HES - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen and welcome to the Second Quarter 2019 Hess Corporation Conference Call. My name is Amanda and I will 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 second you Good quarter morning everyone earnings conference and thank participating

and Our was earnings our issued morning release website appears this www.hess.com. on

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

usual with me Chief Chief Hill, Greg John as Officer; John are and Officer; Chief Operating Executive Rielly, Hess, Financial today Officer. Now

call now Hess. John I turn over will the to

John Hess

our we a original continued production our exploratory guidance. conference and come our now our strategy guidance to to year execute will and quarter, second Welcome come I will will our call. and end deliver and capital to review provide expenditures Riley John in Thank Jay. discuss expected full performance. strong at our our you, range In the operational in projected results. With strategy under upper of second the to Hill Greg performance update, quarter then operating our financial

XXXX. the to than Guyana Bakken acres A portfolio flow operator balanced driver massive industry of to rapid With resource engines decrease growth Gulf is leading paybacks our generate breakeven engines that key returns. our $XX and and quality, cash class Thailand, less Gulf deepwater its portfolio, ExxonMobil which barrel cash a between strategy of on reservoir and is X.X position is of that Block, million to our Mexico expected is Hess Our track Stabroek the and by is has cost, in uniquely the growth. and per our by in The scale, cash advantaged the world interest Brent where is strong a in financial Guyana. is XX% a

major and oil which In feet April, X approximately expected the Yellowtail discoveries on XXth least our we for to-date to announced in area, encountered offloading in at floating the Turbot vessels or FPSOs established Block is storage Drilling test in the a is of producing being Hammerhead a become evaluated on the The by reservoir oil discovery XXX,XXX over Stabroek encouraging discovery the discovery X appraisal of Block Hammerhead activities production XXXX. XXX Exploration and is potential development hub. with have Turbot the Yellowtail. the well stem Ranger prospect underway. July. the are greater on per at and a continues drill for where block development. barrels Tripletail area results, X well and future the and X a day at drilling potential successful second appraisal including results Total Stabroek the fifth high-quality sandstone at at were These completed bearing number in wells

equivalent additional of year’s barrels up see and to the have oil for increased this discoveries, resources previous continue estimate of billion discoveries further exploration equivalent, barrels than more to Block we and gross the of we As a discovered from more barrels evaluation X of multibillion the estimate billion result of than previous of recoverable of X.X potential. Stabroek oil

produce Destiny Guyana Liza and our In FPSO, arrive from to up XX, in gross Liza expected On XXX,XXX sail September. advance. is day, oil set capacity the Singapore continues to per to developments, July in of to barrels the X Phase of which terms has

of by sanctioned per is FPSO, produce XXX,XXX First capacity to Liza is capacity by expected FPSO use first expected of May, mid-XXXX. production third a gross the of a XXX,XXX was per oil Planning gross Startup in XXX,XXX phase which production is the quarter will Unity X day. a with oil which with will the a second to of of underway at development, Liza Payara, XXXX. barrels day. to for up use barrels Phase between

First to drilling the a high-return robust this track production operating increase we and grow XXX,XXX of by We barrels premier position rigs, with flow for is in oil XXXX. expected equivalent In on cash approximately X XXXX period. net per is meaningful to plan free over a continue locations. acreage of production inventory day Bakken, along have which a generation to

results to lower an loss in financial share crude and the higher share production we of second per compared DD&A per Now prices reduced net were results, which loss the $X.XX reflect of quarter, $X.XX ago net net million $X On basis, of a $XX in or million or the of realized turning loss exploration posted to increased share an $XX XXXX. quarter $X.XX $X.XX million or net second we and to our by U.S. $XXX our share offset improved of posted selling quarter. per XXXX, expenses, million adjusted or in a compared second year a loss adjusted primarily expenses. Compared oil partially per financial quarter with

net barrels per of production XXX,XXX quarter. the in excluding quarter averaged oil ago year XXX,XXX barrels equivalent equivalent of from per day day, Second Libya, oil up

between of and at guidance year oil also which our we per XXX,XXX net barrels end XXXX, of upper equivalent is range. average forecast of excluding day, that Libya, will production XXX,XXX the full the previous For

averaged barrels year up Second day, per XXX,XXX oil quarter net from in XXX,XXX of ago. equivalent equivalent day Bakken oil the XX% production of per a

upper previous average guidance equivalent between production and end barrels XXX,XXX For the net oil of will the now our full day, forecast year Bakken that of at range. XXXX, we XXX,XXX the per

our sustainability to us would Before create practices I published for earlier to our closing, We business continuously XXnd Annual that value Report we Sustainability our performance. improve and like position shareholders believe year. this for month the note

Our and on deliver summary, company will sustainability report financial our future In returns, visible and executing strong free increasing website at strategy, low www.hess.com. production which are we our significant cash is available flow. growth successfully and risk

turn the will to operational now an update. I call Greg for over

Greg Hill

in we our was for an guidance second oil of excluding day, execute barrels to of of equivalent Thanks, John. was XXX,XXX in deepwater Mexico, update to per of quarter, progress XXXX Strong averaged barrels partially equivalent day. continue by provide at quarter oil Shell-operated our our oil unplanned across to per strategy. reduced I in which performance Starting second Enchilada of XXX,XXX X,XXX day. our as with XXX,XXX net equivalent would facility per operated the the the offset quarter barrels production production, approximately our Gulf the portfolio production on net within Libya, by which downtime like

in quarter, and previous expected our by quarter, of production In forecast Mexico day, our in of production JDA Gulf excluding to between XXX,XXX our Southeast asset expect at from year is the growth Asia Based now Southeast barrels Gulf upper XXX,XXX of the up on the end partially day, average planned continued the and Mexico be barrels XXXX fourth and in July. XXX,XXX oil of Bakken Libya, the Barry maintenance the the offset ramp in performance is to of Bakken, to of net at of third expectation production we oil Hurricane as equivalent impact early in equivalent we net Asia year-to-date strong guidance per and average deepwater full XXX,XXX between our of range. which per

completion delivered new strong a to on capitalizing Bakken, we success Turning perf and design, of now the our quarter. the plug

Bakken XXX,XXX of oil was barrels per net than at of day of production net barrels and equivalent XX% the XXX,XXX oil per guidance quarter Second end of day, averaged equivalent approximately the to year-ago which higher our range quarter. top XXX,XXX

XXX,XXX day. quarter, between XXX,XXX will equivalent For of net production oil average third the our forecast barrels we and Bakken per

oil and in new XXX,XXX and guidance third Bakken the we new per also barrels quarter, to expect of XX we online. upper approximately average which For bring online, day, full second we production In will net XX at wells forecast previous year our of quarter between now the XXXX, equivalent end wells range. XXX,XXX brought the is

For online. wells the new full year XXX approximately of still expect XXXX, to bring we

has working of second X,XXX approximately quarter. Baldpate in shutdown offshore, per North to XX% per of in Gulf equivalent the Llano in for Hess interest, X completed Moving Field. production in return the of averaged oil are where Shell-operated online maintenance of production Gulf in successfully our approximately which well in a quarter, day well as reflecting at Mexico, the reach Mexico, facility in and a Basin. the investing barrels we days, rate in weeks of completed was Southeast of equivalent XX,XXX line in of the at well the of In unplanned the expected July averaged barrels Enchilada per is day fourth gross planned XX,XXX the in an oil high Mexico, and shut-in between report quarter, a In to as of barrels a production pleased at to net equivalent of Bells The Gulf deepwater was brought approximately schedule. XX and Tubular that drilled second oil maintenance day Asia, Malay activities XX-day planned shutdown the in opportunities, Conger our strategy production with ahead net reflecting activities deepwater in X resulted XX,XXX successfully

mentioned is at to back earlier, production planned a week pre-shutdown I now JDA we shutdown X-weeks As last also and completed the levels.

drilling discoveries on so Haimara XXXX Guyana, to on the for in of our new turning Now on July, number at test a X included stem Hammerhead-X continues, and total the future discoveries bringing development. the to XX. potential drill Stabroek June Hammerhead-X operations we Yellowtail, respectively, evaluating the currently on a and block We successful in Tilapia, with exploration Block far are far and thus success the X results wells which completed and

drillship wells of the successful planned Phase finish XX Liza the Tripletail October. logging Ranger to An appraisal Ranger well, as in exploration Our drilling well northwest of the Stena for results of The follow-up the to is and well Liza as oil-bearing located in and then will commenced with Carron field. Ranger expected are of large X extensive development structure, intermediate drilling drill drillship section currently carbonate a X the as approximately return stem the one in quarrying miles XXXX X X. drilling well Noble established Madden a test recently which the Tom program January X

to FPSO, Bob Phase day, risers production per project fabrication and gross oil production has gross turning Unity to oil Destiny Now Guyana The X our utilize Noble barrels Douglas Liza planned. plan is by XX% approximately Singapore of and is Unity as barrels is expected capacity quarter departed flowlines developments, Phase X, the at is approximately first track is umbilicals, The activities September. of will to sanctioned FPSO will capacity subsea underway. oil XXX,XXX proceeding million arrive in X to are drillship day of the a oil. progressing of a will with in May, the achieve installation first Drilling and develop XXXX. Liza Liza in Liza XXX,XXX of on wells where Guyana the Liza XXX barrels development Phase have the and currently per by of of complete.

of between is XXX,XXX A on of for Payara at gross development is per third XXXX. and to have a expected first barrels expected oil mid by phase XXXX. day, with XXX,XXX oil track capacity of oil First

and execution guidance our previous our positioned to and than to we range the along production expenditures in XXXX our be capital previous end exploratory upper are with strong, closing, guidance. at continues lower of In deliver

better, a cash trajectory Our position Bakken growth to generation returns, significant which to material years us free deliver to generate is come. offshore Guyana efficient shareholder all engines continues cash bigger industry continue get and and flow for leading and strong to on value cash capital significant of flow, the many

the to Rielly. turn John I’ll over call now

John Rielly

net the XXXX. with earnings XXXX. today, quarter of will I net in loss results second second quarter. from first quarter first of We income adjusted the million in a my periods, of basis, On net of a to of quarter of Thanks, the compared an we million $XX which $X $XX loss incurred million XXXX incurred excludes Greg. remarks affecting of the of XXXX compatibility the compare quarter between second in items In

immaterial. income in quarter net the of On Turning second in were variances second quarter E&P an to million XXXX to E&P. adjusted between the compared had The and first basis, net the of quarter. price income of $XXX $XX previous volume and quarter million

the earnings $X quarter follows: decreased by in million; production in North earnings million; guided, XXXX in in earnings and maintenance operating changes million; decrease after-tax Tubular cost, between severance workovers other earnings an by second million Guyana Malay driven primary activities taxes the higher first and decreased components earnings million; higher higher of as The by $XX by and of changes by expense as adjusted of Bells decreased earnings decreased earnings E&P were Basin quarter seismic decreased foreign all second $XX $X by $X million. in other for items $XX exchange at overall

million Turning $XXX before Midstream, previous second in Midstream XXXX. to controlling the compared of in million of quarter income compared amounted net XXXX million Midstream the the quarter to $XX segment second the to had quarter. of $XXX the EBITDA, million interest, quarter in in to $XX no first

interest compared and million in of XXXX. first million expenses $XXX the $XXX after-tax corporate second For to were in quarter the quarter corporate,

position, excluding billion, Turning facilities, equivalents financial and billion. available and billion, liquidity finance cash total obligations Midstream, credit $X.X cash committed at to including end, totaled was and $X.X quarter while lease were our $X.X debt

from was in in $XXX the were by quarter, facility XXXX. that a facility quarter. credit operating revolving cash During in in cash which million, our scheduled to January the expenditures un-drawn million credit $X.X the investments maturing for we billion $XXX Changes $XXX second XXXX, was entered new, replaced mature capital previous provided quarter. million working second fully May in Net second operating while increased cash capital flows into and activities

previous full shutdowns XXXX, to of to and quarter. cost, barrel range second guidance, cash of third of $XX.XX year and oil turning excluding quarter of were Libya, per Libya, Libya, JDA in maintenance of planned XXXX equivalent, oil $XX excluding of expense equivalent, E&P to be barrel impact $XX second E&P the of oil impact and Baldpate, oil down to year of per was per per $XX.XX DD&A equivalent. oil costs planned is Bakken which Full which including third Libya, quarter. of projects now oil from for including $XX.XX to barrel to the of oil cash Libya, equivalent, the per expected are quarter in the excluding Hurricane barrel costs, the reflects the our XXXX per Libya, in of equivalent, barrel $XX.XX E&P, the and equivalent, Barry. project guidance at $XX.XX the and for Now maintenance of be We equivalent barrel $XX in cash $XX $XX excluding per barrel

the is $XX an forecast tariff million quarter is the third oil of full DD&A The be approximately XXXX, oil to million in $XXX range E&P be full range expected which cost, to XXXX. of year total and and are X in Midstream $XXX barrel $XX the barrel throughput Libya, guidance year gas third Exploration haul unchanged increasing to in in be at $XX oil equivalent. be $XXX range to lower unit the equivalent expenses, excluding equivalent $XX year excluding processing per the due guidance $XXX to anticipated guidance. projected to third expense, expense the our to Dakota. production volumes $XX increase and with the Libya, range to in quarter Hess million. third growing expected equivalent range of for $XX.XX per in dry per operating in be quarter, of quarter Midstream in of the million North is driven The the plant of third excluding costs, increase previous $XXX for year projected be the million of end with startup $XX Little in is to guidance full million to the the third-party This of full of the $XX in of and for to $XX in $XX million, of fourth Missouri tariff with to by oil quarter, barrel per results of of to barrel to the

to range tax year. of in quarter for be The the excluding expected and for expense the an X% to rate, E&P the X% effective full is Libya, third

remain Our hedge oil positions unchanged. crude

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

expect are year. from for per remainder the We million full $XX quarter exploratory $X.X amortization billion approximately approximately down quarter expected $X.X original and billion. the of to premium million option expenditures guidance is $XXX E&P year, and be of to which capital the be third the in for

Midstream, income be net million full the million million year. Hess $XXX of $XXX for anticipate segment the in third quarter Midstream the attributable approximately For to from in to we and range $XX the the to

million. Turning to the be expenses third to to are range range the the million. of $XXX be $XX to third XXXX, the million $XXX of expense in to to and range and full corporate estimated $XXX million be $XXX to in the $XX full estimated is million of quarter guidance in range million million $XX for guidance Interest for in to year million quarter corporate, year be to the of of $XX

remarks. my concludes This

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

Operator

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

Doug Leggate

you if mean release, Obviously, Hi what on probably one the give the unusual. a this could Longtail is the just hub, single on Guyana, area thanks. detailed Bakken. bit little but describe think Guyana Greg, one Hammerhead scant you us I a the potential then but On for morning that Yellowtail been to a of a kind development I major on more and everybody. wonder And couple of, a then ask assumes the question guess, Turbot for they’re Good appraisals? development to relate the bit forward that little FPSO. I you. doesn’t as it’s and the does assets an past color to Could exploration alluded when bring your boost in had accelerated I related seems in development? the

that to just seems the kind greater offer any we’re wonder still of color uplift us than it So an haven’t why we for here. on development I stacking if XXX,XXX you visibility up could guidance XXXX? seen

Greg Hill

Yes, Doug. Thanks.

take me your first let So question.

actually first all, X The wells. Hammerhead-X good Hammerhead both three finally, high-quality demonstrated and good on of Hammerhead-X first really results between both all, well mobility. And And things: reservoirs. showed very the connectivity very had for is DST all So the Hammerhead-X connectivity. of

So, all development. pressure well that so X wells are in bodes a for communication

this into area. development for the results studies all Now we’re rolling obviously the planned of that

So, rolling announce are but earnest we’re just we as not speak. to we ready in the anything into the all data studies

of the And Block Regarding your that starting northeastern and studies drill probably the be year, lot between of second of then other given development and or seaboard. as of Tripletail end we’re Turbot additional Obviously, this we year, area. now it’s question, Liza. more of now do along first X, between Turbot amount part are on and a look some we’ll do forward Liza Stabroek or the X we get the between the going And wells or to multi-FPSO kind that started we block a southeastern really between exploration southeastern going drilling in along found. Turbot X prospects to really volume them potentially you’re complex earnest, X and with and we then that right, underpinned doing furthermore, have volume complex, the also, situation

that’s a rolled being see development lot to we But speak. again, into upside continue studies into area. of as all So, that

Doug Leggate

one. Thanks follow-up a for quick is My the Greg. hopefully clarity,

mix, it to going bit. the seemed development the that if further, mix You speak My your system on believe read dropped I your Bakken. what’s the expectations oil for to on that the material payment to of relates saw quarter, forward you going oil volumes, guys wonder area? quite you NGL mix a there there. in and change any And really to mix in this guess, it we liquids process the oil kind question I’ll I should in in relative a I a leave third-party could lot through

John Rielly

our in And Sure, Thanks be going Doug. change there shouldn’t forward. for any mix that. no,

our Bakken call asset. and in well So, let capital first of, it’s production. production doing cost is talk just a production, oil specifically, It me overall at and I’ll really it, terms high-level and

was April has had we were been availability tough quarter, was during June but So, months the and really May well what July strong really low, and strong. and weather

we’ve cut, So, let oil just said XX%. low say always what me we we’re can in to mid-XXs this tell you so XX%, is

And going can feel we’re there the using quarter. increase our number we comfortable second see from very to production strong You third the third production guidance quarter that you have that Bakken. on a can to for oil gave that

then specifically, happened. point your me So to on the quarter, let get second what

availability we oil were oil look I quarter, weather As it was timing months, so mentioned, tough if a the and of capture, additional quarter. and into that first like affected gas well low both cut capture does gas. and that second in you had April Then of had XX% get in at gas May and our we high the so

all to So, in the XX% being else gas production been percentage would gets would’ve XXX,XXX your, our call on in kind an oil now to the XX%. with to But payment processing cut that equal, in it area, it, fee. I have XXX,XXX overall said

or do that POP So, Tioga of the percentage contracts. proceeds contracts are our percentage Gas of a we Plant at have

those the second And first gas prices, and with received more so, volumes between we obviously, quarter for what NGL happened, lower and contracts.

second equal, we being a the else to call probably gas, it sand all want of day quarter. picked X,XXX barrels, barrels in up NGL So, you X,XXX if

Bakken The and the XXX,XXX plug really why just said to team on doing a the we’re day, But we well barrels low the way we’ve oil right mid-XX% a cut and well. perf wells showing barrels going XXX,XXX that’s let so is executing are oil asset is for track going where to all day. are it really forward say, is. up the So to maintain this cut me always

the and we’re the asset about So, quarter excited looks third good.

Doug Leggate

Appreciate on the much. so detailed Thanks John. answer

Operator

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

open. is line Your

Bob Brackett

Guam, can update an you in that? on the question Quick status morning. on give the the [indiscernible] prospect of us Good

John Hess

quarter quarter. that’ll we poised tieback. so a to in so drilling we Bells. Bob, that third the tieback that’s begin well that in a third Tubular Yes, spud be And will the are If successful,

Bob Brackett

Okay. a edge of looks you high It structure. the that sits can opposed to the well Ranger or looking Are about the at you what like appraisal the follow-up of what And on sort the the then reservoir as on talk you are X, testing for? up pretty purpose is? of quality structure

John Hess

Well, was side standpoint. X leeward I think, actually Ranger on Bob, drilled move was It safe the we’re Ranger the know well side. X historic windward a going you relatively in drilled the to carbonate drilling position to of from The a the well, reef.

to we higher of expect et was rainwater, because action also the and portion So, that porosity wave cetera. reef that’s the subjected

So, we’re us help connectivity. there. will DST quality and do also a to establish want looking We for reservoir that

Bob Brackett

you Thank that. Great. for

Operator

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

is line open. Your

Roger Read

Yes, thank you good morning.

of Just efficiencies where back give through wondering flowing the an million if are we in to guidance could the idea maybe the us roughly decline? and come CapEx change the $XXX

John Rielly

easy one-off an had it but across been it’s execution. I wish I portfolio, just way so our Roger, good really is

Southeast Guyana, have good. So, quite it’s this been in in costs is Bakken, Asia,

the So, from the cash the $XX.XX the per BOE. $XX it to reduction to down thing $XX on BOE portfolio. really to $XX Same there cost, the is across

would on be the portfolio. seeing the portfolio. We’re I Bakken it biggest capital it across really the probably the is piece the but guess across

Roger Read

So, we’ll just that? a or call it like potpourri something

John Rielly

name. Yes. That’s good a

Roger Read

of rest I Guyana. the guess let’s crowd like here, of kind then the talk And Alright.

should we see think the As the there you the think alongside like exploration program, ability about you see to mean, FPSOs with I being the you achieve to the want continued achieve original the as achieve to highlighted then continued all able expansions you are development, able would we or rig out, the X you process development, I go being everything parallel guess, do E&A exploration on fleet think I on to believe exploration? for we’ll to XXXX existing as, and execution that all about

Greg Hill

Yes.

on rigs initially Stabroek that the Obviously, plan and move of will into going to to Roger, on that will drilling, back the Phase success, wells in development focused these add depending a drillship E&A. the to So, fourth be we E&A rigs theater the exploration a to development at They’re etcetera, as we over drilling be on going do move to fourth a are to for begin be Block there time. X quarter. work But couple from might get in while, point come flexible.

a done developing great from are block. E&A everything get standpoint get we plan in of exploration to to we So, want an before the time

we do developing all of plan a are So to that.

Roger Read

Alright. Thank you.

Operator

Thank comes Singer Brian And our Sachs. question you. from the Goldman of line next of

line is open. Your

Brian Singer

Thank you. morning. Good

Greg Hill

morning. Good

Brian Singer

and follow-up of additional Just a does exploration. first questions couple to Guyana on the relate

beyond You mentioned specifically, step the southeast Ranger out the more And and drill that little corridor or the otherwise the there year? between and away to a that a in be you Ranger drilled or not? you from from into Ranger over potentially with any or going talk are some away of carbonates locations bit wells are Can either if next this that upcoming. structures just see to step out rig you plan fourth new Liza

Greg Hill

No.

the lay X next So for sequence of months. just, let again, kind the drilling me out

first and to X extensive an going the Ranger all, follow and logging drill quarrying then we’re and program appraisal well of with So, DST. that

on and I With, between earlier, location the end half focus drilling before rig of Turbot the then back be So, Liza. the go next the first a we X rig the second exploration year. southeast out the wells really beyond additional of the the well, X as will the spud that or anticipate on of mentioned be amount And to Tripletail spud block time. to going will well being that, part of exploration so that’s the year. that in for fair The

continue them, and sequence that down many that is we’ll Kaieteur that, really think But also corridor add can plan cetera. in of So, to defining upside. Suriname we of represent ships that how in looking the XXXX beyond and a that XX Hess the so block well do there, have inventory well obviously, our XXXX, side, et that then barrels we we then Block and block course, a block how I it’s in the prospects we’ll multibillion And southeastern developments of the in of spud exploration also. well on to on as important

is going program Guyana there several So, to for extensive be sure. in an next over E&A years the

Brian Singer

with least there? And you’ve discoveries connected my how talk you’ve think seen initially to planning Haimara. that at data any get some just monetization and like regards made is, Can you new great. that the about about of That’s should or you follow-up

Greg Hill

No.

overall block it’s think in, being hub sure development of some some certainly sequencing, XX as And more around say. more queue. the next And months, explore to clear But we in want Haimara yet, in our we’ll I is plays Haimara rolled that’s in that far and into plans. appraise not yet. and part how as the it not and when

Brian Singer

thank Great you.

Operator

And Mizuho. our of of you. question line next from Paul the comes Thank Sankey

open. Your line is

Paul Sankey

outlined Hi on is the, good point you too morning a are much which very simply of variation of, therefore, everyone. of and plans you’ve don’t you and Greg, are at major luxury a mean clearly is or this really development stable really much anticipating long-term nature activity theme terms sort the there there I accordingly Is guess fairly exploration that success the change? in change very of is inventory plans the potential this really in Guyana. and the quite problem levels have discoveries,

Greg Hill

one Yes, returns. maximize financial Paul, most a here, approach capital-efficient we think is the will excellent taking it phased question. No, and our which we’re

and The a reason about ship, doing which you And be line after further us fourth sizing exploration would be year that program. a perspective, of financial one. quarter for after the of Payara getting X return be mid-XXXX roadmap will schedule, in going in actually is and gives fourth and the fifth probably fifth X, of program to on sight a then appraisal we’re would exact out, that ahead Liza Greg’s we’ve which So which a the ship the ship about the ships. exploration the by and appraisal definition actually, the which X and of first give really after the Payara, on talking that is in laid probably a that Liza XXXX, XXXX running that year from followed is is

very about that. maximizing in drilling it’s financial we’re of Exxon opportunity CNOOC the we’re further from ships returns have we’re also are So, a requirements from very and have. about on excited the impact aligned financial Obviously, may financial that, comfortable an getting about exploration for and those ships. identify very and totally from terms value we manageable But and that sequencing this we further perspective, and

Paul Sankey

markets, could I you passed given I thoughts lot us can impact update years? how over follow-up, past a how ask for markets a latest of just If things of Gulf jump volatility have regarding couple on we’ve times and can in oil Guyana the changed oil will your if had

John Hess

for then I situated a and still on with GDP and is and an to fit very but developments going think breakeven how and impact and Guyana oil barrel slower growth at oil shale, a second growth low have Well, a by The to they’re world OPEC intersect rate that’s had know, demand enough are well unfolding. balanced something headwinds being demand growth, be into grows obviously how you for enough very all market as much a rate a these to is that and the first barrel, supply. worldwide demand how determined the market, at GDP obviously as is market. demand World we’ve ship the of a $XX new $XX slower a development having keep growing, of having the having investment Brent price price high breakeven low-cost ship price very to

obviously, have cost something low with. we to portfolio want a why live to And build that’s per is a has barrel. So, volatility that we

in resilient So, have any almost environment. price we returns

Paul Sankey

John. you, Thank

Operator

[indiscernible]. And you. of the Cheng question line from of next Thank comes Paul our

is open. Your line

Unidentified Analyst

morning. guys good Hi

John Rielly

Paul. Hi

Unidentified Analyst

sixth to know on it’s would the a up also given is year then the be to spending but A Guyana full be probably the rig. for up up early that I to want X ramp still outlook pretty probably at Bakken the preliminary And XXXX I look Phase questions. after substantially. spending we that suppose going the should couple I expense see of CapEx. that

that maybe, change? going delta John, is at in can those you items to to how help So us look the

John Rielly

Sure, December early I to John Investor that our as just back in XXXX give the you in out normal Day we think our plan Paul. XXXX per can our in Obviously, XXXX. late or we’ll about go well. talked guidance and XXXX for laid But practice as

that X talked XXXX and exploratory as do out. in for what’s free and laid to going spend expect year, had be down So, we $X about the X generate capital Bakken, $X we To rigs to we XXXX this billion cash so rigs go and question, that that, that billion year in of to approximately we have with Bakken based and on next Bakken, specific we flow. had your we’ll have rigs happen X then

that So, the from Guyana, talked that’s big there. we’re billion Phase $X.X what we the John will about, that same we’re activity had there out, add be Bakken. And the getting would as with and that there that the Guyana. at comfortable the year, standpoint, some in increase expected coming of That’s Hess any nice the expecting been and coming as we’ve Day level in mid-XXXX. as laid X exactly, not And we’re Investor we that so per yes. with be some timing efficiencies obviously, on in in increases this perfectly in is just

going is a day. well barrels at according plan. XXX,XXX everything to along executing is Bakken So,

starting Guyana. to up We’re quarter a closer in

expect to And so, of when type you guidance can get XXXX. we that

Unidentified Analyst

contribution the strategy and day, look Okay. in earning to hedging coming you think rightfully is quick What this cash indicated remark. for for that us as the barrels next point, a balance and detailed year, you going I onstream Two Phase say so a really And strong it is at standpoint, your have let’s flow One, overlift John, by one. with X,XXX the missed I necessary secondly, that I per to it quarter? maybe you from sheet like? the the have hedging? future pretty and What’s

John Rielly

Sure.

starting in by XXX,XXX Basin we offset XXX,XXX we XXX,XXX day JDA, let overlifts, day that of barrel had our barrels. so just in just it, Libya, overlifts the tax under the call can barrels North in Libya, probably being a tell a XXX,XXX barrels with day line big had about, Denmark and Malay a by me So we overlift overall, one with a was you had so also

is what Libya since and from it driving immaterial, was standpoint Denmark an just So, overall earning that happened overlift.

program there. So, we’re do for intend volatility. as forward, as on, with as on to the thing hedges our that discussed, or Then we to just XXXX. Hess far put discussed nothing prudent material we John just oil do, a have We it’s looking going price we yes, just think

sure to to insurance that that program can we it’s execute an want great from do something we this that standpoint So, just make we have.

So, to expect you for XXXX. us to conditions to can market subject adding hedges

Unidentified Analyst

the money hedging. The comment would in make long only is I over everyone haul like that seems lost

I’m So, thank for is Anyways that not the really the you. shareholder. benefit for sure

Operator

comes Thank Arun line the JPMorgan. you. And of question of next our from Jayaram

Arun Jayaram

development My key, Greg, or in in Greg. XQ your such the you I was of question wondering, outside or perhaps is Yes. area, core Goliath for areas etcetera? kind as first did wondering Red some the wells Bakken you tested the and have I some guys of of if XX was areas of Sky

Greg Hill

Yes.

areas yet. wells a a say in of I to-date that let out at in we the So XX% expectations, first $XX meeting with don’t of me of that’s to that what lot we order there drilled returns the But say barrel. wells will is those are all, have and have, XX%

to be in different of and and for completion spacing designs kind those we’re development and XX in plan further XXXX order Our areas. optimize their drill about areas testing try is in wells, to to going these well

going this grow we’ve IRRs inventory of that like expect at I a XX-year to optimization and exceeds recall, going a a those barrel. And of Goliath wells do Sky, optimization. got that you expect as least $XX we’re result in Red I that to that that XX% with areas inventory year at As the – is probably

Arun Jayaram

Great. John, great guidance production as and well with range the some this you your QX overall us color for Bakken thoughts oil QX? John total Could Rielly. one’s as your of oil on gave a the thoughts BOE mix. on production for versus us help And and you on

John Hess

XX% So XX% looking were first quarter we and of and production, of was if – in production first quarter. two oil second quarters the overall our we you the where saying the our you’re was in kind at were

is I would – overall I’m – about. So are say talking and you doing this

Arun Jayaram

Overall? Right.

John Hess

guidance. yes, Overall, company

So up third quarter, for it the to would driven Bakken good oil slightly go production expect by I growth.

Arun Jayaram

of to it X what just production kind the impact sneak well. that will on net And the enough. number one be Can Llano, is a in, you more Fair basis? us remind

Greg Hill

Yes.

and a XX,XXX between it’ll base, X,XXX quarter growth So we half in and on fourth a of have that. be barrels day the

net be the So half of would that.

Arun Jayaram

lot. a thanks Great,

Operator

Campbell from comes Thank you. the Jeffrey question And Brothers. of Tuohy next line our of

Jeffrey Campbell

improved addition well and shift the the this anticipated was mentioned perf release in to something that? Bakken. press The from to I was morning. was in Good plug or wondering, this performance just

Greg Hill

No.

to the for about think this program design. X% perf. plug the XXX% XX% IRRs program are million X And to going are and XXX% in our sliding XX% the average, EURs – between and I again, XXX% referencing on XXXs a for sleeve previous to and this IP is barrels, XXXX be year. really whole And XX% at between versus and shift those our increase a EUR IPXXX increase and in about delivering, XX%

extremely well. the is strong and very pleased doing a program So Bakken with we’re and the results very

Jeffrey Campbell

for of closer spacing to the XX settled drilling in if well in still wondering, May the the you’ve Okay. the tighter I net Discussed optimal present areas? or you Slide Bakken – on value testing your areas certain was in for And acreage, spacing presentation. core are referring spacing higher just

Greg Hill

No.

I think configuration core pretty X in the and that X the settled we’re on.

I as And maximize our good you might optimization there. I’ll although you out is get get I could out is it, call think as all the really X it’s objective acreage, acreage, DSU widen occur NPV. the because why Tier say actually that do that you to spacing into

DSU cetera, So maximize basically it’s to going to spacing, profit NPV. et loading, be equation well that of

as not be into So you go you tight might spacing, may as change acreage. you out the well other the

Jeffrey Campbell

further in sufficient real one Hammerhead was in going steps? are Okay. determine just I are sneak that to there, last next to one quick, there back wells plans tests the Hammerhead And I wondering the X or current any you’ve if discussed just

Greg Hill

Yes.

next well steps. data and evaluation determine got data think to I have we enough

Jeffrey Campbell

it. Appreciate Thanks. great. Okay,

Operator

the from of James. Pavel is of line question next our Raymond Molchanov And

is open. Your line

Pavel Molchanov

Thanks XX $X pricing Bakken Hub a that but in quarter shutting not hovering the and have part your where of of It’s point taking Bcf wells? Henry gas you to last production in resort What’s might below around obviously is with question. U.S. for that. huge context you mix did the

John Hess

No. We us don’t wells in see shutting there.

associated again, lot have So what Bakken of gas is a well. we with our

shale we X wells. probably Also of in it times have to wouldn’t shutting than gas you anything. most has the be remember other Bakken So, stream amount in the liquids

the in overall position are gas to down, good even consequence and a rest backs. our net the price of as are NGL So backs prices net still are they to accretive in natural we pretty optimize our though the country, a

Pavel Molchanov

what’s Okay. stance latest status And same update context your on in that that? the on flaring and

Greg Hill

Yes.

regulatory point venture as requirements we We that our south on will be comes are Targa, I well flaring south within actually joint LMX is our substantially below gas and of particularly, regulatory in requirements. with on, the the drop in river time. which imminently plant that think And river at of substantially will

So, flaring an LMX. problem not with for it’s is us, issue us, particularly not for a

Pavel Molchanov

Okay. Appreciate it.

Operator

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

great day. a You may now disconnect. Have

Hess (HES) 1 Aug 192019 Q2 Earnings call transcript