Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen and welcome to the Fourth Quarter 2022 Hess Corporation Conference Call. My name is Kevin and I will be your operator for today. [Operator Instructions] As a remainder, 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

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

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

the are Chief Hill, Officer; Greg Officer. and John Operating Chief with today Officer; On Executive Chief John Hess, Rielly, me line Financial

I to John call the will Hess. turn now over

John Hess

review morning then Today, cover Jay. then our operations thoughts will and financial our you, John conference continued to our progress will call. results. our discuss Good Thank the oil quarter strategy. our I Hill Greg fourth some share and will welcome about markets in Rielly executing and

challenge. and fundamental just secure world and and massive faces The gas needed affordable an Oil to energy ensure to be decades dual are will for transition. come a

that reach of zero period, three not by the how scenarios they IEA, scenarios forecast XXXX. Energy last we Agency, its for Energy emissions. energy At and will We need dual over And globally challenge. Outlook end World more the latest XX% meet year, published or offers to International are the this require same net to approximately

also meet deficit structural a facing oil more in energies. and scenarios, reasonable the in of both clean significantly the the and a all world investment IEA three to is gas energy According In in is required years billion for supply estimate and gas billion IEA, XX in with the global growth as approximately required next each and years. is $XXX $XXX compared the for year billion the invested $XXX demand investment approximately X to last annually oil to

more officials $X sober In clean $X Business trillion to between of of terms trillion. since for understanding challenge, expensive annual needed a a is this the transition a costs and technologies than especially next capital today. do investment lot many require government $X.X financial of year’s not of money becoming is take exist more each trillion have time, that of investment years, XX investment approximately is energy The an going in must energies, scarce current long and environment. the significantly year last and leaders more and

orderly To energy an have energy economic transition, climate have policymakers literacy literacy, literacy. and must

industry and leadership cash and our Our resource and at our social flow performance time, same industry governance deliver to the low growth generate disclosure. in supply grow cost of strategy is leading maintain our environmental, and base,

execution cash both of by come successful by to growing deliver value Our for shareholders our company years uniquely and significant value has growing to to this intrinsic strategy positioned returns.

Based oil Brent change story, value have Xx. strengthen than and currently In our of providing fast approximately upon industry story flat proposition. ratio twice a XXXX, flow price with also XX% a annually under as and And our per as more debt-to-EBITDAX of sheet is our $XX top cash to will XXXX cash growth. forecast unique to between industry line increase rate duration balance terms of by our growth, we flow an leading barrel, an leading continue

returning up going of cash to sheet to Executing increasingly becomes increasing or free flow our shareholders portfolio the free position cash annual As balance our to reducing flow by the to further our remainder in strategy by are we XX% committed strengthen regular debt opportunities to by XXXX, million, cash and our repurchase we our decreased with XX% program. million positive, ensure that debt our $XXX we a cycle. through our increased high-return can this stock $XXX quarterly fund investment dividend completed the

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

than gross differentiated repurchases provinces the high-return increases return steadily low-cost the share our expected proportion of have in the discoveries As our Key Asia. year, Block, investing recoverable XX% a resource XX and is than and a Gulf only a future largest interest of capital. Stabroek we home a the XX the with XX oil Guyana, in X barrels exploration one to of last more free oil over opportunities, strategy remaining. discovered Guyana, in has on operator. Mexico represent to potential of built the last including focused balanced Hess are block, cash more flow years, discovered underpinning Since barrels is world XXXX, billion of equivalent the Bakken, generation we years, of to of is our where growing By had Southeast ExxonMobil Deepwater on estimate portfolio have and multibillion which

the underpin oil standalone and of Southeast-X feet well, significant Fangtooth on located feet first Southeast-X Stabroek a We to has prospect water. southeast stand area of stone X our new drilled XXX X,XXX was discovery. was Block future today potential encountered and development. Fangtooth-X discovery this reservoirs oil-bearing Fangtooth well the are deep exploration to the to of oil miles a approximately The at original pleased the approximately announce Fangtooth

and sanctioned Brent Stabroek breakeven per oil of oil $XX developments have the between $XX a price on Our barrel. Block four

offloading billion, or of and We production Bakken. XX% have the allocated floating be which line will to Difficulty] X sight of to storage and more [Technical FPSOs than vessels Guyana

and and and our a to and cash repurchases. share as allocate increase opportunities, sheet, continue low financial capital priorities Our position dividend are keep conditions of to strong to balance provide high-return to to market our grow return our investment capital framework cost to

at In barrels Guyana, Phase of the combined X of currently production are day. XXX,XXX their operating gross and developments per capacity oil than Liza Phase Liza more X

Payara, development, per XXXX, the XXX,XXX schedule a production for oil with of third end barrels gross of remains startup approximately of Our capacity day. on by

the with to oil a quarter. of production November development, Yellowtail, Guyana of fifth Uaru day to expected fourth in capacity was barrels A final Our a capacity by our submitted day. plan of approximately per online come with for of XXX,XXX is the of and the approximately development production in of XXXX, XXX,XXX gross first barrels oil expected per approval end is Government development gross in of

plan further We lower and with continue program cash X-rig and for Block will exploration planned continue our active the will in an the In Stabroek also which program, Guyana enable a Bakken, cash costs wells to infrastructure. unit we appraisal approximately XXXX. flow, generate optimize us free operating to in our significant XX

a create inflationary barrels drilling production in oil do innovation, We Greg principles team inventory applying of and net improve of of locations manufacturing culture to equivalent a lean to continue to average job per of his high-return have robust an us manage day XXX,XXX of an to cost pressures. to outstanding enable grow XXXX. efficiency and

we where in engines and attractive We two drilling tieback to production facilities our North plan assets. also will will drill and see wells. we And operating we Southeast development XXXX, in wells at In invest joint infrastructure opportunities. cash and both Basin to in exploration offshore of investment the continue Asia, invest two Mexico, in the area Gulf Malay

Guyana. forest a will the the strategy, to execute role high-quality, well from they verified to commitment degrees our we of below Agreement’s remain for agreements preservation world’s world, of force one XXXX announced independently the we sustainability $XXX as Government private global the credits our As average sector Paris to top and XXXX rise REDD+ largest and carbon to play important Protecting of carbon sinks in minimum temperature aim In between X the December, limiting continue is of million priority. a Celsius. directly purchase natural to the foundational the

net sustainable more was initiative to further Guyana, Climate Avoiding strengthens one our its our to XXXX. commitment Government of with equity than of global pledged company’s and adds to the to the long-term our COPXX and national with a of successful ongoing XXXX. people, by lives the by end to achieve upon in including basis XX% countries, commitment to net XXXX. is at the XXX and our Scope The our invest plans agreement made deforestation agreement efforts the commitments we X country reduction The This in improve Guyana communities. strategic demonstrates part proceeds deforestation announced to earlier from emissions directed indigenous carbon gas people an on emissions of Guyana, the Scope of X Guyana Summit, and development greenhouse building agreement proceeds the the and healthcare zero important partnership major purchase where of credits

are have We throughout Dow the XXXX performance been Sustainability leader as for governance in In environmental, North and America proud November, place our social consecutive for XXth consecutive on disclosure. industry earned achieved World to was Jones and annual time we an a for Hess recognized in and in leadership included the global analysis the CDP’s year also for year. status Sustainability climate December, In XXth first Index. the the Jones Dow Index

our intrinsic flow to both continue to grow cash value execute cash leading and to successfully by growth. proposition, our a industry increasing strategy, our offers supply cost base, resource delivering low and summary, we which returns, In a our unique grow value generating

through flow becomes return repurchases. increasingly our shareholders of positive, and we prioritize further capital As to continue cash dividend increases to our the share free portfolio will

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

Greg Hill

Hess. at of in oil oil Yellowtail Thanks, Bakken. strong XXX barrels year primarily were barrels approximately John. performance additions of reserves Net billion the reserve of proved the operational the of result the X.XX execution sanction of at million of for stood XXXX XXXX end equivalent was and Guyana equivalent. and strategic another Proved

approximately XXX% production finding of and asset equivalent. cost a at sales, of we XXXX $XX.XX Excluding replaced barrel per of oil development

production above day. oil than barrels barrels equivalent of Bakken in Strong XXXX, excluding Turning In of offset XXX,XXX fourth the more the averaged performance portfolio of across the our of was guidance month to impacts Libya, the net equivalent per day, quarter approximately winter experienced production. XXX,XXX during December. of weather per oil the company-wide severe which

equivalent XX% per excluding full we of oil the an XXX,XXX net forecast For equivalent with day, of increase of between XXX,XXX Libya. of approximately barrels barrels oil production XXXX per compared and XXXX, production average XXX,XXX to day, year

below in December, impacts to equivalent oil our XXX,XXX only XXX,XXX guidance per wells in day to between severe per weather first which was barrels winter online we of of reflecting fourth of of the our limited net of XX oil average day, quarter. barrels production production In day. oil quarter XXX,XXX barrels company-wide and XXX,XXX net equivalent per Bakken, XXXX, forecast the quarter the For to of XXX,XXX equivalent new

of For completion bring XXX to day. XXXX, to XX operated drilling million. our XXX,XXX we In quarter year barrels plan XXXX, XXXX, and average averaged In wells online. net the XXXX, averaged Bakken equivalent and drill we of full per XX inflation operate gross between In online well new XX% we $X.X drill first bring wells X approximately will and estimate oil approximately to XX%. plan production wells industry and XXXX, expect per XXX cost the approximately new and wells. In rigs

expect to about $X.X and technology forecast we X% D&C of through manufacturing year. impact the or to However, above cost million well per our last lean mitigate application this approximately average and

barrels will average XXX,XXX For per the full production XXX,XXX between we year net oil day. and XXXX, Bakken of forecast equivalent

barrels production winter oil weather steadily oil barrels in per and and net to XXXX. forecast quarter contingencies equivalent day day, forecast in from ‘XX carryover weather average and December. grow XXX,XXX is approximately and XXX,XXX effects over of average of to Net First between the per XXX,XXX the of reflecting course equivalent is production severe Bakken the ‘XX

nearly this for hold decade. a level expect to We of production

full equivalent offshore, to averaged Deepwater day day barrels the Moving the Gulf fourth net in of per of oil production XX,XXX XXXX. year for the per quarter Mexico, oil in of equivalent XX,XXX barrels the and

XX,XXX for of Mexico the and net engine quarter first Gulf Gulf normal average we approximately in well year of remains barrels Mexico day, The field full Deepwater company per will cash platform reflecting and of growth. production for maintenance. oil equivalent as forecast XXXX, as the For planned a an the declines important

Prospect X X well, the in infrastructure-led the Northern plan located well area exploration X well, we X high-quality tied second spud where was will in Pickral well infrastructure-led is will existing participate interval back Miocene Block expected of Gulf improved of the to the be Esox areas a to XXXX, be and year that April second exploration hub be Green which Mexico, sub-salt will the will will hub be The in opportunity will wells targeting successfully class Canyon Bells. online sands Mississippi exploration same Miocene spud The be the in the in half Tubular Canyon X of exploration has in the Shell-operated and sub-salt technology In wells, Hess-operated target well and application the the XXX, brought class tieback XXXX. will imaging and wells. be in the infrastructure seismic at through Llano Hess-operated Tubular fourth at drilled and The be image. the latest X Stampede at well spud at The will quarter, Bells field. in tieback well in to

from both expected oil wells in First XXXX. is

equivalent XX% North XX,XXX oil of day per full XXXX. in day and area development a the In for net interest, the Southeast Hess Malay fourth XX,XXX Basin, barrels Asia, averaged equivalent joint oil from of where has the per barrels production quarter year in

XXXX, and net For and day. between the first equivalent quarter oil XX,XXX full in Asia, forecast the production per XX,XXX of Southeast we year barrels average

from XXXX. ExxonMobil for of quarter the XX,XXX liability, the to XX% in Stabroek fourth operator, oil oil XXX,XXX XXXX Block and delivery and delivered barrels barrels the of Turning day guidance. facilities interest both for Hess full above and where the is production project has per partnership XXXX, day our exploration Guyana Guyana, exceptional year the per a averaged in in of success Net

production year in first day. to average quarter net XXXX, forecast full the the oil XXX,XXX and per approximately Guyana we of barrels For

about day. debottlenecked Turning to successfully above Liza was oil Phase X, to utilizing or Unity and per developments. world-class Phase Liza capacity operating deepwater. start-up in at nameplate in last which is first performance revised X the nameplate was FPSO, Liza February XXXX achieved capacity months, ramp-up has XXX,XXX of in year of production from X of in been achieved its and barrels oil

currently nameplate considered opportunities operating for being The optimization oil Liza XXXX. XXX,XXX is of above of barrels Unity capacity currently Production its at per day. late or are

XXXX. The third late Singapore ahead in depart from commissioning activities remains arrival is The The hookup anticipated first to complete. quarter is and of development, oil expected and Payara, schedule is of XX% in FPSO commence achieve Prosperity first by end following to approximately Guyana. and project the

of final is which the year. be by approval November, first submitted sixth is early Singapore oil one and underway. The the we next and Government Topside quarter. to The track government development, remains expected for completed module our in in our fourth – and development, and fabrication China XX% is is development hole Pending and development, currently Whiptail, development approximately complete enter in drydock is Uaru, our Yellowtail, awaiting XXXX. drilling of fabrication was commenced fifth plan Guyana, on anticipate end by Singapore sites to are first expected approvals, the we in and is for sanctioned Guyana FPSO in April. activities have

of a on future and are exploration. the original well, Southeast-X approximately resulted could oil encountered discovery, area approximately feet well, the The significant discovery appraisal development well new to Fangtooth southeast further Fangtooth-X Fangtooth and oil XXX X Southeast-X form located miles reservoirs in of the underway. Stabroek sandstone activities for oil-bearing basis The a Turning Block. this

XXXX, Block. will several drill will discoveries see we and that XX prospects deeper to variety barrels We lower wells and a on approximately appraisal exploration wells continue include play plan risk will existing potential penetrations test in the exploration types. Stabroek of intervals. that of And additional near and These multibillion to target

XX northwest age the miles well the portion is prospect. test Liza-X will well wells, reservoirs the underneath well the in The are Fangtooth a play upcoming carbonate of Northwest of Block, are approximately Lancetfish-X cretaceous Don a northwest first underlies operations Taylor well. also continuing to on The Drilling of [ph] field. a the Stabroek Noble Fish-X Stabroek. deep miles aged drillship. the of X.X in regard deeper located corner Southeast-X that exploration is well, test at well underway Tarpon northeast Jurassic operations the approximately the With in clastic

is an the well deep of there and that, [ph], will Fangtooth area called Barreleye. target which a will Basher upper campaigning updip a well Beyond in a east prospect penetrate prospect called [indiscernible] which

feet despite expected XX%. in plan in in The offshore a the BP the Chevron, located is Basin. to large well, has Moving is Orphan Northern Stena we each BP-operated approximately the on well the water. FSS-X arrive The to Canada, tertiary target XX% to in participate very Hess a second of interest X,XXX quarter fan rig well working have location will and of submarine and which age. IceMAX

with our was be Gulf a the upside will major which XXXX of deliver position projects further and of strong, advancement with performance exciting in summary, and in come. the Mexico years value delineation our the program year all again significant shareholder steady us to Bakken for In of an growth with trajectory, drilling industry-leading in and many an execution significant of and XXXX to active returning to the Guyana,

I call Rielly. will the turn over John to now

John Rielly

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

earnings million; E&P of higher $XXX sales earnings were fourth fourth was net expense million; million; third realized third $XX $XX E&P. million; in after-tax DD&A million XXXX earnings by earnings in million. million earnings increased lower The prices items of quarter other $XX by earnings as the in and an $XXX increased fourth by exploration Midstream lower selling volumes decrease E&P costs higher for of between earnings compared by in all $XXX decreased lower million decreased $XXX overall quarter quarter. with components increased income and million; the follows: Turning to increased cash the tariffs adjusted quarter $XX expenses changes earnings $X by by the

compared volumes which by $XX our million after-tax approximately sales our increased by approximately income fourth with overlifted million. quarter, the X.X barrels, were For E&P production

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

financial At December $X.XX obligations the Turning debt billion, segment, billion; facilities; total including totaled to our excluding Midstream and position. and $X.XX billion. lease liquidity XX, equivalents cash $X.X credit was available committed cash were finance and

carbon During the our the we of Concession X million in completed fourth credits for REDD+ quarter, Waha $XXX interest of of million. X% million, from in $XX the sale the net and Libya we proceeds Guyana for Government purchased

repurchases shareholders returned E&P the $X.XX both compared and operating in quarter third with operating Total average were provided of fourth the $X.XX million was dividends activities and quarter. capital by exploratory the working total the in million liabilities million. X.X quarter, $XXX billion expenditures million price cash repurchases activities to cash changes after We million shares $XXX quarter. amounted stock in the capital assets was fourth the billion in compared quarter approximately per by to in of third approximately the quarter. repurchased share and In to $X.X third share. million $XXX for billion in quarter, $XXX fourth fourth in net cash fourth Net through provided $XXX bringing common changes XXXX an operating before and $XXX to share at in in

E&P. range of costs Now Mexico. $XX turning the of to a cash oil planned at be to the E&P Penn barrel the which in per We in $XX.XX project quarter, the for of equivalent workover Field Gulf for first State includes guidance, to first

quarter barrel to E&P year per is forecast equivalent $XX per $XX.XX of oil $XX.XX be $XX.XX and full expense in in per the range the the first full For the equivalent. of the DD&A to to $XX range for to equivalent are to barrel $XX costs XXXX, expected barrel year oil oil of be of for cash of XXXX.

million results the to excluding operating costs XXXX. costs, E&P This the billion and to to of full $XX $XX.XX first XXXX. range the $XX be in Exploration $XXX in year $XX the are of billion first the million per equivalent XXXX. the is of year $XX equivalent quarter quarter for barrel in full range hole projected $XXX $XXX be projected to to $XX.XX the million million $XXX range for per barrel million for expenses, for Midstream for million year of in to be oil expected to in $X.XX tariff the quarter The full to first dry of the unit and $X.XX oil to total and

for E&P year $XXX income $XXX to the expense to range in is be to million and quarter XXXX. the tax of first the million million expected for $XXX $XXX full million

Based approximately reduce be XXXX we oil $XX $XX XX, barrel. and for As our day have of barrels monthly hedge an million per to our full with for approximately a amortization, depending will of XXXX, selling to purchased put plan position by on million on year increase prices XX,XXX earnings first conditions. the $XXX we premium We quarter to level option non-cash for realized per XXXX. reflected price January as by our similar XXXX, in position, expect floor WTI our options in market average current the of which

Our $X.X expenditures quarter E&P XXXX. be approximately the first billion in expected to capital for million year approximately full and exploratory the are $XXX and of

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

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

This remarks. my concludes

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

Operator

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

Your line is open.

Arun Jayaram

Yes. Good morning.

John Hess

Good morning.

Arun Jayaram

us was of teach-in I Fangtooth. – you a you’re give are the of still you’re in Lancetfish. but know us have Greg, give wondering on little had I could bit at that bit the and you’re of teach-in channels for? But drilling what deeper you if sense a campaign, exploring sand success a on a exploring a

Greg Hill

Well, interval, that pay. at the we of that lot well really first which Fangtooth had Again, past of you you look our said it’s number before, deeper and existing below original XXX thanks interval, miles for years, was at But of discovery it pay. couple question, as prospect the of Arun. X,XXX importantly, have a of if well, over feet X.X of Stabroek only had feet XXX located it if in discoveries Southeast In a the look stand-alone in underlies southeast the and is the majority of our Fangtooth-X, which the deep we’ve Block. upper the Fangtooth that of And I oil-bearing think wells. well, first penetrations the had tails discovery the feet campaign

we in are of Lancetfish one And could DST year, that in development exciting. other some you and potential oil and a mentioned in continue which are to called of west a around all And future remarks, northeast there as Fangtooth is that’s get mentioned, there prospect it to pretty opening as it. is And there. there in Fangtooth, mean Fangtooth, channels his appraise probably Basher, this so of and called John is the is actually that combination going a

continue continue very discovered deep and it’s we But couple years. think also exploration significant and resource add next we the we We the the upside to to will of explore kind encouraging, as go just I will the of see. through also to

Arun Jayaram

Got it.

Stabroek up you what maybe a it a Fangtooth I this DST Whiptail the follow-up, kind later boat do But it is Just the development you’ll that’s the after year. perhaps of be on about mentioned to queue, seventh know, Block? Greg, moving

Greg Hill

Yes.

good bearing. quality that it’s seeing oil again, reservoir we’re I think and

So progress the to our Block. we as oil strategy is continue quickly the developments on to can as Stabroek

sand quality bearing. good So and oil

So coming the up it’s in queue.

Arun Jayaram

a lot. Thanks Great.

Operator

Jeanine next Barclays. Our Wai comes Instructions] [Operator with question from

open. is Your line

Jeanine Wai

Hi, good morning, everyone. Thanks our questions. for taking

John Hess

Jeanine. morning, Good

Jeanine Wai

cash just returns Good to quick going morning. real Maybe here.

You’re Can what related to free I committed to sheet annual maturities where healthy XX% we for mean through you fall and prices, determines note returning have debt talk flow adjusted it’s that about balance range and right cash buybacks. within really of dividends cash you that in the to XXXX, up oil you a pretty ‘XX else? and anything your manageable. ‘XX balance or now maybe are whether

John Hess

Yes. No. question, Excellent Jeanine.

earlier, keep As to allocate that, to is year. really $X.X cash budget priority priority next to our said billion, of first with high-return, one this for priority to I capital with is capital continue this a investment and our very number low-cost the opportunities. That’s strong Along position balance sheet.

last for puts still the as our want volatile free over to have downside I year, protected. capital, the yes, return But it’s protection, then cash to market, in is we and unlimited our shareholders. And on You saying terms year. did downside protect to we provide appreciation be upside to some flow sure where bought will we heard that the returned downside make a shareholders John of of XX% want

Jeanine, that, is to grow dividend. within priority our first The

So will be quarter. to capital did year of our the this Board framework give and consideration will increase our market meets consideration regularly repurchases return as as we dividend goes our as Then year. then provide, conditions and last on share strong strong increasing to during

Jeanine Wai

cost are included And project, be should Uaru the look And back Yellowtail even I turning For there is how additional And we be or to that anticipated pieces the for inflation? here, maybe be development believe, the billion. Would the Thank baseline estimate? similar versus to maybe Guyana Great. you. example, you moving you. is versus much to size able future around scope $XX.X related in Thank to on to that billion? things aren’t projects, which $XX.X consider as other a bigger? that comment

Greg Hill

Yes.

of current couple number market the connects number is twice progresses. the away the their further billion final of submitted color example, things. Yellowtail, that it on the reservoir it, to going the finalized kind $XX.X is project the reflects of that then to the details. a is is final in give EIA surf will finally for of as scope. will part you as project Uaru sanctioned. final conditions systems. sanction as But and is a estimate reflects case, big But operator It that once we the of once because a be One Government as we consistent the also example give we And additional And is, So cost any of with Guyana.

John Hess

And I best industry. important is the of returns think, Jeanine, what’s some offers still Uaru also in the

So even developing. inflation cost low the in there the best resource the offers we’re fact though The it cost, that carbon, returns some it’s industry. is still of low with

Jeanine Wai

gentlemen. Thank you, Great.

Operator

[Operator Doug question comes Bank with Leggate of Instructions] America. Our from next

Your line is open.

Doug Leggate

everyone. morning, good Hi,

John Hess

morning. Good

Doug Leggate

I I Guys, a a if longer-term question. wonder could ask of kind

signaled so you development crazy they the ultimately the thing time billion and XX to the because I So mean at be could this have of couple find at in happen that and, relinquishment this is, phases Exxon years you’ve that. BOEs. lines think XXXX. to And acreage enough out you to John, talked get But already bigger, going looking horizon years? could time for that question to And of on? seems were talking potential so I continues that what that be does think the retain ago for would double exploration in guys we over everything runs XXXX. block several had times, needs deeper stand to on time next guess, resource What we’re are that XX, worked, the you It my if a the number about of a

John Hess

Doug, remaining. deeper the made on of our Yes, question. We see and XX,XXX great versus Greg at efforts some barrels of exploration feet at feet. remarks still context exploration multibillion happened excellent potential where horizon have XX,XXX development efforts most

appraisal. why really of excellent We barrels that’s innings a potential, is are to the Three after early has an are six-rig the get And defining for and development potential still for remaining. ExxonMobil definitely and program. job developing are them in multibillion activities block, deeper three that, of this exploration doing

are very to all going continue high-value that the to capture are year have sure we the make program to on exploration think future we active years resources block. So, and this we a appraisal

Doug Leggate

to be an think John, to on to approvals ‘XX, do going in time have you or clear, before enough securing the have the secure development approvals? you development terms that just are you of extension So,

John Hess

we No. joint ExxonMobil and we appraisal the are The ahead by can, reason with work program, that. doing closely and make is the sure the that of capture that we and exploration to to resources our venture all to Doug, government we led do get

Doug Leggate

My want take on here don’t because on. John. kind you of why a that, I for but and around guidance did it’s kind this follow-up, given you. downtime of two-parter, a lot [indiscernible] also is mind, got for to think so you Thank comments have cryptic year, Guyana has this of Appreciate mention if you which I debottlenecking perhaps Liza

is a going visibility. things there X-year, lot of So, terms that in X-year on of

my is question So, this.

what would to kind And sort people that as of out $XX.X look of Exxon kind billion for some us lot number give guide Part put a like EIS. Liza-X you B can go all, a capacity then year? and we guess. my the the over ultimate through I of trajectory, the in freaking of downtime Some this as are of First is,

big you relative lower because know what guys that than in not a Can that have we Hess’ to come recovery of $XX.X that absolute typically billion? the you Now, us contingency. is deal. cost a of number tell is But

Greg Hill

Yes. Thanks Doug.

take me let question. So, your first

a opening looking we my of remarks, in the Phase mentioned at potential X. I for half latter in as are sometime XXXX So, debottlenecking

as each to going is have spoken one vessel. bespoke, depending of on Now, we be the these before,

typically to are pinch where the want points vessel. the on dynamic engineer project year data understand you the before a You of

have you in I the As think past, expect kind debottlenecking. of XX%-ish a I in can said kind of any uplift

think in Again, as possibilities engineering here early that. range we stages I just the in of of that’s the are well.

in that maybe the quarter. come So, would on fourth

have for Guyana. included downtime So, we guidance some for in that the

next can production for barrels John downtime, we downtime. no And as to CapEx the really normal talk forward also for downtime bit to Uaru. the also in And a basically about those are about. different four can estimates talk think include I and project the quarter pigging some XXXX, had little year what and the XXXX of tax are debottlenecking maintenance trying John we

Rielly So, John

John Rielly

Yes.

execution. billion, estimates correct, rightfully section so, projects cost our and can beginning a $XX.X always fantastic out or say project, a going right of the is Doug, on the on where But we these you On we several job contingency come single every for look, time with meeting years construction. we estimates. are has of at and the there are on What now, beating that to final wait ExxonMobil on was their done in

breakeven, this have said John there So, be has world-class returns will world-class in Uaru. project it earlier, will

once it, excited about Final has are details that. we We government the can provide. approved

Doug Leggate

it. its much it’s bigger. on appreciate John. so XX% lost as And Thanks not I

Operator

comes from Cheng [Operator with Paul question Scotiabank. Instructions] Our next

open. line Your is

Paul Cheng

Hey I $XX, when just you did the part the XX,XXX where you that John is to show first the guys. Rielly, fourth is clarify. also quarter? And are is and When flow Couple WTI? it morning. fourth where that statement credit of quarter, talking Brent up carbon say kind in about in for think or Good the two cash questions, of – the income the million, purchase, you the show for does $XX for

John Rielly

Sure.

put on. do me hedges that first the let was your question on So, we

now. have options We right put WTI on

So, day that’s to said, level as like XX,XXX. year. last year. had a WTI intend barrels And combined do to about a last hedged XXX,XXX get between I we Brent, similar And and we

WTI add us for currently, looking XX,XXX that at to put be should position. you for this is again, So, options to But $XX.

Paul Cheng

on you in million option put XXX put? of year, the premium just are anticipation the the going this is in for for the the to not increase John, And full for that

John Rielly

want XXX,XXX, updates That on your could to second you carbon but on is have. XX,XXX you the just math, you credits. to question we hedge to correct. double Then double our position. the is as if give it That we will increase Simple get it, we for that

million sheet will it assets. long-term on have, income on cash held. in we nothing carbon capital. balance the on it the in asset statement XX when an see working credits, is that what And because other that that XX,XXX purchase is And you flow So, is on our – statement, being you look there at,

Paul Cheng

be the Greg. you what impact Okay. have previously, wells low have question after is final than I been in is there can what that end discussing? to also, year have been now previously is full for year the compared first going of the winter on quarter is can contingency you And anything comparing that or share storm expected the of Bakken, the fourth us has production, low for number lighter And seems tell consideration this you up plan taking we even first the But quarter. to the Is weather. for conservative to think that to quarter? you my you understand what it seems be into I

Greg Hill

No.

think first severe with the impacted mobilize really I talk me wind chill, resources. to our low let about for So, The snowfall coupled significantly snowfall that. ability

put XX, You to minus chill. just wind people work at can’t minus XX

in number online that on so increased XX new wells bringing what was the quarter, it And then new We delayed importantly, And projected down significantly our did coming was online. of it backlog wells. wells XX. that fourth

day, significant if So, a a X,XXX see day, come things barrels that’s impact. those fairly lost can a wells. And on you at we barrels X,XXX you assume XX

in I think are we mode. recovery

quarter a in and is build regular so from out be build, get the I time XXX,XXX steady the importantly, a there on dig We in It will this this of steady average XXXX, cadence. to recover steady barrel literally. think that that. Paul, expect this to But to day cadence, that just to now build takes Bakken

touch a will think will I in we towards the XXXX. end We probably XXXX. importantly, XXX average barrels day XXX,XXX of But

are a So, from it. here we and solid about at concerned Wells performing on are XXXX all to trajectory not as expected.

EURs bit acreage. XXXs going That’s in with XXX, less in IP spite coming You a little into quality of of X.X. of are these

reservoir aberrations the So, as are These expected. through as performing you it is That’s all kind of exactly weather the go year. just is.

Paul Cheng

an I this you have see. for what is estimate Great. the Bakken? year Do in exit rate

Greg Hill

we far guide at look out. wait because yet and am odd of until on forward kind kind year, hesitant before so the quarter will always and to that not little Paul. of we No, forecast that fourth as weather, weather we closer are a And project we is like as go always we I through

Paul Cheng

Okay. Thank you.

Operator

Our from Instructions] [Operator Neil Goldman question Sachs. Mehta next comes with

Your open. line is

Neil Mehta

really dividend, about And to aggressive $XXX Hey. appreciation as so In buyback congrats prices worth a as to I $XXX well, that think there capital on quarter, The around stock, to follow-up this back the the around last how want on Thanks recognizing done Jeanine’s year. you Has you question bought just of million stock? and your buying returns. think did million changed share should think – the the fourth want guys. we that. share you I year, of be we price be ratable prioritizing will well? And have

John Hess

Neil. Thanks

going in you high-return John our Bakken, to what sheet. those balance opportunities Just invest said early, back and maintain has priorities, that little strong a reiterated Guyana

in then. line, the be had give at repurchases And we strong consideration through increase. dividend the then because that XX% as we dividend to to thing, cash further mentioned, that are first the looking up to share John first will will return So, going

we have FPSOs and both to will through at appreciation, right to Guyana. dividends that look producing you that XX% we as way stock share it and repurchases. as we the we So, now two – with committed look we currently framework, return at are up said, on in the return is And only the

and have remember, to time flow. billion to this cash We us on day a be in Payara XX,XXX ramped, is a an it’s starting $X XX,XXX FPSO And year. in barrels Payara every comes barrels about and once fully going day,

XXXX, bigger. bit you Yellowtail a in then similarly have little So,

$X cash little and more than running, that’s XX,XXX billion. a flow approximately. So, barrels a that day bit up When fully

and to Now, we to FPSOs got we have we got develop in up the Uaru all ‘XX, XX have found. resources

that of generates. that in each cash flow advance believe these and in our significant FPSO shares of buying accretion we So, NAV growth

we So, continuing deliver share the significant that by will repurchases. believe shareholders to value

Neil Mehta

test those element post-XXXX should And would a John. about moving you, calibrate again we we Thank here. post-XXXX. cost is numbers? our models follow-up there us Yes. around think just Any is CapEx, pieces the that And recovery help us that where to to you to, point just try recognizing

John Hess

obviously, program about talked what for follow-ons But year, see are so as that. drilling four-rig there. this see what will Bakken changes wells of the really into we relates and question. Mexico, be is Gulf we shouldn’t we Neil, much that any think move to just – Greg So, it year thanks early, as you had next this happens. will steady

little early. it’s a So,

may Asia Southeast down. be slowly coming

spend. You bit saw then And from year. the came down it in obviously, ‘XX big last Guyana, a

will three to continue line. So, kind we in of FPSOs have coming

FPSOs have still So, Payara on, will but will we are that three development be phase. the in

with you other what And of So, take three is we in those current up early see have purchases, to market, year. XXXX. first FPSO which current kind add a the the the with those, bit then bit expect piece we purchase a have compared FPSO FPSOs as I so can market this up, to mean so our you one to is

Neil Mehta

Great. Thanks John. Thank helpful. Very you.

Operator

[Operator Our Sandler. question Instructions] next Ryan comes with from Piper Todd

open. is line Your

Ryan Todd

a Maybe just ones. Thanks. couple quick of

you year-on-year, offshore are and I in on mean offshore? inflation Canada seen number. and in some at about Gulf cost seeing worse things seeing the have in the across mitigate cost able you terms talked you where it rig off, Mexico with inflation rates indirectly as there about and First of it Uaru the what we and portfolio, But inflation Bakken. your appreciate I to don’t the is what of certainly in look have of talked the you of you that been know I up? are type are

Greg Hill

the I I Well, you rigs as to think for unreasonable. rigs, mentioned, high-Xs, kind are mean not XXX, approaching certainly, of up I mid offshore going think

– Now in from insulated actually with first remember, four we Yellowtail. the because locked already developments that Guyana actually are the largely are certainly, three in

locked So, in. those were costs

and a good increases. ExxonMobil both were rig job that the oil And say of delivering tubular obviously, will outstanding done increases offset oil an up, but bit. tubular goods rates has little to I country country of rig Some cost improvements flowed

we that our nature mentioned, insulated finally are we And it’s fairly cost again, into get we So, the and insulated levels reflect will from the of all we Guyana. sort of But largely seeing. of once that as we are inflation, sanctioned. we portfolio the going will because But are Uaru in that projects are those the on. market of details because have in

Ryan Todd

maybe then hedging, just the And this detail question the philosophical year’s hedging. Thanks. on I on Great. appreciate a

stable Guyana time, that amount importance grows, cash do a just think we you to from you as an longer production or over in continues term, of kind kind flow as hedging reduce view strategic of view? and As to expect increase do point your capacity that insurance of

John Hess

think to from on again, just I from growing it for each levels you Percentage-wise expect year done significant I view each a that production could as have we aspect on should that leave And similar think at protection definitely investors. it. to royalty strategic the the protect can remain insurance percentage-wise an lower you time But you point FPSOs, and We importance hedge good of insurance as overall. upside bring have of we clearly downside side before, maybe again, levels our view. expect see the WTI us hedge we to keeps and again, Brent percentage that a have could tax

Ryan Todd

John. Thanks

Operator

Parks from question next Our comes Instructions] Touhy [Operator Noel Brothers. with

Your line open. is

Noel Parks

Good Hi. morning.

John Hess

Good morning.

Noel Parks

on. to earlier wanted something on was just touch I mentioned base that

you exceptional want Guyana. you just a slowdown having results? if in bit some talk that wondering that was experiencing facilities had modeled do? or about not talking you could I just were if contributed curious I in to to You how was reliability little maybe about maintenance there it

Greg Hill

at year, at have forward Guyana, maintenance in. as And No. Guyana. that of for some you to comment in What then you my look was was there whole little a QX build all we if in earlier look

have maintenance. runs You and pigging facility some some will

to the downtime of we very So, we kind build production, as a was that of Guyana year into had exceptional, but reliability. full forward high QX for look

Noel Parks

you But identified? off Okay. talk how dropped if I you I about the on a prospect the this. just and could touched mentioned, minute. it geology if bit was I that you And that of Great. apologize little for Canada a offshore wondered

Greg Hill

Yes, sure.

number we of So, trap. about is with this we time opportunity. Guyana partners a one-well And There large same this a only identified identified commitment. really the that stratigraphic prospect the is a very

opening our is XX,XXX show in feet The in the will only up It’s quarter. or prospect water, we it’s so, shallow. X,XXX depth remarks, As and very the of second about in XX,XXX. feet total mentioned rig

kind wonder, But it where one-well So, we be going very large. goes. is this it’s a a of see to will and

Noel Parks

hear. to Good Great. Okay. Thanks.

Greg Hill

Thanks.

John Hess

you. Thank

Operator

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

day. have You may now disconnect a and wonderful

Hess (HES) 25 Jan 232022 Q4 Earnings call transcript