HES - Earnings call transcript Q3 2021

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Operator

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

Jay Wilson

Thank you, call. in our Josh. for third 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

On Financial each Officer; Chief our Greg posting we of the Operating be Hess, remarks Chief prepared presentation. there Rielly, Chief John call today Executive me will Officer; and to website the John In any line following over audio Hill, case transcripts are now issues, John on the I’ll speaker’s Officer. are with turn Hess.

John Hess

the these by is Greg scenarios, In this scientific scenarios, to gas Today, Thank policymakers transition. With in Rielly you, growing shed and strategy. much results. to guide help $XXX on for zero Jay. World reasonable this be will operations, will orderly the XXst energy leaders from world will four and the each is by need year gas literacy, decades is scenarios grow To meet latest to then Sunday, estimate review making. all successful investment our their I economic global to renewables third provides call. over much cover continued in net years. and in $XXX XXXX. the month, to years; still to International not greatest gas. billion. change Good these it billion. Last transition, reach literacy energy year, number world’s This Significantly IEA that billion forecasts, appropriate and to A to next are and Energy our in needs, investment light energy oil supply COPXX challenges: has will is the conference Welcome at financial year’s emissions decision It and climate and come. and morning, published oil Outlook be literacy. have the will our remember Climate Hill energy everyone. discuss quarter that ensure of to these our Agency its a the which is important progress two and XX% oil $XXX The four XX more more next in XX least executing beginning address estimate we scenarios The in energy required our more business needed Energy global to was John our century. about challenges. undertaking earlier

cycle and investing our cost cash to is return, opportunities, governance strategy resource built have low only short long supply performance have environmental, delivering sustain high grow and focused we that and industry is of cost and low balanced social cycle in a base, differentiated Our growth, a and assets. leading between flow By portfolio while disclosure.

rig third the flow our is to the deliver significant strategy, consensus to our the come expected the as on above a low years engine XXXX operating By in of is the engine free significant capabilities. durable is growth successfully Gas the S&P adding sell positioned is of in Guyana engines the growth in have the Our end estimated top the Bakken growth is Company and Gulf XXX. assets executing become our and estimates, are us track XX% on side at the cash peers Bakken, decade. turnaround the Asia, cash coming of which ahead. Mexico annual of competitively between our advantaged our and to September and strong we and phases flow grow developments recent cash XX% cash most Tioga XXXX, cash Based the Southeast of where upon of is and to oil cost generate expansion flow Plant, and compound Also, puts in through rate in the multiple Bakken and X% years a line. completing by a

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

We continued managing strength have to well maintain financial as for risk. as

and to shares further A Partners. month, $XXX proceeds cash of the half million remaining million next a In interests billion of received prepaid January completed Guyana, $XXX balance the and on from Midstream’s X, Earlier monetizations expected our Corporation million $XXX we the the returns under units and Midstream. and liquidity industry’s these XXXX to midstream early ratio consideration Phase its to XXth, value B investments. maturing our Hess of material debt and of sheet. Class Liza position. forward our Hess-owned company of $XXX cash for Class of loan As proceeds year term brought March in to this net September The $X of XXXX. our of reduction total August, one enable to This offering plan in sale and Global shareholders. our Hess debt startup in the July, X with Denmark Hess is us had repay to our received cash drive $X.X buyback effective strategy from sponsors, from of billion in we is public also XXXX, consider of strengthened we long-term sale also EBITDAX In best million, and of Infrastructure X we Denmark the increasing combined Key

discovery a Block, XX% On On the at the on our operator, FPSOs at on the announced interest the producing significant Stabroek discoveries for developments. barrels oil to XXst of more continue XXth we increased Cataback. Pinktail, Block equivalent, recoverable oil the on equivalent, we approximately We has up multibillion up the announced and in potential than and of at XX where million the ExxonMobil for resource Stabroek X the These see is oil October Whiptail to low gross significant Xth, oil XXth more block billion and quarter XXXX, barrels Xth third to future from of block we on and the future cost the to will of FPSOs the the the and October discoveries X barrels estimate billion during exploration least barrels and we of discovered remaining. block. gross day develop than six per underpin see XX estimate Hess potential discovered queue of resources previous

per Monday. development early oil XXX,XXX startup X on Liza arrived current third the a The XXX,XXX averaged the In gross Liza terms with XXXX Phase complex our barrels Guyana for FPSO gross and day, Phase production Unity in day quarter. is of per in in the production X of Liza developments, barrels Guyana of from track oil capacity on of

on Block Field in development gross the track XXXX, of Payara of Our Stabroek achieve third also day. to a the XXX,XXX first on barrels per at is with oil capacity oil

on $XX submitted of a oil oil developments Brent capacity have approximately in three Development per between block the was Guyana for to of Plan The day price XXXX. to fourth barrels Yellowtail breakeven the Our development of recently and Pending Government project government our oil envisioned at approvals, per barrel. with first of sanctioned $XX is a have XXX,XXX approval. gross of the for oil

well reduce on and and ESG the quartile proud water rating ESG years. are earning use, our positive and In Turning leader triple-A as disclosure. management to impact biodiversity a emissions leader such land the air relative an we performance governance in making for and strategy in in MSCI waste, areas on reflects specific Earlier our to social as ratings communities for triple-A month, industry as our to ESG emissions performance. The XXXX practices operate. environmental, recognized peers Hess Company of our ratings top reduction the achieving designates and in focused and a operational sustainability, remain strong received carbon a risks industry previous where consecutive we and strong XX executing double-A as and be summary, to rating performance our and this managing as after we

to shareholders through we and our now among And rank is After portfolio cash free dividend our over loan that increasing growth Company will the the industry-leading you. an S&P uniquely off but the update. capital call to will which to repurchases. cash turn in increases opportunistic Greg I Thank paid decade is generates believe Our return our share for flow and Hill we will over positioned the not only best term operational is flow, XXX. prioritize deliver next of

Greg Hill

in despite the third full Plant hurricane In John. per downtime strong day turnaround North with excluding our we XXXX, equivalent a executing year the deliver Gas related Libya. in XXX,XXX guidance. expect operational Gulf XXX,XXX quarter Mexico performance, net to averaged line the equivalent Thanks, Companywide our production production meeting Dakota. major excluding of In oil safely the we and at production net per barrels extended average day, of oil for targets of quarter, continued Tioga fourth barrels Libya, approximately and in companywide our to

and workers quarter Plant to no keep barrels per guidance Bakken, XXX,XXX a environment more our This Gas per XXX,XXX above safety Tioga third and production strict that the expansion, extensive reflected task day the oil of in to day. COVID than required safe. adherence equivalent approximately of primarily execution XXX strong barrels protocols oil Turning turnaround was small equivalent to net averaged of of

day. production quarter, barrels average per the net to of fourth XXX,XXX For expect XXX,XXX oil equivalent Bakken between we and

XX and approximately we net year new brought day, line. wells forecast fourth proceeds drilled the new continue range NGL XX of to XXX,XXX for volumes our cash and This drill but For new on of and to on drill to we which oil significantly of we the wells an this wells average approximately XX our equivalent guidance flow. guidance percentage year’s XXX,XXX XX production and increase compared to contracts, XXX,XXX our In reduces full barrels to to per under oil bring third wells to quarter, line. In line. wells we reflects Bakken approximately approximately approximately prices, the on barrels full earnings previous year And XX expect in wells XXXX, day. of equivalent increases per the XXXX, XX to quarter, bring expect

have our we improvement $X.X XXXX. some cost although oil In rigs, inflation, but million terms well operating are experienced per costs, of we had drilling average been robust added in full-year our we prices rig the and February, given of of we forecast September. drilling and high-return locations, inventory in third completion maintaining two in a Since

production, grow Moving to us three-rig our our program further cash costs. in drive cash allow flow infrastructure to reductions a and will and optimize in-basin unit better

production the Now, offshore. of In Gulf Mexico, equivalent net our per oil barrels averaged XX,XXX equivalent moving of XX,XXX oil per the of barrels of day. XX,XXX deepwater compared to guidance range to to third day, quarter

by September. period outages day. Production we and equivalent production and facilities downstream caused of which power per Gulf average was facilities Mexico extended Hurricane XX,XXX recovery restored to XX,XXX an reflected platforms. of of net of results fourth processing Ida, the quarter, following barrels between of forecast at oil the our transportation our In all of end at Our

production net guidance third full was barrels of XX,XXX barrels oil production our year of Southeast XX,XXX equivalent day. to of the day, XX,XXX barrels per of net with per line quarter remains XXXX, In planned XX,XXX equivalent of day. average oil per equivalent for in equivalent approximately oil Mexico our the barrels net Asia, our oil per forecast in net For Gulf oil full to remains due the of to of approximately production day, XXXX equivalent and is and approximately nominations reflecting of barrels day year COVID. per XX,XXX shutdowns production forecast maintenance forecast impact at XX,XXX quarter lower Fourth

is work from net per of production Hess. oil Now, averaged turning XXX,XXX barrels gross day, XX,XXX day or of the Liza reliability. on oil in X and XXX,XXX Phase to year the quarter Guyana design modified development in production barrels take two the Liza quarter, Phase flash barrels X per system for production oil first will These evening. fourth with day result are forecast barrels Guyana. from XXXX. compression to optimization In the of Replacement to is the per the Monday the the oil third Phase planned FPSO, full planned of X of Liza capacity XXXX. quarter to which average a in of per Unity projects to Net Liza in fourth gas now utilize XX,XXX for day arrived Destiny The expected and is and place production higher approximately quarter

installation hook steps will up. line umbilical Next be and mooring riser and

on remains oil First track XXXX. first quarter for

in third Yard and is underway. FPSO production capacity approximately The in entered barrels Turning drilling the of have at Topsides Prosperity Keppel Prosperity oil achieve track Dyna-Mac XXXX. The development Payara, to August is on development fabrication XXX,XXX at project our overall per a to Singapore of hull complete. XX% will and on day gross the first are oil Xst.

joint the development project sanctioning, government will with gross at per utilize fourth our project capacity FPSO the an the of venture Yellowtail the of for and of As barrels to submitted Guyana. Government month Pending earlier of this XXX,XXX plan approximately approvals oil Yellowtail, a development day.

is oil for XXXX. First targeted

miles Whiptail-X, As in northwest increase approximately of southeast month, XXX on Turbot-X. located will of John reservoirs, a hydrocarbon oil estimated approximately Exploration east was July, step-out appraisal underpin X In of located WhiptailX bearing future XXX sandstone a quarter Block and respectively. approximately located X In high miles gross Stabroek reservoirs, developments The and well, barrels quality, XXX Tripletail-X activities XXX high the This the and west resources of execution to XXX value call quality and Stem miles announced Fangtooth-X positioned at and reservoirs. discoveries and Yellowtail. to of to of closing, announced quality, the that of reservoirs. are that and September, announced billion of at Uaru-X our target miles include These encountered deliver bearing John Longtail-X Tests Drill as the approximately deeper XX Santonian once will encountered well feet mentioned, feet now Cataback, Liza-X, Pinktail-X well finally, the activities recoverable we miles demonstrated as contributed oil equivalent. significant located we exploration feet earlier bearing. In that strong of discovery oil we and wells Campanian aged approximately discovery encountered we X which is significant And This shareholders. fourth to will discovered this since high well. we bearing discoveries well will further drilling feet over and include again Rielly. well, announced of Appraisal sandstone southeast July. approximately three oil the feet test have X drilling is delivery, Liza-X. XX I to well of XX the turn the

John Rielly

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

of of the gain $XX after-tax an sale include earnings interests quarter in our Denmark. Third million from

increased and the quarter. were reduced crude third million quarter prices quarter Mexico, basis, third and adjusted by nominations all in million the Gulf maintenance X In million; the income in increased of Malaysia, the quarter oil, other the barrel of sales resulting The selling items by increased results increase in sales cargos of quarter. planned earnings Gas between primarily costs earnings $XXX $XX NGL the sold realized Sales lower gas Guyana, and in lower of the to natural in by in lower of than compared were an follows: volumes downtime $XX $XXX million XXXX million; third million; earnings lower third after-tax the second in hurricane-related lower overall million. income an net On two components adjusted $XX $XXX due Tioga planned volumes $X net $XX quarter in from of E&P. million by exploration expenses Plant to downtime lower of million; of Bakken, earnings barrel million; earnings increased earnings E&P quarter, to the second as second by for DD&A we maintenance in XXXX and of third the from lower three turnaround. changes up oil increased Turning cash Higher sold expense the by E&P X quarter million quarter, in oil cargos earnings $XXX had previous

production an volumes our barrels, For the sales after-tax E&P XXX,XXX were the insignificant underlifted quarter, by on compared our third with quarter. had approximately which results for impact

The net in with of to segment Turning quarter. the quarter XXXX income third in Midstream. the million Midstream prior of $XX $XX compared million had

the Gas was Midstream Third quarter quarter related third quarter. of with in completed. non-controlling interests, the safely results in included Tioga before maintenance turnaround successfully million amounted the to costs XXXX previous to $XXX $XXX that and EBITDA, Plant compared million

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

in net million our $XXX prepaid and interests of net Class approximately proceeds Class of During million the public the of shares we $XXX $X $XXX B offering Hess $XXX the our Midstream. from million to quarter approximately the In of sale Hess-owned A Denmark. of received loan $XXX third Hess-owned plan of and in proceeds we million of billion proceeds units from X.X of Hess XXXX. million term remaining sale Midstream the received repay July, of we In million XX.X from million we October,

by XX%, Midstream $XXX recent Hess to million prior net changes quarter, cash million these a transactions. in compared liabilities second with two by second liabilities third was in in with in third net operating million $XXX in million $XXX of decreased capital Changes provided assets second $XXX quarter. working ownership on assets In with and Our operating activities basis provided was operating after the is approximately during before cash the $XXX $XX quarter operating the compared operating XX% and increase in quarter. million the third cash million activities activities quarter. provided in by changes net quarter, by with consolidated compared an the the In compared

turning guidance, for first to Now, E&P.

operating in of the million. Our E&P $XX costs, in oil barrel cash of $XX.XX to oil year to range range of equivalent for to oil and to equivalent the for $XX $XX the per barrel $XX per quarter in expense, oil cash E&P year, barrel selling year third per significantly oil dry $XX.XX is $XX range million equivalent equivalent. of impact midstream the DD&A equivalent including fourth of $XX expense realized quarter year of million guidance quarter the $XX excluding to This The the equivalent is reduced in compared fourth of but full year equivalent to of approximately year. barrel oil $X,XXX for $XX.XX the $XX.XX of to Bakken. was $XX $XXX Libya, quarter per prices and million quarter. income expected tariff forecast costs, Libya the expected guidance and volumes barrel previous be Libya in for be and XXXX. costs million to oil to for of flow, fourth to of $XX end hole equivalent to the $XX.XX full million million be received $XXX third barrel and and to million of fourth fourth $XX excluding to higher results prices. barrel expense, our projected barrel tax costs, is for in oil Libya, of oil be be $XXX percentage $XXX of $XXX Libya production of of the range $XX oil range range per million, be $XXX equivalent E&P of taxes E&P Libya $XX.XX the in Libya, approximately be to the $XX full to the in barrel of $XXX of per XXXX. million proceeds Libya of cash the were for quarter in the for increased Exploration lower equivalent We expenses, to per reflects full expected the excluding commodity million excluding million, in is per $XX.XX the to contracts $XX.XX of $XX project fourth of updated full the quarter, in projected XXXX, guidance $XX.XX full of expected and of $XXX is previous including is is in unit which the improved higher year are quarter The the full total the up to equivalent. in per of the and which for at reflecting under oil excluding DD&A million barrel approximately year, excluding full to and to range previous of barrel the the from per per be guidance excluding to which

be premium We million expect non-cash $XX will amortization for quarter. fourth option the approximately

WTI a For $XX $XX floor ceiling of and have barrel. oil the price of with XX,XXX barrels price barrel for day of day we barrels collars per per year XXXX, purchased per oil of per a

of cost We entered a over $XX which XXXX per of collars price is million, be for XX,XXX program $XX Brent with of day The price floor $XXX ratably per and amortized per barrel have of this will hedge a barrels barrel. into ceiling also XXXX. oil

two million oil expect quarter, Guyana. of we barrel fourth sell the from cargos X During to

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

$XXX segment to of $XXX for of be full million income million which the net is Midstream fourth the is For million, midpoint quarter previous to the be to million. approximately Hess $XXX our from the projected Midstream, anticipate approximately guidance year $XX and we attributable to

expenses Interest to to expected estimated to to the our expected the are the down in the my full million, to million $XX the $XXX is $XX quarter be of previous from million approximately guidance compared the to range of to fourth be to quarter estimated to $XX expense This fourth million in is for $XXX million, of concludes corporate. Corporate in in of the full year which range million. million is is range Turning be guidance year be million for $XXX million $XXX of and $XX $XXX and the range remarks. previous million our $XXX of to million. $XXX to

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

Operator

first with comes JP line Instructions] Morgan. [Operator Your you. the Arun Jayaram question from Thank of

Arun Jayaram

Good maybe with I you to morning. Phase start Greg, wanted on X. Liza

days, give as just You Liza you can sense do a Phase mentioned think X oil? on could the a block how the But be many you that first Stabroek guide, to Monday. the ship using months us around got you

Greg Hill

Yes, sure.

a the thing thanks it’s the then of umbilicals get in and up now for more Arun. we Remember seafloor. is have that lot and vessel. And risers obviously, water, lines to the to do So, arrived first flow the question, to that hooked to there’s

that, early very but say would for looks are is like be and XXXX definitive I So, than what XXXX could start-up, don’t an firmly think early on track more possible. I we

Arun Jayaram

follow-up, Greg, you And then, maybe as well. for great. Great, my

on subsea some Exxon Uaru. to key a side the Yellowtail. around and now the of is think to around kit market overall in billion just questions Yellowtail $X buy And the expect the cetera, bit pressures, with the of that of a know One over that then color on you’re just and Uaru. Yellowtail about future your range little inflationary et $X around and from subsea phases maybe billion million raw for they $XXX put cited did materials, some of for inflation, project. one provider the I how They

help Greg? us could you just pressures, inflationary think maybe just So, about

Greg Hill

Sure.

I is there think going first of yes, inflation on. all,

think there’s remember. things we a to I have couple of

three First of EPC mentioned, all, phases, first for you are existing contracts. the under those which

is efficiencies. basically an strategy, those to increases ExxonMobil many one, insulated extraordinary cost on think from job of this utilizing So, doing And build then, we’re design deliver contracts? EPC I

have we on don’t Now, the the Yellowtail, numbers. final still

So, once that the nature on color do it’s what though. project the the I the give remember PSC market is of think important are. sanctioned, we’ll costs to

time so you get rapid by any efficiency is cost the of the increases recovered. PSC Yellowtail, So the the that get rapidly

So, impact PSC. for at even is project in all, very of firmly that $XX the breakevens project we’ll cost overall the increases, not some the range. to on Yellowtail, with return be the much right, we And barrel superefficient because -- in $XX

of with projects best on one So, potential the increases. project. cost planet, even Great the some

Operator

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

Doug Leggate

you guys put I seen very smart hedges, Guys, I think that and given have as I know your I you haven’t we’ve that place. cost, the to CapEx you embedded there’s And gave us you Strategy in in should given Yellowtail. the in a I to XXXX over could outlook give yet. I Day. the question, with a go I blunt at framework But, the ask guidance recovery back if spending may, oil price And be you XXXX think concern that think the about to wonder just how of sticker if we the trajectory? shock that on some kind

number and would should out where the a mark? the be if $XX range, of something billion off be I that said type in threw we So, thinking

John Rielly

color giving for capital on let some XXXX. start just Doug, with our me

approximately a in we full will rig, a directional Rule we’ll We’ve Bakken. $XXX we January. the and it’s know, a But Bakken. rig from our the a add there. of rig in add obviously, that thumb, standpoint, give you Now, when finalize with guidance added let’s million we when start

seeing also for to non-operated with prices, -- wells. point, the higher We’re more your we’re ballots

approximately that, million an So, year. our we for in next JV wells $XX of increase could see non-op

Guyana, you’re will capital at coming if flow expect we million $XXX increase pickup in with cash an In obviously, also that from a as So, look Bakken, increasing and of well looking we approximately Bakken. development spend. production as next a our year, at

So, our Guyana. the development we year spend in million the $XXX with went for with guide into

in We’re going that. come under to

we’ll Guyana And year. let on probably say million just our so, me development approximately spend $XXX this be

continued with X Payara, developments it’s billion a for Guyana Phase $X Liza think the capital approximately year. the development and and next on be spending on will So, we’ll Yellowtail, begin we

another So approximately, million again, $XXX there.

The areas Southeast are Asia. Gulf Mexico of other and then

year. we basically So, much And year do we’re Gulf plan this our Gulf on well North tieback typically money And all spend X Malay million. at and looking in to Basin. Phase to million Asia, the drill of Southeast in not a And X to in one the $XXX we we’re next $XXX Mexico, well exploration complete of Phase and Mexico. spending developments

have we’ll some there. increase So,

So, I’d about will $XXX say be million. combined, those

from X $XXX I’ve $XXX But Gulf Guyana, have we’ll remind Asia. I So and of have Southeast to and Liza everyone, coming line. got Phase million million Mexico Bakken on

comes on. always from simple up And X I Brent a you and additional that $XX use $X of have day, so, XXX,XXX when Phase our billion X comes then, we have basically to Payara Liza cost. pick per that Liza price and And -- Phase -- on $XX about cash of and going a we’re just We alone do obviously, cash math, oil when I’ll I’m just of full flow in and do Yellowtail. share barrels

each So, as we’ll get much more flow cash comes on. FPSO

Yellowtail? We’ll talk So, directional. do on update in that’s to John, January. you a want

John Hess

and submitted the And it on higher is Yes. the has government, cost. FTP Yellowtail well, to been Doug

its I basis. Guyana. to financial and be of realize to capacity this think FPSO simply significantly XXX,XXX largest per going between to cost approximately oil And the per oil mentioned, day have It on higher. that in of while development gross And date barrels is cost developing will a Greg best will we our $XX be some development everybody has the returns, the a outstanding are and this breakeven in Brent. barrel industry, higher, as resource is needs $XX

best So, is the but resource in these it’s some outstanding industry. the costs are and Yes, much economics. higher, economics we’re higher, recovering the of are the

Doug Leggate

at Difficulty] billion… [Technical wouldn’t I So, $XX anyone

John Hess

I won’t comment on that.

the number. approved, and official the we’ll let FTP Let’s be announce then

Doug Leggate

hopefully really Thanks. quick My And a follow-up, on Yellowtail. one. is that

XXX,XXX, above still with XX%, the production now should XXX,XXX. on in about just it to Greg, words, Is we I optimization being FPSOs? is all release, mentioned just on it’s You how want these the other confirmed to EIX, nameplate? the in check you XXX,XXX of think XX% in

Greg Hill

Yes, Doug.

be will XX% be I experience debottlenecking bespoke. a I I everyone for is to business again, in expectation. will years. think of a of capacity and think everyone being would is -- bespoke, these little bit just But XX% so Again, So, this or capacity will a that sizes XX this This reasonable a developments based for bit different. little on my increases. be everyone range think

investment. remember, But, in You’ll wait low very is, profitable data think see these are And for rapid I achieved point some increases vessels. recovery, expectation to the think bottlenecks I future unreasonable get to and things these don’t the where PSC, do. cost with And second an are. obviously, are typically dynamic that’s for capacity very the

Operator

comes next question from Scotiabank. Our with Paul Cheng

Paul Cheng

time it that as be for at being the push doing decision? reason it’s I first quarter. the particular any think Is in the and previously same debottleneck there now, the the turnaround, expectation Liza-X to separate and will that of

John Hess

Greg?

Greg Hill

Yes.

inspection on you to maintenance was to more work Paul, quarter. is optimization other said, as deferred now the This be which the work done efficient. concurrently, is Destiny allow planned planned first and much So, for simply

So, work they it support. some vessel the of time at operator completing get bunch fully while same the pushed other had which we and just efficiencies down, the to a

Paul Cheng

surprised be it vessel that Would actually more you I more the into then optimization? say be do will two that to efficient is the you I’m separate events. done, mean, efficient when

John Hess

Paul, down optimization, to the vessel while ExxonMobil was That’s take won’t. work wanted some do what I it we do the to meant, it down. that is when other No,

that some work later maintenance was some by year, the work that forward, in time pulling at for it’s doing scheduled efficient. more same just all much So, the concurrently,

and that’s quarter. And so, they et to and the and it pushed pieces got why first needed cetera parts

Paul Cheng

so the And it. gas think guys I are there. to that seem the mean, Guyana you originally, doesn’t you up you resource it do think signed going to at Greg, when now government, I to develop with the I are that some agreement supposed Yellowtail, guys point

So, line to any will government? negotiation be or that the means need with to game plan still time that the when gas the subject developed

John Hess

Greg?

Greg Hill

Yes.

Paul. there’s think I two So, pieces,

the for And benefit sanction. of lower shore we’ll project generate the now. once pipeline feet if energy to to of then plant power right? first gas, XX done, project, the onshore reliable a in piece details day stream more energy of the to after a million you phase would cost, project is is going slip it’s the to in that So, It’s cleaner, it. be share That is million supply people on gas the the a XXX cubic -- will, gas to right design

think Regarding the but referring were studies what solution, gas there out the way future, are is long-term out Paul. today, to, in it’s I you which

But, about gas the unique it’s significantly So, to are it’s the Because the years, potentially we about these even going next remember, maintenance increase beyond reservoirs not highest of value worry so. is recovery. well five part there gas the on. certainly studies is miscible. need that, And the of other pressure anything

be back enhanced a of reservoir. putting in will an that there gas So, the oil result effect as recovery

use, highest reinjection. is the and So, gas actually you most beneficial that of if will,

Paul Cheng

or say the And ways the dividend? the we John, return looking to will any dividend, it’s flow, can to shareholders. you mentioned incremental to get going return going there And the XX% you question XX% once be it? variable the consider main targeting share? assume for below at how I of cash still for increasing that times, look I or that estimate should me, increasing point think, is John. X we you the EBITDA your at common to cash net is just the at it’s those? buyback, to be and is I or that for sheet we And think to also, kind should that that vehicle that say going debt be at How cash shareholder, should to incremental point, that you’re balance that final that mean,

John Hess

Sure.

-- But same, our returns And increase at there. below opportunistic the as billion we begin I cash first off that line, Phase debt point, another pay be majority go dividend. that will the share dividend. We’ll to our will do be each FPSO shareholders. And get and increase X start on it, What of said to as looking going our And then, IR, shareholders. we to term that flow. EBITDAX repurchases. Yellowtail, earlier, back $X So, is the basically at loan. remains with would another with we’ll when obviously, we’ll have you with strategy increasing flow, and still the remaining $X to billion part have the on, returns of we’re progressively that comes mentioned an get we significant increasing the point, free We’ll will cash free X

Paul Cheng

ultimate I you when times your EBITDA talking once X be times, much suppose ratio. below about that John, will below drop that you’re X target

So, Is X-time less multiple or what is than half point? less it that ultimate than ratio a want? you

John Hess

Yes. I’m going to two answer ways. it

So, once we under comfortable X, absolute with do our levels. we get debt are

We liquidity our have -- is good. very

XXX maturity a -- coming have maturity We XXXX. $XXX in million

next XXXX. is into maturity Our

these because drive much when then, will X is fairly the come due. with So, increases pay actually can under EBITDA off happen We come we’ll time on FPSO, And what will maturity they as FPSOs just line. so continue. each quickly the

at be again to in we just can want prices, due do we And Guyana. below to X. great that look, we that yes, do have commodity returns various So the

Operator

from And Capital Phillips question your next with Johnston One. comes

Phillips Johnston

optimal Hess touch thoughts up like on wanted quarter’s the guys Bakken up me. but of to around did one seems asset. obviously Midstream, volumes you Just call, given on of we your just strategic for want It that the I that topic, to size guess, perhaps test think at day get by to I sense that your selling capital level follow just to on to to makes that Midstream that process just a third just harvest it Once up and level. once of to the marketing party a is you less and return plateauing it and shareholders? XXX,XXX control occurs freeing before asset potentially operational that critical, in would last

Greg Hill

Phillips, GIP with midstream I mean, is our we are two. and investment happy very

add assets. optionality provides you value a control, to also what on midstream mission. barrels takeaway the it continues is day, operational So, get markets. differentiated to that mentioned able XXX,XXX earlier, said, maintaining being to focused to our for Like to And marketing John it the us believe we’re our and minimizing up as we high-value with very E&P

us gives capture down to it the drive So, increase and gas flaring. our ability

GIP value Midstream. and the to both of Hess maximizing Hess So, long-term committed remain

times get And earlier optimize Midstream helped Hess the QX that up to liquidity position. capital there. the in offerings month, they their QX leverage we this had did, So, buyback actually were we getting and designed Midstream structure, the secondary as the increase X its to float,

maintains for flow distributions. these a Midstream, it pro So, free has and cash position it forma credit Hess after transactions, strong continuing

that continue free will and leverage low to capacity it the because leverage ample cash balance down. flow, to So, sheet have we’ll that with continue drive

or So, can support including side growth its future that return to shareholders, on there capital the Midstream of incremental Hess.

with So basically, is we’re been Hess here Midstream. doing about what talking what continuing we’ve

John Hess

unitholders is the Hess Midstream Hess clear, Hess of maximize to to and value its also the and Midstream And objective maximize of to to GIP value be our as well.

Operator

Goldman question Mehta next with Sachs. Our from comes Neil

Neil Mehta

this leave you you does attack it on the appropriate just and kick And protecting strategy. is to talk of terms thought implemented XXXX while appear progress still to on optionality high some the you was way maybe hedging? question made your you there. hedging. Kickoff off collar level why of And lot upside in downside, Can a that but

John Rielly

Sure.

our investment to significant to shareholders. price upside Guyana. to looking mean, in protection that So, with hedge strategy. is while do as look for I I this the we XXXX. this consistent world It’s opportunity our giving to our past continue fund protection put mean, majority -- we’re strategy, class for our of We downside And also provide

prices. the collars, program, collars I a use and we floor floor floor as also, flow. the more above at puts billion day mentioned, barrels the exposure the our it, hedge XX,XXX hedging and of you than efficient to XX,XXX to greater with as program. of the But of prices barrels So, ceiling puts oil $X of of high cost WTI in We $XX be just $XX those have Brent we with high $XX. $XX ceiling the oil additional those of at per the cash the case at In oil day reduce retain mentioned, to ceiling per at and

addition, oil our all we either. any in not we and production our natural obviously, hedged of gas, So, productions have hedged, of NGL hedged no haven’t

be downside again, prices. a higher with to on significant oil be accrete up But protection got So, we able that continue the in investment. to price we’ve position good value to the continue to

Neil Mehta

up Bakken? oil just Great, in prices a And the What strategy would the cash growth to follow-up just some strategy it flow free spend for talking you guys. take as about Bakken. on strategy the with time opposed to here your guys is development pursue then, Can a you there.

John Hess

Greg?

Greg Hill

Yes, sure.

the a Bakken primary our be in to remember, cash role engine. of is the portfolio So

our such, So, decision the Bakken that’s cash And first is as driven any to the thing. returns by in position. to in corporate going flow add rigs be

Now locations, having assuming X,XXX inventory. future X would said to which, we have go $XX of up that XX WTI, years rigs you at rig over

a that XXX,XXX billion flow. it that fourth cash back and inventory on maximizes at objective you maximum Bakken. rig year, a to if nearly the XXX,XXX of to the the That’s barrels to a barrels ultimate day. we that like and or in we oil Bakken. then do get $X optimizes at that at free will, Why? flow And the just price, Because take decade day, adding free And million the of have run to between generates the other that’s year. would next $XXX can X Bakken Our generation cash a it the with is XXX,XXX to consider depending minus, plus the a market efficient of we frontier, rigs, fourth end by -- is of on adding remember sort barrels We will important thing hold next And day. Bakken depending think for we’d conditions just the rig. I point, that

a level as strategy. we this massive becomes for position just inventory just is long And cash our time. very cash up with as that annuity long it can. So, that that to annuity and Get it the hold

Operator

Noel from Parks with comes question Brothers. next Touhy Our

Noel Parks

the if was I resource could maybe through you increase. walk the estimate some of components wondering of

like of came barrels X new from to degree at And interested, said things, project. the the particularly well, announcement, the XX degree it took But billion for that just the -- -- that some Cataback. the in you wondering analysis, from sand incremental maybe that down to two recent recent help just on a I’m You billion predrill barrels discoveries, quality most consistent the maybe contribute the is cetera? also, And the could increase. your consistent bit drilling with from derisking porosity most discovery. drill little The et you

John Hess

Yes, Greg.

Greg Hill

for mute second. a and combination Pinktail a things. Sorry. things Cataback. think Obviously, the lot of big was on Whiptail-X were I resource Look, a I the and was of estimate Whiptail-X and

taking primary So, drivers the billion. than to the from that of billion those were X number approximately greater XX

was the that that majority So, of the change, move.

billion and I upside already. think multibillion it’s spite XX of important to this still barrels that there’s in that, beyond also additional above of remember barrels

this year sand I discovered very we’ve everything quality, extraordinary good. mean, sand all quality. has it’s Regarding

announced, As we Whiptail-X XXX feet that of was the hydrocarbon-bearing XXX And but had of feet. oil-bearing feet XXX mentioned, XXX reservoirs. feet, sand, we the also, Cataback Whiptail-X last well, well

in quality So, large, high all of three reservoirs these very those are very discoveries.

there’s wells. or reservoir in issues quality sand So, any with no of those quality

Noel Parks

future you can out anything as maybe discoveries, just recent -- the I more have that you further? help findings? Does your able to for guess, the the optimism drilling in and step wondering, been just extrapolate, from I’m among inform consistency you

Greg Hill

Sure.

just way what to and I north entire that the eastern further to that it Turbot think, is call like reservoir I what confirms is great rock. it seaboard Liza all from is

high-quality out so, continue XXXX in see to talked will our that Campanian the be and strategy we about. build explore to forward just I to part those very continue And prospectivity reservoirs that of upper going in

The deep. XXXX to get is second objective now. in in more uncertainty penetrations have most will with one the the we That’s the

right? to it’s made, primary that’s a the exploration deeper lower these and specifically upper year. objectives the Campanion, stratigraphy. upper mentioned then objective And drill appraisal we’ve our which we’ll we is of reservoirs. about three deeper X,XXX explore fourth in Santonian, Fangtooth say all the outstanding Those reservoirs. program discoveries And Campanian, Campanion XXXX that is appraise our are next As third continue the explore feet So, quarter, well those appraise, I called deep, when deep upper than at aimed

Operator

question comes Energy. David from next Pickering Heikkinen with Our

David Heikkinen

just I XX or a check it the different to XX Have guys wanted what is X to on on together? sites? we’re Just to with finalized, estimates is down you subsea putting be total going the trying things as couple narrow of wells again, Yellowtail. cost

Greg Hill

be the all be. the configuration sanction, will as actually discussion exactly And when details partnership to final final we No, looks Yes. we those that still like. share as what we’ll that’s said, project with to under what take able

John Hess

And we’re was economics and lot on resource. the point up world-class Yellowtail Greg follow returns has larger that a making, to covering because

a lot are $XX they and should give the on $XX we on FTP, the So, is higher. -- cost, is while Once get breakeven focused focused granularity people per again, we talking can between on the resource, that. be barrel going to And which be Brent.

David Heikkinen

looks Yes, it’s barrel a much bigger extent, it like.

John Hess

Exactly.

David Heikkinen

roughly being A of did versus incremental the I capital is very exploration with year-over-year. it even. that kind together then developed to $X.X before huge my was expense? billion right, helpful that And area of Payara, put math

John Rielly

gave that before. that increase I No,

combined and then with XXX and XXX it of So, Southeast was Gulf Mexico Asia. Guyana and Bakken

includes exploration. X.X, So, that XXX our and from

David Heikkinen

thought… I Okay.

John Rielly

Bakken, flow picking then, obviously, Brent, from we’re of production. additional $XX And the cash up problem. some on, just well flow billion comes $X no up higher Yes, to pick obviously, always then, out have what we’re to that so. point I And Phase X at as there, going cash additional

David Heikkinen

rig XXX,XXX a day? you before fourth that’s would that the equivalent potential get upto a barrels in And Bakken

John Rielly

That’s correct.

David Heikkinen

numbers guys. got Thanks, I’ve Perfect. now. right, my

John Hess

you. Thank

Operator

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

day. disconnect. now Have a may You great

Hess (HES) 27 Oct 212021 Q3 Earnings call transcript