HES - Earnings call transcript Q2 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2022 Hess Corporation Conference Call. My name is Liz, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Jay Wilson, Vice President of Investor Relations. Please proceed.

Jay Wilson

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

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

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

John Hess

low on been peak for The oil price gone today. approximately Brent oil per a the last review of our results. in on then John Welcome the quarter a financial call. will our will executing month, affected markets. conference to $XX will that Greg Jay. second markets review strategy. per recessionary In Hill operations, oil to discuss markets the the comments barrel Thank and $XXX financial $XXX and our first barrel our you, some to from per have has barrel Rielly crude Today, I also our of fears weighing then have provide progress

the tight. oil However, physical market remains

of several to to a per least at barrel. crude Brent today cash physical buy example, cargo, buyers dollars have For premium pay a

in unprecedented economy we X demand and have and financial down markets supply The taken it global the in In are a We the is shock XXXX years to oil times and both shock. markets. shut for a markets, experienced for recover. approximately

terms oil approximately recovery a Global has there programs and government to monetary stimulus global pre-COVID XXX levels In of per barrels of policies. demand, has million day. V-shaped been financial due returned oil accommodative various demand to

Global struggling hand, than predominantly other result the investment. oil recovery. to seen has supply has under U-shaped up global On with keep been industry years of of of oil supply demand, X a more more a as

less inventories we barrels consequence, approximately a today oil XXX quarters X much million levels. so on global global so pre-COVID consecutive As of are draws have seen inventories oil that than

second look economy increase increasing X to the per of to X.X China's we after million and oil of As day the expect by air barrels a we result year, global as lockdowns travel. half demand COVID reopening to million

over very and by production supply, capacity oil in resources position a for come, tight gas and in exports, a reliable, global in day U.S. low-cost left world year. the Hess investors. oil get the Russian -- needs balance global With value market the X and on for that expect to In a barrels over supply of year, approximately year of while highly strong differentiated a is offering we tighter decades proposition oil shale last the now enabled have world. is to even to oil oil further the growing, terms producers In spare little potential there million demand very grow per for sanctions lagging the the

time, cash continue is of flow disclosure. our maintaining cost leadership industry-leading low industry and resource governance social performance the and supply same and a to growth, environmental, in at delivering high strategy growth Our while

execution strategy to rocks for returns. years to now uniquely value growing production Guyana By Asia robust our Bakken, low-cost next deliver down built locations the X to Bakken, in can Gulf low-cost more and this years. come, in balanced the growing and shareholders high-return coming phases opportunities, highly the investing growth drilling we development Our over our of Mexico intrinsic are focused the of only our base, curve. we Southeast for developments and XX% best company high-quality on multiple best Guyana, positioned resource portfolio cash than value moving returns, annually of has steadily deepwater of deliver and by a successful high-return with both oil by have the cost the inventory online profitable we the Through continued of in of

Our Guyana X between have a Brent of price per sanctioned breakeven barrel. developments oil in $XX and $XX oil

is price flow have of as our In twice approximately of barrel, flat $XX top and line increase industry-leading per growth. Based than we industry-leading to terms of cash story. between an rate growth, cash a upon fast flow forecast by as XX% our change annually durability more oil XXXX Brent XXXX, and

strengthen sheet coming under balance from time XXXX. XXXX expected in decline in Our in than less will with X debt-to-EBITDAX to to also the years, Xx continue to

we reducing shareholders increasing cash flow strengthen returning the further to the free annual our to in portfolio or to sheet to cash positive with flow our our our of committed debt. going remainder the up years, position As are becomes XX% balance cash free increasingly coming by

million year-end. the and existing growth, opportunistically repurchasing strong remaining amount during to board we under by repurchase million our for a of intend X.X quarter, program commenced the approximately Given share repurchase flow shares we our stock cash authorization million common second $XXX $XXX

to but plan that income-oriented level sustainable price attractive regular continue a our environment. to a is we to increasing oil investors, ahead, dividend Looking low in

generation decade. As oil growing our is proportion the of free Guyana, to share Key increases, capital. our province cash a the our industry's repurchases represent flow of will in return steadily strategy discovered largest last

in the Hess least at production XX% X has and FPSOs gross a up continue resources day than operator, of where more interest Guyana, the with potential XX and to oil to for the production in floating a offloading discovered is Block vessels, per FPSOs, storage Stabroek or develop capacity on the the to block. ExxonMobil On X see XXXX barrels and of million we

in production of production month. Liza Destiny its In the terms XXX,XXX development the Liza reached Phase on its of optimization which oil X oil at of production oil sanctioned earlier Phase gross The developments, Liza oil work capacity this reached new X our of first of XXX,XXX in achieved capacity has barrels barrels approximately gross development, day than following per February, more day second quarter per production FPSO.

resource of to XXX design development gross recoverable million with development with fifth approximately a production XXXX. on be date the oil expected In project per first and field of XXX,XXX barrels April, start-up Payara underway gross work per announced a of at Block. Stabroek The a an base production in Stabroek Yellowtail, the to Meco oil Front-end oil approximately of day which oil for expected on capacity capacity of by early plan barrels Our submitted XXX,XXX engineering estimated the of is year-end. and with of on a Block will is government in for approximately largest day the our third track development barrels Uaru to development XXXX. sanction we develop will of be have late the in

wells, for appraisal year X. this an future we invest Seabob continue program total potential the resource Yesterday, approximately and Block Guyana, In terms remaining. estimate wells add our bringing approximately XX announced block planned to to previously with discoveries X X of active in we barrels the These exploration in Stabroek to discoveries and on XX Stabroek to multibillion Kiru-Kiru exploration we of X billion equivalent XXXX. barrels the announced the in of the for continue Block gross see oil new recoverable will of and at

asset, expected approximately net X longer power Dakota. to Now company we our throughout play. acres an and core Severe widespread our in April the Production the caused industry. in shut-ins have recovery turning than Bakken, lasting and position industry-leading to May North weeks the took for outages efforts with XXX,XXX X operated and production of the weather largest

operations versus Bakken of planned half in first second half. Our XX now to be are year the wells approximately with in new the recovering XX the online brought

our strength and and added rig the us unit in more of to net achieve need of oil XXXX, fourth cost will flow supply, barrels this infrastructure. day oil world's the of a generation, we for the production will XXX,XXX which a allow cash maximize oil approximately cash lower Given which our optimize market earlier free per level equivalent month,

to sustainability to XXth announced Report, our to dedicated are transparency. and in publication and Sustainability disclosure. our leadership continue we our performance As long-standing environmental, strategy, industry our demonstrating commitment we Annual social On Monday, we execute governance of and maintaining

performance continue earn of a and Corporate leader energy to XXth ISS based for for as Hess on be Citizens consecutive recognized and Best by the the ESG XXX ESG, disclosure. on company assessment the XXXX May, industry In to we named only year was quality We place list independent an list. an the to the were our

to is strategy to March of world's of health access Guyana. financial to quarterly gas long-term prosperity program, commenced our government national Earlier to the the Mount commitment. producing to of and our the financial shared during with needs. deliver returns vision while and part and XX% high-quality our central shareholders. our continue regular fundamental month, oil we which reflecting and to help of industry-leading this people provide the Sinai safely business meet System responsibility the execute to a the summary, successfully commitments growing in government's to energy and affordable Guyana multiyear share Health second growth initiative care and flow Social quarter, increased We cash our sustainability strength health we a is by responsibly our repurchase dividend shareholders, the In care a announced and for for

increase invest As operational cash intrinsic continue and repurchases. an our we to company's turn the both portfolio our to shareholders dividend grow update. becomes further Hill value flow for will to now will to our share of to I the Greg increases through increasingly and capital over positive, return call free

Greg Hill

Thanks, John.

production second the continued the up a experienced was bring first and the more Liza year the in the expected. quarter from net of barrels averaged production online and to XX% we XXX,XXX quarter, from increase quarter, to XX% the company-wide approximately production that equivalent day, XXX,XXX second expect company-wide Phase net quarter, and Net day, wells XXX,XXX of by oil In and excluding to weather we company-wide per further oil Although the day, is in to in to barrels third second slower nameplate at Bakken, the production XXX,XXX capacity. In XXX,XXX of excluding the the Libya. up expected was in we equivalent Phase modestly barrels of ramp anticipate and impacts per second fourth X Libya. and average per quarter, In than Bakken Liza as oil to quarter increase Libya. operates half net build equivalent company-wide of production excluding we between X between net continue

barrels forecast XXX,XXX full excluding per year net the to of XXXX, For approximately oil average equivalent production we now Libya. day,

the Turning to Bakken.

quarter oil severe May. weather in production guidance equivalent line per oil XXX,XXX to of recovering day and our to expected XXX,XXX was the now XXX,XXX the barrels Second in barrels and April equivalent quarter. between This of and is in of with averaged reflected Production and net per is increase day. third impact

day. For between XXX,XXX XXX,XXX barrels production to increase net the forecast we per oil to of quarter, and further equivalent fourth

a net year higher volume percentage our production This XXX,XXX NGL per full Bakken X,XXX average XXXX, day. reduction per forecast barrels day a XXX,XXX the under approximately and reflects oil result of of proceeds equivalent we of oil For equivalent to of now as of barrels prices. contracts between

is Although overall cash NGL volume are entitlements lower, flow substantially higher.

tubular of we supply to drilling chains, across and country in goods. are oil pressure terms costs, completion see upward continuing particularly In our

culture. increased our in $X.X in chains cost of by tight effectiveness drilling full impacts per through and distinctive XXXX. completion mitigating our supply well I As average per have $XXX,XXX proud to of our million average team's a largely lean inflation, year the result, well we forecast am

spec well approximately quarter wells brought and wells drilled inflation believe costs this forecast completion the and weather-related and and to we now in online, drilling full were to expect we EURs In XX about XX results bring year strategic our of month, a year-over-year. wells drilling due experiencing with full added drill which we XX% the new the equipment. XX secure in slightly quarter, second expect and between year XXXX, than is industry for new rig Nabors high In between X.X% able the Earlier XX XX continue a to the increase by third rig and While we delays approximately and second online. mobilizing overall XX we previous XX%, terms quarter, only to IPXXXs Individual online. meet partnerships XX to in guidance Bakken. wells bring and we lower the approximately wells to And to drill and is fourth wells new crew. or our completion second fully to class expectations. Through exceed Halliburton staffed, a of are

a to will cash us Moving net per approximately optimize further infrastructure program and XXX,XXX which costs. to X-rig of oil in-basin our unit day to production our reductions will barrels allow drive grow in in equivalent XXXX,

equivalent day guidance our production oil production XX,XXX be to approximately the oil Lano in being barrels XX,XXX In XX,XXX quarter, Gulf Tubular net offshore. Gulf and equivalent offset day. Penn barrels the averaged of and equivalent third start-up tieback high-quality the of barrels to Miocene by moving logged Now pay. shut Well XX,XXX partially planned This we downtime average deepwater forecast reflecting day a quarter between August, XXX second per X feet of the per Mexico, issue. State of Bells a of due downtime to net oil per in mechanical In the will of compared Mexico which of at planned to of

operations is XX%. system. year Block net results. per with have petroleum and still X of with forecast and Basin Hess Miocene our the came Green Asia, oil now the oil-bearing production is XXXX. established existence Canyon XX Phase completed Gulf guidance quarter XX,XXX expectations, equivalent and is on full a are barrels of XXXX, oil an the second age June of being For prospect In production Huron day. of of interest Chevron barrels Shell The June, in our X In in we and well operator approximately on oil Malay is was barrels XX% achieve approximately XX,XXX to drilling Phase encountered gas each day high-quality is a day. equivalent Southeast early net results and development working Mexico for the sidetrack XX,XXX equivalent working per encouraging the North reservoirs of per appraisal of to first and above Well evaluated the online track planned. in producing compared on

JDA oil equivalent XX,XXX expected production per approximately Third planned maintenance is Basin. North quarter Malay average net forecast between per and to year and day, reflecting barrels barrels production of Full both at day. of XX,XXX oil equivalent XXXX is to average XX,XXX

X barrels X. Guyana. Now XX,XXX oil Hess. per XXX,XXX reflecting the of been per per nameplate very net net Liza In XX,XXX about turning to the Liza capacity Phase day delay barrels ramp-up the modest has in a oil day, successful. second quarter, of Overall, July, its of to of start-up In Phase oil reached production barrels or day averaged of

the production completed in of replacement work Offshore month, high production X which at of day. capacity optimization operating and resulted flash gross the oil FPSO gas compressor, barrels was its has second or now per above this of SBM completed Earlier Liza also new the Phase is flaring. the routine For X in reliability XXX,XXX quarter, and

track pace. barrels XX,XXX of production than is Guyana forecast average Yellowtail, production achieve develop Prosperity underway which first per will a complete XX,XXX Third topside oil quarter Guyana the of is have of With and XXX,XXX capacity first oil per in development fourth in barrels range have oil sanctioned on Singapore oil is and continues of XXXX. third and day for we now day more development a XX% in project, Payara, gross day XXXX. and well of Brent April, approximately to well which and our capacity to is barrels late a XXX on installation of is million fabrication to oil day year approximately and per to the of In The will of of at barrels have at drilling approximately development breakeven FPSO per on net gross from track to a project per full will a The barrel. barrels XXXX. price the increase in oil of oil XX,XXX production regard to achieve XXX,XXX $XX oil

plan anticipates at fifth As sanctioning. Uaru development and Guyana quarter the to of with Meco, government for pending our development the of approvals submitting XXXX, first targeted project the operator oil government the fourth in for

Block. hydrocarbon-bearing block, approximately both intervals of reservoirs. resource Turning of discoveries in is test Yellowtail deeper sandstone the of recoverable located part southeast upper high-quality campaign Seabob-X to upper on the campanion currently block, discovered new add Stabroek approximately also the approximately the well well well exploration. XXX equivalent. far the part Yesterday, gross will The field. XX Kiru-Kiru-X southeast discovery, for encountered X well is thus of XX sandstone ahead miles we feet announced block discoveries of of high-quality XX southeastern to and estimate The the drilling is The in encountered feet has southeastern the of located Cataback-X the The miles to barrels reservoirs. the billion of X oil-bearing oil

portion located wells of of Campanian discovery development the of of the Mako. well up-dip Whiptail potential the next The up-dip will stacked These Banjo-X well activity Barreleye-X The up Barreleye Yarrow-X In Upper test The southeast are west of Campanian well play south Stabroek of stacked is and well. well. of located the future Upper Banjo. inboard is X appraise northwest X discovery well in miles drilling in the targets and will the terms on the will XX Yarrow Tilapia. also of and Block, target the queue discoveries Yellowtail The at block. oil targets, miles

Zanderij-X each working a Shell experienced the expected third half of recovering Campanian opportunities growth first The the Suriname, the with well. will Llano participate see of in drilling quarters, fourth in interest. and In both well the XX play are the closing, the our Upper both will at in Block in We positive late coming operated Huron from on we in had severe we the results August Mexico assets addition and exploration Chevron Hess, to spud to stacked and now addition, and In test targets. rig. impacts is one weather year particularly steady and expect Gulf have X Shell of Bakken continues production the in Guyana back on in success Malaysia robust led have fronts. of prospects. cash generate exploration inventory our continues a flow, and steady and and extraordinary tie infrastructure both and all production to deeper

to Our free material Rielly. growth our and and will portfolio call shareholders. distinctive, over to long-lived deliver cash turn to John and positions value accelerating the I us uniquely production flow significant now

John Rielly

my We will today, to Thanks, remarks of on Greg. the the $XXX adjusted compare net an results million XXXX. In second quarter compared in had income quarter first second the the basis. $XXX I or XXXX quarter of $XXX first with million in of from quarter million

net follows: in compared million increase increased prices earnings between quarter Turning of All earnings by to quarter second in as Higher by $XXX decreased the first with million; the first Higher items after-tax E&P costs earnings an the $XXX Higher second components earnings million. $X $XXX by million; the realized $XXX cash other DD&A expense and $XXX had of $XX selling were decreased changes million; earnings sales million in of Higher increased second overall earnings volumes for decreased by by of E&P. earnings $XX XXXX quarter million; E&P income million quarter quarter. in The

$XX with underlifted decreased For the by which by million. barrels, volumes income E&P approximately our our sales after-tax were XXX,XXX second quarter, compared approximately production

million compared the the net Turning The EBITDA, XXXX. had $XXX in first million both to XXXX the Midstream second in quarter interest first million of Midstream. $XX with noncontrolling income second $XX quarter. in and of Midstream before quarter was quarter of segment

was sales of the unsecured our and expenditures June, as second of ratings facility grade. quarter rating $X.X replaced BAAX and the we $XXX million May and a cash In agencies Moody's facilities, while $X.XX Hess XXXX revolving quarter At second operating billion million $XXX billion cash we quarter. of primarily Investors Changes equivalents million Midstream due $XX $X.XX purchase the shares for Hess quarter, July In stock million. in proceeds liabilities second utilize credit financial now under Hess Service Hess expiring intend in of quarter, stock first the In existing liquidity exploratory selling net Hess XXXX. cash to public repurchases we from with barrels under BAX. rate changes credit stock finance the first commenced $X.XX in second excluding our owned quarter. flow of amount the million, increased shares In X the billion million of repurchase $XXX In working assets lease X.X million A Class Midstream. program. end approximately to the were approximately in by sale remaining X.X received facility oil compared to oil in end, of and total available shareholders the operating the capital All the was operating upgraded committed of volumes. in Hess July, repurchase million $XXX quarter units during $XXX new in $X.XX billion. provided prices cash Class from offering E&P $XXX quarter including common second Turning in Total with from we quarter million obligations debt the from total with the in XXXX, of Corporation were credit the program to Guyana, second our the by first capital activities returned share dividends. billion, million activities position. up B Midstream, crude by X.X in board-authorized the sold We and million XX $XXX crude approximately $X.XX million including cargoes of and sales cash expiring revolving billion, in to senior Net year. and to higher before million-barrel quarter investment and major amounted credit April, X.X of realized totaled to owned this

to turning Now guidance.

Beginning the the generated of quarter, the third carryforwards. we previously loss remainder for in First, net Guyana operating E&P. will use

As we to a liability. start a incur tax current result, will income

day day of XX,XXX of of barrels. Our guidance third oil to Guyana of includes XX,XXX X,XXX barrels tax approximately quarter net barrels per production oil per

production XXXX XX,XXX year of approximately to approximately day In of net oil of first in were tax sell Guyana day barrels There barrels quarter of X,XXX guidance oil full Our second both per million-barrel per or includes barrels. third liftings of expect year, Guyana. tax XX the this quarters. no barrels the quarter and from fourth we

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

prices, premium will which quarters. We expect fourth amortization, realized approximately the third be noncash in reflected will million for option our and selling $XXX both be

portfolio. third Our reduction conference the is in our are due of year, billion $XXX the The expenditures call. in I expected last $X.X quarter full which million efficiencies the to $X.X across the to referenced in phasing from for be guidance and previous that E&P of down is activities the capital approximately exploratory approximately and and billion Bakken

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

for approximately For range $XXX million due of up $XXX the year, corporate, million legal from million the which expense and $XXX million in $XXX for remarks. estimated million is year, the concludes of to to This to approximately million quarter the $XXX $XXX corporate the the lower for $XX professional of million fees. guidance third range range. guidance end is estimated for in million and quarter full higher be in and previous of Interest is full are previous be to $XX expenses to our third the my which to

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

Operator

Instructions] Arun with Jayaram [Operator question JPMorgan. from first Our comes

Arun Jayaram

John, to I start with return. wanted cash

as returned buybacks point remaining the your and to you complete the would you and about including plus authorization, of to your dividends CFO, ahead plan the This about which quarter, return XX% buyback dividend. think go should acknowledge we your flow, million of free $XXX and of framework, the XXXX? of of your approach pace the how which about as buybacks up cash think we about we includes I'm XX% wondering capital to return

John Hess

Reilly. Yes, John

John Rielly

Yes. Thanks, Arun.

to So framework framework our what set on annual is our you return basis. the up an is -- remind just capital

free -- and reduced $XXX in So that we cash debt the that and is are annual have flow did cash we we free first of look XX% that return return committed are our flow. at quarter. to million to reductions, cash up we for flow to planning And which free

framework up than this rest are, the you see year, favorable it's million discussions said, more and be with we second authorized we free so sheet done can $XXX in ramping commodity where results, And in year balance with above actually improving, you is up of because expect done the going cash our as with Guyana that flow our XX% million give XX% prices of to the be position. to can Bakken from quarter as this Board, So price environment. throughout the our second remainder and the quarter, $XXX commodity favorable look ramping our this with our the

really you coming This and then to just capital just look, the beginning, we should continue plan And are starting think we XXXX, return is about, program. so to it.

bringing for said, just be with Guyana remember program. So are to coming XXXX, be an a now year. year more we going a that's XXX,XXX going think years. once And a is commodity continued to than barrels going move that as is day. here Again, this the begin into as to we on you FPSO committed almost are we can prices XX% do to that next favorable, framework. should to if But we Bakken,

have So growing we're to free a flow. cash going

and be to a going is we as bigger X% going out. move on number that So bigger

that's should about. be you framework think I So thinking the strategic

Arun Jayaram

follow-up told was program last for you if the in around lower soft in And Great. XXXX just quarter. Guyana. maybe us some and a you John Bakken bit Riley, CapEx $X.X could rigs billion I in a your sustain E&D you. provide than little continue us maybe X wondering update, if you CapEx commentary

John Rielly

guidance, what John. for soft do. because you ahead, Thank Go the we'll Arun, that's

bit parts moving we because phasing provide full with have said. fourth usual, the in the like and in some have activities As that do about look, we'll is of from million little a talk at Bakken $XXX you Bakken. are this the you I'll guidance moving the rig plus inflation, And did additional can But January least we at end. into an the expect XXXX before some which

will Bakken the fourth increasing the some So rig, that as well. with be of phasing

a got we've as In can on. Guyana, think So know, $XXX million. you about things lot going of that you

have there's say right? We're be bringing in Guyana going did develop the first on several Yellowtail, in about to more in late because mentioned, -- developing We've quarter, million we'd Payara, also and got to we Greg that on be I Meco, XXX FPSO, with Guyana. So this hundred the energy project to clearly in going Uaru and which the XXXX. gas fifth

looking Mexico typically, to some appraisal our and of a as that Greg which for mentioned, at program, be had Gulf of from of Huron at like tiebacks several year. what we well Also, we're more So but we'll these greenfield. Guyana, infrastructure-led as mention, get the the Mexico. what in We'll done hundred as as million as you standpoint through had go an again, success doing we heard we Gulf well fine-tune

having be monitoring the Mexico increase in we'll then So for industry I some inflation. Gulf of mentioned we're course, it, of And XXXX.

seeing We happening Bakken. Greg D&C mentioned with in are our it. what's cost

labor, are it seeing steel in rig We rates, costs.

the kind year. be at, that numbers looking we are be those But of get soft, we'll So of Arun. can to continue it you to at kind end looking of as we'll the and the fine-tune

Arun Jayaram

about on with buying a the all FPSO? buy made what your determination you those And Have option? Exxon on

John Rielly

right guidance XXXX. expect to has finally the is you determined Arun, not yet, just on timing. would That now I been give No. in not The

expect that I not you're So if days. But would in have you XXXX. models, X in putting pull early still We finalized X XXXX. yet. do early don't it's your in again,

Operator

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

Doug Leggate

to I any there confident guess, is on. about you any so you've that? rethinking together? trajectory updated thorough I fairly given a the thoughts power time and going to obviously, line a Are what's to to want And the first day. outages But could ask barrels why go been should -- on of on with XXX,XXX reason that? in be your I Bakken trajectory the explanation as on Is the there we and still on thoughts weather what

John Hess

Greg. Yes,

Greg Hill

Doug. No,

the on trajectory. think back back in that we're I track Bakken. We're on

As from I start you fourth quarter be quarter see opening wells my in for kick that. remarks, XX%. expect And we start the up fourth then to up The in really rig mentioned to completing XX% the in to fourth rig because third you'll that XXXX. be from

steady why XXXX. the we're increase we trajectory which XXX,XXX hit we'll saying So expect to in day, barrels to have that's a

So it from here. ramp smooth a should be

Doug Leggate

Okay. Greg, that Huron. of Greg, perhaps comments else ask what you color I encouraged to X more address you I'll leave on sidetracking, give is bit might if us little your to little material just about you're everyone with wanted and to want Guyana My upfront. scale? news a pre-drill bit Can And short assumes you're pretty perhaps you're ask more today. suggest. I seeing. on a that This follow-up, kind

qualify exploration X what was Does target potential hub this talked So is you've -- potential predrill going per year here? well about forward. what hub as development the development? this And a

Greg Hill

talk let about let Well, me talk the about well me first. yes, --

Canyon released to was XX,XXX on Block on and it So feet depth the drilled was Green XXXX. rig a of XX XX, June

the So also we oil sands. as planning as we quality really -- Miocene in dip appraisal my I sub-salt in well. Canyon. Northern high-quality remarks, I good, that targeted on a And discovered new opening sidetrack Miocene up that Reason encouraged Green fairway results good in mentioned by an we're we're prospect the did mention,

seeing thing -- Canyon we're area, that a I that's in very of Green we competitive Huron, prospectivity result have think of result leasehold see Northern and additional exciting we the really it what a about in is as position second there. a

Huron. and well from estimates, So X evaluation. Doug, the is positive don't still release we under outcomes predrill

as So that we asset. appraise further information coming

John Hess

would this I in just the we're add fact prospectivity petroleum there's to that. that The area. working encouraged a I system. mean by

of there's and encouraged to by we're further appraisal ahead So drilling and it. going be us,

Doug Leggate

Greg, Did an may going quickly, you're you say do water very have you appraisal. -- If an oil updip to I contact?

Greg Hill

under Doug. still evaluation, Well,

Operator

Our Cheng next question with comes Paul from Scotiabank.

Paul Cheng

First X and guys' John, is on the ports does impact process on -- you or does have your decision thinking in it the Rielly. it or for budget? fear all rising decision with John recession, the how on in

John Hess

John?

John Rielly

Sure.

So I and budget mentioned would that's why, as things of the one said, what year. guidance our Arun be for soft next

the lower that cash We develop in to are it's our the the to cost, looking going optimize best and want X our up to program base -- it's at -- there, change there's way the Bakken. We doing obviously, We're We're our that. Bakken. to no have rigs. return infrastructure

change there. So there won't be any

the so the up that. budget where ends monitor to cost And on with continue everyone and we'll update

there a to oil get basis, as go-forward we are then development, possible. on returns we excellent, early us country plan on for oil just can So trying the the and as be for again, bring unchanged. to province there Obviously, Guyana, as phenomenal this a forward is as Guyana will the for of much

try fifth again, FID, development the ship get the the So getting plan Payara, in into for government. to Yellowtail,

susceptible change cost there. everybody there. doing inflation has Again, seeing. the is that with no So managing cost Exxon, that an job been But else we are to excellent

in about comes. Guyana. and have So $X I not we'll budget, update changing our again plan our we're in said, where that in we number as that original year But billion this

a a So slots. up. talking again, at said, will and our where rates be has as that I the see of the and rig this kind new million managing inflation year Gulf get but we several program, the good dollars really we inflation. hundred it are more, Exxon done able And job Mexico thing looking were we'll to about because And being just of then again, ends

that we managing, that again, at of but some do this talked to be looking do we our about, like we'd So infrastructure-led tiebacks. that's want something, we do will and appraisal to

the So higher. -- even a extremely returns those are cost inflation good little again, bit is if

it our doing, several working talking be the managing then Exxon has So year as And again, and can inflation really ends And we'll as a rates and will much rig new looking get we possible that hundred I it kind were are we're as Gulf of practicing what again and But I more. up. as and our about again, take the dollars being So lean to you we because just strategic able said, -- of Mexico our keep think thing inflation. where we million on at program, this soft see the job get that our to good with done guidance culture trying slots.

So that's we looking at. will something, be again, that

John Hess

Paul. X And point, other Yes.

great question. a So -- it's and

be all for now. terms Guyana, definitely the stay should do to be next and to between will Having Board see on a said getting slowdown some that, will of prepared think reasons end the that the puts year economic make there's strong for in risk, high-return I stress We there to it now a steps sure to budget the I as recession we ahead we sheet tighter can of year. on we'll are of though invest our of downside. companies there dealing also the the we in have test definitely that, and and price so Definitely, recession balance certainly with be scenario this mentioned get end as market in opportunity our an protection take recession we year. still the we'll even our in the keep normally

It's our recession senior make has sure be with financially to Board of next to a we'll occurs. So prepared into in leadership disciplined going the that year. the certainly going be case one scenarios we're

Paul Cheng

roughly back going Rielly, pushed to you year. from has And Can Great. some year much? this next been how John mentioned you to activity quantify

John Rielly

Sure.

only range We're wells that little like, with online. right mentioned, say, next wells down. to Greg online, a I bit are we're say in, moving online as of would to going So be wells now year. X

wells drilled. the Some of

Greg original fourth didn't that from XX up So actually our XX, that's but of mentioned, as wells, rig. there were include the guidance

should an we XX have additional, say, XX -- fourth to drilled. the gotten So wells

And only we're so getting X.

moving got we've way. that additional that wells are So

things. wells at kind X of are or you're to some to XX So infrastructure next that year, next and other X-ish to online type moving moving just be year small looking drilled wells

you're that next looking probably got So million altogether, that type $XX year. to in moved range

Operator

Barclays. with Wai Jeanine from comes question next Our

Jeanine Wai

follow activity you increasing what near mentioned to of some term. follow-up you're tracking Can up is And X Gulf? to of headlines goal been in discuss for partners their We'd I generally is the know you in 'XX well. medium-term on like positive like are then the grow in your the monetize position terms our appetite just to from Doug's activity what's your and interest Mexico your side there? in very your fields. And plan your sounds it of looking There's that some on your Gulf there of questions. the

John Hess

have. that course not or makes us in acquisition. elsewhere business, on our the but Greg, optimize side, comment in the look the Yes, anything M&A portfolio, portfolio, I for in of of over be can acreage we it go Gulf to always seen our have that an role our And strategy. to do in for the if we Wai, market, Jeanine, we The normal we the exploration you appreciate it just sense Gulf

our in low of We have invest and to cost better opportunities portfolio high return investments.

more Greg, return of opportunities our grow frankly, quite to to that looking portfolio. the need of So the business the role to disciplined. going M&A on outside. We the We're to investment don't can and stay returns focused getting financially do would most But our you much returns. that. erode the about that going Gulf we've seen inventory We're from in have talk of stuff the we're we then of

Greg Hill

Jeanine. Thanks, Sure.

for engine, of a remains an for Gulf it's Mexico the for us, of the important cash very important platform So It's us. growth and portfolio. part a

that grow class X our flow high-return we minimum opportunities you we blocks If we've acquired cash or can new lease also as selectively XX through pursuing years, a in and in And hub got also want -- really is add Gulf class production exploration objective portfolio, the recall, hub tiebacks selectively to in and it, exploration been tieback prospects. sustained our So we've now our opportunities. rebuilding in the the balance of and that's XX such portfolio last X Gulf we a over new to.

years capital, forward per for year roughly assumption we for those both assuming wells us going drill opportunities a that, good for So those planning compete tiebacks Canyon out gate, Huron is encouraging and for new where competitive again, Green Northern opportunities very have there. leasehold basin first the the particularly a several that being of class results. very hub that the we with is next X And focused would again, on Huron,

So we're excited about that. pretty

Operator

Ryan Sandler. with Our Piper comes next from question Todd

Ryan Todd

other quick a questions. just couple of on Maybe follow-ups

this out you were know outlook strategy, you to a look plan Mexico varies Gulf over how of probably On medium-term of you'd in drive were talking wells flat is lot do production as you you trajectory hold there years, growth? in about you if -- of next think of on few that Or that couple of a the you to year, general production a I but term the if medium the do were as Mexico, Gulf modest of the over Gulf Mexico? that the the could things, about there the

John Hess

Greg?

Greg Hill

Sure.

could and and infills couple that next the assume through infrastructure-led tiebacks. do it objective for think we'll ILX, exploration you to I our hold wells these really flat are of quick that is years,

hub doing in wouldn't wouldn't as feature exploration period. class that, those also be later until those to in obviously prospects, that come we're Beyond growth some going

a success some these term, as short of longer-term it, flat exploration it from hold minimum prospects. So sub-class assuming grow

Ryan Todd

Perfect. on And an then maybe earlier a follow-up comment.

timetable thoughts over sustainable you'd it dividend? be? of materially a you to a competitiveness. this little bit you'd would dividend, that like year, about of competitive I a dividend the you define define And at? talked How to the a of to kind kind which to it -- grow it to but You grow you obviously desire peer any the earlier of are how like you've What looking group mean, on increased where level position would

John Hess

investor, the what just to generalist are. John meaningful compete for going the John, to elaborate is really our the think we that don't bit think at. to I'm answer something want to little premium it, investor, about to Yes. a low But That's oil be you under dividend oil it I also want a looking way have plans and not sustainable and S&P gas prices. up yield. but we're holds why it what but We the

John Rielly

Sure.

but to dividend So we'd did that's here. get did we're give it John increases attractive continual that And what a that, is John mention to I investors. a good our like do, that explanation to level income-oriented mean on to the clearly looking

you but about are income-oriented the So looking I that think think is the at. yield output, can yield an investors

a that share So grow coming in will but we have cash move our because XX% we continue ability repurchases Payara oil will to to Bakken to a as But significant we growing of able the that barrels free free our the with low it be couple and to share against can of return make next again, dividend dividend out we that the the here, bigger an bigger dividend, we're XXX,XXX our environment, that XXXX you move cash actually, flow be a grows. ultimately when will years, kind cash growing sustainable in mentioned, price part that I a repurchases. and day as then here Guyana, going as want flow portion as put late increase of flow and then almost FPSO to we're year that

Operator

Our next Sachs. from Neil Goldman with Mehta comes question

Neil Mehta

is the a And I comment market. And had be what you're they in the realizations, lower in good were what financial first in couple the of we the quarter. on that see might the than physical had you it macro. questions made the markets, price John, realizing around

that to price? just the divergence whether realize and something you than talk able can So front you're about higher

John Hess

or X mean physical planning market tightened you're are great in which and dollars Brent buyers barrels. over for this buying on because Europe, physical been that's But than or is a needs Russia seeing But premium dollars price just in Brent the Neil, the futures obviously, is not and now. there. short the obviously, has it's as evolves just inventory screen. going more day. even current I market and is a Yes. between more, market. have what's the Obviously, for we'll a There's barrel, really several screen I last every assumption out you now changes, know, for seeing But good barrel to the WTI is equivalents the price we've see of the a you the how months the question, the in on strong And think, Brent world what end year. the the several

the of concerns we of have more taken if are out barrels One is Russia. obviously,

go sanctioning up. talking barrels, about their will number Russia I terms I X those of and exports If is think down grows barrels day. EU that million of in premium that a the is think physical about more

Neil Mehta

gas. natural is on follow-up the And

so in of years? over your you your perspective gas, natural to open in changed And on if next us do curve. structurally remind U.S. you're couple you relates we how in then love of strengthening hedging view And how the it position, participate anything about and And your particular the -- mid-cycle? commodity thinking are as can

John Hess

price, gas countries price the Very U.S. its and have the interrupted. that the you're that's also concerns I'll having And and as John into because about European XX% Europe to of starting and had European insulated relatively from I on Russia. be production obviously, its the and think shale LNG that domestic going And gas, as the factor. business Asian of Freeport and to trading the EU because well the ration start is that to Europe, has gas, impact in problems about continues from handle having the of their LNG been because buys supply hedging. when an winter, availability impacted Yes, the terminal, specifically natural being Obviously, see recovers.

and $XX it's think between the X%. numbers to where for Europe the closer U.S., gas in $XX an I Mcf, natural somewhere are in So

U.S. exporter. world, it's of much lower the is energy-independent. but still the because a we're than up the So We're net in part rest

and about gas very prices. the But Europe coming we are you to when a plenty that, U.S. as both hit you I I that’s be stay get tight matter. see to think John, more and both natural I the later, start gas but inventories out the into so So certainly will through in both market, and conflict rest is think tight, in think winter, saved even does back natural U.S. where think gas on There's natural hedging sides to has sooner rebuild Asia. world, to then of business that natural gas look winter. do this past going a the to the of Russian-Ukraine for the of the resolved, so want lot got normalize. to staying you the get you equilibrium there, than When the falling more question? it function going And of willing in lives that that for

John Rielly

Sure.

XXXX not So in point. hedges for next year, at do on for hedges this any or we have beyond

to you price Now, you with that on. strategy, that and assume floor a strategy know should continue we'll put is our

John we'll So the just time year and of to that of the do volatility on. get of floor this the But is, we the discussing end the aspect where putting a do put everything want year. also to be year, put into as time next That's has we obviously, been end use that early We'll them call options. that. from that the the or on to on typically frame closer we puts,

but do to provide do again drops a we'll the there insurance, or happening Should be -- a to those You that there recession to year change? us that that towards after just that expect the prices should should again end can next and of year. something prices, years be

Operator

question with Roger next comes Wells Read from Our Fargo.

Roger Read

think XX of some tests, on billion-barrel will that target terms some out likely things of like and resource stem discoveries are things tests, here up of to that in Guyana try the flow as follow -- stuff before. than last eventually raise there. that's the just Where some drill in we the the raise Maybe about more you rate of

John Hess

Greg?

Greg Hill

Yes.

billion So X Seabob barrels so as those Kiru-Kiru, we underway, recoverable XX announced still are be these the additive and to which hydrocarbons. said, will discoveries, already gross

I the Yarrow part inboard and is opportunities. look And fact, we the significant Banjo Seabob, X help potential that if as forward, leading look Stabroek the discoveries that oil wells, southeastern oil Block. next so will the you to about is why further part encouraging think is delineate of these a play they're in in at inboard that

there could inboard be centered that So another oil play. FPSO oil on

cetera, after do you we'll that prove to as really some get them these up mentioned, So wells really et done, on we play. inboard trying DSPs, oil

exciting. very very, So

Roger Read

Yes.

So Guyana now. been that years it keep several on. you for has to see It's way good

just if the The of could, kind going to inflation I question. back question, other

might of activity getting -- things the are Guyana assume see you're is As be recession, terms XXXX out Gulf lower there, But this already, of crude underlying talked We're and cetera. continue point and starting what on XX of to look inflation year. probably Mexico. next a that you understand right. terms et and good Where some in the strip let's handle all about inflation at going to in are you but to

John Hess

answer John, to part? do that you want

John Rielly

Sure.

we are with that Roger, rates. mean costs I just So competitors, steel seeing and seeing, and onshore our rig like we're offshore prices, pressure upward labor

no seeing there's are So question we that.

So you we Guyana. mentioned, we talked -- about as

X.X% mention did you cost year. So Greg onshore, to from this go D&C the that heard X.X%

inflation are continuing. We from XXXX, things coming seeing these

with prices, still efficiency be can't to in. higher hard there. Again, the why you I till of to mitigate oil contracts mentioned, through like I with we're higher with full obviously, and the the much that of into And the will XXXX, prices, tightness going working get oil we'll course, in X.X% give all expect effects to flow. see returns think our higher we XXXX suppliers, cash the that. number. with end That's the the getting of strength in gains, relationships you working But numbers year, we but that continue should we're when wait So our the

be can't continue of the we'll the to on I'll said end year, everyone earlier, specific. I the contracts call. I through what work our That's but So exactly and update January

John Hess

also equipment Yes. well. this with Nabors And excellent his with moved and and Greg Halliburton think, other the Roger, as -- expeditiously secure team I thing with is and cruise

our are high-quality a I go we well plus of into So as I the Greg mitigate as will inure some year to to competitors, positioned next and the the increases. manufacturing to of as and we have think are people. equipment team And don't and think that our cost pressures track have mitigating record of fact leaders are cost his that benefit proven

year, think it impact whatever but I number, you the to John So steps as is. end and give the of of at that mitigate we're staying we’ll the exact ahead said, taking

Operator

with question Vin from Lovaglio Mizuho. comes next Our

Vin Lovaglio

Phase just to about at The projects. barrels similar was me first online? debottlenecking investment future if over X. Liza ability was importantly, those carry work you just could And I required extra XX,XXX to the to question a then work remind wondering on your get debottlenecking probably more

John Hess

Greg?

Greg Hill

sure. Yes,

minimal. that XXX,XXX et level I, XXX that capacity changes, barrels of Phase very mean was of piping nameplate to on this So get cetera. investment the from day a new to new some I the

Phase on So as major X. you a shouldn't think that investment about

certainly and phases, for those debottlenecking II for As we forward think additional vessels. X to we look Payara, potential I see also the in Phase could future

going think to it's XXX and be these each Beyond say, get we'll to bespoke bigger, efforts remember class, important debottlenecking see. wait thing And that, to for vessel. as have the about vessels your the I is

going it's on to So depend how to can the as dynamics you out vessel capacity of additional it. of individual eke operating that much

that hopefully, question. answers your So

Vin Lovaglio

bit second the obviously, intensity unconventional. investment the and And from of cash the dividend? profile U.S. development Great. and a to back quite capital is the X regular different just mean, I Guyana was return

peer is affects this and or your regular on base think your Just if regular from differentiate you the wondering dividends thinking how X you the and that dividend can group E&Ps. way that ultimately the

John Hess

that dividend will each X moderate builds increase pace, to intend that certainly also value but We Yes. at meaningful. a sustainable, over year time but and the be

Operator

David Our next with question Cowen. comes from Deckelbaum

David Deckelbaum

to the only some already. questions I as thrown day were a X Bakken asset. level target about had, XXX,XXX optimal -- performance as think of a really you've we follow-up of But answered that additional in out the for the most the other I think,

Or cost we're some higher do that program? -- just still all were inflation we're the in seeing of the in these rig the move long-term XXX,XXX the the given number? we unit inflation, is there there, right higher? is some numbers given seeing higher a Just to of X believe the given price on still steady-state the of that And inflation that pricing some move size, both at is if of slightly

John Hess

Greg? Yes,

Greg Hill

drilling great WTI. if or generate think you at that we've No. portfolio, our locations got $XX returns look at X,XXX Look, I more a

So kind are the is And And all Bakken in certainly, is returns have return the in at XXX,XXX day current oil any in rate, the place infrastructure a we inflationary the Bakken. you optimum if absolutely will, the be for obviously, really fills movement to price prices, outstripping barrel right? so of effects. from up it a those plateau the the place that fantastic, standpoint because

think wells tieback a to the like there. need already you So Gulf of infrastructure in almost about as future is Mexico. The

for So Bakken high the returns wells. incremental are very those

be that of able the for for we'll hold barrels to at while, amount we day XXX,XXX about decade, So hold the period. rigs cash a Bakken the generating have, portfolio during that almost a flow and that all significant plateau that we'll with free hold

billion cash higher. current it $XX, of much over at is So $X Obviously, generates free price flow.

it So portfolio cash for day. becomes this XXX,XXX annuity massive that the at a barrels

Operator

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

may You now disconnect.

Hess (HES) 27 Jul 222022 Q2 Earnings call transcript