward ~~contracts~~or swap strategies may be used to ~~purchase certain~~reduce exposure to foreign currency fluctuations for currencies in which we conduct ~~business with the intent of reducing exposure to foreign currency fluctuations.~~business. At September 30, ~~2020,~~2021, these forward ~~contracts~~and swap strategies relate to the British Pound, ~~Danish Krone~~Canadian Dollar and Malaysian Ringgit. Interest rate swaps may be used to convert interest payments on certain long-term debt from fixed to floating rates.

The notional amounts of outstanding financial risk management derivative contracts were as follows:


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020

		(In millions)					(In millions)
Commodity - crude oil put options (millions of barrels)		13.8		54.9
Commodity - crude oil put options / collars (millions of barrels)						Commodity - crude oil put options / collars (millions of barrels)	54.0		27.4

Foreign exchange forwards	Foreign exchange forwards	$	130	$	90	Foreign exchange forwards	$	135	$	163
Interest rate swaps	Interest rate swaps	$	100	$	100	Interest rate swaps	$	100	$	100

~~For calendar year 2020~~As of September 30, 2021, we have West Texas Intermediate (WTI) put options for 120,000 barrels of oil per day (bopd) with an average monthly floor price of $55 per barrel ~~for 130,000 barrels of oil per day (bopd),~~ and Brent put options for 30,000 bopd with an average monthly floor price of $60 per barrel for ~~20,000~~the remainder of 2021. For calendar 2022, we have WTI collars with an average monthly floor price of $60 per barrel and an average monthly ceiling price of $90 per barrel for 80,000 bopd and Brent collars with an average monthly floor price of $65 per barrel and an average monthly ceiling price of $95 per barrel for 30,000 bopd. See Note 14, Subsequent Events.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below reflects the fair values of risk management derivative instruments.


		Assets		Liabilities			Assets		Liabilities

		(In millions)					(In millions)
September 30, 2020
September 30, 2021						September 30, 2021
Derivative Contracts Designated as Hedging Instruments:						Derivative Contracts Designated as Hedging Instruments:
Crude oil put options / collars						Crude oil put options / collars	$	106	$	—
Interest rate swaps						Interest rate swaps	4		—
Total derivative contracts designated as hedging instruments						Total derivative contracts designated as hedging instruments	110		—
Derivative Contracts Not Designated as Hedging Instruments:						Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards / swaps						Foreign exchange forwards / swaps	1		—
Total derivative contracts not designated as hedging instruments						Total derivative contracts not designated as hedging instruments	1		—
Gross fair value of derivative contracts						Gross fair value of derivative contracts	111		—
Gross amounts offset in the Consolidated Balance Sheet						Gross amounts offset in the Consolidated Balance Sheet	—		—
Net Amounts Presented in the Consolidated Balance Sheet						Net Amounts Presented in the Consolidated Balance Sheet	$	111	$	—
December 31, 2020						December 31, 2020
Derivative Contracts Designated as Hedging Instruments:	Derivative Contracts Designated as Hedging Instruments:					Derivative Contracts Designated as Hedging Instruments:
Crude oil put options	Crude oil put options	$	205	$	0	Crude oil put options	$	64	$	—
Crude oil swaps	Crude oil swaps	0		(29)		Crude oil swaps	—		(54)
Interest rate swaps	Interest rate swaps	6		0		Interest rate swaps	5		—
Total derivative contracts designated as hedging instruments	Total derivative contracts designated as hedging instruments	211		(29)		Total derivative contracts designated as hedging instruments	69		(54)
Derivative Contracts Not Designated as Hedging Instruments:	Derivative Contracts Not Designated as Hedging Instruments:					Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards		0		0
Foreign exchange forwards / swaps						Foreign exchange forwards / swaps	—		(1)
Total derivative contracts not designated as hedging instruments	Total derivative contracts not designated as hedging instruments	0		0		Total derivative contracts not designated as hedging instruments	—		(1)
Fair Value of Derivative Contracts		$	211	$	(29)
December 31, 2019
Derivative Contracts Designated as Hedging Instruments:
Crude oil put options		$	125	$	0
Interest rate swaps		1		0
Total derivative contracts designated as hedging instruments		126		0
Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards		0		(1)
Total derivative contracts not designated as hedging instruments		0		(1)
Fair Value of Derivative Contracts		$	126	$	(1)
Gross fair value of derivative contracts						Gross fair value of derivative contracts	69		(55)
Gross amounts offset in the Consolidated Balance Sheet						Gross amounts offset in the Consolidated Balance Sheet	(13)		13
Net Amounts Presented in the Consolidated Balance Sheet						Net Amounts Presented in the Consolidated Balance Sheet	$	56	$	(42)

~~We chartered 3 VLCCs and have loaded a~~Of the total fair value of ~~6.3 million barrels of Bakken~~our crude oil during the second and third quarters of this year for sale in Asian markets. In connection with this activity, we entered into Brent swap transactions intended to fix the difference between Brent prices in the month of production and the forward Brent price for the expected month of sale. At September 30, 2020, net realized and unrealized gains from the Brent swaps of $17 million were deferred in ~~Accumulated other comprehensive income, and the liability for unrealized losses from the Brent swaps was $29 million. In addition, total net realized gains from WTI put options associated with the VLCCs of $40 million were deferred in~~ ~~Accumulated other comprehensive income~~hedging contracts at September 30, ~~2020~~2021, $65 million is presented within Other current assets and $41 million is presented within Other assets in our Consolidated Balance Sheet.

The fair value of our crude oil put options ~~and crude oil swaps~~at December 31, 2020 is presented ~~within~~in Other current assets ~~and~~ ~~Accrued liabilities, respectively,~~ in our Consolidated Balance ~~Sheet~~Sheet. . The fair value of our interest rate swaps is presented within Other assets in our Consolidated Balance Sheet. The fair value of our foreign exchange forwards ~~at December 31, 2019~~and swaps is presented within Accounts ~~payable~~receivable - Joint venture and other and Accrued liabilities in our Consolidated Balance Sheet. at September 30, 2021 and December 31, 2020, respectively. All fair values in the table above are based on Level 2 inputs.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Derivative contracts designated as hedging instruments:

Crude oil ~~derivatives:~~ derivatives designated as cash flow hedges:Crude oil hedging contracts ~~increased~~ decreased Sales and other operating revenues by ~~$143~~$64 million and ~~$435~~$179 million in the three and nine months ended September 30, ~~2020, respectively. In~~2021, respectively, and increased Sales and other operating revenues by $143 million and $435 million, respectively, in the three and nine months ended September 30, ~~2019, the impact from crude oil hedging contracts on Sales and other operating revenues was an increase of $2 million and $3 million, respectively. At September 30, 2020,~~2020. The pre-tax deferred ~~gains~~losses in Accumulated other comprehensive income (loss)related to outstanding crude oil ~~price~~ hedging contracts were ~~$199~~$88 million at September 30, 2021, $82 million of which will be reclassified into earnings ~~within~~during the next twelve months as the ~~originally~~ hedged crude oil sales are recognized in earnings.

During the first quarter of 2021, we completed the sale of 4.2 million barrels of Bakken crude oil transported and stored on 2 VLCCs during 2020 for sale in Asian markets. We recognized net losses of $4 million from crude oil hedging contracts associated with the VLCC volumes in the first quarter of 2021.

Interest rate swaps designated as fair value hedges: ~~At September 30, 2020 and December 31, 2019, we~~We had interest rate swaps with gross notional amounts totaling $100 million ~~which were designated as fair value hedges~~at September 30, 2021 and ~~relate to debt where we have converted~~December 31, 2020, that convert interest payments from fixed to floating rates. Changes in the fair value of interest rate swaps and the hedged fixed-rate debt are recorded in Interest expense in the Statement of Consolidated Income. ~~In the three and nine months ended September 30, 2020, the~~The change in fair value of interest rate swaps was ~~an increase in the asset of~~ NaN and ~~$6 million, respectively, compared with~~ a decrease ~~in the liability~~ of $1 ~~million and $4~~ million in the three and nine months ended September 30, ~~2019,~~2021, respectively, compared with a change in fair value of NaN and an increase of $6 million in the three and nine months ended September 30, 2020, respectively, with a corresponding adjustment in the carrying value of the hedged fixed-rate debt.

Derivative contracts not designated as hedging instruments:

Foreign exchange: Foreign exchange gains and losses, which are reported in Other, net in Revenues and non-operating income in the Statement of Consolidated Income, were NaN and losses of $2 million in the three and nine months ended September 30, 2021, respectively, compared with losses of $1 million and $4 million in the three and nine months ended September 30, 2020, ~~respectively, compared with gains of $1 million and $4 million in the three and nine months ended September 30, 2019,~~

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

respectively. A component of foreign exchange gains and losses is the result of foreign exchange derivative contracts that are not designated as hedges, which amounted to net gains of $1 million and $1 million in the three and nine months ended September 30, 2021, respectively, compared with net gains of $1 million and $4 million in the three and nine months ended September 30, 2020, ~~respectively, compared with net gains of $1 million and $2 million in the three and nine months ended September 30, 2019,~~ respectively.

Fair Value Measurement:

At September 30, 2021, consolidated long-term debt, which was substantially comprised of fixed-rate debt instruments, had a carrying value of $8,507 million and a fair value of $10,052 million based on Level 2 inputs in the fair value measurement hierarchy. We also have ~~other~~ short-term financial instruments, primarily cash equivalents, accounts receivable and accounts payable, for which the carrying value approximated fair value at September 30, ~~2020. At September 30, 2020, total long-term debt, which was primarily comprised of fixed-rate debt instruments, had a carrying value of $8,288 million~~2021 and ~~a fair value of $9,006 million based on Level 2 inputs.~~December 31, 2020.

14. Subsequent Events

OnIn October ~~5, 2020,~~2021, we received net proceeds of $108 million from the public offering of approximately 4.3 million Hess-owned Class A shares of Hess Midstream LP. As a result of this transaction, the Corporation's ownership in Hess Midstream LP, on a consolidated basis, decreased from approximately 45% at September 30, 2021 to approximately 44%.

In October 2021, we entered into ~~an agreement to sell~~additional WTI collars for 10,000 bopd and Brent collars for 30,000 bopd for calendar 2022 with contract terms consistent with our ~~28% working interest in the Shenzi Field in the deepwater Gulf of Mexico to BHP Billiton, the field’s operator,~~other calendar 2022 hedge contracts outstanding at September 30, 2021. As a result, for ~~total consideration of $505 million, subject to customary adjustments,~~calendar 2022 we have WTI collars with an ~~effective date~~average monthly floor price of ~~July 1, 2020. Our net share~~$60 per barrel and an average monthly ceiling price of ~~production from the Shenzi Field was 11,000 barrels~~$90 per barrel for 90,000 bopd and Brent collars with an average monthly floor price of ~~oil equivalent~~$65 per ~~day (boepd) during the first nine months~~barrel and an average monthly ceiling price of ~~2020. The sale is expected to close during the fourth quarter of 2020.~~

In October, the operator, BP, completed drilling the Galapagos Deep well (Hess 25%) in the Mississippi Canyon area of the deepwater Gulf of Mexico. The well was not a commercial success and third quarter results include exploration expenses of $37 million, primarily$95 per barrel for well costs incurred through September 30, 2020. We estimate $7 million of additional exploration expense will be recognized in the fourth quarter of 2020 for well costs incurred after September 30, 2020.60,000 bopd.

1516

PART I - FINANCIAL INFORMATION (CONT'D.)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the unaudited consolidated financial statements and accompanying footnotes for the quarter ended September 30, ~~2020~~2021 included under Item 1. Financial Statements of this Form 10-Q and the audited consolidated financial statements and related notes included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2019 and Part II, Item 1A. in our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30,~~ 2020.

Overview

Hess Corporation is a global ~~Exploration and Production (E&P)~~E&P company engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids, ~~(NGLs),~~ and natural gas with production operations located primarily in the United States (U.S.), Guyana, the Malaysia/Thailand Joint Development Area (JDA), ~~Malaysia,~~ and ~~Denmark.~~Malaysia. We conduct exploration activities primarily offshore Guyana, in the U.S. Gulf of Mexico, and offshore Suriname and Canada. At the Stabroek Block (Hess 30%), offshore Guyana, we and our partners have ~~announced eighteen~~discovered a significant ~~discoveries.~~resource base and are executing a multi-phased development of the Block. The Liza Phase 1 development achieved first production in December 2019, and ~~is expected to reach its~~has a nameplate production capacity of approximately 120,000 gross ~~bopd in the fourth quarter.~~bopd. The Liza Phase 2 development was sanctioned in the second quarter of 2019 and ~~is expected~~remains on track to ~~start up~~achieve first production by early 2022, with production capacity of approximately 220,000 gross bopd. ~~The~~A third development, Payara, was sanctioned in the third quarter of 2020 and is expected to ~~start up~~achieve first production in 2024, with production capacity ~~up to~~of approximately 220,000 gross bopd. A fourth development, Yellowtail, has been identified on the Stabroek Block with an expected production capacity of approximately 250,000 gross bopd and an anticipated startup in 2025, pending government approvals and project sanctioning. The discovered resources to date on the Stabroek Block are expected to underpin ~~the potential for at least five~~up to ten floating production, storage and offloading vessels ~~(FPSO) producing more than 750,000 gross bopd~~(FPSOs) with the first six FPSOs expected by ~~2026.~~2027.

Our Midstream operating segment ~~which is comprised of Hess Corporation’s 47% consolidated ownership interest in Hess Midstream LP,~~ provides fee-based services, including gathering, compressing and processing natural gas and fractionating ~~NGL;~~natural gas liquids (NGL); gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota.

In March 2021, the Corporation received net proceeds of $70 million from the public offering of 3.45 million Hess-owned Class A shares of Hess Midstream LP. In August 2021, HESM Opco, a consolidated subsidiary of Hess Midstream LP, repurchased 31.25 million HESM Opco Class B units held by a subsidiary of Hess Corporation and an affiliate of GIP for $750 million. We received net proceeds of $375 million. HESM Opco issued $750 million in aggregate principal amount of 4.250% fixed-rate senior unsecured notes due 2030 in a private offering to finance the repurchase. In October 2021, we received net proceeds of $108 million from the public offering of approximately 4.3 million Hess-owned Class A shares of Hess Midstream LP. After giving effect to these transactions, the Corporation owns an approximate 44% interest in Hess Midstream LP, on a consolidated basis.

Hess Response to Global Pandemic ~~and Market Conditions~~

~~The global~~ COVID-19 ~~pandemic~~ continues to have a profound impact on society and industry. The Corporation’s first priority in the midst of the ~~COVID-19~~ pandemic ~~remains~~has been the health and safety of the Hess workforce and local ~~communities.~~communities where the Corporation operates. A multidisciplinary Hess emergency response team has been overseeing plans and precautions to reduce the risks of COVID-19 in the work environment while maintaining business continuity based on the most current recommendations by government and public health agencies. The Corporation has implemented a variety of health and safety measures including enhanced cleaning procedures and modified work practices such as travel restrictions, health screenings, reduced personnel at offshore platforms and onshore work sites wherever this can be done safely, and remote working arrangements for office workers. In July 2020, Hess Midstream LP announced that the planned maintenance turnaround at the Tioga Gas Plant originally scheduled for the third quarter of 2020 was deferred until 2021 to ensure safe and timely execution in light of the COVID-19 pandemic.

In addition to the global health concerns of COVID-19, the pandemic has severely impacted demand for oil. In response to the resulting sharp decline in oil prices, the Corporation’s focus is on preserving cash and capability, while protecting the long-term value of its assets. In the first quarter of 2020, we reduced our E&P capital and exploratory budget for 2020 to $1.9 billion, that was subsequently further reduced to $1.8 billion, representing a 40% reduction from the original budget of $3.0 billion. This reduction is being achieved primarily by shifting from a six-rig program to one rig in the Bakken, which was accomplished in May, and deferring discretionary spending across the portfolio, including reduced 2020 drilling activity and deferral of some development activities on the Stabroek Block, offshore Guyana. We plan to maintain a one rig program in the Bakken until oil prices approach $50 per barrel WTI. In March 2020, Hess entered into a $1.0 billion three year term loan agreement. In October, we entered into an agreement to sell our 28% working interest in the Shenzi Field for total consideration of $505 million, subject to customary adjustments, with an effective date of July 1, 2020. The sale is expected to close during the fourth quarter of 2020.

Third Quarter Highlights and Outlook

Our E&P capital and exploratory expenditures in 2021 are forecast to be approximately $1.9 billion. Oil and gas production in ~~2020,~~2021, excluding Libya, is forecast to be approximately ~~325,000 boepd. We have more than 80%~~295,000 barrels of ~~our forecasted crude~~ oil ~~production for~~equivalent per day (boepd). For the remainder of ~~2020~~2021, we have hedged 120,000 bopd with $55 WTI put options ~~for 130,000~~and 30,000 bopd ~~and~~with $60 Brent put ~~options for 20,000 bopd. The fair value~~options. For calendar 2022, we have hedged 90,000 bopd with WTI collars with an average monthly floor price of $60 per barrel and an average monthly ceiling price of $90 per barrel, and 60,000 bopd with Brent collars with an average monthly floor price of $65 per barrel and an average monthly ceiling price of $95 per barrel.

In the ~~open crude oil put option contracts at September 30, 2020 was~~third quarter of 2021, we received net proceeds of approximately ~~$205 million.~~$130 million from the sale of our interests in Denmark and $375 million from the repurchase by HESM Opco of approximately 15.6 million Hess-owned Class B units. We also repaid $500 million of our $1 billion term loan and we intend to repay the remaining $500 million in 2022. In October, we received net proceeds of $108 million from the public offering of approximately 4.3 million Hess-owned Class A shares of Hess Midstream LP.

1617

PART I - FINANCIAL INFORMATION (CONT'D.)

Overview (continued)

Net cash provided by operating activities was $1,991 million in the first nine months of 2021, compared with $847 million in the first nine months of ~~2020, compared with $1,356 million in the first nine months of 2019.~~2020. Net cash provided by operating activities before changes in operating assets and liabilities was $2,105 million in the first nine months of 2021 and $1,271 million in the first nine months of ~~2020 and $1,717~~2020. Capital expenditures were $1,274 million in the first nine months of ~~2019. Capital expenditures were~~2021 and $1,540 million in the first nine months of ~~2020 and $2,072 million in the first nine months of 2019.~~2020. Excluding our Midstream segment, we ended the third quarter of ~~2020~~2021 with ~~approximately $1.3~~$2.41 billion in cash and cash equivalents. In ~~2021,~~2022, based on current forward strip crude oil prices, we expect cash flow from operating activities ~~expected proceeds from the sale of our interest in the Shenzi Field, expected proceeds from the sale of the 6.3 million barrels of oil loaded on VLCCs,~~ and cash and cash equivalents at September 30, ~~2020,~~2021 will be sufficient to fund our capital investment program, dividends, and ~~dividends.Due to~~ the ~~weak commodity price environment,~~repayment of the remaining $500 million outstanding under our $1 billion term loan. Depending on market conditions, we may take any of the following steps, or a combination thereof, to improve our liquidity and financial position: ~~further~~ reduce the planned capital program and other cash outlays, including dividends, pursue asset sales, borrow against our committed revolving credit facility, or issue debt or equity securities.

Third Quarter Results

In the third quarter of ~~2020, we incurred a~~2021, net ~~loss of $243~~income was $115 million, compared with a net loss of ~~$212~~$243 million in the third quarter of ~~2019.~~2020. Excluding items affecting comparability of earnings between periods detailed on pages 2425 to ~~27, we incurred~~28, adjusted net income was $86 million in the third quarter of 2021, compared with an adjusted net loss of $216 million ~~compared with an adjusted net loss of $105 million~~ in the third quarter of ~~2019.~~2020. The ~~decrease~~improvement in ~~adjusted~~ third quarter ~~2020~~2021 adjusted after-tax results compared ~~with adjusted results in~~to the prior-year quarter primarily reflects ~~lower~~higher realized selling prices, partially offset by the impact of lower net production, including curtailed production in the Bakken related to the Tioga Gas Plant maintenance turnaround and ~~higher exploration expenses.~~reduced Gulf of Mexico production due to Hurricane Ida.

Exploration and Production Results

In the third quarter of ~~2020,~~2021, E&P had a net ~~loss~~income of ~~$182~~$178 million, compared with a net loss of ~~$60~~$182 million in the third quarter of ~~2019.~~2020. Excluding items affecting comparability of earnings between periods, ~~the~~ adjusted net ~~loss for~~income was $149 million in the third quarter of ~~2020 was $156 million,~~2021, compared with an adjusted net loss of ~~$41~~$156 million in the third quarter of ~~2019.~~2020. Total net production, excluding Libya, averaged 265,000 boepd in the third quarter 2021, compared with 321,000 boepd in the third quarter of 2020, compared with 290,000 boepd in the third quarter of 2019. The average realized crude oil selling price, excluding the effect of hedging, was $36.17 per barrel in the third quarter of 2020, compared with $55.91 per barrel in the prior-year quarter reflecting a decrease in benchmark oil prices and widening of crude differentials realized as a result of reduced demand caused by the COVID-19 pandemic. Realized gains from crude oil hedging activities improved after-tax results by $143 million in the third quarter of 2020 and $2 million in the third quarter of 2019.2020. The average realized crude oil selling price, including hedging, was $63.17 per barrel in the third quarter of 2021, compared with $45.60 per barrel in the third quarter of ~~2020, down from $56.03 per barrel in the third quarter of 2019.~~2020. The average realized ~~NGLs~~NGL selling price in the third quarter of ~~2020~~2021 was ~~$11.63~~$32.88 per barrel, compared with ~~$9.41~~$11.63 per barrel in the prior-year quarter, while the average realized natural gas selling price was ~~$2.94~~$4.71 per thousand cubic feet (mcf) in the third quarter of ~~2020,~~2021, compared with ~~$3.81~~$2.94 per mcf in the third quarter of ~~2019.~~2020.

The following is an update of our ongoing E&P activities:

•In North Dakota, net production from the Bakken oil shale play averaged ~~198,000~~148,000 boepd for the third quarter of ~~2020 (2019~~2021 (2020 Q3: ~~163,000~~198,000 boepd), ~~with net oil production up 13% to 108,000 bopd from 96,000 bopd in the year-ago period,~~ primarily due to ~~increased wells online~~the impact of lower drilling activity caused by a reduction in rig count from six to one during the first half of last year, lower NGL and ~~improved well performance. Natural gas and NGL production also increased from higher wells online, additional~~ natural gas ~~captured and processed, and approximately 6,000 boepd of additional~~ volumes received under percentage of proceeds contracts ~~resulting from lower prices. In~~due to higher commodity prices, curtailed production related to the planned Tioga Gas Plant maintenance turnaround completed in the quarter, and the second quarter 2021 sale of our Little Knife and Murphy Creek nonstrategic acreage interests. Net oil production was 78,000 bopd in the third quarter of 2021 and 108,000 bopd in the prior year quarter. NGL and natural gas volumes received under percentage of proceeds contracts were 9,000 boepd in the third quarter of 2021 compared with 22,000 boepd in the third quarter of 2020 due to higher realized NGL prices lowering volumes received as consideration for gas processing fees. In 2021, we ~~operated one~~added a second rig in February and a third rig in September. We drilled 618 wells, completed 1322 wells, and brought 2219 new wells ~~online.~~online during the third quarter. We forecast net production to average in the range of ~~180,000~~155,000 boepd to ~~185,000~~160,000 boepd for the fourth quarter of ~~2020~~2021 and approximately ~~190,000~~155,000 boepd for the full year ~~2020.~~

As previously announced in the second quarter, we chartered three VLCCs and have loaded a total of 6.3 million barrels of oil in the second and third quarters for sale in Asian markets to enhance cash flow and maximize value from our Bakken production. The first VLCC cargo of 2.1 million barrels was sold in China in September with cash proceeds received in October.~~Loading of the second and third VLCCs was completed in the third quarter.~~2021.

•In the Gulf of Mexico, net production for the third quarter of ~~2020~~2021 averaged ~~49,000~~32,000 boepd ~~(2019~~(2020 Q3: ~~59,000~~49,000 boepd), reflecting hurricane-related downtime as well as higher planned maintenance. The Esox-1 well, which commenced production in February, reached its gross peak rate of approximately 17,000 boepd, or 9,000 boepd net to Hess in the third quarter. In the fourth quarter, Gulf of Mexico net production is expected to average approximately 40,000 boepd. Production from the Conger and Llano Fields is expected to remain shut in for approximately 40 and 75 days, respectively, during the fourth quarterprimarily due to ~~hurricane recovery work, and~~ the ~~Penn State 6 well will remain shut in until a workover can be completed in December. We expect all hurricane-impacted production to be fully restored before the end~~sale of ~~the year.~~

~~PART I - FINANCIAL INFORMATION (CONT'D.)~~

~~Overview (continued)~~

~~In October, we entered into an agreement to sell~~ our ~~28% working~~ interest in the Shenzi Field for total consideration of $505 million, subject to customary adjustments, with an effective date of July 1, 2020. Our net share of production from the Shenzi Field during the first nine months of 2020 was 11,000 boepd. The sale is expected to close during the fourth quarter of 2020.

In October, the operator, BP, completed drilling the Galapagos Deep well (Hess 25%) in the Mississippi Canyon area of the deepwater Gulf of Mexico. The well was not a commercial success and third quarter results include exploration expenses of $37 million, primarily for well costs incurred through September 30, 2020. We estimate $7 million of additional exploration expense will be recognized in the fourth quarter of 2020, ~~for well costs incurred after September 30,~~higher hurricane related downtime in the third quarter of 2021, and natural field decline. Net production from the Shenzi Field was 9,000 boepd in the third quarter of 2020.

•At the Stabroek Block (Hess 30%), offshore Guyana, net production from the Liza Phase 1 development averaged ~~19,000~~32,000 bopd for the third quarter of 2020 following first production in December 2019. During the third quarter, the operator Esso Exploration and Production Guyana Limited continued work to complete the commissioning of the natural gas injection system that should enable the Liza Destiny FPSO to reach its capacity of 120,000 gross bopd in the fourth quarter. Phase two of the Liza Field development, which will utilize the2021 (2020 Q3: 19,000 bopd). The Liza Unity FPSO, with an expected capacity of 220,000 gross bopd, ~~remains on target to achieve first oil by early 2022.~~

~~On September 30, 2020, we announced we had made the final investment decision to proceed with development of the Payara Field on~~arrived at the Stabroek Block ~~after~~on October 25th, and startup of Phase 2 of the Liza Field development ~~plan received approval from the government of Guyana.~~remains on track for early 2022. The third development, Payara, will utilize the Prosperity FPSO ~~which will have the~~with an expected capacity ~~to produce up to~~of 220,000 gross ~~bopd and~~bopd; first oil is expected in 2024. ~~Ten drill centers are planned with a total of 41 wells, including 20 production wells and 21 injection wells. Excluding pre-sanction costs and FPSO purchase cost, our net share of~~A fourth development, ~~costs is forecast to be approximately $1.8 billion.~~

~~Two new discoveries were announced~~Yellowtail, has been identified on the Stabroek Block ~~during~~with an expected production capacity of approximately 250,000 gross bopd and an anticipated startup in 2025, pending government approvals and project sanctioning.

PART I - FINANCIAL INFORMATION (CONT'D.)

Overview (continued)

Since July, we have announced the ~~third quarter of 2020:~~

~~Yellowtail-2:~~ 19th, 20th, and 21st significant discoveries on the Stabroek Block. The ~~Yellowtail-2~~Whiptail-1 well encountered ~~approximately 69~~246 feet of ~~high quality oil bearing reservoirs and is located adjacent to and below the Yellowtail-1 discovery. Yellowtail-2 is the 17th discovery on the Block.~~

~~Redtail-1:~~ ~~The Redtail-1 well encountered approximately 232 feet of~~net pay in high quality oil bearing sandstone reservoirs, and the Whiptail-2 well, which is located 3 miles northeast of Whiptail-1, encountered 167 feet of net pay in high quality oil bearing sandstone reservoirs. The Pinktail well encountered 220 feet of net pay in high quality oil bearing sandstone reservoirs. Pinktail is located approximately ~~1.5~~21.7 miles ~~northwest~~southeast of the ~~Yellowtail discovery. Redtail-1~~Liza Phase 1 development and approximately 3.7 miles southeast of Yellowtail-1. The Cataback well encountered 243 feet of net pay in high quality hydrocarbon bearing sandstone reservoirs of which 102 feet is oil bearing. Cataback is located approximately 3.7 miles east of the ~~18th discovery on the Block.~~Turbot-1 well.

Following the completion of ~~appraisal work at~~ the ~~Yellowtail-2~~Cataback well, the Noble Tom Madden commenced Phase 2 drilling and completion activities. The Stena Carron ~~drillship began drilling~~completed drill stem tests on Uaru-1 and Mako-2 and is currently performing a drill stem test on Longtail-2. Following the ~~Tanager-1~~completion of the Pinktail well, on the ~~Kaieteur Block, located 46 miles northwest of Liza in August. Tanager-1 drilling operations are ongoing. The~~ Noble Don Taylor ~~drillship completed the~~commenced development drilling ~~of the Redtail-1 well,~~at Payara. The Noble Sam Croft and isNoble Bob Douglas are currently drilling and completing ~~Liza~~ Phase 2 development ~~wells. The other two drillships, the Noble Bob Douglas~~wells, and the ~~Noble Tom Madden, are drilling~~Stena Drillmax left the Stabroek Block following the completion of the Whiptail-1 well and ~~completing Liza Phase 1 and Phase 2 development wells.~~will return in the fourth quarter to drill the Fangtooth prospect.

•In the Gulf of Thailand, net production from Block A-18 of the JDA averaged ~~27,000~~30,000 boepd for the third quarter of ~~2020 (2019~~2021 (2020 Q3: ~~33,000~~27,000 boepd), including contribution from unitized acreage in Malaysia, while net production from North Malay Basin, offshore Peninsular Malaysia, averaged ~~23,000~~20,000 boepd for the third quarter of ~~2020 (2019~~2021 (2020 Q3: ~~27,000~~23,000 boepd). ~~Net production was lower at the JDA and North Malay Basin reflecting COVID-19 impacts on economic activity in Malaysia which reduced natural gas nominations.~~

•AtIn August, we completed the ~~Waha fields (Hess 8%), onshore Libya, production was shut~~sale of our interests in ~~during the first nine months~~Denmark for adjusted proceeds of ~~2020 due to the declaration of force majeure by the Libyan National Oil Corporation as a result of civil unrest.~~approximately $130 million. Net production ~~averaged 22,000 boepd for~~from Denmark during the third quarter of ~~2019.~~2021 was 3,000 boepd (2020 Q3: 5,000 boepd).

Consolidated Results of Operations

The after-tax income (loss) by major operating activity is summarized below:

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess Corporation:
Exploration and Production $ (182) $ (60) $ (2,802) $ 117
Midstream 56 39 168 111
Corporate, Interest and Other (117) (191) (362) (414)
Total $ (243) $ (212) $ (2,996) $ (186)
Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic (a) $ (0.80) $ (0.70) $ (9.83) $ (0.63)
Diluted (b) $ (0.80) $ (0.70) $ (9.83) $ (0.63)

~~(a)Calculated as net income (loss) attributable to Hess Corporation less preferred stock dividends, divided by weighted average number of basic shares.~~

~~(b)Calculated as net income (loss) attributable to Hess Corporation less preferred stock dividends, divided by weighted average number of diluted shares.~~

~~PART I - FINANCIAL INFORMATION (CONT'D.)~~

~~Consolidated Results of Operations~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess Corporation:
Exploration and Production	$	178	$	(182)	$	461	$	(2,802)
Midstream	61		56		212		168
Corporate, Interest and Other	(124)		(117)		(379)		(362)
Total	$	115	$	(243)	$	294	$	(2,996)
Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic	$	0.37	$	(0.80)	$	0.96	$	(9.83)
Diluted	$	0.37	$	(0.80)	$	0.95	$	(9.83)

Items Affecting Comparability of Earnings Between Periods

The following table summarizes, on an after-tax basis, items of income (expense) that are included in net income (loss) and affect comparability of earnings between periods:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Items Affecting Comparability of Earnings Between Periods, After-Tax:	Items Affecting Comparability of Earnings Between Periods, After-Tax:									Items Affecting Comparability of Earnings Between Periods, After-Tax:
Exploration and Production	Exploration and Production	$	(26)	$	(19)	$	(2,277)	$	3	Exploration and Production	$	29	$	(26)	$	(118)	$	(2,277)
Midstream	Midstream	—		—		—		—		Midstream	—		—		—		—
Corporate, Interest and Other	Corporate, Interest and Other	(1)		(88)		(1)		(88)		Corporate, Interest and Other	—		(1)		—		(1)
Total	Total	$	(27)	$	(107)	$	(2,278)	$	(85)	Total	$	29	$	(27)	$	(118)	$	(2,278)

The items in the table above are explained on pages 2425 to ~~27.~~28.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Reconciliations of GAAP and non-GAAP measures

The following table reconciles reported net income (loss) attributable to Hess Corporation and adjusted net income (loss) attributable to Hess Corporation:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Adjusted Net Income (Loss) Attributable to Hess Corporation:	Adjusted Net Income (Loss) Attributable to Hess Corporation:									Adjusted Net Income (Loss) Attributable to Hess Corporation:
Net income (loss) attributable to Hess Corporation	Net income (loss) attributable to Hess Corporation	$	(243)	$	(212)	$	(2,996)	$	(186)	Net income (loss) attributable to Hess Corporation	$	115	$	(243)	$	294	$	(2,996)
Less: Total items affecting comparability of earnings between periods, after-tax	Less: Total items affecting comparability of earnings between periods, after-tax	(27)		(107)		(2,278)		(85)		Less: Total items affecting comparability of earnings between periods, after-tax	29		(27)		(118)		(2,278)
Adjusted Net Income (Loss) Attributable to Hess Corporation	Adjusted Net Income (Loss) Attributable to Hess Corporation	$	(216)	$	(105)	$	(718)	$	(101)	Adjusted Net Income (Loss) Attributable to Hess Corporation	$	86	$	(216)	$	412	$	(718)

The following table reconciles reported net cash provided by (used in) operating activities and net cash provided by (used in) operating activities before changes in operating assets and liabilities:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020

		(In millions)					(In millions)
Net cash provided by operating activities before changes in operating assets and liabilities:	Net cash provided by operating activities before changes in operating assets and liabilities:					Net cash provided by operating activities before changes in operating assets and liabilities:
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	847	$	1,356	Net cash provided by (used in) operating activities	$	1,991	$	847
Changes in operating assets and liabilities	Changes in operating assets and liabilities	424		361		Changes in operating assets and liabilities	114		424
Net cash provided by (used in) operating activities before changes in operating assets and liabilities	Net cash provided by (used in) operating activities before changes in operating assets and liabilities	$	1,271	$	1,717	Net cash provided by (used in) operating activities before changes in operating assets and liabilities	$	2,105	$	1,271

Adjusted net income (loss) attributable to Hess Corporation is a non-GAAP financial measure, which we define as reported net income (loss) attributable to Hess Corporation excluding items identified as affecting comparability of earnings between periods, which are summarized on pages 2425 to ~~27.~~28. Management uses adjusted net income (loss) to evaluate the Corporation’s operating performance and believes that investors’ understanding of our performance is enhanced by disclosing this measure, which excludes certain items that management believes are not directly related to ongoing operations and are not indicative of future business trends and operations.

Net cash provided by (used in) operating activities before changes in operating assets and liabilities presented in this report is a non-GAAP measure, which we define as reported net cash provided by (used in) operating activities excluding changes in operating assets and liabilities. Management uses net cash provided by (used in) operating activities before changes in operating assets and liabilities to evaluate the Corporation’s ability to internally fund capital expenditures, pay dividends and service debt and believes that investors’ understanding of our ability to generate cash to fund these items is enhanced by disclosing this measure, which excludes working capital and other movements that may distort assessment of our performance between periods.

These measures are not, and should not be viewed as, substitutes for U.S. GAAP net income (loss) and net cash provided by (used in) operating activities.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

In the following discussion and elsewhere in this report, the financial effects of certain transactions are disclosed on an after-tax basis. Management reviews segment earnings on an after-tax basis and uses after-tax amounts in its review of variances in segment earnings. Management believes that after-tax amounts are a preferable method of explaining variances in earnings, since they show the entire effect of a transaction rather than only the pre-tax amount. After-tax amounts are determined by applying the income tax rate in each tax jurisdiction to pre-tax amounts.

Comparison of Results

Exploration and Production

Following is a summarized income statement of our E&P operations:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Revenues and Non-Operating Income	Revenues and Non-Operating Income									Revenues and Non-Operating Income
Sales and other operating revenues	Sales and other operating revenues	$	1,159	$	1,580	$	3,346	$	4,812	Sales and other operating revenues	$	1,759	$	1,159	$	5,236	$	3,346
Gains on asset sales, net		—		—		—		22
Gains (losses) on asset sales, net										Gains (losses) on asset sales, net	29		—		29		—
Other, net	Other, net	10		17		17		44		Other, net	19		10		49		17
Total revenues and non-operating income	Total revenues and non-operating income	1,169		1,597		3,363		4,878		Total revenues and non-operating income	1,807		1,169		5,314		3,363
Costs and Expenses	Costs and Expenses									Costs and Expenses
Marketing, including purchased oil and gas	Marketing, including purchased oil and gas	244		453		766		1,385		Marketing, including purchased oil and gas	542		244		1,427		766
Operating costs and expenses	Operating costs and expenses	228		251		645		695		Operating costs and expenses	249		228		711		645
Production and severance taxes	Production and severance taxes	34		47		92		132		Production and severance taxes	42		34		123		92
Midstream tariffs	Midstream tariffs	237		182		703		509		Midstream tariffs	270		237		802		703
Exploration expenses, including dry holes and lease impairment	Exploration expenses, including dry holes and lease impairment	71		50		291		127		Exploration expenses, including dry holes and lease impairment	36		71		117		291
General and administrative expenses	General and administrative expenses	53		51		155		141		General and administrative expenses	42		53		140		155
Depreciation, depletion and amortization	Depreciation, depletion and amortization	478		507		1,469		1,430		Depreciation, depletion and amortization	308		478		1,007		1,469
Impairment		—		—		2,126		—
Impairment and other										Impairment and other	—		—		147		2,126
Total costs and expenses	Total costs and expenses	1,345		1,541		6,247		4,419		Total costs and expenses	1,489		1,345		4,474		6,247
Results of Operations Before Income Taxes	Results of Operations Before Income Taxes	(176)		56		(2,884)		459		Results of Operations Before Income Taxes	318		(176)		840		(2,884)
Provision (benefit) for income taxes	Provision (benefit) for income taxes	6		116		(82)		342		Provision (benefit) for income taxes	140		6		379		(82)
Net Income (Loss) Attributable to Hess Corporation	Net Income (Loss) Attributable to Hess Corporation	$	(182)	$	(60)	$	(2,802)	$	117	Net Income (Loss) Attributable to Hess Corporation	$	178	$	(182)	$	461	$	(2,802)

Excluding the E&P items affecting comparability of earnings between periods detailed on pages ~~24 to~~ 25 and 26, the changes in E&P results are primarily attributable to changes in selling prices, production and sales volumes, marketing expenses, cash operating costs, Midstream tariffs, depreciation, depletion and amortization, ~~(DD&A),~~ exploration expenses and income taxes, as discussed below.

2021

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Selling Prices: ~~Lower~~Higher realized selling prices in the third quarter and first nine months of ~~2020, decreased~~2021, increased after-tax results by approximately ~~$145~~$325 million and ~~$665~~$995 million, respectively, compared to the same periods in ~~2019.~~2020. Average selling prices were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

Average Selling Prices (a)	Average Selling Prices (a)									Average Selling Prices (a)
Crude Oil – Per Barrel (Including Hedging)	Crude Oil – Per Barrel (Including Hedging)									Crude Oil – Per Barrel (Including Hedging)
United States	United States									United States
North Dakota		$	43.20	$	53.03	$	42.61	$	53.74
North Dakota (b)										North Dakota (b)	$	59.65	$	43.20	$	52.27	$	42.61
Offshore	Offshore	48.56		58.72		45.60		60.12		Offshore	62.23		48.56		57.36		45.60
Total United States	Total United States	44.55		54.72		43.54		55.88		Total United States	60.14		44.55		53.46		43.54
Guyana	Guyana	52.60		—		44.35		—		Guyana	70.05		52.60		65.31		44.35
Malaysia and JDA	Malaysia and JDA	42.59		58.55		38.02		61.55		Malaysia and JDA	69.87		42.59		64.94		38.02
Denmark		50.38		63.13		52.97		67.37
Libya		—		62.28		—		65.08
Other (c)										Other (c)	68.36		50.38		62.93		52.97
Worldwide	Worldwide	45.60		56.03		43.88		57.48		Worldwide	63.17		45.60		56.62		43.88
Crude Oil – Per Barrel (Excluding Hedging)	Crude Oil – Per Barrel (Excluding Hedging)									Crude Oil – Per Barrel (Excluding Hedging)
United States	United States									United States
North Dakota		$	33.69	$	52.88	$	32.95	$	53.65
North Dakota (b)										North Dakota (b)	$	65.11	$	33.69	$	56.37	$	32.95
Offshore	Offshore	38.39		58.56		35.64		60.03		Offshore	67.88		38.39		61.91		35.64
Total United States	Total United States	34.87		54.57		33.79		55.79		Total United States	65.64		34.87		57.66		33.79
Guyana	Guyana	42.82		—		33.10		—		Guyana	73.12		42.82		67.72		33.10
Malaysia and JDA	Malaysia and JDA	42.59		58.55		38.02		61.55		Malaysia and JDA	69.87		42.59		64.94		38.02
Denmark		44.38		63.13		41.72		67.37
Libya		—		62.28		—		65.08
Other (c)										Other (c)	71.43		44.38		65.91		41.72
Worldwide	Worldwide	36.17		55.91		34.02		57.41		Worldwide	67.88		36.17		60.33		34.02
Natural Gas Liquids – Per Barrel	Natural Gas Liquids – Per Barrel									Natural Gas Liquids – Per Barrel
United States	United States									United States
North Dakota	North Dakota	$	11.68	$	9.55	$	9.57	$	12.96	North Dakota	$	32.94	$	11.68	$	28.59	$	9.57
Offshore	Offshore	11.03		7.93		8.27		12.95		Offshore	32.00		11.03		24.08		8.27
Worldwide	Worldwide	11.63		9.41		9.44		12.96		Worldwide	32.88		11.63		28.23		9.44
Natural Gas – Per Mcf	Natural Gas – Per Mcf									Natural Gas – Per Mcf
United States	United States									United States
North Dakota	North Dakota	$	1.18	$	1.32	$	1.13	$	1.64	North Dakota	$	3.75	$	1.18	$	3.96	$	1.13
Offshore	Offshore	1.13		1.89		1.21		2.21		Offshore	3.76		1.13		2.91		1.21
Total United States	Total United States	1.17		1.55		1.16		1.90		Total United States	3.75		1.17		3.62		1.16
Malaysia and JDA	Malaysia and JDA	4.53		5.18		4.44		5.18		Malaysia and JDA	5.45		4.53		5.22		4.44
Denmark		2.87		3.74		3.44		3.84
Libya		—		5.11		4.90		5.32
Other (c)										Other (c)	3.62		2.87		3.05		3.81
Worldwide	Worldwide	2.94		3.81		2.85		4.06		Worldwide	4.71		2.94		4.54		2.85

(a)Selling prices in the United States are adjusted for certain processing and distribution fees included in Marketing expenses. Excluding these fees ~~Worldwide~~worldwide selling prices for the third quarter of ~~2020~~2021 would be ~~$47.42~~$66.79 (Q3 ~~2019: $59.35)~~2020: $47.42) per barrel for crude oil (including hedging), ~~$37.99~~$71.50 (Q3 ~~2019: $59.23)~~2020: $37.99) per barrel for crude oil (excluding hedging), ~~$11.82~~$33.05 (Q3 ~~2019: $9.58)~~2020: $11.82) per barrel for NGLs and ~~$3.08~~$4.81 (Q3 ~~2019: $3.88)~~2020: $3.08) per mcf for natural gas. Excluding these fees ~~Worldwide~~worldwide selling prices for the first nine months of ~~2020~~2021 would be ~~$46.62 (2019: $60.64)~~$61.18 (2020: $46.62) per barrel for crude oil (including hedging), ~~$36.76 (2019: $60.57)~~$64.89 (2020: $36.76) per barrel for crude oil (excluding hedging), ~~$9.63 (2019: $13.13)~~$28.44 (2020: $9.63) per barrel for NGLs and ~~$2.97 (2019: $4.13)~~$4.65 (2020: $2.97) per mcf for natural gas.

(b)Excluding the two VLCC cargo sales totaling 4.2 million barrels in the first quarter of 2021, the North Dakota crude oil price for the first nine months of 2021 excluding hedging was $59.99 per barrel and $55.29 per barrel including hedging.

(c)Other includes our interests in Denmark and Libya.

Crude oil hedging activities were a net loss of $64 million and $179 million before and after income taxes in the third quarter and first nine months of 2021, respectively, and a net gain of $143 million and $435 million before and after income taxes in the third quarter and first nine months of 2020, ~~respectively,~~respectively. For the remainder of 2021, we have WTI put options with an average monthly floor price of $55 per barrel for 120,000 bopd, and ~~a net gain~~Brent put options with an average monthly floor price of ~~$2 million and $3 million before and after income taxes~~$60 per barrel for 30,000 bopd. We expect noncash premium amortization, which will be reflected in ~~the third~~realized selling prices, to reduce our fourth quarter ~~and first nine months of 2019, respectively.~~

results by approximately $65 million.

2122

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

For calendar ~~year 2020,~~2022, we have WTI ~~put options with an average monthly floor price of $55 per barrel for 130,000 bopd, and Brent put options~~collars with an average monthly floor price of $60 per barrel and an average monthly ceiling price of $90 per barrel for ~~20,000~~90,000 bopd and Brent collars with an average monthly floor price of $65 per barrel and an average monthly ceiling price of $95 per barrel for 60,000 bopd. ~~At September 30, 2020,~~Premiums paid for the ~~fair value of the open crude oil put option contracts was~~2022 WTI and Brent collars were approximately ~~$205 million. We expect noncash put option premium amortization,~~$160 million, which will be ~~reflected in realized selling prices, to reduce our fourth quarter results by approximately $95 million.~~amortized ratably over 2022.

Production Volumes: Our daily worldwide net production was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In thousands)									(In thousands)
Crude Oil – Barrels	Crude Oil – Barrels									Crude Oil – Barrels
United States	United States									United States
North Dakota (a)		108		96		110		89
North Dakota										North Dakota	78		108		80		110
Offshore	Offshore	34		40		43		45		Offshore	20		34		30		43
Total United States	Total United States	142		136		153		134		Total United States	98		142		110		153
Guyana	Guyana	19		—		19		—		Guyana	32		19		30		19
Malaysia and JDA	Malaysia and JDA	3		4		3		4		Malaysia and JDA	3		3		4		3
Denmark		4		6		5		6
Libya		—		20		2		19
Other (a)										Other (a)	20		4		22		7
Total	Total	168		166		182		163		Total	153		168		166		182
Natural Gas Liquids – Barrels	Natural Gas Liquids – Barrels									Natural Gas Liquids – Barrels
United States	United States									United States
North Dakota (a)		58		47		54		40
North Dakota										North Dakota	44		58		48		54
Offshore	Offshore	5		5		6		5		Offshore	3		5		4		6
Total United States	Total United States	63		52		60		45		Total United States	47		63		52		60
Natural Gas – Mcf	Natural Gas – Mcf									Natural Gas – Mcf
United States	United States									United States
North Dakota (a)		194		125		178		102
North Dakota										North Dakota	158		194		159		178
Offshore	Offshore	60		84		91		87		Offshore	52		60		77		91
Total United States	Total United States	254		209		269		189		Total United States	210		254		236		269
Malaysia and JDA	Malaysia and JDA	282		336		284		349		Malaysia and JDA	284		282		339		284
Denmark		4		6		5		6
Libya		—		12		2		12
Other (a)										Other (a)	9		4		9		7
Total	Total	540		563		560		556		Total	503		540		584		560
Barrels of Oil Equivalent (b)	Barrels of Oil Equivalent (b)	321		312		335		301		Barrels of Oil Equivalent (b)	284		321		315		335

Crude oil and natural gas liquids as a share of total production	Crude oil and natural gas liquids as a share of total production	72	%	70	%	72	%	69	%	Crude oil and natural gas liquids as a share of total production	70	%	72	%	69	%	72	%

(a)Other includes our interest in Denmark and Libya. Net production from ~~the Bakken~~Denmark was ~~198,000~~3,000 boepd and ~~194,000~~4,000 boepd in the third quarter and first nine months of 2021, respectively, compared with 5,000 boepd and 6,000 boepd in the third quarter and first nine months of 2020, ~~respectively,~~respectively. Net production from Libya was 19,000 boepd for both the third quarter and first nine months of 2021, compared with ~~163,000 boepd~~nil and ~~144,000~~2,000 boepd in the third quarter and first nine months of ~~2019,~~2020, respectively.

(b)Reflects natural gas production converted based on relative energy content (six mcf equals one barrel). Barrel of oil equivalence does not necessarily result in price equivalence as the equivalent price of natural gas on a barrel of oil equivalent basis has been substantially lower than the corresponding price for crude oil over the recent past. In addition, NGLs do not sell at prices equivalent to crude oil. See the average selling prices in the table on page ~~21.~~22.

We forecast net production, excluding Libya, to be approximately ~~300,000~~295,000 boepd for the fourth quarter and ~~approximately 325,000 boepd for~~ the full year ~~of 2020.~~2021.

United States: North Dakota net ~~oil~~ production was ~~higher~~lower in the third quarter and first nine months of ~~2020,~~2021, compared to the corresponding periods in ~~2019,~~2020, primarily due to ~~increased wells online~~the impact of lower drilling activity caused by a reduction in rig count from six to one during the first half of last year, lower NGL and ~~improved well performance. North Dakota net~~ natural gas and NGL production was higher in the third quarter and first nine months of 2020, compared to the corresponding periods in 2019, due to increased wells online and improved well performance, additional natural gas captured and processed, and additional volumes received under percentage of proceeds contracts ~~resulting from lower prices.~~due to higher commodity prices, curtailed production related to the planned Tioga Gas Plant maintenance turnaround completed in the third quarter of 2021, and the second quarter 2021 sale of our Little Knife and Murphy Creek nonstrategic acreage interests. Total offshore net production was lower in the third quarter and first nine months of 2021, compared to the corresponding ~~period~~periods in ~~2019,~~2020, primarily due to ~~hurricane-related~~the sale of our working interest in the Shenzi Field in the deepwater Gulf of Mexico in the fourth quarter of 2020, higher hurricane related downtime ~~and higher planned maintenance. Total offshore net production was flat~~ in the third quarter of 2021, and natural field decline. Net production from the Shenzi Field was 9,000 boepd and 11,000 boepd for the third quarter and first nine months of 2020, compared to the corresponding period in 2019, as the effect of the hurricane-related downtime and higher planned maintenance in the third quarter of 2020 was offset by higher production, primarily related to the Esox-1 well, which commenced production in February.respectively.

2223

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

International: Net oil production in Guyana was higher in the third quarter and first nine months of ~~2020,~~2021, compared to the corresponding periods in ~~2019,~~2020, due to ~~commencement of~~the production ramp up from the Liza Phase 1 ~~development in December 2019, while net~~development. Net oil production in Libya was shut in during the first nine months of 2020 due to force majeure caused by civil unrest. Net natural gas production was lower at Malaysia and JDA reflecting COVID-19 impacts on economic activity in Malaysia which reduced natural gas nominations.

~~Sales Volumes:~~ ~~The impact of~~ higher ~~sales volumes improved after-tax results by approximately $25 million and $200 million~~ in the third quarter and first nine months of ~~2020,~~2021, compared to the corresponding periods in ~~2019.~~2020, due to the lifting of force majeure in October 2020. Net natural gas production at Malaysia and JDA was higher in the first nine months of 2021, compared to the corresponding period in 2020, reflecting higher natural gas sales due to a recovery in economic activity.

Sales Volumes: Worldwide sales volumes from Hess net production, which excludes sales volumes of crude oil, NGLs and natural gas purchased from third parties, were as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2021	2020	2021	2020

		(In thousands)					(In thousands)
Crude oil – barrels (a)	Crude oil – barrels (a)	15,134	15,593	43,950	44,594	Crude oil – barrels (a)	13,627	15,134	48,315	43,950
Natural gas liquids – barrels	Natural gas liquids – barrels	5,768	4,756	16,555	12,318	Natural gas liquids – barrels	4,338	5,768	14,282	16,555
Natural gas – mcf	Natural gas – mcf	49,674	51,782	153,375	151,855	Natural gas – mcf	46,317	49,674	159,387	153,375
Barrels of Oil Equivalent (b)	Barrels of Oil Equivalent (b)	29,181	28,979	86,068	82,221	Barrels of Oil Equivalent (b)	25,685	29,181	89,162	86,068
Crude oil – barrels per day ~~(a)~~	Crude oil – barrels per day ~~(a)~~	164	169	161	163	Crude oil – barrels per day ~~(a)~~	148	164	177	161
Natural gas liquids – barrels per day	Natural gas liquids – barrels per day	63	52	60	45	Natural gas liquids – barrels per day	47	63	52	60
Natural gas – mcf per day	Natural gas – mcf per day	540	563	560	556	Natural gas – mcf per day	503	540	584	560
Barrels of Oil Equivalent Per Day (b)	Barrels of Oil Equivalent Per Day (b)	317	315	314	301	Barrels of Oil Equivalent Per Day (b)	279	317	326	314

(a)~~During~~Sales volumes for the ~~three~~first nine months of 2021 include 4.2 million barrels that were stored on VLCCs during 2020 and ~~nine~~sold in the first quarter of 2021. Sales volumes for the three months ended September 30, 2020 include 2.1 million barrels that were stored on a VLCC at June 30, 2020. During the three months ended September 30, 2020, we stored 2.6 million barrels ~~and 6.3 million barrels, respectively,~~ of crude oil ~~were loaded~~ on VLCCs ~~for sale in Asian markets. The first VLCC cargo of 2.1~~bringing total stored volumes to 4.2 million barrels ~~was sold during the third quarter of~~at September 30, 2020.

Marketing, including ~~purchased oil~~Purchased Oil and ~~gas:~~Gas: Marketing expense is mainly comprised of costs to purchase crude oil, NGL and natural gas from our partners in Hess operated wells or other third parties, primarily in the U.S., and transportation and other distribution costs for U.S. marketing activities. Marketing expense was ~~lower~~higher in the third quarter ~~and first nine months~~ of ~~2020,~~2021, compared with the ~~corresponding periods in 2019,~~third quarter of 2020, primarily due to ~~lower benchmark~~higher third party volumes purchased and higher prices paid for purchased volumes. Marketing expense for the nine months ended September 30, 2021 included $173 million related to the cost of 4.2 million barrels of crude oil ~~prices~~stored on ~~purchased volumes and a net reduction of $34 million and~~two VLCCs in 2020 that were sold in the first quarter. Marketing expense for the nine months ended September 30, 2020 was reduced by $147 million ~~respectively,~~ for the net cost of crude oil inventory that was capitalized for the barrels loaded on VLCCs.

Cash Operating Costs: Cash operating costs consist of operating costs and expenses, production and severance taxes and E&P general and administrative expenses. Excluding items affecting comparability described in Items Affecting Comparability of Earnings Between Periodsbelow, cash operating costs ~~decreased~~increased in the third quarter and first nine months of ~~2020,~~2021, compared with the corresponding periods in ~~2019, from lower~~2020, primarily due to higher workover activity and higher production and ~~severances~~severance taxes associated with ~~lower~~higher crude oil ~~prices and the impact of cost reduction initiatives. Per-unit~~prices. On a per-unit basis, cash operating costs were ~~down~~higher in the third quarter and first nine months of 2021, compared with the corresponding periods in 2020 on the ~~lower~~higher costs and the impact of ~~higher~~lower 2021 production volumes.

Midstream Tariffs Expense: Tariffs expense increased in the third quarter and first nine months of ~~2020,~~2021, compared with the corresponding periods in ~~2019,~~2020, primarily due to higher ~~throughput volumes in 2020.~~minimum volume commitments and tariff rates. We estimate Midstream tariffs expense to be approximately ~~$240~~$295 million in the fourth quarter of ~~2020.~~2021.

~~DD&A:~~Depreciation, Depletion and Amortization (DD&A): DD&A ~~expenses were~~expense was lower in the third quarter of 2021, compared with the corresponding period in ~~2019,~~2020, primarily ~~as a result of the impairment charges in the first quarter of 2020.~~due to lower production volumes and lower DD&A ~~expenses were higher~~rates resulting from year-end 2020 revisions and additions to proved reserves. DD&A expense was lower in the first nine months of ~~2020,~~2021, compared with the corresponding period in ~~2019, reflecting higher~~2020, due to lower production volumes ~~partially offset by~~and lower DD&A rates resulting from the impact of first quarter 2020 impairment charges ~~in the first quarter of 2020. DD&A expense on a per-unit basis was lower in the third quarter~~ and ~~first nine months of~~year-end 2020 ~~compared with the corresponding periods in 2019, primarily due~~revisions and additions to ~~the year-over-year mix of production and the impairment charges in the first quarter of 2020.~~proved reserves.

2324

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Unit Costs: Unit cost per boe information is based on total net production volumes. Actual and forecast unit costs per boe are as follows:


		Actual								Forecast range (a)			Actual								Forecast range (a)
		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended December 31,	Twelve Months Ended December 31,		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended December 31,	Twelve Months Ended December 31,
		2020		2019		2020		2019		2020	2020		2021		2020		2021		2020		2021	2021
Cash operating costs (b)	Cash operating costs (b)	$	9.86	$	12.13	$	9.45	$	11.75	$11.00 — $11.50	$9.50 — $10.00	Cash operating costs (b)	$	12.76	$	9.86	$	11.34	$	9.45	$12.00 — $12.50	$11.75 — $12.00
DD&A (c)	DD&A (c)	16.16		17.67		16.02		17.38		15.50 — 16.00	16.00 — 16.50	DD&A (c)	11.77		16.16		11.72		16.02		13.00 — 13.50	12.50 — 13.00
Total Production Unit Costs	Total Production Unit Costs	$	26.02	$	29.80	$	25.47	$	29.13	$26.50 — $27.50	$25.50 — $26.50	Total Production Unit Costs	$	24.53	$	26.02	$	23.06	$	25.47	$25.00 — $26.00	$24.25 — $25.00

(a)Forecast information excludes any contribution from Libya.

(b)Cash operating costs per boe, excluding Libya, were ~~$9.69~~$13.45 and ~~$9.31~~$11.86 in the three and nine months ended September 30, ~~2020,~~2021, respectively, compared with ~~$12.75~~$9.69 and ~~$12.34~~$9.31 in the same periods of ~~2019,~~2020, respectively.

(c)DD&A per boe, excluding Libya, was ~~$16.18~~$12.38 and ~~$16.10~~$12.29 in the three and nine months ended September 30, ~~2020,~~2021, respectively, compared with ~~$18.79~~$16.18 and ~~$18.50~~$16.10 in the same periods of ~~2019,~~2020, respectively.

Exploration Expenses: Exploration expenses were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Exploratory dry hole costs (a)	Exploratory dry hole costs (a)	$	31	$	10	$	166	$	10	Exploratory dry hole costs (a)	$	2	$	31	$	11	$	166
Exploration lease and other impairment (b)	Exploration lease and other impairment (b)	10		3		48		14		Exploration lease and other impairment (b)	5		10		15		48
Geological and geophysical expense and exploration overhead	Geological and geophysical expense and exploration overhead	30		37		77		103		Geological and geophysical expense and exploration overhead	29		30		91		77
Total Exploration Expense	Total Exploration Expense	$	71	$	50	$	291	$	127	Total Exploration Expense	$	36	$	71	$	117	$	291

(a)The first nine months of 2021 primarily relates to the Koebi-1 exploration well, offshore Guyana. Exploratory dry hole costs in the third quarter of 2020 relate to the Galapagos Deep exploration well in the Gulf of Mexico, while the first nine months of 2020 also includes the write-off of previously capitalized exploratory wells (see Items Affecting Comparability of Earnings Between Periods below).

(b)The first nine months of 2020 includes impaired leasehold costs due to a reprioritization of the Corporation’s forward capital program ~~(see~~(See Items Affecting Comparability of Earnings Between Periods below).

Exploration expenses, excluding dry hole expense, are estimated to be in the range of ~~$35~~$50 million to ~~$40~~$55 million in the fourth quarter of ~~2020.~~2021.

Income Taxes: The ~~decline~~increase in income tax expense in the third quarter and first nine months of ~~2020,~~2021, compared to the corresponding periods in ~~2019,~~2020, is primarily due to ~~lower~~higher pre-tax income in Libya ~~as a result of the declaration of force majeure in January 2020. Excluding items affecting comparability of earnings between periods~~ and ~~Libyan operations,~~Guyana. E&P income tax expense in the third quarter of 2021 was $140 million (Q3 2020: $6 million income tax expense) and ~~nine months~~includes $103 million of ~~2020 was an~~income tax expense ~~of $11~~(Q3 2020: $5 million ~~and $17 million, respectively, compared with an expense of $3 million and $12 million in~~income tax benefit) from Libyan operations. For the ~~third quarter and~~ first nine months of ~~2019, respectively.~~2021, E&P income tax expense was $379 million (2020: $82 million income tax benefit) and includes $279 million of income tax expense (2020: $19 million income tax benefit) from Libyan operations. An income tax benefit of $80 million was recognized in the first quarter of 2020 attributable to items affecting comparability of earnings between periods. Excluding items affecting comparability of earnings between periods and Libyan operations, E&P income tax expense is expected to be ~~an expense~~ in the range of ~~$10~~$35 million to ~~$15~~$40 million for the fourth quarter of ~~2020.~~2021.

Items Affecting Comparability of Earnings Between Periods:

The following table summarizes, on an after-tax basis, income (expense) items affecting comparability of E&P earnings between periods:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Severance		$	(26)	$	—	$	(26)	$	—
Impairment		—		—		(2,049)		—
Gain on asset sale, net										Gain on asset sale, net	$	29	$	—	$	29	$	—
Impairment and other										Impairment and other	—		—		(147)		(2,049)
Dry hole, lease impairment and other exploration expenses	Dry hole, lease impairment and other exploration expenses	—		—		(150)		—		Dry hole, lease impairment and other exploration expenses	—		—		—		(150)
Crude oil inventories write-down	Crude oil inventories write-down	—		—		(52)		—		Crude oil inventories write-down	—		—		—		(52)
Cost recovery settlement		—		(19)		—		(19)
Gain on asset sale, net		—		—		—		22
		$	(26)	$	(19)	$	(2,277)	$	3
Severance										Severance	—		(26)		—		(26)
											$	29	$	(26)	$	(118)	$	(2,277)

2425

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

The following table summarizes, on a pre-tax basis, income (expense) items affecting comparability of E&P earnings between periods:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Severance		$	(26)	$	—	$	(26)	$	—
Impairment		—		—		(2,126)		—
Gain on asset sale, net										Gain on asset sale, net	$	29	$	—	$	29	$	—
Impairment and other										Impairment and other	—		—		(147)		(2,126)
Dry hole, lease impairment and other exploration expenses	Dry hole, lease impairment and other exploration expenses	—		—		(152)		—		Dry hole, lease impairment and other exploration expenses	—		—		—		(152)
Crude oil inventories write-down	Crude oil inventories write-down	—		—		(53)		—		Crude oil inventories write-down	—		—		—		(53)
Cost recovery settlement		—		(21)		—		(21)
Gain on asset sale, net		—		—		—		22
		$	(26)	$	(21)	$	(2,357)	$	1
Severance										Severance	—		(26)		—		(26)
											$	29	$	(26)	$	(118)	$	(2,357)

~~Severance costs:~~Gain on asset sale, net: In the third quarter of ~~2020,~~2021, we recognized a pre-tax gain of $29 million ($29 million after income taxes) associated with the sale of our interests in Denmark.

Impairment and other: In the second quarter of 2021, we recorded a ~~pre-tax~~ charge of ~~$26~~$147 million ($26147 million after income taxes) for ~~employee termination benefits incurred related~~the total estimated future abandonment obligations of the West Delta Field in the Gulf of Mexico. In June 2021, the U.S. Bankruptcy Court approved Fieldwood’s bankruptcy plan which includes discharging decommissioning obligations, subject to ~~cost reduction initiatives. The pre-tax amounts are reported~~conditions precedent, for certain of Fieldwood’s assets. Those obligations will transfer to former owners of the properties, including us with respect to the West Delta Field, which we sold in 2004. Potential recoveries from other parties that previously owned an interest in the West Delta Field have not been recognized as of September 30, 2021. See ~~Operating costs~~Note 11, Guarantees and ~~expenses~~Contingencies ~~($20 million),~~ ~~General and administrative expenses~~ ~~($5 million), and~~ ~~Exploration expenses, including dry holes and lease impairment~~ ~~($1 million)~~ in the ~~Statement of~~Notes to Consolidated ~~Income~~.Financial Statements.

~~Impairment:~~In the first quarter of 2020, we recorded noncash impairment charges totaling $2.1 billion ($2.0 billion after income taxes) related to our oil and gas properties at North Malay Basin in Malaysia, the South Arne Field in Denmark, and the Stampede Field and the Tubular Bells Field in the Gulf of Mexico, primarily as a result of a lower long-term crude oil price outlook. Other charges totaling $21 million pre-tax ($20 million after income taxes) related to drilling rig right-of-use assets in the Bakken and surplus materials and supplies. ~~See~~ ~~Note 8, Impairment~~ ~~in the~~ ~~Notes to Consolidated Financial Statements~~.

Dry hole, lease impairment and other exploration expenses: In the first quarter of 2020, we incurred pre-tax charges totaling $152 million ($150 million after income taxes), primarily related to the write-off of previously capitalized exploratory wells in the Gulf of Mexico ~~as detailed in~~ ~~Note 3, Property, plant~~ and ~~equipment~~ ~~in the~~ ~~Notes to Consolidated Financial Statements, and~~ to impair certain exploration leasehold costs.

Crude oil inventories write-down: In the first quarter of 2020, we incurred a pre-tax charge of $53 million ($52 million after income taxes) to reduce crude oil inventories to their net realizable value. ~~These charges are included in~~ ~~Marketing, including purchased oil and gas~~ ~~in the~~ ~~Statement of Consolidated Income.~~ ~~See~~ ~~Note 2, Inventories~~ ~~in the~~ ~~Notes to Consolidated Financial Statements.~~

~~Cost recovery settlement:~~ Severance:In the third quarter of ~~2019,~~2020, we recorded a pre-tax charge of ~~$21~~$26 million ($1926 million after income taxes) for employee termination benefits incurred related to ~~a settlement on historical~~ cost ~~recovery balances in the JDA. This charge is included~~reduction initiatives. The pre-tax amounts are reported in ~~Marketing,~~Operating costs and expenses ($20 million), General and administrative expenses ($5 million), and Exploration expenses, including ~~purchased oil~~dry holes and ~~gas~~lease impairment ($1 million) in the Statement of Consolidated Income.

~~Gain on asset sale, net:~~

~~In the second quarter of 2019, we recorded a pre-tax gain of $22 million ($22 million after income taxes) associated with the sale of our remaining acreage in the Utica shale play.~~

2526

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Midstream

Following is a summarized income statement for our Midstream operations:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Revenues and Non-Operating Income	Revenues and Non-Operating Income									Revenues and Non-Operating Income
Sales and other operating revenues	Sales and other operating revenues	$	264	$	215	$	825	$	595	Sales and other operating revenues	$	304	$	264	$	887	$	825
Other, net	Other, net	4		1		7		1		Other, net	3		4		9		7
Total revenues and non-operating income	Total revenues and non-operating income	268		216		832		596		Total revenues and non-operating income	307		268		896		832
Costs and Expenses	Costs and Expenses									Costs and Expenses
Operating costs and expenses	Operating costs and expenses	84		73		271		186		Operating costs and expenses	98		84		222		271
General and administrative expenses	General and administrative expenses	4		9		16		20		General and administrative expenses	6		4		17		16
Interest expense										Interest expense	28		23		74		71
Depreciation, depletion and amortization	Depreciation, depletion and amortization	40		36		117		105		Depreciation, depletion and amortization	41		40		122		117
Interest expense		23		13		71		45
Total costs and expenses	Total costs and expenses	151		131		475		356		Total costs and expenses	173		151		435		475
Results of Operations Before Income Taxes	Results of Operations Before Income Taxes	117		85		357		240		Results of Operations Before Income Taxes	134		117		461		357
Provision (benefit) for income taxes	Provision (benefit) for income taxes	1		—		5		—		Provision (benefit) for income taxes	3		1		9		5
Net Income (Loss)	Net Income (Loss)	116		85		352		240		Net Income (Loss)	131		116		452		352
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	60		46		184		129		Less: Net income (loss) attributable to noncontrolling interests	70		60		240		184
Net Income (Loss) Attributable to Hess Corporation	Net Income (Loss) Attributable to Hess Corporation	$	56	$	39	$	168	$	111	Net Income (Loss) Attributable to Hess Corporation	$	61	$	56	$	212	$	168

Sales and other operating revenues for the third quarter and first nine months of ~~2020~~2021 increased, compared to the corresponding periods in ~~2019,~~2020, primarily due to higher ~~throughput volumes.~~ minimum volume commitments and tariff rates partially offset by lower pass-through rail transportation revenue.

Operating costs and expenses for the third quarter of 2021 increased compared to the third quarter of 2020, primarily due to costs associated with the planned Tioga Gas Plant maintenance turnaround. Operating costs and expenses for the first nine months of 2021 decreased compared to the first nine months of 2020 primarily due to lower pass-through rail transportation costs, which were partially offset by the costs associated with the planned Tioga Gas Plant maintenance turnaround.

Interest expense for the third quarter and first nine months of ~~2020~~2021 increased, compared to the corresponding periods in ~~2019,~~2020, primarily due to ~~increased operating and maintenance expenditures on expanded infrastructure and initial costs related to~~ the ~~Tioga Gas Plant turnaround. The increase~~$750 million in ~~interest expense from 2019 reflects higher borrowings by the Midstream business.~~aggregate principal amount of 4.250% fixed-rate senior unsecured notes issued in August 2021.

Excluding items affecting comparability of earnings, net income attributable to Hess Corporation from the Midstream segment is estimated to be approximately ~~$55~~$70 million in the fourth quarter of ~~2020.~~2021.

Corporate, Interest and Other

The following table summarizes Corporate, Interest and Other expenses:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020

		(In millions)									(In millions)
Corporate and other expenses (excluding items affecting comparability)		$	23	$	26	$	88	$	86
Corporate and other expenses										Corporate and other expenses	$	27	$	23	$	93	$	88
Interest expense	Interest expense	95		88		279		267		Interest expense	97		95		286		279
Less: Capitalized interest		—		(11)		—		(27)
Interest expense, net		95		77		279		240
Corporate, Interest and Other expenses before income taxes	Corporate, Interest and Other expenses before income taxes	118		103		367		326		Corporate, Interest and Other expenses before income taxes	124		118		379		367
Provision (benefit) for income taxes	Provision (benefit) for income taxes	(2)		—		(6)		—		Provision (benefit) for income taxes	—		(2)		—		(6)
Net Corporate, Interest and Other expenses after income taxes	Net Corporate, Interest and Other expenses after income taxes	116		103		361		326		Net Corporate, Interest and Other expenses after income taxes	124		116		379		361
Items affecting comparability of earnings between periods, after-tax	Items affecting comparability of earnings between periods, after-tax	1		88		1		88		Items affecting comparability of earnings between periods, after-tax	—		1		—		1
Total Corporate, Interest and Other Expenses After Income Taxes		$	117	$	191	$	362	$	414
Total Corporate, Interest and Other Expenses after income taxes										Total Corporate, Interest and Other Expenses after income taxes	$	124	$	117	$	379	$	362

Corporate and other expenses were comparable in the third quarter and first nine months of ~~2020,~~2021, compared to the corresponding periods in ~~2019.~~2020. Interest expense ~~net was higher~~ in the ~~third quarter and~~ first nine months of ~~2020, compared to~~2021 was higher than the corresponding ~~periods~~period in ~~2019,~~2020 due to interest incurred on the ~~$1.0~~$1 billion three year term loan entered into in March ~~2020 and lower capitalized interest in Guyana.~~2020.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Fourth quarter ~~2020~~2021 corporate expenses are expected to be in the range of $30 million to $35 million, and interest expense is expected to be ~~approximately~~in the range of $90 million to $95 million.

~~PART I - FINANCIAL INFORMATION (CONT'D.)~~

~~Consolidated Results of Operations (continued)~~

Items Affecting Comparability of Earnings Between Periods: In the third quarter of 2020, Corporate expenses included a pre-tax charge of $1 million ($1 million after income taxes) for employee termination benefits incurred related to cost reduction initiatives. ~~In the third quarter of 2019, Corporate expenses included a noncash pension settlement charge of $88 million ($88 million after income taxes). The charge is included in~~ ~~Other, net~~ ~~in the~~ ~~Statement of Consolidated Income. See~~ ~~Note 9, Retirement Plans, in the~~ ~~Notes to Consolidated Financial Statements.~~

Other Items Potentially Affecting Future Results

Our future results may be impacted by a variety of factors, including but not limited to, volatility in the selling prices of crude oil, NGLs and natural gas, reserve and production changes, asset sales, impairment charges and exploration expenses, industry cost inflation and/or deflation, changes in foreign exchange rates and income tax rates, changes in deferred tax asset valuation allowances, the effects of weather, crude oil storage capacity, political risk, environmental risk and catastrophic risk, including risks associated with COVID-19. For a more comprehensive description of the risks that may affect our business, see Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2019 and~~ ~~Part II, Item 1A. Risk Factors~~ ~~in our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30,~~ 2020.

Proved reserves are calculated using the average price during the twelve month period before December 31 determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within the year, unless prices are defined by contractual agreements, excluding escalations based on future conditions. Crude oil prices used in the determination of proved reserves at December 31, 2019 ($55.73 per barrel for WTI; $62.54 per barrel for Brent) are higher than the corresponding average crude oil prices for the nine months ended September 30, 2020 ($39.59 per barrel for WTI; $43.48 per barrel for Brent). If crude oil prices for the rest of 2020 remain significantly below prices used for proved reserves at December 31, 2019, proved reserves at December 31, 2020 are expected to be significantly lower than proved reserves at December 31, 2019. The magnitude of any changes to proved reserves at December 31, 2020 can vary due to a number of factors, including actual crude oil prices for the full year, the amount of any additions to proved reserves, positive or negative revisions in proved reserves related to 2020 reservoir performance, the closing on the sale of our 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico, the levels to which industry costs will change in response to lower prices, and management’s plans as of December 31, 2020 for developing proved undeveloped reserves.

Liquidity and Capital Resources

The following table sets forth certain relevant measures of our liquidity and capital resources:


		September 30, 2020			December 31, 2019				September 30, 2021			December 31, 2020

		(In millions, except ratio)							(In millions, except ratio)
Cash and cash equivalents (a)	Cash and cash equivalents (a)	$	1,285		$	1,545		Cash and cash equivalents (a)	$	2,419		$	1,739
Current maturities of long-term debt		8			—
Current portion of long-term debt (b)								Current portion of long-term debt (b)	514			10
Total debt ~~(b)~~(c)	Total debt ~~(b)~~(c)	8,288			7,142			Total debt ~~(b)~~(c)	8,507			8,296
Total equity	Total equity	6,882			9,706			Total equity	6,256			6,335
Debt to capitalization ratio ~~(c)~~(d)	Debt to capitalization ratio ~~(c)~~(d)	45.7		%	39.6		%	Debt to capitalization ratio ~~(c)~~(d)	44.5		%	47.5		%

(a)Includes $4$5 million of cash attributable to our Midstream segment at September 30, ~~2020~~2021 (December 31, ~~2019:~~2020: $4 million) of which, $3 million is held by Hess Midstream LP at September 30, 2021 (December 31, 2020: $3 million).

(b)Includes the remaining $500 million outstanding under our $1 billion term loan maturing in March 2023 that we intend to repay in the next twelve months.

(c)At September 30, ~~2020,~~2021, includes ~~$1,903~~$2,613 million of debt outstanding from our Midstream segment (December 31, ~~2019: $1,753~~2020: $1,910 million) that is non-recourse to Hess Corporation.

~~(c)~~(d)~~The debt~~Total Consolidated Debt of Hess Corporation ~~(excluding~~(including finance leases and excluding Midstream non-recourse debt) as a percentage of ~~the sum~~Total Capitalization of ~~debt plus equity (excluding~~Hess Corporation as defined under Hess Corporation's term loan and revolving credit facility financial covenants. Total Capitalization excludes the impact of noncash impairment charges and non-controlling ~~interests) as defined under Hess Corporation’s revolving credit facility and term loan debt covenants.~~interests.

Cash Flows

The following table summarizes our cash flows:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020

		(In millions)					(In millions)
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	847	$	1,356	Operating activities	$	1,991	$	847
Investing activities	Investing activities	(1,814)		(2,018)		Investing activities	(815)		(1,814)
Financing activities	Financing activities	707		(169)		Financing activities	(496)		707
Net Increase (Decrease) in Cash and Cash Equivalents	Net Increase (Decrease) in Cash and Cash Equivalents	$	(260)	$	(831)	Net Increase (Decrease) in Cash and Cash Equivalents	$	680	$	(260)

2728

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Operating activities: Net cash provided by operating activities was $1,991 million in the first nine months of 2021, compared to $847 million in the first nine months of ~~2020, compared to $1,356 million~~2020. The increase in ~~the first nine months of 2019. The decrease in 2020~~2021 operating cash flows primarily reflects ~~lower~~higher realized selling prices. Changes in operating assets and liabilities was a use of cash of $424 million in the first nine months of 2020, and a use of cash of $361 million in the first nine months of 2019. Changes in operating assets and liabilities in 2020 were primarily due to a decrease in accounts payable and accrued liabilities reflecting reduced operating activity levels,prices and the ~~temporary increase in accounts receivable and inventory resulting from our VLCC transactions which will reverse over the next two quarters. Proceeds from the~~ sale of ~~the first VLCC cargo of 2.1 million barrels of oil were received in October and proceeds from the sale of the second and third VLCC cargos totaling~~ 4.2 million barrels of Bakken crude oil ~~are expected~~stored on two VLCCs in the first quarter of 2021. Changes in operating assets and liabilities reduced net cash provided by operating activities by $114 million in ~~2019 included a one-time payment~~the first nine months of 2021 and $424 million in the first nine months of 2020. At September 30, 2021, we have accrued income taxes and royalties payable of approximately ~~$130~~$350 million ~~to our joint venture partner for its share of sale/leaseback proceeds~~in Libya primarily related to ~~our sale~~operations from the period December 2020 through September 2021, which we expect to be paid in the fourth quarter of ~~the North Malay Basin floating storage and offloading vessel in 2018.~~2021.

Investing activities: Additions to property, plant and equipment of ~~$1,823~~$1,238 million in the first nine months of ~~2020~~2021 were down ~~$181~~$585 million compared with the corresponding period in ~~2019.~~2020. The decrease primarily reflects ~~lower~~reduced drilling ~~activity~~activity. Proceeds from asset sales of $427 million resulted from the sale of our interests in Denmark and the sale of our Little Knife and Murphy Creek nonstrategic acreage interests in the Bakken, partially offset by payments in the first quarter of 2020 related to capital expenditures accrued in the fourth quarter of 2019. The first nine months of 2019 included additions of approximately $90 million associated with the Midstream operating segment's acquisition of assets from Summit Midstream Partners LP.Bakken.

The following table reconciles capital expenditures incurred on an accrual basis to Additions to property, plant and equipment:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020

		(In millions)					(In millions)
Additions to property, plant and equipment - E&P:	Additions to property, plant and equipment - E&P:					Additions to property, plant and equipment - E&P:
Capital expenditures incurred - E&P	Capital expenditures incurred - E&P	$	(1,338)	$	(1,764)	Capital expenditures incurred - E&P	$	(1,145)	$	(1,338)
Increase (decrease) in related liabilities	Increase (decrease) in related liabilities	(239)		44		Increase (decrease) in related liabilities	27		(239)
Additions to property, plant and equipment - E&P	Additions to property, plant and equipment - E&P	$	(1,577)	$	(1,720)	Additions to property, plant and equipment - E&P	$	(1,118)	$	(1,577)
Additions to property, plant and equipment - Midstream:	Additions to property, plant and equipment - Midstream:					Additions to property, plant and equipment - Midstream:
Capital expenditures incurred - Midstream	Capital expenditures incurred - Midstream	$	(202)	$	(308)	Capital expenditures incurred - Midstream	$	(129)	$	(202)
Increase (decrease) in related liabilities	Increase (decrease) in related liabilities	(44)		24		Increase (decrease) in related liabilities	9		(44)
Additions to property, plant and equipment - Midstream	Additions to property, plant and equipment - Midstream	$	(246)	$	(284)	Additions to property, plant and equipment - Midstream	$	(120)	$	(246)

Financing activities: ~~Borrowings in the first nine months of 2020 include $1.0 billion related to our new three year term loan.~~ Hess Midstream ~~borrowed a net total of $146 million from their~~reduced borrowings under its revolving credit facilities ~~in the first nine months of 2020 and $176~~by $32 million in the first nine months of ~~2019. Payments on finance lease obligations were $6~~2021 and increased borrowings by $146 million in the first nine months of 2020. In the third quarter of 2021, Hess Midstream issued $750 million in aggregate principal amount of 4.250% fixed-rate senior unsecured notes due 2030 to finance the repurchase of 31.25 million HESM Opco Class B units. In March of 2020, ~~and $47~~the Corporation borrowed $1 billion under a new three year term loan that matures in March 2023. In the third quarter of 2021, we repaid $500 million relating to our $1 billion term loan. Common stock dividends were $234 million in the first nine months of ~~2019. We paid common stock dividends totaling~~2021 and $233 million in the first nine months of ~~2020, compared~~2020. Net cash paid to ~~common and preferred stock dividends of $241~~noncontrolling interests was $589 million in the first nine months of ~~2019. In addition, net~~2021 which included $375 million paid to GIP in the third quarter of 2021 for the repurchase by HESM Opco of approximately 15.6 million GIP-owned Class B units. Net cash ~~outflows~~paid to noncontrolling interests ~~were~~was $194 million in the first nine months of ~~2020 and $41~~2020. Proceeds received from stock options exercised by employees was $75 million in the first nine months of ~~2019.~~2021 and $15 million in the first nine months of 2020. In the first quarter of 2021, we received net proceeds of $70 million from the public offering of 3.45 million Hess-owned Class A shares in Hess Midstream LP.

Future Capital Requirements and Resources

At September 30, ~~2020,~~2021, we had ~~$1.3~~$2.41 billion in cash and cash equivalents, excluding Midstream, and total liquidity of approximately ~~$4.9~~$6.0 billion. ~~Our fully undrawn $3.5 billion committed revolving credit facility matures in May 2023, and we have no debt maturities until the $1.0 billion three year term loan matures in March 2023.~~ Oil and gas production in ~~2020,~~2021, excluding Libya, is forecast to be approximately ~~325,000 boepd and we project our E&P capital and exploratory expenditures will be approximately $1.8 billion in 2020. We have more than 80% of our forecasted crude oil production for~~295,000 boepd. For the remainder of ~~2020~~2021, we have hedged 120,000 bopd with $55 WTI put options ~~for 130,000~~and 30,000 bopd ~~and~~with $60 Brent put ~~options for 20,000 bopd. The fair value~~options. For calendar 2022, we have hedged 90,000 bopd with WTI collars with an average monthly floor price of $60 per barrel and an average monthly ceiling price of $90 per barrel, and 60,000 bopd with Brent collars with an average monthly floor price of $65 per barrel and an average monthly ceiling price of $95 per barrel.

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Net cash provided by operating activities was $1,991 million in the first nine months of 2021, compared with $847 million in the first nine months of ~~2020, compared with $1,356 million in the first nine months of 2019.~~2020. Net cash provided by operating activities before changes in operating assets and liabilities was $2,105 million in the first nine months of 2021 and $1,271 million in the first nine months of ~~2020 and $1,717~~2020. Capital expenditures were $1,274 million in the first nine months of ~~2019. Capital expenditures were~~2021 and $1,540 million in the first nine months of ~~2020 and $2,072 million in the first nine months of 2019.~~2020. In ~~2021,~~2022, based on current forward strip crude oil prices, we expect cash flow from operating activities ~~expected proceeds from the sale of our interest in the Shenzi Field, expected proceeds from the sale of the 6.3 million barrels of oil loaded on VLCCs,~~ and cash and cash equivalents at September 30, ~~2020,~~2021 will be sufficient to fund our capital investment program, dividends, and ~~dividends. Due to~~ the ~~weak commodity price environment,~~repayment of the remaining $500 million outstanding under our $1 billion term loan. Depending on market conditions, we may take any of the following steps, or a combination thereof, to improve our liquidity and financial position: ~~further~~ reduce the planned capital

~~PART I - FINANCIAL INFORMATION (CONT'D.)~~

~~Liquidity and Capital Resources (continued)~~

program and other cash outlays, including dividends, pursue asset sales, borrow against our committed revolving credit facility, or issue debt or equity securities.

The table below summarizes the capacity, usage, and available capacity for borrowings and letters of credit under committed and uncommitted credit facilities at September 30, ~~2020:~~2021:


		Expiration Date	Capacity		Borrowings		Letters of Credit Issued		Total Used		Available Capacity			Expiration Date	Capacity		Borrowings		Letters of Credit Issued		Total Used		Available Capacity

			(In millions)												(In millions)
Hess Corporation	Hess Corporation												Hess Corporation
Revolving credit facility	Revolving credit facility	May, 2023	$	3,500	$	—	$	—	$	—	$	3,500	Revolving credit facility	May, 2024	$	3,500	$	—	$	—	$	—	$	3,500
Committed lines	Committed lines	Various (a)	175		—		54		54		121		Committed lines	Various (a)	100		—		29		29		71
Uncommitted lines	Uncommitted lines	Various (a)	214		—		214		214		—		Uncommitted lines	Various (a)	230		—		230		230		—
Total - Hess Corporation	Total - Hess Corporation		$	3,889	$	—	$	268	$	268	$	3,621	Total - Hess Corporation		$	3,830	$	—	$	259	$	259	$	3,571
Midstream	Midstream												Midstream
Revolving credit facility (b)	Revolving credit facility (b)	December, 2024	$	1,000	$	178	$	—	$	178	$	822	Revolving credit facility (b)	December, 2024	$	1,000	$	152	$	—	$	152	$	848
Total - Midstream	Total - Midstream		$	1,000	$	178	$	—	$	178	$	822	Total - Midstream		$	1,000	$	152	$	—	$	152	$	848

(a)Committed and uncommitted lines have expiration dates through 2021.

(b)This credit facility may only be utilized by HESM Opco and is non-recourse to Hess Corporation.

Hess Corporation:

On April 13, 2021, we amended the Corporation's fully undrawn $3.5 billion revolving credit facility that had an expiration date in May 2023, by extending the facility for one year to May 2024 and incorporating customary provisions for the eventual replacement of LIBOR, among other changes as set forth in the amended credit agreement. This facility can be used for borrowings and letters of credit. Borrowings on the facility will generally bear interest at 1.40% above LIBOR, though the interest rate is subject to adjustment if the Corporation’s credit rating changes. At September 30, 2021, Hess Corporation had no outstanding borrowings or letters of credit under its revolving credit facility.

In ~~the first quarter of~~March 2020, we entered into a ~~$1.0~~$1 billion three year term loan agreement with a maturity date of March 16, 2023. Borrowings under the term loan generally bear interest at LIBOR plus an applicable margin of 2.25%. until the term loan's first anniversary. The applicable margin varies based on the credit rating of the Corporation’s senior unsecured long-term debt and will increase by 0.25% on each anniversary of the term loan. ~~The~~In July 2021, we repaid $500 million of the term loan. On October 4, 2021, we entered into a second amendment to the term loan agreement ~~contains~~to allow for a 50 basis point reduction in the interest rate applicable to certain outstanding loans.

The revolving credit facility, including as amended, and term loan are subject to customary representations, warranties, customary events of default and covenants, including ~~the same~~a financial covenant ~~as our revolving credit facility which limits~~limiting the ratio of Total Consolidated Debt to Total Capitalization ~~(as such terms are defined in the revolving credit facility and term loan agreements)~~ of the Corporation and its consolidated subsidiaries to 65%, and ~~customary events~~a financial covenant limiting the ratio of ~~default.~~secured debt to Consolidated Net Tangible Assets of the Corporation and its consolidated subsidiaries to 15% (as these capitalized terms are defined in the credit agreement for the revolving credit facility and the term loan agreement). The indentures for the Corporation's fixed-rate public notes limit the ratio of secured debt to Consolidated Net Tangible Assets (as that term is defined in the indentures) to 15%. At September 30, ~~2020,~~2021, Hess Corporation ~~had borrowings of $1.0 billion under this term loan agreement and~~ was in compliance with ~~this~~these financial ~~covenant.~~

~~At September 30, 2020, Hess Corporation had no outstanding borrowings or letters of credit under its revolving credit facility and was in compliance with its financial covenant.~~covenants.

Two of the three major credit rating agencies that rate our debt have assigned an investment grade rating. In March 2021, Standard and Poor’s Ratings Services affirmed our credit rating at BBB- ~~with negative~~and revised the outlook ~~in October 2020 while~~to stable (from negative). Fitch Ratings affirmed aour BBB- credit rating and revised the outlook from stable ~~outlook~~to positive in August ~~2020.~~2021 and Moody’s Investors Service affirmed our credit rating at Ba1 with stable outlook, which is below investment grade, in March 2020.

We have a shelf registration under which we may issue additional debt securities, warrants, common stock or preferred stock.

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Midstream:

At September 30, ~~2020,~~2021, Hess Midstream Operations LP (formerly Hess Midstream Partners LP, or HESM Opco), a consolidated subsidiary of Hess Midstream LP, had $1.4 billion of senior secured syndicated credit facilities maturing December 16, 2024, consisting of a ~~$1.0~~$1 billion 5-year revolving credit facility and a fully drawn $400 million 5-year term loan A facility. The revolving credit facility can be used for borrowings and letters of credit to fund HESM Opco’s operating activities, capital expenditures, distributions and for other general corporate purposes. Borrowings under the ~~5-year~~five year term loan A facility will generally bear interest at LIBOR plus an applicable margin ranging from 1.55% to 2.50%, while the applicable margin for the ~~5-year~~five year syndicated revolving credit facility ranges from 1.275% to 2.000%. Pricing levels for the facility fee and interest-rate margins are based on HESM Opco’s ratio of total debt to EBITDA (as defined in the credit facilities). If HESM Opco obtains an investment grade credit rating, the pricing levels will be based on HESM Opco’s credit ratings in effect from time to time. The credit facilities contain covenants that require HESM Opco to maintain a ratio of total debt to EBITDA (as defined in the credit facilities) for the prior four fiscal quarters of not greater than 5.00 to 1.00 as of the last day of each fiscal quarter (5.50 to 1.00 during the specified period following certain acquisitions) and, prior to HESM Opco obtaining an investment grade credit rating, a ratio of secured debt to EBITDA for the prior four fiscal quarters of not greater than 4.00 to 1.00 as of the last day of each fiscal quarter. HESM Opco was in compliance with these financial covenants at September 30, ~~2020.~~2021. The credit facilities are secured by first-priority perfected liens on substantially all the presently owned and after-acquired assets of HESM Opco and its direct and indirect wholly owned material domestic subsidiaries, including equity interests directly owned by such entities, subject to certain customary exclusions. At September 30, ~~2020,~~2021, borrowings of ~~$178~~$152 million were drawn under HESM Opco’s revolving credit facility, and borrowings of ~~$400~~$393 million, excluding

~~PART I - FINANCIAL INFORMATION (CONT'D.)~~

~~Liquidity and Capital Resources (continued)~~

deferred issuance costs, were drawn under HESM Opco’s term loan A facility. Borrowings under these credit facilities are non-recourse to Hess Corporation.

Market Risk Disclosures

We are exposed in the normal course of business to commodity risks related to changes in the prices of crude oil and natural gas, as well as changes in interest rates and foreign currency values. See Note 13, Financial Risk Management Activities, in the Notes to Consolidated Financial Statements.

We have outstanding foreign exchange contracts with notional amounts totaling ~~$130~~$135 million at September 30, ~~2020~~2021 that are used to reduce our exposure to fluctuating foreign exchange rates for various currencies. A 10% strengthening or weakening in the U.S. Dollar exchange rate is estimated to be a gain or loss, respectively, of ~~less than~~approximately $5 million ~~respectively~~ at September 30, ~~2020.~~2021.

At September 30, ~~2020, our total~~2021, consolidated long-term debt, which was substantially comprised of fixed-rate instruments, had a carrying value of ~~$8,288~~$8,507 million and a fair value of ~~$9,006~~$10,052 million. A 15% increase or decrease in interest rates would decrease or increase the fair value of debt by approximately ~~$440~~$390 million or ~~$485~~$400 million, respectively. Any changes in interest rates do not impact our cash outflows associated with fixed-rate interest payments or settlement of debt principal, unless a debt instrument is repurchased prior to maturity.

At September 30, ~~2020,~~2021, we have outstanding WTI and Brent crude oil ~~put option~~hedging contracts. As of September 30, ~~2020,~~2021, an assumed 10% increase in the forward WTI and Brent crude oil prices would reduce the fair value of these ~~derivative instruments~~contracts by approximately ~~$55~~$120 million, while an assumed 10% decrease in the same crude oil prices would increase the fair value of these ~~derivative instruments~~contracts by approximately ~~$60~~$110 million.

~~At September 30, 2020, we have outstanding Brent crude oil swap contracts.~~As of September 30, 2020, an assumed 10% increase in the forward Brent crude oil prices used in determining the fair value of our Brent swaps would reduce the fair value of these derivative instruments by approximately $20 million, while an assumed 10% decrease in the same crude oil prices would increase the fair value of these derivative instruments by approximately $20 million.

3031

PART I - FINANCIAL INFORMATION (CONT'D.)

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including information incorporated by reference herein, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “would,” “believe,” “intend,” “project,” “plan,” “predict,” “will,” “target” and similar expressions identify forward-looking statements, which are not historical in nature. Our forward-looking statements may include, without limitation: our future financial and operational results; our business strategy; estimates of our crude oil and natural gas reserves and levels of production; benchmark prices of crude oil, ~~natural gas liquids~~NGL and natural gas and our associated realized price differentials; our projected budget and capital and exploratory expenditures; expected timing and completion of our development ~~projects and proposed asset sale;~~projects; and future economic and market conditions in the oil and gas industry.

Forward-looking statements are based on our current understanding, assessments, estimates and projections of relevant factors and reasonable assumptions about the future. Forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations of future results expressed or implied by these forward-looking statements. The following important factors could cause actual results to differ materially from those in our forward-looking statements:

•fluctuations in market prices of crude oil, ~~natural gas liquids~~NGL and natural gas and competition in the oil and gas exploration and production industry, including as a result of ~~the global COVID-19 pandemic;~~

•potential disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks or health measures related to COVID-19;

•reduced demand for our products, including due to ~~the global~~ COVID-19 ~~pandemic~~ or the outbreak of any other public health threat, or due to the impact of competing or alternative energy products and political conditions and ~~events, such as instability, changes in governments, armed conflict and economic sanctions;~~events;

•potential failures or delays in increasing oil and gas reserves, including as a result of unsuccessful exploration activity, drilling risks and unforeseen reservoir ~~conditions;~~

•~~potential failures or delays~~conditions, and in achieving expected production ~~levels given inherent uncertainties in estimating quantities of proved reserves;~~levels;

•changes in tax, property, contract and other laws, regulations and governmental actions applicable to our business, including legislative and regulatory initiatives regarding environmental concerns, such as measures to limit greenhouse gas emissions and flaring as well as fracking bans;

•disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks or health measures related to COVID-19;

•the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures under which we may not control;

•~~the ability to satisfy the closing conditions of the proposed asset sale;~~

•unexpected changes in technical requirements for constructing, modifying or operating exploration and production facilities and/or the inability to timely obtain or maintain necessary permits;

•availability and costs of employees and other personnel, drilling rigs, equipment, supplies and other required services;

•any limitations on our access to capital or increase in our cost of capital, including as a result of weakness in the oil and gas industry or negative outcomes within commodity and financial markets;

•liability resulting from litigation, including exposure to decommissioning liabilities for divested assets in the event the current or future owners are unable to perform, and heightened risks associated with being a general partner of Hess Midstream LP; and

•other factors described in the section entitled “Risk Factors” in Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2019 and our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30,~~ 2020 as well as any additional risks described in our other filings with the SEC.

As and when made, we believe that our forward-looking statements are reasonable. However, given these risks and uncertainties, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur and actual results may differ materially from those contained in any forward-looking statement we make. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

3132

PART I - FINANCIAL INFORMATION (CONT'D.)

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The information required by this item is presented under Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures.”

Item 4. Controls and Procedures.

Based upon their evaluation of the Corporation’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, ~~2020,~~2021, John B. Hess, Chief Executive Officer, and John P. Rielly, Chief Financial Officer, concluded that these disclosure controls and procedures were effective as of September 30, ~~2020.~~2021.

There was no change in internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 in the quarter ended September 30, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

3233

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Information regarding legal proceedings is contained in Note 11, Guarantees and Contingencies in the Notes to Consolidated Financial Statements and is incorporated herein by reference.

~~Item 1A. Risk Factors.~~

~~Part I, Item 1A. Risk Factors~~ ~~in our Annual Report on Form 10-K for the year ended December 31, 2019~~includes certain risk factors that could materially affect our business, financial condition, or future results. Those risk factors have not materially changed, except for the risks associated with the COVID-19 global pandemic included in ~~Part II, Item 1A. Risk Factors~~ ~~in our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30, 2020.~~

3334

PART II – OTHER INFORMATION (CONT'D)

Item 6. Exhibits.


Exhibits
4(1)			Amendment No. 2, dated as of October 4, 2021 to the Term Loan Agreement dated as of March 16, 2020, as amended, among Hess Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent incorporated by reference to Exhibit 10(1) of Form 8-K of the Registrant, filed on October 6, 2021.
31(1)			Certification required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)).
31(2)			Certification required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)).
32(1)			Certification required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
32(2)			Certification required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
101(INS)			Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101(SCH)			Inline XBRL Taxonomy Extension Schema Document.
101(CAL)			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101(LAB)			Inline XBRL Taxonomy Extension Label Linkbase Document.
101(PRE)			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101(DEF)			Inline XBRL Taxonomy Extension Definition Linkbase Document.
104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2020,~~2021, has been formatted in Inline XBRL.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


HESS CORPORATION
(REGISTRANT)


By						/s/ John B. Hess
						JOHN B. HESS
						CHIEF EXECUTIVE OFFICER


By						/s/ John P. Rielly
						JOHN P. RIELLY
						EXECUTIVE VICE PRESIDENT AND
						CHIEF FINANCIAL OFFICER

Date: November ~~5, 2020~~4, 2021

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