HES - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 Hess Corporation Conference Call. My name is Amanda and I’ll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. to of conference Investor like Wilson, to now President Vice Relations. would turn over the Jay I Please proceed.

Jay Wilson

Thank you, call. in our Amanda. for fourth you Good quarter morning everyone earnings conference and thank participating

and differ and Our was known are to Today's call actual federal those the projections earnings contains subject securities uncertainties and or cause implied within our other results statements of issued morning to conference forward-looking release and that meaning expressed website, may appears from such those section measures we the include this on can laws. www.hess.com. and website. these supplemental risk These non-GAAP statements. on unknown the statements quarterly Also, and These set in financial measures. discuss the the forth the information the provided today's differences between most on in financial Risk of may of Hess' SEC. reconciliation measures with GAAP filed Factors be financial certain annual comparable call, our in directly conference found non-GAAP reports A risks

As Officer. Greg Financial Hill, Hess. usual, Officer; Chief Executive the Chief Operating Rielly, are Officer; today and John now over with to Chief turn call John Hess, I'll John me

John Hess

progress Jay. Greg operating I to conference welcome Thank will John morning Rielly our and Hill performance, our executing our quarter results. review review fourth Good you, will financial and then our our in strategy, call. discuss then will

only high and allocate in low of return Guyana industry. in invest highest two cost XXXX, to to first, of XX% investment about to the are; our we assets, opportunities Through priorities plan strategic capital the Our Bakken return our opportunities. expenditures

and the the our Gulf of long-cycle short-cycle a with growth of Mexico engines portfolio is investment and focused of deepwater a built our have opportunities Thailand engines. Guyana with as we and Bakken cash Gulf and Second, combination

position we per than portfolio XXXX than by at barrel Day, production growth XXXX. cash annual recent of compound flow discussed less portfolios $XX XX% breakeven deliver through with and our a more our XX% to approximately annual compound Investor As growth Brent

we investment day financial cash we ensure continue entered of grade have in XXXX put to our fund flexibility manner. are growing sheet, on we world-class and to by reduce the hedged will billion of with capital opportunities an X.X Fourth, on prices We balance to per the investment on the barrels Third, in XX,XXX options billion with and rating. basis. and should $XX reliable cash oil that WTI spending a maintain XXXX free a capacity to disciplined up our oil flow move lower $X sustained focused credit program

exciting XXXX by followed X the an point, an are of cash XXXX X with phase with in Bakken the And start-up Liza from Phase ship adding transitioning thereafter investment each free a mid-XXXX in development growing offshore flow through Phase year inflection to phase XXXX. of additional oil We in to generation a XXXX. beginning Liza the offshore equivalent by in then planed an Guyana day XXX,XXX per barrels start-up for Guyana Guyana,

we portfolio capital cash through dividend as share opportunistic of Finally, and will shareholders to flow, prioritize increasing our generates free repurchases. return

terms will interest driver announced the Hess sustainability is our is strategy protecting we strategy, of Pluma. Block the discovery A social operator. by to at to be where tenth our execute on continue we a we key guided ExxonMobil the of In responsibility. long-standing As in commitment block has Guyana environment, XX% and the Stabroek and our the safety, in December,

of well and drilling of was Earlier of for additional and discovery well, the the discoveries, evaluation east month, block exploration is miles Turbot Also, discovered the this expected new Liza X As Payara early in multi-billion a increased is recoverable began resources end start-up the start-up estimate than previous XX a third Phase XXXX towards first The the result the equivalent Haimara-X the is is X Sanctioning exploration Tilapia-X of key the X as potential. billion in of strategy sanction development with of of more to as quarter with of by Project area. this Bakken. gross with barrels expected Phase Pluma-X for to start-up, further the track on exploration development early on Liza XXXX oil discovery, of barrels XXXX. to our expected on in mid-XXXX. XXXX.

drilling we locations. growth have XX-year operated high of largest more asset than where Our a inventory return

day increase approximately cash $X per Our oil prices. Net the net should of of of XXXX by post asset XXXX, oil flow XXX,XXX transition production barrels billion. present value million expected generating $XXX grow to to plug-and-perf approximately free at by is equivalent completions to annual current

results. turning financial our XXXX Now, to

was Greg. Pro additions loss equivalent. equivalent of F&D oil of organic end net $X.X these net in of of of was changes at a year our stood production the $X.X equivalent Libya, years. XXX,XXX in the proved oil forecast equivalent per equivalent growth, flow, loss XXXX, per is in towards at produced over XXX,XXX operations flow million, billion was The the delivered of increased our reserve low $XX of was day will adjusted of of oil billion XXXX, significant barrels XXX,XXX and oil cost Full-year oil of forma compared cash additions XXX,XXX equivalent day and oil just barrels and XXXX. well-positioned Proved production to Libya. majority were XXXX visible will million day of production our barrels and of is to forecast In asset Libya. XXXX, be billion and capital excluding of per shareholders. net average the of and the per free summary, equivalent excluding returns, of XXX% In of In $X.X reserves XXX,XXX capital are oil deployed between for billion, we risk extremely higher rate cash and in our increasing Bakken than between return year. to from barrels average in financial forma which production we majority turn in XXX,XXX per was XXXX. representing to $XXX oil barrels XX% our to barrels replacement reserve barrel equivalent deliver I XX.X to under the an future $XXX strong from day, before XXX,XXX Our and day, an at Bakken. barrels now life production up prior per the X.XX sales in pro XXXX, working call

Greg Hill

to scale, generation. opportunity XX% accounting gross the resources timing and Hess and a plug-and-perf horizons, X of five more Stabroek free approximately the Guyana successfully excluding delivered recoverable The exploration XXXX the generate a cycle every our breakeven of extraordinary of original these John. day. interest Ranger, completions of in in is XXX,XXX continued provide Longtail, oil over of X,XXX moving execution Pluma. in per $XX per by XXX,XXX which our barrel in equivalent Based the XXXX Hess investment to that breakevens, operator, even XXX,XXX oil and Hammerhead at confirmed December, In cash In interest major per August. with grow oil to million and world-class our was achieved guidance XXXX, further for closing the of invested we estimate barrels net design the of we day which WTI. stage expect and reservoir inventory production capital play by by has is transition Bakken, barrels XXXX, our planned sliding than oil Guyana, were approximately the Resources Block Block base annually $XXX in sleeve our XXX,XXX operational the from delivering middle equivalent X.X XX in our versus discovered independent day on an which is shale which trials shallow continued accretive. $XX strategy. on have oil at barrels is the at and million-acre JV net barrels previous of to exceptional field per barrel reduced by discoveries of success respect. increased run while Utica, than a production cash XXX,XXX focus Pacora, as XX% Thanks, up The on billion oil key Through ExxonMobil producing capital Libya, cost further barrels to should we from and results, at JV resource towards significant after of for can ago. the oil barrels producing XXXX. X.X asset of in XXXX, approximately brought for to year growing sale production equivalent by Brent of and generate that locations was potential of exceeded year guidance. guidance of floating the block late the barrels of through quality, at day we price than our about development X.X industry-leading decade. of XXXX growth per per average in on day study, vessels to We net or the per XXXX, of In drilling flow reinforces XX-year a within least production equivalent flow production returns net a also oil we IRRs approximately strong full-year the more equivalent, FPSOs, of of interest value significantly combination sale billion This our delivery million five In of storage billion $XXX where the equivalent after current offloading for next XXXX portfolio prices to Stabroek the on Ascent Utica our more on

net approximately turning barrels excluding production. Libya, day net production day, equivalent to our XXX,XXX equivalent the above per quarter, oil guidance on fourth of the barrels basis. same of per In oil of Now, XXX,XXX averaged

pro net In basis full-year forecast equivalent which between approximately of Libya, oil day, to equivalent XXXX, oil barrels we net the average production excluding average to approximately barrels per and XX% on the XXXX. XXXX, of first XXX,XXX above forecast a XXX,XXX For we is forma XXX,XXX of day. per quarter production

barrels the ago oil the per above of quarter, which net of Now, previous XXX,XXX In Bakken. per an represented barrels fourth averaged net of equivalent XX% guidance turning equivalent XXX,XXX day. to year increase over our oil day, the and of approximately production quarter

of oil XXX,XXX full-year averaged barrels the XXX,XXX per net XXX,XXX For per to net full-year equivalent of with guidance barrels day. equivalent day production oil in-line of XXXX,

net to brought XXX XXX,XXX drilled and wells new wells oil equivalent wells XXX approximately in XXX XXX we For forecast of In between equivalent of XX% quarter above average of net production the expect XXX,XXX and Bakken In first the XXXX, levels. oil approximately day XXXX Bakken bring our to compared drill barrels and to average we wells XXXX. per barrels to XXX,XXX to XXXX, XXX,XXX approximately plan approximately day. we production online, per full-year XXXX, online

per barrels day in production equivalent North on production the of Basin, per of net equivalent per XX% the the the deepwater oil day Combined Thailand joint to the Mexico, the quarter the per and development guidance, equivalent also of oil Moving XX,XXX of and in and from barrels production XX,XXX to the between XX,XXX of forecast XXXX for barrels equivalent net day averaged and per day XX,XXX interest, JDA full-year has North net in XXXX of State day net oil XX,XXX At averaged XXXX. per of in net of our barrels equivalent XX,XXX return the the of average XX,XXX Mexico Penn per X Basin Deep barrels equivalent oil the and XXXX. the and offshore XX,XXX production reflecting barrels full-year for production XX,XXX deepwater full-year day. above oil over XX,XXX is area which and barrels Gulf equivalent Gulf our of between net Conger At XXXX. Hess of forecast oil day averaged and Malay production for of oil Gulf of net assets early net our Thailand, full-year Thailand field. oil per well the barrels We from new assets quarter Malay performance to strong Malaysia approximately for from our fourth average Gulf quarter equivalent net a fourth day the

Turning of located well, to Tom Longtail-X drillship miles Stena southeastern Guyana. of drilling the discovery Carron drilling the Earlier Block. Tilapia-X, Pluma-X the Noble the discovery, a the east Haimara-X the drillship began and began this part XX Madden miles X west in well, the second of both month Stabroek located

both from results have to expect We shortly. these Wells of

Yellowtail. well wells, Stena area, drilling a and completion on drill Following will conduct at Carron Noble Turbot likely the the stem additional Tom of exploration operations drill on the an Longtail test Madden these will the discovery

XXXX and wells, in on exploration the and of to these the Turbot the Stabroek drilling and further expected discoveries, include Beyond area. appraisal appraisal Hammerhead Block Ranger is

that well on where in are to Liza play field the closing, deliver In exploration drill progressing upside, facilities shareholder we X offshore X sanction distinctive the Noble enable Guyana FPSO continue many now installation Subsea the performance see is will and and Phase third the a is flowlines Rielly. prospects the schedule, to believe risers the multibillion and be later to years to the installed the Phase we FPSO year. in advanced. the come. schedule. Bob for for Destiny over of umbilicals, significant the Liza Douglas in and portfolio quarter we prioritized Liza Also, earlier, block, on prepared capabilities development the Liza world-class and Preparations expect have types second the Payara call that being is industry-leading will drillship Phase drilling of to turn and development by of topside as subsea Additional XXXX. the being I of built John and Singapore. is X development underway us modules in are expected Destiny be installation, for I mentioned will from barrels Liza quarter this value the continue to together quarter equipment created also in and first of Singapore wells to sale for sanctioned arrive The

John Rielly

$XX XXXX the remarks to million the net quarter. quarter a quarter, third third XXXX. the quarter loss compared in my XXXX, today, provide of loss $X incurred and the from guidance Thanks, fourth of for will Greg. of million a results compare In to We of in I fourth net

compared quarter quarter, items from $XX Excluding $XX previous loss of million, the income of a million to crude the net earnings resulting affecting periods, comparability net between in were prices. lower results realized in fourth oil primarily of

items the incurred E&P. of after-tax E&P quarter, quarter a the of fourth adjusted an in in income compared third E&P quarter. Lower realized prices million of exploration results results reduced selling results results an improved changes $XXX $X Higher by The third basis, On XXXX million. Lower $XX were in other of fourth fourth as million. of expense follows: components the cost All to million. DD&A $XX between overall the by for quarter reduced Turning results reduced and net to in net $XXX million by $XXX adjusted by results $XX million. million reduction loss quarter

the quarter basis third midstream million million XXXX, $XXX of million fourth million million the of The $XX $XXX in fourth quarter net $XX quarter, an were in in fourth On expenses quarter. and had Midstream. interest and XXXX. $XX noncontrolling XXXX. to to to quarter. segment in third to the corporate Turning were to After-tax income the adjusted $XXX of in XXXX, million $XXX the the in EBITDA compared quarter, amounted before $XXX expenses the previous in interest to million after-tax of of million quarter the the Midstream in compared interest fourth corporate compared previous quarter compared

our to financial position. Turning

receivable. quarter. for equivalents capital completed cash Cash was program. $XXX capital capital billion million million in Changes fourth midstream, Excluding quarter, our fourth common In stock, while working December available an due increased announced operations we $X.X cash facilities, previously reduction million, million accounts activities in debt $X.X was flow purchased in billion, by and working fourth were cash $XXX a operating $XXX increase total expenditures $X,XXX stock of credit $X billion, which the repurchase and $XXX changes XXXX. before payable the including to million and from the committed in quarter, in XX, cash flows at was from liquidity were accounts

equivalent forecast to equivalent to Libya of operating quarter pre-production of turning $XX range the XXXX, for be full-year to first of the to of barrel cash projected per per of Guyana for $XX is be to range DD&A equivalent the quarter we for for total $XX costs XXXX, to $XX costs project $XX.XX Libya includes expense, $XX.XX X first in future for and the full-year which pre-development the the E&P oil Phase and This results per excluding quarter oil unit $XX of excluding and for per oil XXXX. guidance, cost, of E&P of Libya of and activities full-year barrel per the Now in barrel barrel barrel for phases. for of of $XX.XX $XX.XX XXXX. equivalent $XX to oil equivalent cost, to in in oil excluding first XXXX,

approximately million to of quarter be The XXXX rate, billion. be capital expected is XXXX tax million. costs an XXXX. range $XX XXXX $XXX tariff dry quarter $X.X the the earlier, first hole expenditures expected $XXX Libya in the $XX expense to and in of million. be to quarter in be The guided exploratory to in in in of expected with and be be full-year X% first are forecast the are is million for the full-year with to $XXX expected the projected to million excluding to million first expenses, full-year $XXX range As range Exploration to million excluding E&P effective in to midstream range the of X% $XXX to

Our XXXX crude oil positions hedge unchanged. remain

per oil for day XXXX contracts. of $XX with barrels option WTI XX,XXX have We hedged calendar put

approximately quarter expect $XX premium option per in amortization We XXXX. be million will

quarter of expected $XX from in $XXX in to segment anticipate approximately to million. range million the be Midstream, we to Midstream the For Hess first million XXXX, with the $XXX to net income be attributable full-year

to the $XX $XXX full-year of in the and million be for range for in of million Turning million are and the million This expenses in million $XXX estimated expenses $XX quarter of in to full-year million. to quarter million guidance range the corporate of to my concludes remarks. range corporate, in estimated the of of $XXX XXXX. the million, the be be first $XXX to range first to $XX are to to XXXX, $XX Interest

be will the operator. any the now We to to I questions. will turn answer call over happy

Operator

first Our Lynch. Leggate is Merrill line question Instructions] [Operator of from Doug America the of Bank of

Your open. line is

Doug Leggate

the dynamics you I of given would hedge everybody. just but this given just the hasn't to is, need going position out got plan you to year, what guess perhaps really prices would take set second in, price you the few back, guess I'm it below what flexibility obviously I any weeks plan Thanks. the where given oil I'm for only are contingency morning, take, a well what changed John oil when into Good of it budget, are they half to the if you Rielly, put the the thinking CapEx you’ve just curious obviously cut, come? were where would

John Rielly

and Sure, out we Doug. to mean, at do to do we I have as we Investor our this We intend have strategy really feel that Day, continue long-term execute we it. laid the really portfolio growth and deliver cash production can – nice from this earlier. portfolio XX% really the Hess flow growth the we’re as mentioned on the place John now asset and a sales XX%

So, portfolio with only commodity the predict our prices. with that is we can't thing this,

So, is to we’re uncertainty. all trying manage doing now

oil cash the and we that’s We’ve proceeds did have that’s place and $XX balance floor asset we with for do the the on the sheet XX,XXX WTI. per So, hedges in billion what left barrels and of day price from sales? of with $X.X XXXX

environment. in So, the low-price this deliver to strategy even company that is well-positioned

an into in execute the and right that much that’s now, CapEx But by that we get of have plan principally low-price out extended we as to the we have everything in in XXXX low-price extended an extended go and more Investor in billion reduce if would rigs as reducing really environment the to deliver Bakken. rigs tail-end annual and with Bakken we we case Now, by XXXX, is really our that in environment laid six Day. as the our flexibility XXXX, mentioned into to said $X

Doug Leggate

of Haimara I eye expecting Tom that of couple and by exploration was slots, if keep exploration this of Obviously, it’s not plan now an part Okay. I well is My X Madden it's I kind as like in I on would if this on, under day, as our block for and and wells? only can it total it. just I on for I the if we’re service the I and may appreciate. the terms understand understanding in east that around, scale, if looks if we green other The point, but point, question, but imply just test, last test that contracted for And have I from you Turbot-Longtail, wondering well guess. wonder been could but year you at to follow-up probably already saw extended do has will that so, big was realize is move what the on is way you sector Greg, characterize so that which of discovery. us may of is is telling just a

confirmation that can would appreciated? any offer color So, be around Thanks. or you

Greg Hill

Doug. thanks Yes,

So, announce Haimara’s the expect well. operations are in remarks, as our and to we we shortly, as that well Tilapia currently on underway opening something said as

objectives Madden, Regarding find to what year go to purpose to to again that second it is and etcetera objectives are well to are continue our throughout have, threefold. objective this et to where we XXXX. We depend And our really they, the but four around Hammerhead; yes, then on appraise really of Tom explore/appraise big Ranger; testing is, we they, those talking main about as really third and in use cetera. of underpin does appraise on three because and we block without One vessels forward, kind the numbers are the rig is is five, Turbot. specific plan how

that in do exploration/appraisal theater. two we’ll and the year, this objectives with main our are those So, rigs

Doug Leggate

guide clear, right? cost hole a not million G&G be $XXX to dry the a that’s Just cost,

John Rielly

million XXX the Doug, from…? sorry I'm guide

Doug Leggate

that I you that not suggested guidance hole? G&G, dry think the is exploration, for Yes,

John Rielly

Okay.

Day. be for going to in Investor $XXX So, out what is spend exploration million XXXX that’s laid we

Doug Leggate

I I thought [indiscernible]. Sorry.

John Rielly

exploration $XXX guidance so, that capital hole be will we costs, The are for so that’s without XXXX. give my the Oh, my approximately when out, expenses from exploration I million give spend talking in expense. dry – you

Doug Leggate

Right. Got it. Thank you.

Operator

you. Thank

question of Goldman of Sachs. next the from line Our Brian Singer is

Your is line open.

Brian Singer

Thank you, good morning.

John Hess

Good morning.

Brian Singer

Guyana follow-up FPSO about X next the you to you regards just months, months said, appraisal Wanted on actually program to point were the what X X additional up success? on to it expansion the appraisal FPSOs door X the opposed FPSOs open on beyond the exploration the or degree so X for as X to additional versus is on plus is underwrite X emphasis talking – appraisal, over with just beyond as does to contingent plus

John Hess

Yes, Brian.

is said So, year to as of I both. remarks though earlier, intentions the program answer the mean, primary X. I the underpin in and one is X my with this vessels

or play in. in beyond complex So, on we above then Hammerhead, it know more and additional where be prospectivity will how it Ranger as will play exploration does that. you to that that and or be And are additionally block does on one finally in Turbot mentioned, they? the or when and one the likely there the new potentially on more doing be is We so

really of but anxious underpinned, build kind we’re we because online. a to the cadence year it’s ship obviously, So, both, coming X many, X and design a one, want of, keep to get

those designed, and them So, to it’s how are, big engineered, build to them. get them importantly understand get important more where

Brian Singer

in you. unrelated just cost the of you're regards the give shift Bakken, service to but of may Thanks. terms seeing to environment cost follow-up Great. more is the realization And environment can the the be that the in on you're Bakken my your with of to just seeing you currently us the front? latest Thank and what then that plug-and-perf, then service

John Hess

Yes.

I’ll the cost. So, service take

So, the inflation more that market. the a cost very than It’s I guess is, it’s know is point not of Therefore, experiencing Permian the seeing. different Bakken first regional Brian Permian. the is level you

that, that’s said, average Now, Bakken of Most having seeing be the we’re having we cost with suppliers to labor in of XX% X% that that combination lean-manufacturing the the average in in an and we’re will established cover service performance-based higher all many said of cost, form our of confident XXXX. suppliers our increase but of we've capabilities or able with contracts to inflation. on the of our

we’ll inflation. promised, from we're the guidance what standpoint, well So, a deliver spite very we cost of confident in

John Rielly

to the back the Brian on just your And normal to they Bakken. question realizations, in are

the about going the spread quarter, per X barrel during to to Clearbrook maintenance. minus at million just of barrels away that due [TI] the fourth to the refinery was fourth demand the $X.XX beginning from and quarter, of moved of a So, plus due $X.XX

like we’re now back of to been and normal. around dollar a are type above so more differentials of So, again, add a the the multiple the refineries to markets seeing can under just our oil Bakken into provide online, normal back move is just They’ve are And market. if the flexibility differentials. to have I strategy our export to there us value dollar highest

pricing. XX% we the can So, Brent influenced get about of our to oil coast to the get

in of rail. and of combination that’s – transportation pipelines our firm a So through

Brian Singer

Thank you.

Operator

our line of Simmons Ryan is from the Energy. of you. question next Thank And Todd

you is is might Todd, open. Mr. line be line Your open. on line And mute, your

Ryan Todd

plug-and-perf brought type if how of XX fourth Of for can program? under many Sorry, you in the quarter early on the curve A of looks I apologize targeted to and were on your questions comment how any wells Bakken. you production relative that. for quick couple those in the that XXXX the expectations

John Hess

had the So, on in really is could Greg we in the carryover plug-and-perf. I’ll all fourth turn some We basically quarter plug-and-perf. it said over almost being and as sleeves to were XX it’s sliding it plug-and-perf online, but going performance program coming have forward, came our online was XXX%. that

Greg Hill

a mute was for I Sorry. second. on

results high from plateau production a barrels X% to a in to reminder, our a the an or meeting XX% indicate At to overall expected Just barrel previously XXX,XXX increase beating what Bakken EUR. are are far the plug-and-perf in in IP That so XXX. billion completions deliver expectations XXX. at increase over least I say increase intensity importantly will we is $XX rates. WTI, guided XX% that IP increase a by $X and on NPV per And is that day

good in forward. we’re going stead So,

Ryan Todd

relatively a but near-term oil things? the hear and the bounces good strong maybe that every you know in those is It’s any ask well, Alright. from around fourth weather, quarter-to-quarter, impacts on as quarter time two had from you to and I mix anything

John Hess

weather Now has been impacts. there some minor

You cold. extremely know, it’s

is that So, recover alive expect rest from and nation, well in vortex North the like we of as polar Dakota the but just the all normal. to

Greg Hill

oil going expect pricing, too And standpoint, do due extracted in and asked fluctuate quarter-on-quarter oil I really range and foreseeable in you’re you NGL's also mean but going the know question the we your is right. NGL the then, to gas low-to-mid just to to the volumes cut just guidance to for way XX% I our future. changes captured, average from cut

increase our the and it drove gathered cut. in in gas up we by relative to Gas was did that maintenance Tioga quarter, because have the gas the driven lower oil Plant So, was QX

Ryan Todd

I help. the appreciate guys. Thanks Perfect.

Operator

Thank you.

next from Brothers. Campbell the is Jeffrey Our of of line question Tuohy

open. is line Your

Jeffrey Campbell

Good on morning and congratulations the quarter.

John Hess

you. Thank

Jeffrey Campbell

how I future? with was development to color just the for Guyana, program, of kind regard options that’s eliminate wondering could you XXXX or the add confirm how know specifically to well you some, test you going to help

John Hess

of the think, establish the know you purpose the primary to purpose testing continuity. reservoir program, I always Well, is

far. So, on going compartmentalization there is that or so anything like

good very continuity of stem have reservoir indicated our everywhere All drill go. we tests

it vessels X tests important that’s take about under evacuate will understand you many how to some have as belt and those your So, think wells to to reservoirs. X

we the the discoveries stem will new that and X to like be there. drill So if be X will would that testing, we’re and the looking testing at that while to majority purpose dedicated get or of again,

Jeffrey Campbell

how Stony of areas just comment wondering, XXXX? I Nesson broadly rigs you. the Just on such kind in thank distribute wondering best could East of drilling Okay, you're And and you the completion? and Keene Beaver the Creek Lodge distribution going the and to versus around as your completions in was

John Hess

Yes.

that then in spread really Beaver of to online in then if wells XX East to be more be XXX or think that about So, in try another the you Lodge, or are have of we the XX [cap different we're about those Nesson, and wells XX be area], kind etcetera. loadings will in will Stony going about out and XX Creek, drill, so would XX miscellaneous be Keene,

of field. parts the other of kind So, wells test in

Jeffrey Campbell

to sort it know Bakken push may talked as where moderate the about areas this done – can XX, to of that operators be those have EURs is well, you in an you On that see completions is more that other up? recently in I the haven’t try if effort

John Hess

Yes.

think so. I

wells, we’re in be know in and going XX to XX Red XX Goliath about Sky. You those

that as spacing in So, even the how really do think move areas you out, those field. loading about of kind potentially of profit and we

to average of we you to experience belt And the year, north if year. EURs want of that X at certainly, XXX. some well the XXX's to this are So, our be will program. for XXX this barrels program IP the for under going look get But the million

the healthy XXX% range. good and to in So, program XX% returns

Jeffrey Campbell

you. color. that appreciate Thank I Great.

Operator

Thank from Research. you. question of next of Brackett comes our Bernstein And line the Bob

is line open. Your

Bob Brackett

Guyana? you the talk morning. election regulatory first good through and pending of down in you Could are the the Hi, Guyana, do milestones terms by quarter coming approvals. How they see government in and the influenced

John Hess

it two ways. Let’s handle

there just – third-party thing plan elections on and oil in question impacts of XXXX. to the firm the up think a we Bob first approval the the The ahead. absolutely vet with also the early moving details vote still that in to on getting expect X of in And development development achieve we to Liza place, being activities. to is in no-confidence track forward, X Phase to engineering no or of anticipate basically final quarter the work all government exploration scheduled, of there and With start a which on that plan mid-XXXX. recent I first Liza important steam is but remains our underway development by it’s getting is Phase ExxonMobil

Bob Brackett

barrel follow-up a clear. quite strong. $XX under the that of is F&D Related Yes. That’s

a to of If production-related was came sanction either booking bookings XXXX, Guyana revisions that or How barrel amazing you go an as $X back the look do project the cadence those forward? on think as about we we then Liza through. reserves

Greg Hill

you believe reserve We’ve greater know as have barrels booked and says book and really barrels basically. we X point, Guyana because any approximately sanction Phase XX the just cadence X. barrels XXXX. the here have discovered. did is And in it than not of this million XX booked so only got there’s resource billion Exxon the the this competitive with We and million at Bob. Sure, with we’ve we advantage of barrels One, our backlog cadence

is time. then. up same picking at pick we to will Phase Phase Then of when X, barrels X begin wells as So, those that additional performance X end says as sanctioned, also We’ll pick barrels. is year. now Phase on up we’ll and get the Exxon we reserves the by start-up be production John the up drill Phase for X

So, saw standpoint, every and have mentioned time we gift once be expect as these this reserves from we’ll phases moves on the you reserve low year will keeps John to every over for here that. on with us additional the F&D cost to come as record because continue as Guyana out associated earlier, the giving that a year, Hess

on the a in puts uniqueness little competitive just just the of it So, and low-cost scale reserves terrific the advantage. us

Bob Brackett

color. that for thanks And Great.

Operator

Fargo. question Thank And of line next you. from the Read Wells comes our Roger of

Your line is open.

Roger Read

remain morning. talk to Good Guyana little a should stuff, of to in for we some just of destiny any watch equipment comfortable bit be of and issues what Maybe should can about, thanks. or you watching of development terms on to us else Yes, delivery some the early completion drilling follow-up I the on guess timelines the the XXXX we with critical and then vessel the start-up? other anything

John Hess

Yes.

we’re mentioned will schedule issues and whatnot, think of I no there So, yet. vessel I foreseen the are you when do know as on show so opening in remarks, that, cadence to up my the

the to vessel location. We are get on on schedule

the next Guyana. quarter in start in think all really activities watch thing second I the the key surf to is of that

on oil – are activities, will are say won't be wells on date, deliver an control just issues. up to bring to X-month are but project don't flow a make you schedule it reason so period XXXX. X-month we them to that in sure we you instantaneous in The So, is have that for those ramp. any early based will progress ramp over the on Then you key those to

be a the will operator. there So, ramp of X-months to to according X-months,

Roger Read

you Yes, on and then of I hedged this, mentioned curious last sheet obviously for have question there up may And balance just may I year XX,XXX course understand this barrels, have that. one is was the flexibility, but in do represent do what just done been commentary, be to could $XX for hedge again? XXXX, original XXXX opportunity to the or what’s done or would the needing this for itself envision if at missed maybe

Greg Hill

Yes.

into We will XXXX. move continue add we to as to hedges XXXX or look

just and growth. we as healthy continue to XX% to portfolio that like cash is growth executed because, it now to ensure to As flow can our earlier, I said that I and we’re manage where and really we the uncertainty, earlier, right have do like program be deliver insurance production said looking and the what XX%

will So, to with XXXX, hedged we the for XX,XXX a at day WTI once insurance. to to as look well put hedges on floor the XXXX, $XX we barrels look add

John Hess

it’s we upside. we’d And to don't important know we the downside, cap the where structure I that similar use would think protect the be but

Roger Read

Okay, great. Thank you.

Operator

Thank of you. comes from Barclays. our next Paul question And line of the Cheng

Your line is open.

Paul Cheng

guys. morning. Good Hi,

John Hess

morning. Good

Paul Cheng

after quarter John hedges million that to the is for per gave a you amortization cost tax? have Rielly, apologize, I number XX about

John Hess

Yes. That is tax? XX after million

Paul Cheng

curious what everything? have I you their contract the current to see just Okay. ever opposition about have and reached party is out And that, John view and Exxon or mean,

John Hess

Yes.

the our both as So, the consistently intention ruling their contract. you are well know have and they to development that major current of supportive stated PSCR opposition the parties, party party, as have stated that honor

Paul Cheng

to for when the local the market? consortium start on And current the developing the trend, based natural guess will

Greg Hill

of with project is sanctioned. to in to under the feasibility out still under take, – and and to that But studies were project small engineering onshore amount gas what still gas figure will that studies and it been power we plant. amount any It’s discussion main doing the case, but small early some relatively deliver a government going a it review whatnot. fired in under be will has Paul, not

Paul Cheng

comment. Great

saved the and to developed? is and some gets in in this reading through be entire me market that of being that the the scoop that PSC So, PSC, specified the terms need when

Greg Hill

No. All government. the with that’s discussion still under

Paul Cheng

Okay.

So, framed that subject is not is into PSC? discussion actually to

Greg Hill

No.

we’ve is it agreed think and for all is to necessity yet going and it, how determined. all for to be timing the I but that work

Paul Cheng

years day of rigs]? at barrel per Bakken, sustain at can XXX,XXX peak, many that the the you [full on And Okay. based

Greg Hill

to X. X

Paul Cheng

rigs. many X to how years X [indiscernible]? I mean

Greg Hill

better I that? could Based that on that know what you get at better. today. extend mean a years know completion obviously rigs, X technology to peak, we on we know of X there’s know lots but get today, what mean X you based could I things could

Paul Cheng

X is to base But years on X the resource know the that? years you on current what today

Greg Hill

so Right. be XXX,XXX about At level, That’s let day barrel roughly a peak. clear X-rig that? me a

Paul Cheng

the can us XXXX and the Midstream, Rielly tell what John is XXXX? for on Yes. you CapEx expected

John Rielly

are of because has of Midstream. but to Midstream know million the It’s I XXXX, first XXX million XX related million the amount put guidance. you. the in gross close top water is to There water asset the sale was XX giving that’s million to approximately on that For Midstream amounts in is XXX its CapEx assets, some for you out small expected that, that quarter. That’s to that

Paul Cheng

How Okay. number? any kind rough about of XXXX,

John Rielly

out guidance on have don't We that. No.

well potential will Midstream all depend the opportunities any as So, has. our plans, third-party as again, it on that

Paul Cheng

you. Thank Okay.

Operator

Payne comes And Fargo. Ross from you. our Thank the Wells question next of line of

line Your is open.

Ross Payne

the will resolved involved Guyana part Venezuela western Exxon’s on guys? doing the exploration us you. you through on think very can an got with Thank the be border, when you are give update Obviously, ship How that UN? of you

John Hess

seismic Drilling unaffected kilometers the closest Liza the discoveries, XXX and kilometers Ranger more discovery, the and the oil from XXX offshore incident approximately the the where area vessels than our development approached XX Saturday, XX the the from incident vessels operations is Navy. development that are Guyana of in The December by involved area. by were occurred acquisition on when Venezuelan

that Guyanese in from about position. will continuing important that. related know up Southeast supports producing oil as court. international States development offshore XXXX is Phase expected talked Guyana is, development, which of drilling are also our United area day CARICOM. activities position, The to think an where be it’s supports to the barrels fully XXX,XXX X also development by point The it exploration UN the just and The And terms unaffected. Greg to as the of here, be Guyanese unaffected incident. Block. in to the So, to in going it early is I drilling the well in a goes And that Liza operations Stabroek and

an day diplomatic will very issue be the the that end will position we're optimistic Guyanese that prevail. have court, is of encouraged the to that is through but this the at and So, handled

Ross Payne

about Okay, rail thank of XX% at on you it what XXXX? to can all question is you the in or barrels that and versus very One you, XXXX more the pipeline sounds percentage get to is Bakken, going Gulf, change can much. your mix like

John Hess

on approximately day that So, have is a barrels XX,XXX goes now DAPL. what right we

approximately export So east, that can it you there. from the can get get can Coast. Then to from to have [Netherland], or we can go Patoka, rail west that Gulf

a got day rail like that we XX,XXX barrels can on XX,XXX to You've move.

as again to more DAPL So that's and Gulf our Gulf, on our as to Gulf continue And Brent-link to potential grows I look expansions access – to and of Bakken get get competitive crude. the to to those keep pricing various pricing advantage out that – production but coast get the pricing. keep we'll multiple the saying – we we how are Brent-link there basically such coasts going will

looking So, DAPL. of such we at some expansions these as are

Greg Hill

will looked of at the be you rail be the majority future the for and movements to flex. market our Bakken through our So, of there will crude pipeline

Ross Payne

Thanks perfect. guys. Okay,

Operator

Thank you.

of next line Raymond Molkanov James. is of Pavel the from Our question

line Your is open.

Pavel Molkanov

issues capacity lines to taking facing the topic guys. you question as takeaway or to volumes? the gas general constraints are the in anything any of Thanks for that Bakken, those with Back ramp flaring around continue

John Hess

volumes. anticipate as we No, don't any we our flaring ramp gas restrictions

capacity adequate have We place. in

Pavel Molkanov

capital envisioned XXXX one authorization then fair no buyback part previous is quick it as QX the completed having And to is that Okay. you the of as additional just say mentioned allocation? buyback, on a in

Greg Hill

investment we in to Guyana further fund the first can a strong and maintain world-class third and position, the financing debt without liquidity is opportunities that need for by or ample our cash to sheet Bakken Our balance the second ensure way. priority and equity

repurchases. the to transition cash of to you to to plan through free return flow in flow, time begins cash forward that we share and portfolio phase recurring from opportunistic investment shareholders out dividends our our go majority XXXX. higher and generate As We and free

Pavel Molkanov

good, Very it. appreciate Alright.

Operator

next from John the is Generale. our Herrlin Societie And of you. Thank of line question

Your is open. line

John Herrlin

Hi, Greg? just addition extensions were additions some reserve this you is the With year primarily Bakken they said most ones. where of unrelated

Greg Hill

was mixture and a John extensions of add. actually It

previous additional well A, do you The is but revisions, out, you up get revisions generally ads these versus could well get get of year year ads. So, extra where pick five-year the get with pick technical do that year so some some you those in of you're and got going the some B, get we’re program a you A, up. were Then the revisions in the ones the the in you you program, well higher, so going to now pods ads to so had prices and get as have you from then well.

John Herrlin

fact given and not reserve do large you Okay. going consider base other additions elsewhere it’s resource and something Guyana discussing have the ever because you your resource it's potential be Would captive so frequently you discuss? to in lagged that are

John Rielly

working and the Day this typically Exxon No. growth X We XP Obviously, have resource greater on do like type that as don't out we Investor laid out XX% have laid – we we a and discuss interest. Guyana. has number, we do what barrels in but we don't than billion

million right an have And we XX of of that. locations our returns well people the beyond So, greater obviously we that have get have in then now. inventory with with than and we well as I inventory obviously can XX% scale mentioned Bakken, booked the and XX-year then of that only that

flavor do advantage we good how real that's we reserve have position. resources because backlog, to give with and competitive our a your So, we believe point, that our

GregHill

the barrels there estimated And EUR Greg. around the somewhere X.X well. is in Bakken as billion

John Herrlin

you do of lot Greg. the capitalize year terms a was for John of Thanks, Since, in answering expense questions, XXXX? interest this where on

GregHill

out. one that dig to have going I'm John,

John Herrlin

that’s We can off-line do it fine.

GregHill

is. I maybe what off-line you on that exactly can back get Yes, to

John Herrlin

you for us last Yes. sense exploration? give That's What as one what Could incurred. was development? XXXX a was then for me of costs fine. And the

John Hess

standpoint in cost incurred So, from our XXXX.

Our exploration spend was $XXX million.

John Herrlin

Okay, great. Thanks.

John Hess

you. Thank

Operator

much. your Thank very conference. for today's you concludes participation. This you Thank

may great You disconnect. day. Have now a

Hess (HES) 30 Jan 192018 Q4 Earnings call transcript