HES - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day ladies and gentlemen and welcome to the third quarter 2019 Hess Corporation conference call. My name is Andrew 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].

conference recorded this replay reminder, a is for being purposes. As

the now Investor to like would conference Relations. to proceed. of I President turn over Vice Jay Please Wilson,

Jay Wilson

participating morning call. thank Andrew. earnings everyone you third quarter Good you Thank for in our conference and

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

unknown expressed other those include from cause filed results Today's laws. subject implied are These in and within risks in uncertainties meaning Risk may risks differ to forward-looking and SEC. of reports that These and statements. or and conference call those the contains of the actual such statements with to statements projections the quarterly the securities known forth set Hess' Factors section federal annual

certain the the can reconciliation website. measures. Also, on information non-GAAP financial comparable the today's financial supplemental differences measures on and these provided conference of non-GAAP most financial directly found in measures GAAP our discuss A be call, between may we

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

turn I John Hess. over to now the call will

John Hess

Welcome review to Jay. our then performance call. discuss quarter Riley Hill third a results. strategy you Thank update, I will Greg John and operating our will conference financial will provide our

capital disciplined exploratory execute to had lower our higher expenditures allocation, continued guidance. We We on than previous strategy capital and high-return delivering only and production opportunities. of our low-cost, focusing another quarter, strong

$XX of Brent engines our on financial terms and barrel growth as of and the XXXX. growth Guyana industry-leading as deepwater with by breakeven a Bakken deliver portfolio flow cash performance track Mexico is and portfolio cash below and engines Gulf per Our returns, the to our in Malaysia

sheet a our financial a high-return With in the growth across sheet strong strategy range are a projects prices. at of liquidity balance end position cash of strong part our to position. balance on the of we of maintaining our key quarter, A $X.X billion and is fund

million billion. throughout capital the reduced guidance $X.X to execution our strong of result $XXX portfolio, full-year have XXXX expenditures exploratory further and a As we by

Earlier as to XX% Up-C Hess Midstream cash more years. Guyana general our and net world-class the will Hess this distribution expected in where to receive midstream to Partners, Upon and or $XXX own Cash entity capital will announced last will Bakken be is interest than services Midstream XX% Hess five economic outstanding proceeds of to and quarter, used plans acquire oil Hess approximately billion Corporation fourth including and gas million incentive completion to we plan its this close. consolidated an $XXX approximately Hess of next rights business, new the Infrastructure Hess investments partner expenditures Partners over interests, Midstream transaction, in in month, invest convert valued of units million Partners. the water night's $X.XX and structure in approximately the our of at fund which

Turning to Guyana.

major multibillion barrels well located announced in been still development September, is and resources with Subsequently, additional encountered Tripletail-X exploration the Stabroek encountered the remaining. reservoir. discovery operator, bearing than barrels discovery. Block of XX% sandstone a recoverable on the has a Tripletail future at Turbot as a gross the Tripletail discovered of six a where discovery. three under at of oil In billion more Longtail feet will evaluation underpin and have the announced ExxonMobil approximately northeast Turbot interest Xfourth are the previously we area below the hub. of oil-bearing the On miles is The XXX area Block high-quality hydrocarbon well estimated further approximately reservoirs Hess equivalent potential

and for appraisal oil appraising at a These successful evaluation Also, are including drill on stem being activities Ranger with and drilling evaluated drilling continue were Ranger of Hammerhead discovery. results objective X quarter, well the test. with future results, completed the the During activities encouraging the development. potential

FPSO, or of plan production Phase developments, a X Guyana now XX. vessel barrels will our Destiny Liza storage barrels day up utilizing production Phase the to day. The oil second in of XXX,XXX arrived targeted of produce terms XXX,XXX development oil In a use which also X the is December Unity start progressing is on with development per to Liza Liza the to August per gross of Liza and gross and and floating up will offloading FPSO, in capacity

capacity FPSO First is first Payara oil a XXXX. per XXX,XXX Planning third at expected will gross and is barrels expected production of of underway for oil from in is with an by development day which use mid-XXXX. Payara, production

approximately the We led high-quality prospects. the and hub in are is class Yesterday, we in deepwater also of the Canyon, reservoir. a XXX we encountered announced where high-return exploration pay the the Gulf discovery successful XX past oil-bearing blocks and years results $XXX Mississippi pursue net program for well which oil have Esox-X exploration our of million approximately the Hess infrastructure operator Mexico, from acquired five feet in interest. focused to holds seeing over at XX.XX% positive Miocene

is commence in XXXX. financial returns. first to expected to the to quarter tieback production cost Esox the Tubular production of low Bells a facilities generate expect will We be and strong

this Hess the the well. interest operator miles six and Oldfield to year. has We the XX% is which the well of spud by Kosmos Esox-X is located end in prospect, east a the approximately of also plan

Bakken. the to Moving

value. XXXX. barrels oil will in by rig day, the to XXX,XXX reach been the successful initial rigs, barrels six seeing enable of rates, free Net and in approximately of to to flow We to Our generation in plan approximately across completions prices. our current program range day four then resulting recovery production which transition of per per perf reduce are and Bakken equivalent equivalent maintain plug very us we in oil cash production track of material XXX,XXX importantly estimated the on ultimate has and production expected is uplift to most in

we to an share or million share, posted Compared $XX net our year posted or quarter. third turning selling third realized per $XXX million share, which ago partially Now, basis, results. or net per compared XXXX. financial million in loss a of reduced we were loss $XX income by adjusted million quarter $X.XX the the $X.XX expenses. of of loss reflect net $X.XX to or On with quarter the in a exploration our XXXX, of a financial net compared lower of $X.XX third share to quarter, primarily per In adjusted $XX results our prices, offset per

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

XXXX, range for guidance oil to oil from production of XXX,XXX XXX,XXX full XXX,XXX year barrels we are day. excluding previous For guidance equivalent approximately day, our raising equivalent up per to our of the per Libya, net of barrels

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

For the XXX,XXX per net we guidance up equivalent XXX,XXX Bakken production per from XXXX, approximately of barrels year full day. equivalent of our are oil day, for of previous to raising barrels XXX,XXX to our oil range the guidance

visible focused and low to capital In positive summary, of and results returns, free and growth our disciplined cash deliver is risk strong assets company financial achieving our allocation positions portfolio and production a of significant and uniquely increasing strategy flow.

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

Greg Hill

for year-to-date we to range In we update day guidance which an to approximately our XXX,XXX oil with of production full starting equivalent third barrels XXX,XXX Based XXX,XXX would previous year above are to Thanks Libya, our guidance, on the continue of provide range performance, XXX,XXX of of XXX,XXX XXXX like per on production equivalent progress to increasing was barrels to our oil I our excluding execute our in guidance quarter, day, strategy, averaged the strong barrels compared barrels per oil Libya, equivalent oil of John. day. net per equivalent per XXX,XXX as production. XXXX this excluding of quarter net day. to

We fourth per barrels XXX,XXX on to approximately basis. production the day same expect quarter oil of average equivalent

quarter and Natural oil the under Bakken, completions. XX% of our to of perf the by XXX,XXX a continuing plug strong result and the agreements X processing per also quarter. third increased net barrels net above gas higher of increased July higher in which from quarter, gas as production as equivalent XXX,XXX up proceeds oil and barrels prices of percentage startup result gas our operating third during range oil gas XXX,XXX capture production second the from the nearly quarter, plant a In late in in our and NGL Little NGL volumes were Missouri contracts the per performance ago decline Bakken. entitlement quarter year the in day, the the of of Compared significantly guidance from averaged was than of XX% equivalent day to

XX and quarter, During to online third wells. wells we now XX the XX brought fourth new we online and the new expect quarter, bring over between

For the of online full this original weather below year. expect is XXX our due we guidance wells, issues to slightly approximately XXX primarily related new XXXX, earlier wells, year bring to which

per program, increase previous XXXX, of production barrels coming Bakken which day third per day. XXX,XXX our is the more per quarter XXX,XXX prices, NGL the oil performance fourth equivalent of from to net guidance average now fewer loaded year may stronger barrels full to online, entitlement equivalent XXX,XXX our weather higher completions quarter, with reflects In equivalent day. Bakken expectation compared our for reduce proceeds oil contingency contracts. and we well for offsetting For the to of winter approximately wells production back-end expected than XXX,XXX of range new of modest barrels will This forecast approximately from seasonally oil percentage average

Through per the day production costs. $X XXX,XXX In Overall, were manufacturing, our million cost well. drilling well our of as we and oil of to per we to million continued deliver down completion continuing to achieve while costs remain costs progress further first million per towards track $X.X from completion application to drive average expect drilling net targeted on by the of well, quarter, X% third barrels XXXX down equivalent firmly lean reductions quarter. in $X.X and of the we

the the which well has In has equivalent interest Barry rate, in Mexico, well peak reduced Llano-X oil production with averaged third downtime is deepwater Gulf per the the underway well day the oil planned offshore. Hess maintenance and of oil at equivalent by of on ramp-up barrels associated July, production. a barrels third which approaching gradual production net day. net when first been in Hurricane brought of per X,XXX working XX% since with was in per X,XXX current to quarter, The July production moving quarter XX,XXX approximately barrels its equivalent net of of approximately day. The Now reflecting

in feet now well of of XX.XX% which Hess bearing in proving an in at Yesterday, is at Gulf high-quality slot the XXX Mexico existing Hess approximately Our Esox-X the quarter Planning well exploration production the is discovery reservoir. also announced encountered to successful. oil first during well Bells underway net infrastructure to an the of exploration pay facility Tubular a back the The holds led oil light Miocene XXXX. interest. operated age into tie we

We operator and XX% Hess the also end another infrastructure Esox-X well year east miles prospect Cosmos six of by has plan Oldfield a exploration to the in led which interest. approximately on spud is

two Turning maintenance third joint averaged of shutdown quarter, a XX,XXX area. development for per successful completion the the at to activities reflecting Net week Asia. Southeast the day equivalent production oil barrels of in planned

reservoirs an plan. continues well Last to to discovery. three northeast turning are in Stabroek XXXX approximately the The Turbot X,XXX discovery sandstone the month, was fourth number total XX. and operations of Drilling well on ongoing and at discovery. Tripletail-X previously approximately oil block activities discovery the on announced block water success Guyana, Tripletail-X feet the the in located encountered feet is exploration area below evaluation miles additional the discoveries our high-quality hydrocarbon-bearing with oil-bearing and brings in XXX Longtail of are Now drilled to-date and progressing announced of of reservoir. where to we development encountered

on Also Stena drill on Tripletail, XX completion next the program. an Ranger-X of conducting prospect block, drillship Liza-X Carron east appraisal extensive Tom the Madden activities Noble operations located will includes well Following at approximately the the Uaru-X currently miles drillship well, logging and is which the the well. of quarrying

will south is and November to Don the Liza-X rig announced previously approximately discovery in to the Guyana Taylor exploration drillship, the a in the production the test. Mako-X well. Following well, drill fourth Ranger-X, Yellowtail-X conduct miles A located six expected will Noble to arrive move of

Douglas of in barrels Turning Phase Guyana Liza day in on now The of in to production of production project subsea is Liza utilize have plan Phase at oil FPSO X the which is proceeding our XXXX. FPSO, oil per of arrived and is FPSO oil will first development with Liza to X expected the this and sanctioned yard X a achieve of completion the third approximately wells per with XXXX quarter complete. will of by and drillship first Drilling the day to is Liza XXX,XXX XXX Guyana barrels to of of December. The gross targeted to capacity government and day will oil installed the capacity be X, developments. vessel a oil Keppel million oil. oil August to will and is by where of drilling develop a Bob first Liza The in first Pending will nearly hole installation by of sail a Unity XXX,XXX production gross approvals, Noble is development the of Destiny modules commence in expected year, Phase achieve per topside an gross with capacity XX. May Phase Liza utilize in to nearing barrels commissioned. mid-XXXX. is year-end Payara barrels XXX,XXX planned expected Singapore Development the

exploratory strong. In to track we and to on In are expenditures continues deliver higher lower on execution closing, our guided. production than be previously XXXX, capital

Our cash strong on capital is free continue cash flow. Bakken engines generate The a efficient significant trajectory. growth offshore to

material continues value. successful which Mexico cash significant better, program shareholder industry-leading of Gulf and and proving Our get and exploration generation us flow of to bigger to is deliver be returns, Guyana position all to free

call turn will John the over I Rielly. to now

John Rielly

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

On quarter. after-tax income previous were E&P. of E&P as million an The E&P of the quarter of to between $XX net to the third the second adjusted basis, in compared of Turning quarter third the changes million results of follows. $XX XXXX loss adjusted in XXXX, components incurred a and net quarter in

DD&A decrease results by results selling cash increased $XX million decreased Higher results by an decreased by by million. $XX volumes items third $XX Higher million. Lower All quarter $XX sales $XX by results $X cost million. realized prices decreased results overall Higher other million. of in expense million. results decreased for

quarter. Turning to the third EBITDA previous $XXX Midstream in million amounted third in million of segment XXXX, $XX the of quarter to million to quarter $XXX the $XX of midstream second in the non-controlling income had midstream. compared XXXX. of before to net compared in interest The XXXX, quarter million

of million XXXX, in the third million to Turning quarter. an expenses On and after-tax to corporate. compared $XXX quarter previous basis, the were interest adjusted in corporate $XXX

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

As working operating $XXX from in expenditures $XXX net activities and were quarter XXXX, mentioned, John upon Hess or in comparability. changes affecting was of expected year. Midstream $XXX cash in which Infrastructure for provided approximately quarter capital the million of million the before of quarter. to investing third acquisition will is Hess completion Cash third fourth in million activities $XXX items close In Hess million we receive this cash Partners' the Partners, of

$XX in project oil equivalent unchanged costs higher quarter, $XX.XX equivalent including Now, E&P equivalent, per the of in per to oil full-year than our cash per $XX.XX Libya, fourth barrel of of barrel cost, to E&P excluding We of to and the Libya at on of cash the which barrel $XX.XX be turning oil be guidance $XX.XX barrel $XX.XX In third excluding cash for to were per beat guidance, first range to Libya, oil XXXX E&P. and forecast. quarter equivalent. cost production

full and oil per is including equivalent the the of to fourth the per for $XX per in Libya, quarter year and DD&A of to end Libya for year, in projected and $XX.XX barrel This of unit of DD&A costs, equivalent per the quarter barrel barrel barrel in XXXX. operating to excluding of total range equivalent oil of results barrel expense Libya. expense Libya forecast equivalent $XX.XX of fourth $XX to which at barrel for the lower oil the range of excluding to E&P equivalent, oil $XX.XX to excluding previous is the $XX.XX oil quarter oil guidance. $XX.XX $XX.XX third was equivalent $XX in be per $XX.XX full the be per of of in

be dry third-party $XXX is increase an in Little plant gas tariff $XXX due expected million the quarter is quarter and are fourth the $XX is in midstream throughput year tariff third hole previous million. of ramp fourth million $XXX to $XXX year during Missouri excluding range down expected up the to to Dakota. to in for the anticipated approximately from midstream $XX expenses, fourth expected Exploration processing expense of guidance be North the $XXX compared range is in million. projected full costs, to guidance with to $XXX volumes quarter of to with guidance increase The X with million in approximately which The quarter by the the to million, be million be full million in increasing of

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

Our remain crude hedge unchanged. positions oil

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

efficiencies while we number being amortization on fourth the E&P We Bakken, have from wells reduced the $XX be across for in year, portfolio Full expect guidance track be the expenditures are the exploratory million completed option to and to our year. expected $X.X million expected approximately quarter. where but approximately the be of spend capital reflects to down premium production for guidance. previous now reduced The the billion, $XXX well primarily costs non-cash and year exceed original to for

million quarter segment, we the anticipate income the $XX to For Hess approximately from and midstream $XXX to midstream, be fourth full million the specials, net year. approximately attributable in excluding for

corporate, in the million. with are corporate Interest quarter $XX is with $XXX be quarter $XX of million, for be estimated million $XXX unchanged range for expenses to of guidance to estimated the to fourth year the the million $XX guidance of at to million $XXX full to expense in range XXXX, For million million. $XX year full fourth $XXX the million at unchanged to

my concludes This remarks.

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

Operator

[Operator Instructions].

Devin of line the from Stanley. Morgan comes McDermott, question first Your

Devin McDermott

strong Congrats morning. Good on results the today.

John Hess

Devin. Thanks

Devin McDermott

So far Bakken. been some the year, headwinds. my on the despite in this of the of And so weather points first portfolio question is each the it's one quarter actually strong

bit a question. of two-part it's So a

quarter. to was how on on which the is of was and strength this mix one wondering reverses some was transition part reversal, just forward back, have that areas it it's second cost POP then this POP startup quarter normalized the think you and that about going contracts? one plug gone year, first Missouri is, results last out the of and least the question Day NGL about you stepping at to oil production part at that on side. think the like thumb of can X about Investor of the guidance that rule as been that are perf beating sensitivity the you with particularly and as laid thinking of and around I the the expectations, the plant how how you into contracts, mentioned relative the fourth the The we gas Little of was a part And higher the and seems those volumes on of

further improve found you have going returns see far to down out opportunities opportunities you drive what forward what of so to there? the cut and do cost system and costs So

John Hess

Okay.

Let question. me take first your

are in The right. really capture. due quarter you is third This yes, thing. good higher So a volumes the to midstream

GOR not issue no that first the I to at at change say thing reservoir want it's all. material the in is a There the is So wellhead.

very that think the note growth. important I to oil quarter strong it's production in had third we

So, level. it QX was increase the versus XX%

So, great. doing the oil is

you two NGL amounted And higher and volumes that a the as things. gas X,XXX barrels mentioned, to and day to natural about due was

First gas Little from capture in the X on the mentioned, as July. secondly, and that Missouri NGL POP increased you entitlement came And contracts. gas our then plant higher under of all, the

those obviously Now in our weather. a NGL is higher how because those be perform the function Seasonally, in to we future POP contracts NGL prices. are typically going fourth to with lowered going quarter, of prices expectations are the the for

Bakken Now forward look can XX%, is think forward, expect we that as what approximately we going is basis. a I we percentage oil the low-XXs say on that to go average

will will a a thing as stay Now, that say barrels there than volume. be chance actually one is, NGL result additional low, a of it day XXX,XXX other POP I the if prices higher is

is So very good all thing. this a

productivity of you only side. Now, not the wells, second in the are question team, on Bakken the pleased on performance performance the with Extremely your right. of both of terms

their in well on the cost track the in and track on on the exactly on performance what IPXXXs, for So the X% average, the thing XX% am perf team uplift plug I uplift with side. on second expected. that. is, is proud But The we of EURs, really

the a Recall, we first at the $X.X started million year quarter of well.

in in Second $X third a $X.X at at a came million came well. quarter, And well. we million quarter, the we

Now gains all lean is of that manufacturing primarily.

that wells reduce stage that us where some doing to our fiber-optic lower count our cost. ran also also led to well and some the things are We allowed technology we in

$X the of cost, million successful Day NPV the well it's Bakken. way marching Now about add if the at a going billion that we to talked Investor we are $X we towards a to our million achieving $X well further and in are that

well standpoint from on cost are we productivity well a a So standpoint. and track

Devin McDermott

Great.

is on portfolio it's So up XX area as one strong improvement blocks may, if more, new picked get you be as of think past Mexico. And And doesn't a there how there. pretty high it years impressive think the the probably And a may should should. going about Gulf mentioned I also over attention of the been that I just level, at much actually yesterday. profile the announced of few And you cadence into the of we the and level, here of over discovery XXXX? Esox investment portfolio quarters we the Mexico of Gulf and in and the forward exploration terms production and had role the next few the

John Hess

Sure. Yes.

it's obviously, the So important part generation. very of cash a strong portfolio,

We in capability also exploration delivery. have terms project only outstanding but there, of not

of and So day think exploration. Gulf confident the projects Mexico keep level And think high-value, relatively a years. next the we XX,XXX several it over as a it are exploitation combination barrels the through flat infrastructure-led being way we that at is, we short-cycle about of can of about that at really

us. existing of our of going Esox into of is, online I well, remarks, of exceeding with the the to XXX of generate are that. of ramping light equivalent tied terms particularly is since Llano-X very discovery, talked quickly. then of returns would oil day, X,XXX we the but reservoir, A in is barrels in to examples the And net still we couple thing very and say your that opening the our in cash about pleased typical slot terms high discovery Obviously and a Miocene high-quality which well, ILX, tieback outcome about it's And which that's this size. Esox-X very significant flow, will feet per producing brought be not expectations. pre-drill This oil-bearing

a is few oil first matter to of months. discovery So a

to the ongoing. production after well, we still really intend provide similar production because do we Oilfield of some resource think have term that Esox what which to including dynamic well. further of early And But well estimate, great Gulf think is is is a evaluation cetera wanted can we updates highlight example up, year next the data. next and the I I in we to the et the Esox, the in short Now result ILX a it's rate,

need we opening to we mentioned it in in prospects or have see as Now there. acquired XX we keep leases will flat remarks, beyond those it. five John years new that, some hub over past And his the a leads that and grow

we So a got inventory. have fairly healthy

John Rielly

can our long be wells might assume be class, year. it planning class, this And on a within term have shots goal plan probably purposes, infrastructure-led, and hub but two year. two infrastructure-led, for capital capital you about a would It all all hub

Devin McDermott

Perfect. Thanks so much.

Operator

from comes with question Wells of Roger line Read next Your Fargo. the

Roger Read

Good Thanks. morning. Yes.

John Hess

morning. Good

John Rielly

Good morning.

Roger Read

one guess Bakken as the catch-up? anything any the ask. going two we bias have you wells CapEx, the of questions point those a this kind at upside with year CapEx factors, process fewer was of and I we And in year then Gulf? maybe answered more do thought with this Esox to XXXX on in maybe I in wells If about whether think next Bakken development, maybe the the the is to the then

John Rielly

our was plan. this part Roger, all of No.

Day, But going it's to with approximately it and to we kind And XXXX give for and expect on will we of what exactly that guidance we January. Now, for said Investor be billion. spend XXXX our capital the consistent exploratory Day. last our back call I in be $X Investor in mentioned

grow We Esox that that in are order to disciplined free just in that reliable you manner. flow mentioned low-cost cash and high-return, opportunities in only a investing like

the $X and assets of all expect we to reduce world-class and now you will mentioned. more in that's But the our our XXXX about get with cost, really to allocated maybe efficient we factored wells, capital lean, XXXX. XXXX, we Guyana verses in Bakken I But do wells Bakken, with through going be everything more that spend talked the to is spend forward billion as XX% will because into in that be

Roger Read

We and about operator. the at know well will up? looking right up think not Guyana I XXXX, those, how on thing? kind December that of eight starting that ramping the you going rapid careful think commentary kind But should field with Okay. Llano-X is it's think are in Great. then is are to start we understanding coming enough And that there kind the in of should succession. say production a in wells? I the Or total just the about we of of about what's be pretty phased way wells

John Rielly

No.

should in to lot dynamic want build-ups four production. month data, of I way. think potential to you a a including the three ramp some get along assume We

So see what was slowly the wells designed have ramp the on up going all reservoir. this to we and got

That's not well in uncommon deepwater First reservoir. the is in that. do to

John Hess

to proud first point made that that performance operator and joint future specifically and the industry-leading oil venture that's five done, job. to of developments the as I are well. production forward ramp-up production we going bringing discovery well ExxonMobil to needs for our is our in The auger as is be is in very another And think years from

Roger Read

it I will you. Thank Great. leave there.

Operator

Your next Bank question Leggate, comes of of Doug line from America. the

Doug Leggate

Yes. maybe a Guyana. off, morning. Greg, kick John, Good I That could with John morning off Hi. guess, good everybody. just I Good was effort. kick or

got And guess conclusion have compartmentalization have thing appraising. the want on have you is difference give Ranger-X? early a a you been And is I we not much between language, watching planning us that's any the or communication just or sure guess we whether understand the please? to to share with into Anything your I I specifically, of flow I am test, with prognosis got and Because just you can got evaluate all has going I that here Ranger while development. Greg the have intention guess, here I We as key not make for you of too it. Can currently? been viable a quite pressure reading are a about have now John, I were thing we the there? follow-up, What whether be

Greg Hill

say Doug, on Yes. is what I drilling ongoing. are Ranger, and can that evaluation

As encouraging far, you recall, is taken But we that logs core extensive I have what we presence on got the and on a so development, however, oil. coring et program, logging, of of very seen this the reservoir can say cetera based is well. confirmation that, have

say all time. about we at that's point So can in this

ongoing well. on So stay lot of There's tuned. operations the a

Doug Leggate

Is anything Greg. you there little that's a you on press disappointed just this, on Ranger? Maybe bit

Greg Hill

Not to-date.

Doug Leggate

of is out? obviously, obviously going the in there follow-up this. play a you flow My in cash to Reilly, going associated the through. going see with any just flow Because Okay. tax. terms if know, to also this wondering, can as report how here is we you are of I is change will reporting tax in to street am and have help is we terms give to Guyana-related earnings But are no there all John how because

going of going to such a comes kind going there to forward, online. to is large navigate thing portfolio you way not it over all forward? how going the mistaken, am are -- So earnings, of Because you be this cash is of be this any part place going if because are flow the when can headline I

leave can you help offer? any I So it you. And will there. Thank

John Rielly

But you detailed Doug. on explanations give do call the the really I Sure, we exactly for And gave more will will we on that this. that's are some what is forecast January right. the year, when

contract that profit oil out pays And working recovery, So the profit and for interest they the owners. the of government working works the of government taxes its for split oil, the the the the cost owners. way interest after

that do requires a what is record us So tax. to

line essentially have have then barrels with will So is that tax you a we recorded offset up to production above and in what tax. our additional Guyana associated revenue being

line that line. offset So will the above up tax revenue

it tax all about lay numbers, put are Now Guyana. bottom do not there together the forecast, exactly the line with out lay get Exxon's we get that flow affect we get cash Guyana full our will and through out can the for year I numbers production. from then through what specific will will as up we I right. that our But next rate a It taxes you Whatever little more the year. be like show looks and

Doug Leggate

Okay. I the I complicated, but it's answers. know fellows. be to going Thanks, appreciate

Operator

Singer, Your from line the comes next question Sachs. Brian Goldman of

Brian Singer

bigger you. morning. picture Two Thank Good Guyana questions.

benefited some dearth from you the do the see to services evolving the equation activity. inflection structure How sanctions outlook? versus are project the companies of of efficiency for in the international you service future first The side margin services cost oil Now can oil on highlighting cost international is, of the projects, activity? future speak low evolving? broadly You cost you and how projects see

John Rielly

mentioned, over-supplied, drive the focus look the you to the of down. think sector, to If continues on cost deepwater as you also efficiency simplification given low extended industry's be offshore it I continues and at service period and And standardization activity. unit

see So we to expect as result, a on front. minimal cost that inflation

Brian Singer

at Great. process the how of and determining the timing, options? talk rates the Haimara of then relative any And other development? if about on my discoveries return Thanks. just see to would there And you follow-up Can there is the the at on you all, gas update Pluma. of condensate

Greg Hill

No.

but five have XXX,XXX these that barrels won't reservoirs be be in first the I certainly of day think a discussed to part getting they the XXXX. us will developed, FPSOs we

they will good very are But good very still be reservoirs, So fluids. after it that.

So point. they at will developed some be

John Hess

going in which a us what are exploration is still fifth our that to or ship and granularity guidance sixth Tripletail, this And appraisal last give evaluation, southeastern to is the ship under on program area. of that and doing we give more which is sort Turbot potentially Hub of year, fourth

would clarity of we I the give phasing potentially can ship thereafter. next think and more and fifth the So on future ships fourth year

Brian Singer

you. Thank Great.

Operator

comes Your Bernstein Research. the of question line from with Brackett Bob next

Bob Brackett

further of question toward Liza I as commissioning? Bob the going a Douglas Noble Destiny. Does that get stand you do that it to by Good Hi. Will around get Is to what morning. commissioning wells? repurposed? had does drill drillship, the

John Rielly

finish producers just the drilling Field. No. out for and both the there It stay and injectors will Liza of

Bob Brackett

and then four ramp initial a ramp? month three injectors and drilling the will will of partial continue to that of producers So kind be during set

John Rielly

will. it Yes,

Bob Brackett

all you. I That's sense. Thank had. makes That Okay.

Operator

question Gruber, of comes from the Scott line Citigroup. Your next

Scott Gruber

Good Yes. morning.

John Rielly

Good morning.

Scott Gruber

wells on earlier, I in have it color can Bakken any may XQ? provide you you online brought missed but

John Hess

in basically, In all continues Bakken to expectations. the terms meet of program general

average are track IPXXX the increase for XX% on the perf. We and on due to plug

track barrels XXX,XXX of IPXXX. We on of are oil XXX,XXX for the to

basically was about all necessarily There third remarkable on quarter. the nothing track. So

quarter. they the lower but have wells third in did we Now, did online, outperform

Scott Gruber

color year, Bakken Got consider year think improvement next incorporating this service sounds efficiency CapEx you for you it general just deflation And Bakken cost process any magnitude? order improvement. on But as anticipate next do like and CapEx of it. year, as and you there's of about a lot

John Rielly

So seeing from the in Dakota. not costs the in pressure are the cost to North helps on your Scott, decline And that obviously, point, we rig standpoint. with count,

right to well. now costs of and what with we well are Greg on D&C a earlier, six this as million getting So goal said at is, continuing our down focused lean drive more point to are our manufacturing just driving those

next plug gets lean manufacturing, baked capital some offset by our efficiencies in efficiencies, those as will our and So anything and we better just next our year, there again at wells well drilled or costs, just not more drilling the get with for like are have when will year, you cost better for reductions be perf. we for looking really deflation that, that

So that's year. for mentioned rigs And the kind remember, John as for six earlier, of program XXXX. how out next we has are laying it's

Scott Gruber

Got Appreciate the it. Thank color. you.

Operator

comes question Barclays. the Wai from next of Jeanine with Your line

Jeanine Wai

Hi. Good morning everyone.

John Hess

Good morning.

Jeanine Wai

Bakken, Good it's you year guide. outperforming full the morning. and The increased this production year just

prior So wanted just I to the of some questions. from follow-up

load to your a be And contracts. think bias at the than this I that XXX,XXX could say NGL level plan the outperformance I to you it barrels in a potentially higher barrels day, that related day? So was earlier but I that could call heard more think XXX,XXX

a moving you there on considerations kind of there's a day. suggests infrastructure some kind in the have what portfolio. other of and lot So higher similar things target, float of that do been have higher pieces, less opportunities free flow? it maybe people could I other And and I activity also your a been, I think wells achieving CapEx? of there's but lot would you saying, lot your let And production a cash less to guess, have on Or recent are if you know and think of about that of XXX,XXX kind you rather

So in see factor. limiting if I to a on check that's wanted to that

Greg Hill

Yes. for first there let to of the all day. XXX,XXX us infrastructure Well, no is say a all, at me make barrels to constraints it

XXX,XXX XXX,XXX We flat that suggested that track in then to in rigs, and four. we for barrels a at And production then four next to will free of count day as after the will billion number of as are cash year to a will be on free count day. million XXXX, hold your deliver to we still flow, rig and remarks, we barrels $XXX rig drop a cash years we of once flow, dropping a six-rig significant $X the four you drop generating program result a

the flow significant very generator a So for it becomes cash company.

doesn't to the If at why asked make look that. get you XXX,XXX sense barrels? a higher do bigger to it infrastructure go peak, for required economic build We not do than

from as flow an POP chronically volumes are standpoint you And a day. could it low, do contracts to value right, prices. prices capture. ebb is mentioned what thing right And with I hold a be barrels the going and So XXX,XXX the that are additional above XXX,XXX result to NGL overall was, at if would those NGL stay barrels of day we a we

Jeanine Wai

cost really my There's about talk the reductions of lot Great. a it's And on Okay. again, helpful. well follow-up, That's Bakken. and been performance.

some well can operators In CapEx other dollars the is return terms spend. of on your performing making commentary we that that the sure is base have heard of from production, you base highest

higher with a production? So is what's of PDPs better performance on component going Bakken the the on

Greg Hill

or the achieving mean, hang there base I in is. to It continues expectations. beating

base better And no Bakken. So have much doing in are of and with new plug the which we we then, in the see to you how course, production. perf continuing That's problems overachieve the are wells you the design.

Jeanine Wai

Okay. my Great. for taking questions. Thank you

Greg Hill

Thank you.

Operator

Your line comes the Jayaram from next JPMorgan. Arun of with question

Arun Jayaram

XX% third relatively And Is mix. in the remain versus Yes. you of Good you like in outlook morning. if comfortable the a low still give XXX it in with that us your day XXXX oil wondering sounds of the hold should Bakken was correct? Greg, flat MBOE quarter could oil mix quarter? the the whether terms fourth per I on thoughts

Greg Hill

in very are confident Yes, we Yes, that number. do. we

the probably Because gas always said, go that are effect same. this fourth really only staying the fluctuates GORs, the pricing. those Bakken, NGL variation. If at it's oil going wellhead is what's it's I this increased capture the contracts. Does or purely I As volume, always, when midstream, POP it's again up down? when providing and thing gas to percentage look That's in to quarter due mix the the

of how it's sheet. balance the volumes and on So, issue we midstream a consolidate result purely the our

Arun Jayaram

the to similar pretty Okay. But guide, believe? at I would assume XXX, you it the

John Rielly

the on depend does as forward. all it pricing again, we NGL go And Yes.

have up. we So estimated prices NGL going

it you POP contracts. we as I keep the a low-XX with, less price. think point this normalized trying But is it, the yes, Greg we don't on point believe right. So little is, just But really will NGL a call that, out from bit need Greg can was of guess be to said, focus I kind to

production gas execution well Bakken from standpoint. reservoir was strong. really and we really get the and capture. a pricing will XX% gas is just oil going standpoint due And on going the an quarter-on-quarter. fluctuations in the It's up Our Everything NGLs to and

Arun Jayaram

then Liza-X the just Once if I costs. could how give to a did thoughts get some bit us the the capacity And wondering Thanks vessel, at us also, full think you better XXX. my online lot. follow-up. productive me. do -- maybe you the John, on early. pardon operating was vehicle capacity, you be lease is Great. coming understand help ramp you I And could would long a the

just could per maybe barrel. give us op on costs if So I you as thoughts well wondering broader some was

Greg Hill

that's I wells Yes. reservoir, you And because see deepwater get Again, again, not how wells are field those want three performing. in four month you to really to for XXX. in a first assume ramp Arun, on to can think a uncommon to Liza-X the

the increase chokes. You will gradually

You some build-ups. may some do shut-ins to get

nature want all dynamic in really You at not reservoir, the again to of understand the deepwater. uncommon

John Rielly

the as January. go obviously cost we as barrel in get guidance per will And that as then, out will Arun, far we the produce, full

have obviously the will we right. So ramp,

you leased cost. doing higher per it it you are here. of have ramp as we for a have a on, per are Then adding time, as we here which period So moves barrel cost on is the the BOE right, $X-ish will

BOE low-cost would move and the until op $XX above be But line. it per which a will DD&A that later the Phase the to here be this drop X on cash which would $X addition good plan cost to off it cost So to on the will purchased, portfolio. be be that FPSO, ramp on our

more X will and on Phase at that do part this our The point. again, more production plan. take the cash cost. to X of Phase it's as ship will we even So down bigger it get begin

Arun Jayaram

Great.

$X barrel. So cost the cash be cost per $X excluding to the would leasing

like that? Something

John Rielly

bit will little than higher a It number. No. be that

So it $XX. be the will a above bit little

as So drop call we just you a But guidance give $XX-ish we purchased. will you little bit do let's move just full it the under and in can range that around can then type is into to after of FPSO next XX year.

Arun Jayaram

super Thanks. All right. That's helpful.

Operator

Your with line next Cheng question Scotia of comes the Paul Howard. from

Paul Cheng

point you some Liza-X that flow. guys by or John, XXXX XXXX, be cash either on XXXX that at when will suppose come free would stream, I

have may that a longer on yield So internally basis, rate you cash be will term a do target? flow and targeting? What the free be you combination growth production right

John Hess

to laid term out XXXX. plan our as long Day in we our Investor much very Well, this out

growth, track out We execute on strategy, cash XXXX. operations flow are from XX% growth to to is XX% production that which

track. on are We

this Our year underpin results it.

We Our how would year out term we it. forecast results any it. and that look a we really are next that's we strategy at put And executing say. underpin we guidance long

over compounding free generate cash high-return the that continue generator. engine, to XXXX be cash and beyond major Having the obviously then invest free we and beyond, call cash be to starts becoming projects. significant cash XXXX said a in cash continuing flow our flow see will and engines first Bakken that, our a and as Guyana, will and We time

XX% once flow start priority on basis, a basis consistent said, a to the dividend. our free to capital generate return starting cash priority that the be there top first Reilly CapEx and But of be will to recurring on John and we Guyana. the our $X Bakken range increasing billion in will goes our shareholders As to

Paul Cheng

flow basis or term per target of like you that X%, free question to X% say return much my the mind? you in Like have shareholder flow a kind is cash on how have is will guess cycle? cash target? that I Any longer a the that yield, do you the

John Hess

flow capital over will I Because to the be cash cash at shareholders. look flow time, is to majority it increases as of way our free free think the that returned best

the look it. that's to I way think at best

Paul Cheng

maybe this Rielly. John And Okay. is for

cost versus have be, now drop say, the going below that for And by right $XX mentioned roughly You cash Guyana XXXX corporation target just will $XX a call you it like to to $XX. $XX? is it's

is what going reduction be major that for So in component, order the to drop the to much? you

John Rielly

Right.

going to am Guyana biggest I around the said, to starts I are, call So drivers it as two $XX.

Phase know, drop That by $X. as are that's you would cost because of FPSO will the XXXX. that That buyout happen They on X. part will cash in going We that plan.

under XXX,XXX good. Again, a a our a going low-cost you add then Guyana. again down with Esox portfolio, Greg day right That's now So drop with up. mentioned, Bakken there very driving is to to $XX cash And cash are barrels as big $XX. there to up be in, to coming nice contributor the Llano-X got you to ramping

is being really a combination in total, Bakken. it's portfolio So and our of big but the with drivers Guyana

Paul Cheng

is what your costs? on XXXX Bakken John, cash in the target

John Rielly

don't there. portfolio asset I here, as our out have said per average right But by always now. I is Bakken's cost target, lay a se, below cash

continue with it's $XX.XX, in a to day. drive the going this barrels is to to significant XXX,XXX production increase down and below So going that it

Paul Cheng

what number, is the a CapEx XXXX have XXXX? Hess supply you total Midstream Do and in

John Rielly

No.

out We have yet. numbers not put those

XXXX. the when not XXXX, did some they of you tell transaction, out I guidance announcement the but Although for midstream would that in put

Paul Cheng

is This one. for Greg. Final Okay.

is going For mix gas one-well what's or you we which well program early to also us and and that oil Esox-X, a I two-well And additional know the year. that some think not assume? ultimately? are production Do give you data this next should

Greg Hill

Yes.

I give we probably and updates, early data. think, next are will evaluation production of estimate rate after resource results still well dynamic production the you further again, we So ongoing and including some have year

hydrocarbons well, another going the we that enough are all to start with but well could that here we take it see. first evacuate We see to

Paul Cheng

a mix? Do you oil gas have and

Greg Hill

yet. not No,

in We that. the provide the to is reservoirs. in X,XXX GOR will X,XXX range

Paul Cheng

Thank right. you. All

Operator

comes from Campbell, question Tuohy line next Brothers. Your the Jeffrey of

Jeffrey Campbell

congratulations and solid quarter. morning Good on a

John Hess

Thank you.

Jeffrey Campbell

then really that excessive Because to barrels it together stay does, place? there I target, exceeds per equivalent some sounds will that together. some flat it in with XX,XXX? wells. of even some and the embedded have day two maybe like, because mean, how well the expectations XX,XXX Esox-X a limits And a where I there wondering to when have put we am choke the within Or return wondering we sounds big will want you if well period just production? I fits we like like the back to also Esox a might is well back infrastructure it's

Greg Hill

really No, there mean, is infrastructure and choke back is XX,XXX in Necessarily not. can that I I constraints. of There think you wells. won't a no barrels we assume that between will XX,XXX Gulf day, be range. Mexico

will We the Gulf production Mexico. maximize of in

Jeffrey Campbell

in continued Okay. these Liza exploration had that is I thinking number a as I I Thanks. behind the are the bearing exploration just neighborhood. sense. And more area. have question. interest earliest noted makes could that's the Guyana mind one in in Phase-X of if And That to color strikes upcoming with interesting. add project the you this wondering That any get what And sanctioned. was on me wells

Greg Hill

Sure.

of that as think talked delineate exist about are seaboard a before, I we we really Liza. between Turbot that margin. see whole kind and eastern And I have what eastern think I of we do what is call the prospectivity to lot trying in

the understand what trying to future vessels. we inform cadence the of are the to do there really all we So have is volume

you as because So that's content Liza, on Turbot. you higher purpose, higher the basis there than just a have you to to a because probably in get get really closer closer relative oil as value

that So area? around future much our in of in as a Liza interest is really, and can vessel we that delineate for stuff

Jeffrey Campbell

Right. I efficient you to also capital well. understand. be And as want

the color. So thanks for very much

Greg Hill

Absolutely, yes.

Operator

of Your comes Energy. Heikkinen next Hall, line the question Michael from

Michael Hall

Good for time. morning. the Thanks

John Hess

Good morning.

Michael Hall

opposed given some gas quarter ones couple that, quarter Bakken outperformance a this well to next the again am my contracts last How contracts it capture then sounds the expectations reservoir timing? like of quick less that of the much the although of we exceeding end. moving POP there's all in and is of I assumed on or I Yes, as and/or around guess just curious, a increase pieces POP function quarter. saw guide and

John Hess

per mentioned the barrels was earlier, about oil of third POP. of in increased Greg to the a capture day gas equivalent As and due the quarter X,XXX combination

a get there. for feel can number you So that

Now again, a for POP forecasting higher volumes price, the NGL we lower quarter. are so fourth

X,XXX the divided the in year have would So to by four you overall bake quarters. for

barrels more in that. get a the there's well. additional day quarter coming then bit as little capture And a we through So X,XXX in should gas an up picked fourth

the production So nothing significant a that, Greg from mentioned. it in specific, that's driving nothing a as is increase factor, but

Michael Hall

Okay.

ramp clear. I And as guess a Sorry appreciate that be just we outlined, big to got you have about dead beat horse. then if I it. in clearly just But I wanted the see cash free you XXXX, to think have pieces, the kind at outspend year? strip next flow moving do different up next the with over years. coming shaping and all you how of current few the

John Rielly

along mentioned, So, financial Day we we at that. out a have go to to term strong strategy, this long able execute that. laid be Investor with we to John as position strategy. And to have and it continue We Hess execute the

So have at cash on hand. the end the of we billion of quarter, $X.X

additional the we As million. we $XXX an of the transaction, get post also mentioned, closing midstream

for $XX as reminder, XX,XXX we place a do year. for just of still have in a the And the options remainder WTI day barrels the put

an Phase here a program So realize financial on. fund we are do position our program. good, until in we there And investment is comes X strong to really

have looking But production December. Guyana got in now, up from forward we starting

going flow. And there Guyana. flow million cash Greg are you And cash as Bakken up is of XXXX, some as $XXX we mentioned, becoming to generative. free $X picking flow by significantly now in to So cash be mentioned, billion

X use the on the when is balance cash will Liza comes X. Guyana flow. that Guyana on operations, fund along to sheet investment cash free flow Phase So from then we the through Phase And program with generating cash

that generating cash So assets our all flow are point. free at of

that. we in to are a position feel good we So execute

Michael Hall

think to figures I of you any to kind specific us about XXXX, mean But provide? next Okay. year, just help can

John Rielly

are commodity to specific. move. Obviously, nothing prices No, going

will we production get more we into And guidance from as so January, is our give standpoint. on that where

balance will using get But of cash are to We good fund through feel again, the a the our it. some in X. be to position we cash to we from operations, flow Phase on

John Hess

adding that's that. prudent also, just to protecting conditions, the look market our depending upon we going position for downside. about to and how that look XXXX at really We And think is about will certainly hedge we think are being we to disciplined

Michael Hall

you. Thank Okay.

Operator

comes of Raymond Your next Pavel Molchanov, from James. line question the

Muhammed Ghulam

for the behalf question. on Molchanov. Thanks Ghulam, taking Pavel Muhammed is of This guys. Hi

John Hess

Thank you.

Muhammed Ghulam

any for planning on you drill exploration you update of have First still plans Suriname? there all, in do the Are to guys XXXX?

John Hess

Yes.

as blocks So you there's recall, in Suriname. two

each talk So separately. let about me one

planned believe So is Block XX, well second XXXX. currently there being a and excellent for in there is we potential exploration

in the Chevron So there XX.X% nothing as as will Kosmos be XX operator as well is on does Recall, Kosmos. there, a interest XXXX. has Hess Block

third, a third, a third. So

there. Block what's XX in And acquisition operator there On completion ExxonMobil is nearing going XD Suriname, recall of the the block. on is seismic a operator's on the

around in Then smaller, Following we prospectivity that, the XD survey will any undergo that's shoot focused identified. processing. data more will and a

that spud Hess block. And and third in exploration other will a partners well each, on are the first again. likely so XXXX be And Statoil the with

Muhammed Ghulam

one And any? about you bit on know steps, much Understood. What's is are going the you focus Okay. guys Libya? can guys a don't of, but this are there this talk as and I next segment, kind on well, if what there

John Hess

production Look, our there is there. unrest in continues Yes. Libya. civil Obviously, significant

cash that not material. upon generator, continue end disruption giving do. the the a but based It's operations it's So hard political to subject than But at other a day, clarity, of is to thing more unrest. that

it's far fairly been so And stable.

Muhammed Ghulam

Thanks. me. from all That's Understood. Okay.

Operator

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

a Everyone may have day. great now disconnect. You

Hess (HES) 30 Oct 192019 Q3 Earnings call transcript