HES - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2021 Hess Corporation Conference Call. My name is Catherine, and I’ll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. to of conference Investor like Wilson, to now President Vice Relations. would turn over the Jay I Please proceed.

Jay Wilson

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

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

As their transcripts following of we prepared will be website speaker’s our recent posting in remarks on have each we presentations. quarters, done

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

John Hess

Jay. our will and our review continued to progress Hill executing John call. your Thank in performance. Today, Greg conference you, will and you Welcome discuss our review our strategy. Rielly families hope financial well. We quarter first I are all operations, our will Then

and our differentiated phases Southeast is Guyana a cycle in of we low assets, By is long per a cash engine as low Mexico opportunities, to our have positioned return, Bakken, multiple been and sustain price Asia of which continues as short and significant middle supply oil be developments below on we have our breakeven balanced which oil the cost built and engine grow the come growth resource become has strategy, our will Brent cycle to the of $XX growth. of high base, that Guyana a line, as decade. investing cash with portfolio flow drive low with our by portfolio Gulf cost between and begin Let’s only cash engines. cost barrel expect to

generates first As to our cash returns and debt shareholders cash and portfolio we through opportunistic increases dividend free increasing repurchases. flow, will then share prioritize reduction

beginning value and be cash, Even continue have the of of as long-term priorities recover preserve we oil preserve assets. year, to the our seen capability operating our to prices our since this preserve

the billion cash In preserving we credit XXXX, no terms recently at sheet, extended of cash, had $X.XX revolving end a XXXX. maturities until balance debt the year is undrawn $X.X and of and was which of by one facility, March, to on billion

asset March per per oil we budget financial and is million, effective and expected agreement We Denmark to a March, consideration per XXX,XXX sale This portfolio consideration In spend and maintained acreage transaction for a exploratory total have further and announced our options. On in position, we Guyana, capital material hedged the a effective position of This returns the infrastructure. of a close Creek per XXXX. attractive drilling of million, of To locations year’s this with few and have X, than total barrels entered $XXX future an connected and this the that the Little capital $X.X where sell barrel of barrel, have and acreage, we between our per interests of Knife gas $XX weeks. optimize in for two sale where at expected barrel downside This Hess in Bakken drill of is is to April to developments large portion price Murphy three located To close put acreage options nonstrategic cash we within in with liquidity third day announced $XX sales. $XXX barrels forward. quarter. transaction for into XXXX. Bakken XXXX, of the sanctioned interests have oil to XXXX XXXX before billion. southernmost not risks, to the per our Brent XX,XXX to $XX not recently Xth, our manage our January of in were our The of WTI. $XX of oil WTI breakeven X, to strengthen we day and and of we barrel $XX which is put Midstream oil a most Bakken, oil generate More disciplined is XX% allocated brings inventory planning next value

our Hess net we public A prices quarter, largest production of part to portfolio. Midstream a allow oil moved core Bakken the per cash The operated we sustain received a generation During $XX offering asset. portion flow which a as barrel, the added February, strong from will rig, proceeds of above also In in our WTI Class and million $XX us LP. second in small from remains shares of our

of top our with In assets, long-term preserving priority. terms returns, a financial remains of and industry-leading its cost the supply Guyana, of value low

interest oil with has the continue XX of where barrels multibillion to made of remaining. equivalent, operator, and barrels On we potential recoverable a see X billion XX% discovered have approximately Stabroek gross of the is exploration resources we to ExxonMobil future Hess and discoveries significant Block, date

Block. well Yesterday a oil development. the large encouraging further on that define We a underpinning have future announced potential results with the areal this an accumulation, active extent of program year Uaru-X exploration and we at discovery Stabroek appraisal this the

compressor mid-April, days prospect. In production after the of ran expected quarter. the In per discharge months. day XXX,XXX completed for addition, the XXX,XXX oil repairs are from capacity a drilling flash is activities its for ramped back full until curtailed Liza minor silencer appraisal in Production three in Phase since exploration are has discharge was to of and several gross per the and of X barrels range the at during remain Production for up underway to Koebi-X Longtail-X at oil in at the leak silencer. was approximately day to gross gas of first well detected XXX,XXX barrels

this XXXX The oil production achieve of on repair, in barrels to is development expected Following XXX,XXX XXX,XXX is capacity to or Phase to Destiny’s gross a return nameplate day. barrels Liza X oil capacity per track oil first early with day. of per of above of Liza

also startup barrels day. of Block of capacity development underway achieve the on for Engineering government a Yellowtail, gross oil sanctioning. to is Our Field a pending at Stabroek Payara third first and XXX,XXX work XXXX, the development per with oil expected in the Stabroek approvals in on is project XXXX, anticipated oil fourth Block, with

XX by We the term to continue the at to the the for and to see discovered potential block up XXXX, X on resources FPSOs longer develop for on FPSOs least block.

As support ambition zero continue Paris to we our the an by sustainability will to to our guided the commitment a Company’s to execute Agreement this be proud and be strategy, aim industry XXXX. emissions achieve global we are also longstanding net area. We of and in by leader

approximately greenhouse reducing for gas Scope flaring by our commitment, targets intensity by gas we are reduction compared new our Board and gas Scope recently of our targets X surpassed X In to intensity X XX% XX% emissions We five-year XXXX, methane and aggressive for XX% approximately emissions approximately which reduction. our part reduction operated operated reduce intensity XXXX emissions greenhouse approximately have announced Scope sustainability levels. by and X XXXX, five-year significantly by levels. XX% senior emissions emissions XXXX Scope greenhouse to and As intensity from and targets, set leadership our emissions

to capture well store decade. being storing investing designed risk of conducted returns, Institute carbon emissions, capable to this and of of in with carbon scientific deliver financial Salk the are growth larger flow Institute Company into the to reduce, strategy root we develop potentially addition, by that and absorbing work our including and accelerating In summary, low from will atmosphere. that per are systems plants and increasing the Salk advances technological groundbreaking visible cash year billions and executing growth our production In is tons according

and first increases will update. of now opportunistic for reduction flow, an dividend turn shareholders and I capital to to the call our operational increasing will through the As debt we we repurchases. free return share generate Greg cash prioritize then over

Greg Hill

line Thanks, in production and prices which net to quarter, strong Overall, conditions execution averaged XXX,XXX guidance. demonstrated extreme in lower equivalent weather and Bakken our per John. first NGL The oil quarter, with portfolio. the led our both of Libya, volumes. the we higher was during delivery which Company-wide of day, excluding experienced barrels across

gas these the contracts payment of barrels the When Proceeds, gas XXX,XXX reported or from fees. was cover first averaged and day prices NGL income NGL per higher POP Percent volumes net day. our of prices which did resulted barrels a fewer our per our first equivalent instead was due resulted significantly quarter. flow. NGL production. significantly Bakken but XXX,XXX barrels the However, barrels earnings our NGL from fixed in shortfall, we the third-party they oil of equivalent again, to in NGL Hess Of approximately X,XXX for quarter per was take as processing get production higher quarter, the significant of increase, net NGL prices production processing barrels approximately as takes and operated fee to in in done processing cash. of below charge under as But wet Much production prices contracts, of the where it our higher POP cash net reported guidance cash day, is in flows. reduced. gas oil increase in Hence this higher

higher These safe quarter affected February. was below and minus outages were brought weeks temperatures in conditions to Bakken The chill non-productive on workover two extreme and storm production production. higher factor time in which our XX average other power wind drilling non-operated degrees led significantly crews Uri, Fahrenheit the for of and temperatures winter that related our to for lower rigs, backlogs operating

XX and drill and XXXX, XXXX, discussed approximately drilled full we In to in January in approximately in from application to on represents million XX% to expected $X.X In million XX continued $X.X completion a XX wells to a wells year XXXX in line. expect and and of XX As per bring second technology, $X.X our the costs from wells the quarter, drill XX to reduction quarter, we Lean second approximately reduction and bring new million and our Bakken February. on new first line, added line. in wells we average the new brought approximately rig earnings approximately on a in wells call, Thanks and XXXX. X.X% well wells we four are drilling for the expect which the

residual that average day. forecast full we of quarter, higher of our Bakken Bakken second the sale between Plant This day the third for will and strip the planned NGL Tioga Gas barrels impacts, per of the per equivalent prices, acreage, reflects net XXX,XXX of oil weather quarter. the turnaround oil our XXX,XXX XXXX, XXX,XXX and For and equivalent production in approximately the barrels forecast year non-strategic the

production XXX,XXX the between of We forecast barrels expect year the equivalent and rate oil net of a to half day. second of in and XXX,XXX build per XXXX exit

will Moving barrels recovery offshore. production oil net we the In Gulf equivalent following deepwater quarter barrels per forecast day, hurricane that the of operations day. XXXX. oil production averaged reflecting Mexico, XX,XXX quarter, per strong late Gulf average XX,XXX equivalent to of first second of the Mexico In net approximately in of

production for to year the net of reflecting per XX,XXX barrels For natural XX,XXX quarter we maintenance day, was full nominations barrels declines. In Thailand, increase as due average oil Mexico net downtime guidance strong the in production of economic day, equivalent continued approximately of maintain to planned first and gas to per oil Gulf Gulf growth. equivalent natural field our the XXXX, of

Second barrels production year XXXX to full approximately day. equivalent quarter per forecast of and XX,XXX oil are net average

Now turning Guyana. to

from lowest project breakeven net Our or barrels day, Phase oil XXX,XXX of Liza discoveries of per to and in and some industry. the and per gross between developments barrels represent prices prices X class oil Brent Production $XX on the oil per Hess with respect, $XX of averaged of breakeven world first the oil in barrel, in every Stabroek XX,XXX day Block quarter. the are

in of capacity Production silencer. gas and is return Destiny three days XXX,XXX the on approximately for flash above barrels flash restart system, production is gas at a expected expected made Liza oil that following XXth. to compressor’s As gross curtailed to of and of XXX,XXX John range repairs minor of reinstallation gas XXX,XXX the the to discharge compression averaging was between barrels per of mentioned, nameplate several stay day. or while expected and detection are leak to is in silencer months, in oil the Upon production day per currently April the

For average approximately be expected an of order oil for fourth to the compression oil per planned barrels an per the gas fourth second now the XX,XXX system, installed XX,XXX optimization placed Liza day quarter, Offshore year Production XXXX upgraded quarter of to XXXX. average we production full now production to our forecast Destiny’s which and flash work further net between is which XX,XXX will quarter capacity. increase SBM in in production day. the barrels of has net and is

subsurface Liza is it of X I outstanding. has in that overall performance think, note important the been to the

about that gas or the significant uptime reliability. replaced, X, Keppel production confident track has the that with flash We day, to is XXX,XXX Phase barrels the Singapore progressing remains project At strong is will have Liza capacity see from in compressor Guyana midyear. in and exceeded Once seen for of our is completed, yard of very gross performance expectations. to first work XX% are oil XXXX. overall preparing oil well the plan, we we a with FPSO, to improvement per a Liza on Unity and reservoir of sail met The early

oil development, produce The gross third will have work topsides per commenced with also plan, XX% Our utilize completed. hull in XXX,XXX The barrels activities is have capacity progressing the day. FPSO, the Prosperity to will of and is to to of Liza complete Singapore. FPSO about overall which up construction the Payara, project

the Block operator the and Guyana Front-end is on half government second expects Yellowtail. Pending focus the Liza-type achieve the on plan remainder sanctioning, to First XXXX. deeper for of reservoirs submit for reservoirs. to Campanian, Stabroek both oil at the of approval continues in oil expected fourth government track year to project work program XXXX. the design Yellowtail Stabroek project of exploration year. remains The this engineering and the first Block on development and on of The will a for development in the Santonian

activities be Block targeted portion the In of to the Stabroek southeast inform addition, key appraisal in will developments. future

intervals. discovery. XXX was sandstone bearing drilling is of discovery quality, the yesterday, well The made activity, of miles in encountered announced well, potentially the implying high large The appraised appraising In well X.X terms as a an also the currently discovery Uaru-X approximately Uaru-X and successfully incremental feet discovery the and areal drilled oil from Longtail extent. deeper DrillMax reservoir Stena

and Noble primarily in activities May. at Croft, wells an Turbot Additional be to development the of appraisal Madden, in approximately which fleet, sixth focused exploration and developments on appraisal Whiptail and Noble Bob recently at joined a and Carron and The help is the The at planned drilled Koebi-X has planned this Douglas exploration Mako year. the planned Stena area, will half spud the Tom on XX well, fifth are our the will total commenced drilling is Further Noble drilling. the of block. second exploration which to well the for XXXX with Sam be define

over our from to approximately second this reduction entitlements previous in NGL earnings barrels following: be Now, net the accretive of and of X,XXX XXX,XXX non-strategic in of factor production day. short of also to we our base shifting is, weather cash strip Dakota, to flow; approximately and execution per and lower XXX,XXX year average per per equivalent equivalent rate and prices, is up day. brought equivalent forecast day. per of quarter expected due course XXX,XXX barrels XXX,XXX X,XXX value the of of again, per XXXX to barrels to equivalent companywide conditions. demonstrated oil in barrels Full XXX,XXX the a will overall forecast our back challenging back average primarily we to closing, This day now balance increase XXX,XXX the which term full oil from barrels our net In compared of oil sale and between and forward expect and oil reflects production oil interests production, equivalent catch the equivalent once the day XXXX across again delivery related North Bakken second to team forecast year Bakken, for day, between strong of Denmark XXX,XXX impacts asset to in which the is per forward; exit between Approximately reflects acreage again oil barrels of resulting under

value distinctive and will the John portfolio to call deliver will I to years now many to and enable Our Rielly. capabilities shareholders performance come. over us our world to for industry-leading turn class

John Rielly

In Greg. quarter of from compared in quarter loss my the tax XXXX. XXXX an $XXX the compare of income first net $XXX of $XX fourth first I remarks to million the which Thanks XXXX. XXXX from asset will quarter in results adjusted million had an after excluded of the an of of today, fourth gain We sale quarter of to million, net

E&P. realized Turning by oil, million; increased natural by $XXX sales $X Higher by earnings items million, earnings overall first $XX earnings by quarter in of expense of prices of the in The quarter. Lower earnings an fourth costs adjusted XXXX for million. NGL, million; All XXXX to increase E&P crude of DD&A increased and quarter after-tax Lower million; earnings E&P selling first $XX by increased volumes net gas $XX $XXX first in cash million results million; between increased earnings of other $XXX components were compared and quarter income to in the quarter the an of of previous the adjusted XXXX net as changes $XXX had follows: the Higher million loss increased

improved quarter with which production Bakken equivalent sales, income of of two prices percentage sales and the approximately earnings per NGL the XXX,XXX compared of impact Excluding proceeds volumes with NGL million by increased of by were fourth barrels The $XX first $XX or after-tax net higher by XXXX. day quarter. results million million. improved approximately oil reduced from contracts X,XXX VLCC POP volumes cargo the by E&P quarter received barrels, The sales approximately VLCC by $XX under compared overlifted two cargos our the in approximately

quarter. net quarter compared Midstream million Turning million to interests, had non-controlling the of first of segment $XX previous million from before Midstream net In prior in The in quarter. in first $XX million compared received shares EBITDA, to of in offering million March, the Midstream. the Midstream. public to quarter amounted of Class XXXX $XXX $XXX X,XXX,XXX Hess Hess the income the to A in XXXX proceeds $XX Hess-owned of

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

before revolving the facility earlier committed with in the net billion compared the close expected of provided this first executed $XXX working Murphy quarter, date close Our now sale quarter operating consideration interests after fourth $XXX in provided higher for quarter $XXX weeks $XXX the the million and in of and is million working Knife cash by extend of is prices. In with to May Little prior to for credit realized year. year. third of within first million few cash activities was primarily quarter is this month changes capital in expected total XXXX, by fully sale in $XXX one quarter. XXXX, Creek million selling the acreage In $X.X in consideration net of operating total million million changes undrawn The capital following amendment the from activities of the due XXXX, to the maturity through Bakken next compared to in was our of Denmark $XXX our the

to Now, guidance. turning

E&P of previous million the per costs to $XXX excluding range and expenses, higher from equivalent production excluding is million year, in to range up for results the Libya, million excluding We is cash first the oil is to in of E&P maintenance the for are to $XX oil to million $XX.XX is up oil excluding year forecast were operating the oil was $X,XXX barrel per $XX.XX the of $XX of equivalent per the barrel barrel XXXX. of guidance $XX second workover to for $XX per range excluding equivalent project Libya, range the $XX.XX projected full be equivalent, barrel E&P $XXX guidance which expected of to projected unchanged. reflecting is the oil $XXX expense, barrel in year due in commodity the second equivalent, for $XX per to and the be Libya of equivalent, spend. and the unit oil to oil full costs, to oil E&P quarter in of equivalent, in costs, full unchanged. million to This second of to barrel Full $XX.XX guidance be $XX range the and to range of in to to unchanged. of and the total including per for cash due $XXX equivalent, The barrel is $XX of E&P to barrel prices. second to of of for of XXXX. per hole expected of $XXX of oil million to is the Our Libya income million the equivalent expense per of to $X.XX million $XX.XX $XX guidance midstream be million of Libya, guidance year million of quarter, $XX year be Libya excluding first year Libya million for the including previous tax to and quarter the $XX.XX of DD&A quarter. in full cash $XXX guidance. million million barrel to timing $XX is dry the in and in in DD&A oil quarter range quarter $XX $XX.XX of $XX costs $XX quarter which and year quarter of per second per be second primarily tariff from per equivalent $XX.XX barrel oil excluding are Libya, full costs, be impact barrel of updated to expected full equivalent of Exploration $XX.XX million $X,XXX to $XX expense, of of

be contracts. for non-cash In quarter of the second the $XX to amortization whereas and previous the quarter, increase over full is million will second we paid the strike half from million, premium cargos barrel second approximately expect barrel to sell additional three crude the from option million and million oil million We we reflecting barrel cargos approximately X year. $XXX two on the up sold price X which quarter sell of X in Guyana for expect our first cargos million the guidance premiums to $XXX year, expect hedging we five

and capital approximately second billion be year $X.X quarter unchanged. E&P Our million approximately guidance are in to $XXX and exploratory expected the expenditures remains full of the

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

Corporate concludes million $XX range second remarks. my quarter and $XXX to to of $XXX expenses for million guidance million the is is range to expense for $XX Corporate. million $XXX the guidance full full year unchanged. million unchanged. in be year quarter in of estimated This million Interest is second estimated of to to and are For the $XXX million the of $XX be $XXX million to

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

Operator

[Operator Goldman Neil with Your comes first question Instructions] Mehta Sachs. from

Neil Mehta

talked and Congrats inside sub times. back curve, It going about get debt-to-EBITDA one on of net shareholders accelerating returns between you’re there quarter. a the seems X John, to when like good you you Liza-X to get year. forward

So, to what allocation how about with to shareholders? do that think cash and do the you of the optimal excess

Greg Hill

Thanks, Neil. Yes.

ship. still quarter had a Phase barrel XXX,XXX favorable comes right a our is now. conditions plan, we’re it’s on, strategy, day as first and seeing a we’ve our X Now, oil strong for and It market

get significantly as there loan. our entitlement that our begin term pay So, next drive we’ll have inflection and get the we will year. flow -- we flow, cash cash X, take debt-to-EBITDA to And us our excess then will for down therefore, under

growth, increase. it. first our and we’ll continues do flow XX is thing have dividends. to our the balance that we increase significant under billion thing up increase off sheet. in dividend down be coming $X the Yellowtail, to our we’re first as the X, returns increasing with Payara start Once shareholders. And do times then, grow, as What to position have share to going flow loan. that cash is then paid term the debt-to-EBITDA expect that from we’ll be then, consistent flow we’ll and And about a cash been Phase So, increased the to EBITDA and with do like we we And, on said, X begin pay start now excess that We’ll for to will we’ll we’ve cash dividend. to we FPSOs, opportunistic repurchases after

Neil Mehta

the the And long-term about of follow-up the Guyana value is resource. just

FPSOs the to And be prosecuting value there earlier risks. potential think acreage for project, does way of the this do competitive forward And mitigate demand including the to you the that XXXX oil So order some to long-term threats electric monetize about risk long-term come in value you the accelerate demand. traditional change start demand. how vehicles much about pull of to the projects has some of transportation of the I’m some to post to of the some said been as just start in and that think curious the about any and way in

John Hess

XXXX. more the two to the the under Neil. One couple Great were the get XXXX? energy provide would their A XX% of Yes. sustainable And we all question, make. by provide of XX% emissions you. the gas and met, And challenges. more which energy in is that supply, zero these future says world how of do oil still scenario, Thank development resource points supply outlook Look, net world Climate XXXX? by Agency. Energy International be I think, do energy has is Accord pledges if to into we’d Paris to like how of challenges best we mix insights the even the energy

always about XX supply, So, out. climate regard gas be resource, just us positioned our uniquely growing of there’s a have, low that of our it’s about talking that supply. believe some key low-cost be call sustainable the the realize positions factor of you’re price, because to of a shareholders. not needed to and years is of industry-leading about having still longer cost term, about of the Oil and pressures we’re financial a going can for to a talk a differentiated Company going in The energy cash it’s also none that a cost think volatility, growing literacy. at resource And literacy, supply, with to that we it’s obviously assets important term. to Guyana be growth an all when and going longer oil in you as are And isn’t flow and of to this, low will key that, we that with deliver I returns portfolio with be

almost We’re year. every bringing forward it

quick Payara, and XXXX. First payouts then then in very with The very Yellowtail the in are returns are Liza-X, high. in XXXX XXXX with

of thereafter. can be you and these look cadence to year developments about So, value we a going likely one are on most of bringing bringing at low-cost every forward,

flow be So, industry-leading provide and we going And cost low to supply, we think we’re growth. to are forward. positioned with bringing cash the uniquely sustainable of value

Operator

next comes Arun JP question with from Our Morgan. Jayaram

Arun Jayaram

provide And little how to was of at provide bit update you repair on an X and flash if the impact you debottlenecking I that gas Phase activities could Liza the if timing project. I compressor the could the project more also, a color. wanted on see Greg, maybe discuss wondering

SBM compressor. the replacing mentioned be You flash that may gas

little color maybe So, that. more around bit a

Greg Hill

Yes. Sure.

in take me pieces. let two it So,

the So compressor. first, let’s talk about flash gas

happens, As a it down, that in with months, looked being opening John plus. we’ll back next at, for where flash XXX,XXX that will is both within compressor of be to production torn remarks, in Houston, I and a gas days. mentioned couple our of days with associated we that was That curtailed downtime had of now couple a once the So, right? three barrels day expectation restored then get back that the

to increment, which And take July. next that’s another is up incremental is quarter. Phase mentioned, the Then, project, you debottlenecking will production. the now X fourth say So, as the Liza in that occur going

they’re phase still that. engineering Now, of in final

to number that an what fourth quarter, gas compressor that can’t come Exxon be. redesigned. will Also, the quarter. existing going components that’s in to flash exact So, some have of in been I the going you But give replace as the fourth the with to is

installation of new about shutdown So, redesigned quarter, also compressor flash the XX will X. will those two debottlenecking the in things. days, Phase It a the accomplish for that gas fourth be and

Arun Jayaram

lease for And thinking versus on my Great. perhaps in purchase John perspective? prices John, the the Rielly. is yours the on impact decision and Exxon’s from follow-up how timing does improvement oil a FPSO

John Rielly

SBM. They’re is Exxon in that. the with having on discussions now, commercial Right discussions purchases of

So, it factor they’re they’re price itself really discussions. -- is but The there, ongoing. in through a oil just doesn’t have going these

on information. the guidance when we’ll year, that and purchases that expect later the the We have FPSO in timing of provide we get to the information

Operator

Our Leggate comes Bank with from next question of Doug America.

Doug Leggate

Payara, completed FPSO. telling months SCM for for the units, XX you oil of year how Greg, year? us at XX you the is ready complete on is through standardized the XXXX for to put a next topside the are to of middle as boats which So, least you would hull standard installation XX% walk next me from Can sort of middle middle first get XXXX of when these

Greg Hill

and In program. SURF that in. all you requires Payara if the I subsea very get Well, to you three as have SURF kit Doug, water mean, does drilling particular, open seasons, a know, extensive will,

is contingency ExxonMobil built prudent significant But, has done. a There at SURF to do amount given XXXX. of Payara this that still Doug. point, work project, on to is I be So think see, the will is work which There’s well. in come left lot of But is well. we’ll that into yet. look, earlier extremely going Payara executing Hopefully,

Doug Leggate

a get a [indiscernible] point. to you we see some in-person small dinner, got bet We Okay. I’ll an at Greg. that take with

X,XXX to reasonable with about follow-up even day NGLs in on lose contracts. quarter, of of My also you have the Okay. the fourth to the XXX the you POP How an But second has is guided rate in Bakken. exit barrels exit been X,XXX, been rate able rig. on the a

to you So, can there. better with through just you same allow to there I’ll what’s Thanks. leave going the it walk us stick guidance?

Greg Hill

POP to contract want John, answer Rielly? do question, John the you

John Rielly

Yes. Sure.

start The So work. guidance. year in contracts full first, a with POP guidance, the I the our can just original from the about for way that it’s amount you day saw X,XXX-barrel reduction a

bit in fourth. Now, higher the lower third the second a and it’s first, in little a little and

on originally, that that. But impact in number is there not on guiding with that POP fourth this still high the were we quarter. XXX. So, yet, hit And we’re at

XXX, Greg. good we’re performance we’re the on, the production. impact bringing to have with start with that to POP I’ll it. is wells very good. initial seeing XXX does that The And Now But, well

seeing better expectations. than We’re

you Now, only fourth we remember, had in on XX four the to quarter, in got first. the

now beginning that and the pick and just to pick the third really quarter. rig, We’re in second up from up fourth will

that we rate to and you wells those up if the give to pick So, I XXX know performance Greg, ability that us XXX. back anything there’s add. to to from see will exit of want don’t that get

Greg Hill

No.

nailed you John. think I Yes. it,

Operator

comes next Jeanine Wai question Barclays. from with Our

Jeanine Wai

elsewhere My just block? first color them encountered on plan the identified original the latest the seen you indicated well. discovery any newly you do below zones? Can Uaru-X, you well, of on test year? have it elsewhere is provide question commerciality the to intervals And this those you on The Guyana. them And

John Hess

Go Greg. ahead,

Greg Hill

Jeanine. Thanks, Yes.

right? great oil a result, feet. We was Uaru-X again, had sands, high-quality XXX So,

you itself. that miles Uaru-X, It’s of And in does parts of the read-through is right? to have call certainly, the It’s XX, does block. reason it didn’t But significant of parts this we said, deeper Uaru about read-through the part demonstrates other as part a XXth Uaru in which a But, zone. large most was discovery think, to from And I some as have was extent it the the that we the did discover the not other the as significant Campanian. block. lower very the reservoir it other for particular X.X areal clearly location.

John Hess

the The key results. appraisal encouraging is that is very

reservoir have You excellent characteristics.

away, Uaru-X a extent oil. You large aerial versus have it reservoir. high-quality for highly-prolific that potential X.X given And is shows high-quality the Uaru-X of miles

Jeanine Wai

the That’s you. up out is and My back in helpful. capacity maybe going capacities we really kind what like forward to at standard of question. just to do built XXX debottlenecking projects, for future there. But least any capital ships? find debottlenecking, there discussion later. Arun’s second if Thank moderate do in major are including you the of you. opportunities, terms the QX, potential these going Got Liza into pretty pulls of when question we’ll it lot level math, And the that’s for It nameplate of Okay. a just X a upcoming opportunities FPSOs. lot seems debottlenecking really NAV

kind of the the that potential for just ships. wondering XXX So, for

John Hess

Greg?

Greg Hill

think And happens that these data. potential all I there on need Yes. you’ll is, data up to nameplate. of facilities those Jeanine, you bring assume lot a debottlenecking What really gather be you their would you could dynamic ships. then, and that typically

dynamic piece get that need of I so. and is to have these nameplate that’s vessel, how my you are can above occur operating typically vessel the the every expect, what the experience on projects determine of are capacity? you my one think data in a really see that their full where under the after that where conditions, do have to So, to bottlenecks, the key why through fluids debottlenecked increase is can at And I points, capacity you But, future. of you dynamic data because operating running debottlenecking will year those facility that pinch

Operator

Our with comes Cheng from Paul Scotiabank. question next

Paul Cheng

several questions. think, I

net just conservative John, that to a plus, near I seem less term. than at X. First, the presume doesn’t debt-to-EBITDA be very number. it’s a And $XX

the what commodity a the lot expectation? EBITDA changed is So, that term prices. mean the longer I due to

John Rielly

Yes.

our as comes on commodity our mean, each is with is to going each change, on obviously, alone one prices, and two, jump going EBITDA to FPSO Guyana, from line. I let coming ship right. in You’re EBITDA

X, So, for being the we of we net as that X once returns to a kind us, with what would we max. that did under got start was to shareholders. when debt-to-EBITDA set And that’s

have we’ll because Now, of cash debt flow. generating increasing be time during period, now intention future we no that free

debt to the So, what with each up, under is on and going down to drive have goes EBITDA going we X. to EBITDA is ship drive will coming is

position, So in then a we’re increase look, very cash that position dividends to because sheet to and doing first, free strong going a flow beginning obviously opportunistic have share of be and balance repurchases.

Paul Cheng

at target net have all? Do a you debt

John Rielly

cash that, a really it’s is free of term, to short as times. we flow it. be just X it So, going said, driving that after then function our And

the So portfolio have quite to it underneath it. we And keep have do frankly, love X. that, to I’d

our mean, a growth. Each that amount just but the going unique. strong going I’ll I let therefore, on, we in of we’re Brent sheet your all just there, put own significant We’re coming that’s Brent-based to for in production get very you FPSO assumptions to And production, put EBITDA balance have position.

and to we is cash, share John it through that And dividend so, like excess low we’ll standpoint. we’d debt-to-EBITDA keep said do shareholders And what increases as that with earlier, to from that very buybacks. return

Paul Cheng

John, any guidance can quarter, second that the first quarter working kind cash. provide? the capital was of in a big you use And of

John Rielly

do nonrecurring quarter that going And other. the the recurring. give to normal I’m let first, things two just there me first offset So, each and were

$XXX million of the increase driver up. receivables draw $XXX Obviously, basic going in we’re the happy So, which oil to have. prices an of was million,

we So, -- our cash the numbers. up cost, then, receivables went that from lower saw did lower capital have standpoint. you And the

So, we payables reduction of did in have million. $XX a

sales. inventory was our and but as there, so paid prices increased million capital. $XXX also the had We we items. VLCC from had that So, $XX two have reduction strike was hedges, draw premiums the working the we did our we nonrecurring the in One million in on --

they So, each against net other.

see into be capital. move should as balance prices, on should now the in now mentioned if quarter still guidance, that And building, with in out potential increase with as the So, to receivables you’ll we second we up, prices then, that you go our continue receivables.

flat. payables expect the So, be, I would call, just let’s to

So, se not quarter. per the forecasting in second a draw

Paul Cheng

could have Thank question Greg, a you. I quick Bakken. Okay. if on

of day I the think, that for of in years. to that will XXX,XXX the a expectation about is sort get and you number barrels that past total per

that finally, ship? that then, a Can the debottleneck Bakken? the us you in higher tell for still on what that path objective And get the where’s is the you Liza, medium-term on or allow is you capacity that to the X debottleneck. Liza from So, production unit critical

Greg Hill

take So, second the let one first. me

Paul, engineering the changes, remarkable project it. debottlenecking. eliminate, reduce just There’s or It’s Liza facility again, through sides. So underway is on X to the on on basically flowing cetera, nothing still the optimization top friction Phase et piping the

color the gets engineering more So, that we as project give of can done.

our is in Now, engine. the Bakken, again, regarding be Bakken to of role the cash portfolio primary the a

add corporate corporate so, cash going needs. Bakken flow to rigs any and to the And as be the by returns is driven such, in decision

would doing a so, barrels cash would at would billion require be probably back Bakken to rig. the a That prices and the day. second And flow again get long-term $XX remain objective, returns a in the the of considering half medium-term driven we’re our driven be corporate to by And or cash going third year XXXX. Bakken fourth if a free indicated, addition strong of in flow, a rig to as generator $X of XXX,XXX year, be the barrels by day. this Now, then, fourth XXX,XXX by at quarter you WTI,

thing barrels infrastructure that is have it the efficient built use XXX,XXX The about of other the optimizes up a there. we nice day

rig or be the So, because flow it’s fourth going the that and is role to Bakken the of be driven ultimate by spot to returns the again, whether of corporate sort the engine. is third needs, a for add But sweet Bakken. rig cash we cash

Operator

comes Simmons with Our Energy. next question from Ryan Todd

Ryan Todd

on one quick a Maybe Guyana.

think are looking address XX to to to or the about rest over into next what next key looking the your that maybe year, first half that over you months? of questions As the you’re X year the program the key you’re and answer drilling issues the of

John Hess

Greg?

Greg Hill

Sure, Ryan.

drilling appraisal the program exploration So, there’s the three rigs. objectives year with three this of really

sixth is The first that’s to and one Guyana. in underpin to ship discoveries, appraise and the the existing really fifth

Turbot off do you also first We’ll as if rank, was cab that. the Uaru will; after be Longtail’s So, Mako next; will well.

is So, those ship where and we where ship since to DSTs going to with and understood is wells go to inform Yellowtail really some want X number X. get X appraisal

to see was explore our to the penetrations is there The then, deeper year Liza. second to pack, to polygons prospectivity, has can Certainly, Campanian, third the quilt you a well. And you’ll continue we’d investor like in the of if patchwork of really Turbot objective fill there will, and between Santonian that get the get number Santonian. we was objective in as some is, And the this objective drilled positive. that the -- be had a see to with large results, I’ll And to remind Guyana. very recoverable we But, puzzle to get to more some together the key can And Apache’s coupled to on drilling year, more another penetrations resources that do in penetrations, addition understand got very potential everyone, piece we’ve to this Santonian. is as we in begin it. that that a four the we’ve so lot out

Ryan Todd

on level helpful. one for higher maybe, issue. Thanks, John, was Greg. you really That And a

going earlier been about ESG-related to you scope and line, including active ongoing the efforts, As is look energy X be are step to front, other you and we back time consider which able on just the supply the in a guess, reduce roles cost transition use best or little participate, to of and talked may emissions. as barrels? low I down and really further capital are you there as your always Hess Hess bringing think the of has -- X on be

John Hess

greatest cost the be to are being than Institute, there don’t realize, figure research by the Salk if most enthusiastic we the and is difference people we’re and where own carbon very in that one. sustainable atmosphere. XXXX be The resource. superior get low value having supply. set, in shareholders. No, strategy at cash real, Bill down carbon position targets next I’d generate lead research, our said and going number to more climate a really there’s the work out ourselves challenge is standards for remains that that be going Yes. a we great change obviously resource about is oil And returns trajectory in can recommend at are we’re to And to maximize putting the to supporting soil XXst century. our of make to nature Salk focused to growth. Institute growing the that, Having everybody industry-leading of years. Key us groundbreaking but we’ve and read footprint soil -- XX And to and is looking innovation of the on in X game capture oil flow and climate scientific we’re or Scope potential The our going how talked currently is in carbon we needed emissions. two, and emissions one technological time, a track a get getting for by better disaster, on that part the net need breakthroughs opportunity Gates’ way been to easy answers. There long because and a to money industry the net the the energy doing talks emissions. that a energy book, X higher that higher in to offers greenhouse be world, take before, store about to how more Scope a be number lot at provide do about and we to a on and And much challenges the to of I no rate as transition costs to done, we for carbon The avoid zero and changer to gas a technological zero of able ahead our than but us a are really us, XXXX. get emissions, going the that is the actually make set also needed. OGCI much have it That’s at density could is think a contribute

play to shareholders. value second our maximize first, the trying third and role, we’re our for to but So, priority is

Operator

Our next Deckelbaum question Cowen. with comes David from

David Deckelbaum

follow on wanted some up of to just Bakken just conversations. I the

had a You attractive in the really quarter. earlier disposition

production right of profiles behind Hess be some the -- that some that amenable Midstream. now? there ideology would think was similar wasn’t of fit that hooked out the to Are assets there to up the remaining I still pruning

John Hess

returns southern our as there attractive assumed that, strategic Hess quite intact. weren’t Midstream. frankly, our underpinning, a majority It to the The if inventory, inventory. of This inventory. as is and current program, accretive high-return That’s you the four-rig wasn’t No. very drilling part locations, really most a XX-year

to very would to acreage, I of we we’re that our And unique the for returns value in is. free one-off is to flow our Bakken rest a So, guided as the Company. be say cash was generate going the opportunity program Greg cash of of And before, role again, have. more where brought flow by of what The excited we’re said rig and key forward. terms

David Deckelbaum

Gulf right of sort vein sort it volumes? Mexico does there you’re there relates the attractive beyond maintaining along cow looking for that. just follow-up you a appreciate role portfolio. just, about now, do you And a in level sort me how that its really of it is of gum the to talked tiebacks at or of I as production same or think sense that of ‘XX and optimal Are How earlier fit becomes about like make Bakken and the cash how the that’s now? really here, targets exploration in the

John Hess

be cash would terms does a just about well, you it think as would I if of Greg, role it Yes. that the growth opportunities. plays being in great talk some engine but deepwater the have Gulf

Greg Hill

Absolutely.

important Hess. of for platform higher the the Gulf return So, engine is an remains cash and for opportunities a Mexico Bakken, like

to we term, with So, it four we have our we flat. back opportunities years we can flat believe to in of minimum is objective three to get probably, of some the it inventory the opportunities. that tieback short once hold And an hold work tieback

spud. if production, from exploration first currently the number could also which oil with it sanction opportunities, large And evaluating we’re First, we then, with and Llano-X, add expected these Shell, a high-return blocks. of that, we have quickly four months

when the they focused focused and leases during Permian, So, existing downturn, was the leases, the on Gulf, recall, the in acquired offshore, we opportunities we affected by XX you in be and both play. new new so won’t leases. on the we emerging as Biden well, hub [ph] everybody per moratorium as in good foot the very Miocene the that, potentially on see class And Cretaceous stayed some

we’d class like back get on to opportunity. to a hub work So,

be Miocene to Heron, is which going likely is a a [ph] opportunity. one large very called first well The

we’ve we in Gulf potentially got and got and can. a hold as like the the cash going corporation. of the certainly to, inventory would minimum, and back it. of Bakken, it But as do inventory flow to then Mexico like soon the get it So, of the function even returns to But, investment grow flat be we a is to to as needs work

Operator

next with Our from comes Read question Roger Wells Fargo.

Roger Read

just completion going how you NOLs of other methods per up is the time? seeing you’re things, what least on on rate, well the of tax Just the guess, In affecting changed and and other one. curious smaller as side? first my per to the and question think those seeing apples-to-apples production then, there CapEx utilization wells? ‘XX be improvement In ‘XX, other about you’re I But, similar I words, two terms the that kind things, of of period, over possibility in talked was beyond And what in on kind about that of on you is an in words, a at ‘XX, to efficiency above well? was the over CapEx truly the Bakken, follow of with side the

John Hess

Yes. Greg, John. first then and

Greg Hill

Yes, sure.

years. say, same -- the last drilling really no, wells we’ve the Bakken, three let’s So, wells years, been on past the for three the those of types

So, along gains way. the costs there’s say, coming purely that shorter anything like technology is down no and the trajectory that, in, well like or of lean laterals manufacturing differences so

are was which And we IP XX% oil drilling importantly, so, XXX, current year. same think been last same. at averaging X.X barrel the have about nearly IRRs million XXXs year been prices. of And that I the this the wells recoverable as They’ve

technology, of plug we’re just manufacturing or and just and same sleeve, my Through and costs with again, a showed continue perf well down on sliding confidence So, we team, improve to great and a the drive productivity plug well. lot as Got we those as lean inventory. perf. with doing

John Rielly

Roger, the tax policy. on Then

these able what’s been comment a detail them what not on just to to -- it’s much and little released, there’s headlines that because me from on more So, there’s areas. for early be

changes do we which a significant tax net point, of effects carryforward, the mitigate your to increased Now, in depreciation will have operating method. or rates loss

wait have detail. more just to we’ll So, for

Operator

comes with question Bob next Bernstein Brackett Research. Our from

Bob Brackett

those you talk prospects I perhaps there future the Can could that in you a a wells deeper and the to queue explore, there there Are the that exploration. future as hit maybe that block changers in plan? still be to you to years opportunity had could be somewhat in to double could like of southeast Santonian. there? are move the target question, about, is Campanian big And targets one, plus a of the part about broader the terms question drill of ways riskier Are sounds game return going Santonian? the up penetrations development

John Hess

Yes. Greg? Thanks, Bob.

Greg Hill

Yes.

So, underlies complex. Bob, entire look, no, really the the Santonian Liza

want don’t imply really the for that the I all to So, block Campanian. best is Santonian. the underlies area of It southeast of portion that the the

need but we well. as deeper ways standalone some on deepening of wells, more get understand Now, penetrations penetrations exploration penetrations having to And tails said through through Santonian Campanian a this it. is that, also we’ll year both suggested. number that you One

with excited under have the results, system Apache’s areal But sense, big got So, or to we’ve bigger extent coupled of But, the that the we’re more the is as Santonian. do. just we’ll we Liza Santonian four with again, get good the a drilling pretty belt, about reservoir than our complex.

they’re area yet. wouldn’t any spot sweet as particularly I -- So, pick being the

John Hess

to Yes. definition drill block And on still get see on more prospectivity this seismic as other your opportunities. Bob, point, and exploration more we drilling we significant

on Obviously, our of program remains. going active resource of be going double that it it’s out. upside further in made it’s aggressive terms to this discovered pretty And Some year, some to have by potential of be block, be that come. Campanian, more of Santonian, day, to this to it’s we and we there’s going would that in still think, I ExxonMobil, partner, exploration investor the there’s the their to stand clear the and some

Operator

comes Lovaglio next Mizuho. question Our from with Vin

Vin Lovaglio

or back I operators cash First have to flow percentage on cash of Different operating strategies percentage of of on business around based return. mix, kind cash different generated centered but out flow think excess one laid shareholders. mainly

are in unique Guyana. You with spot guys a

pushes if of asset the far one maybe different. percentage cash direction or or a as you other to as percentage cash in something entirely back kind the of of wondering Thanks. flow Just operating flow, shareholders free

John Hess

line that’s more producers, shale an for mainly are formulas assembly cash of Those Yes. flow generation.

growth. We have industry-leading sustainable and flow cash

But as I increasing as down as are majority cash the percentages So think of cash then been said, the very loan. first us. we’ve to term shareholders returns after repurchases. to And clear to generate pay what don’t on, free we go cash, relevant flow John Rielly priority share the dividend first, opportunistic and then our as back that, will free is the

majority the So, is the there. word keyword

Vin Lovaglio

maybe Thanks. just to Guyana quickly. Great. And

there’s But, be any variables should it or that of potentially with least that per FPSO just FPSO XXXX. mention accelerate FPSOs kind if one term? at could or year, we into Payara In here. that You had basically maybe longer a you you the are I’m outlined little a XXXX. reading considering factors deep too starting considering six by hurdles, guys wondering did schedule in bit release, the deployment

John Hess

X them is aiming debugging year program Liza potentially job terms in fifth exploration value help our these terms And give but design doing the before, outstanding sixth basically definition what said of And capital on benefit Liza and bringing of is of those ships ship a the appraisal to one about theater. many, Look, we’ll a building Obviously appraisal is we’re in and Greg the to disciplined, development. being in exploration as it’s will that. management be one, think year ship project is program this X, of future of I of developments. build and one an into bringing for at the cadence X to about define really Yes. ship terms cadence year forward. the ship ExxonMobil, this

Operator

Monroe from with question Helm next Our Hanley. Barrow comes

Monroe Helm

half to market Congratulations my is on targeting continuing specific game what is more follow-on Really very kind questions be starting to drill for of year or your of to you to Santonian you’ve not kind had long-held it. the that on you Thank is the along the whether first and the well well that the identified the of on Santonian. much can me as getting Greg, queue. the about about. any in the differentiated line sidetracks -- the execute base questions which of plan, wells asset which recognize in

Greg Hill

Yes.

there year, in the -- into Monroe, So, part will the have will the certainly Whiptail Santonian, will Longtail-X down year, dip be as well. first and tail the a it. on of first of That will half early

Whiptail the prospect is Koebi. next the on in of right exploration Campanian recall after So, kind queue

And the will of those the year. both have of in there ones be on So, then, other tails second them. Santonian will half

two. the the -- still are the in those next to order of to second the But, define trying exact half year. the drilling be first We’re

Monroe Helm

specific that correct? test. And I be think you said Is Santonian there will that

Greg Hill

will There at aimed will the Santonian be, least that at itself. yes, be one,

Monroe Helm

My second there’s says -- for include is, the Santonian? question Does the Exxon that program. that reserves double exploration

John Hess

Yes.

Monroe Helm

Thank Okay. very you much.

John Hess

Thank you.

Operator

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

You may now a great disconnect. Everyone, have day.

John Hess

Thank you.

Hess (HES) 28 Apr 212021 Q1 Earnings call transcript