Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2023 Hess Corporation Conference Call. My name is Kevin and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

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

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

Jay Wilson

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

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

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

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

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

to I'll now turn Hess. over the John call

John Hess

morning Good Hill will our our and executing results. Greg strategy. Jay. I our first our review continued cover progress you, our discuss will Today, call. and John then operations, will Thank financial conference in quarter to Rielly welcome

offers a that proposition believe value We Hess investors. for unique

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

XXXX. and coming production the through terms robust multiple Bakken, In developments profitable than deliver of of online, can highly more growth XX% our with high-return of resource locations we growth inventory Guyana of drilling annually in phases

production, floating a or line currently of FPSOs, Block in Stabroek capacity sight day. of storage more gross per to X.X of production we the with than On million oil floating vessels, six XXXX Guyana, all and barrels have in

move will a Brent $XX by our supply, we approximately low XX% unit of costs $XX of per curve. the we to continues oil expand, that our the decline our will per cash of XXXX, breakeven forecast achieve price terms In that will base BOE down and resource steadily barrel. cost as cost By to portfolio approximately

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

cash we industry-leading terms story, highly rate differentiated providing of and In proposition. growth, an story have flow change industry-leading duration value of an a

price sheet our Based to forecast barrel, one-time. cash upon fast strengthen Brent recent growth. to annually per more continue a with as twice by at topline XX% per XXXX, flat will approximately $XX -- also oil ratio flow barrel as is $XX XXXX our our our balance increase most and than And approximately between of debt-to-EBITDAX

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

our XX% maintain capital that in fund we are opportunities more to allocated where Our investment strong than have and position the sheet and cash opportunities, a to can Guyana allocate Bakken, our through our of to investment up by our $X.XX dividend also repurchases. in our free dividend XXXX with to March, our flow increased and capital shareholders to XX% share XX% per return increases and cash of framework, return we to of financial priorities balance low-cost we line In share. high-return to ensure annual budget world-class annual capital

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

return generation of flow proportion future capital. of repurchases steadily cash a our free years, expected our As share represent to in are growing increases

protected positions WTI have XX,XXX $XX on have we barrels put $XX the barrels options, barrel volatility, price options per has of the in day oil oil on our per and per downside, of which Brent per hedged day manage while XXX,XXX upside. fully put shareholders barrel oil oil of to be XXXX, XX,XXX of barrels benefiting per day To which

including Hess Southeast-X the XX% gross and Fangtooth our the more Guyana, strategy potential the the equivalent two province industry's the than discovered where decade, than underpinning resource of of start barrels on last XXXX of billion to recoverable since barrels in have XXXX, discovered is XX XX interest block, oil multibillion a discoveries at operator. a with and of estimate had oil Since more has remaining. Lancetfish-X, exploration largest we Key ExxonMobil is

on development Stabroek resources Liza X developments the our potential X The first of in have quarter. is month for up and quarter and fourth day capacity this targeted earlier Phase XX oil of Liza gross the gross an the develop barrels the FPSOs XXX,XXX for of of produced average We in start to up the on sanctioned per to oil FPSO approximately the The to XXX,XXX discovered a third Phase Block at block. ahead approximately early Payara day. with production schedule per arrived of

expected which and approximately will is and XXX,XXX government of to to submitted development come day, have this for of XXXX in year. with oil for plan capacity hopefully sixth approvals to a a be later XXX,XXX for week of development gross oil is -- production gross The and barrels day. per expected fifth Uaru, per development Government at a expected Whiptail, approvals approximately fourth government this barrels production Yellowtail of soon, very our online capacity sanction our regulatory development, are of regulatory

team to grow a XXXX, day lean flow. lower principles of innovation, infrastructure of per a the our We approximately Turning plan barrels equivalent unit Greg culture build cost pressures. an his will to four-rig to and our to manufacturing XXX,XXX to mitigate program, improve job inflationary efficiency net and outstanding enable continue do applying of optimize cash, production generate in of oil to Bakken. us operating fully significant levels which cash continue free and

by company will leader proud area. guided sustainability commitment we long-standing industry we strategy, execute are to continue our to this be and As be an to in our

the a game which in of changer and five potentially per over million global a the the climate store developing plants, from Earlier tackling years of by wetlands year natural change donation capture ability to challenge and harnessing initiative, Institute billions to atmosphere. $XX Salk next carbon this potential month, is of crops the tons we plants announced

earned relative XX XXXX on ratings first Hess proud are AAA, a Governance after rating which for to We Bloomberg AAA MSCI once We Social rating, place In our the have consecutive AA Gender a February, the a designates MSCI's Equality consecutive latest to the XXXX and managing industry-specific received rating is earning peers. risks company highest AAA ESG's rating leader in for Environmental, also assessment. year. in in received again our as ESG Index years. fourth

we low-cost which intrinsic a in growing the and offers proposition value Guyana value execute developments Bakken. for online in strategy, with successfully inventory cash locations high-return our industry In our our unique multiple continue our by robust coming of oil and to returns, drilling phases summary, both our of

to and and we further increasingly shareholders the flow positive cash share further capital it Our become to continue portfolio free will dividend our prioritize to is as positioned through repurchases. increases does, return of

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

Greg Hill

John. oil XXX,XXX net XXX,XXX day. our XXX,XXX per quarter. performance of Thanks, above Company-wide per barrels across portfolio of to equivalent first in the our approximately guidance strong day, barrels production oil averaged operational of We equivalent demonstrated

Phase per of quarter, net several the activities Southeast fields XXX,XXX Gulf second day, Malay at will planned Liza in North and and we of between X maintenance average Asia. company-wide oil production reflecting barrels our at Basin XXX,XXX forecast Guyana, the equivalent in Mexico For of

equivalent from an we For the increase day quarter the oil per barrels XXX,XXX year production per XXX,XXX net day, strong oil between first XXXX, full equivalent company-wide to average of to to guidance performance of now our XXXX. of expect XXX,XXX and of due XXX,XXX barrels in previous

we the was drilled guidance oil online. conditions new per to from XXX,XXX brought per strong quarter, XXX,XXX wells drill wells. online of first the this new In bring oil XX net our barrels XX equivalent In approximately In Bakken, barrels quarter of challenging wells XX winter. reflecting above of day, expect and the recovery weather uptime we XXX,XXX of quarter, second and first production high to and equivalent day

meet and approximately exceed bring new online For the XXXX, terms wells. XXX expect to Individual to of and we results well continue or full year in XXXs EURs IP expectations. drill

net XXXX, between barrels per and Bakken and XXX,XXX XXX,XXX year the to second equivalent day. expect both quarter average For full oil of we production

to better day, reflecting of uptime. In oil quarter average at second offshore. Gulf guidance first primarily several maintenance above day, Mexico barrels per production approximately net Gulf of equivalent planned the oil reflecting of we In of of Mexico, approximately Moving per net our our per XX,XXX barrels Deepwater expect XX,XXX to fields. equivalent barrels the of day, quarter, production the equivalent averaged of XX,XXX oil

to production forecast barrels For per of XX,XXX the day. XXXX, equivalent continue net full to of Gulf year average approximately oil we Mexico

to Canyon May, XXX. for Tubular engine cash X for important an well the spud back remains Mexico a In prospect, company tied of be Block is plan as Bells. growth. exploration platform Gulf located well Deepwater to The in infrastructure-led which Mississippi will the an as Pickerel Pickerel we

Pickerel, plan Canyon in hub the well Green Following exploration another class to Stampede and well we tieback drill at a area.

averaged first oil of day. barrels Southeast Asia, In production quarter XX,XXX per net equivalent

XX,XXX with equivalent guidance Basin. planned production Second approximately at day. is Malay barrels is per barrels forecast in to Asia Full XX,XXX average North XX,XXX of year barrels our production oil oil XX,XXX quarter oil per per day, equivalent of XXXX compared net of net Southeast to for now equivalent maintenance reflecting day forecast previous of average to approximately

In deliver interest execution facilities the Guyana, ExxonMobil in a project outstanding XX% reliability to where Block, Stabroek operator Hess has and continues the success.

primarily strong approximately well facility production per First XXX,XXX of oil our averaged guidance uptime of barrels quarter day, by oil day driven XXX,XXX and barrels of net performance. per above

approximately barrels of oil expect net between and day the reduced for Guyana average capacity previous second our reflecting day. XXX is production, average XXX,XXX Liza barrels per maintenance. barrels from per XXX,XXX We between net now compared X guidance at XXX,XXX quarter, per Phase oil XXX, to of and day, For the of planned XXXX year oil to expected full production XXX,XXX of

oil in to our early in Singapore Turning achieve our April Prosperity dry commissioning arrived FPSO and barrels X. undergoing production Stabroek and The the fourth of and XXX,XXX Yellowtail, vessel first dock of on developments. day, per fourth on capacity Guyana Guyana gross first XXX,XXX day track Block oil with on targeted in of oil per to complete XXXX. entered for The hookup is from approximately hull the April at quarter. The is development remains a third development is oil approximately Payara, XX. One barrel XX% FPSO,

is activities and and fabrication underway. have Topside drilling installation development commenced

Government very of XXX,XXX and are our production per Uaru, approximately with gross soon for regulatory approvals barrels at development day. capacity expected a oil of fifth

on of Guyana government plan the year. development, submission the of the to our for development for later track final is Finally, sixth partnership this Whiptail, field

feet activities XX Fangtooth Now, oil-bearing the miles of potential and This for southeast encountered Well, the X the in stem underway tests turning located Fangtooth to X exploration. Fangtooth in The development analysis for X underpins are further Southeast and Drill further appraisal are oil Fangtooth the Lancetfish-X planned sandstone and of at later Lancetfish Greater reservoir. area. discovery, year. core discovery

well, drill prospect X exploration miles second to deep half prospect of plan the called X the approximately of southwest and west X we of Bacher Fangtooth the miles In X. located another a located is year, deep X Fangtooth which Lancetfish,

Moving spud in in age. Episys very expect and well Basin XX% has Hess of a working XX% the fan well to offshore Chevron, Orphan Canada, Northern The each interest. we tertiary the to have large interest will submarine in a BP target X May. BP-operated

is continues execution trajectory. our Bakken steady on In to be a strong. The closing, growth

we and of to which shareholder position our delineate Our significant Mexico Gulf further programs and major in enormous and assets us value performance upside and for come. have continue of to Asia Guyana, active drilling years projects to advance Southeast industry-leading all deliver the

the will I John turn now call Reilly. to over

John Rielly

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

between in million as million in $XXX XXXX $XXX after-tax in an was income quarter first of XXXX compared income XXXX. of the quarter of net changes fourth earnings net quarter adjusted quarter follows. of the were XXXX first E&P The and the E&P. E&P to the Turning fourth components with of

exploration earnings by lower million Lower by earnings realized midstream earnings and prices by increased earnings an $XXX $XX decrease earnings expenses $XX million. for million sales volumes by costs decreased overall tariffs Lower cash million. increased decreased million. selling in quarter first Lower $XXX of $X

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

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

Turning Hess equivalents $X.X $XX was were XX, and Midstream. March, B position. received net debt obligations At $X.X excluding In the billion, including March to available the lease X.X our we cash proceeds totaled total facilities, cash financial approximately of million committed credit segment, liquidity finance billion. Hess-owned of sale Midstream and to $X.X Class billion, units million from and

realized first and operating the prices. In hedging assets $X quarter of capital cash of the paid to capital XXXX. billion billion fourth selling in primarily were with activities to $XXX compared before net million, in and provided changes quarter E&P and expenditures XXXX, by quarter decreased XXXX, working during exploratory flow sales from activities was the includes which in of $XXX operating million the operating liabilities Changes contracts. first fourth XXXX due by premiums volumes $X.X lower $XXX million in quarter the in of cash quarter for compared first

to guidance. Now turning

for First, E&P.

$XX reflecting and range which maintenance barrel of workover oil for North spend Our the to project per Mexico of oil activities quarter cash guidance $XX.XX the the to and first quarter. due per planned to oil costs equivalent XXXX, in quarter, facilities Gulf at be Malay our costs several Gulf second We workover and of in Unity, the Basin the second equivalent cash of $XX.XX of of in the production deferral of Liza to lower barrel per of equivalent barrel the Mexico. the were than of $XX.XX in higher to $XX E&P E&P spend higher was

results in equivalent guidance unchanged. is oil year XXXX. first expense be quarter cost to expense in $XX the in $XX.XX of DD&A to forecast of per remains $XX.XX for operating of per $XX the $XX.XX of equivalent the full and equivalent This oil for the barrel be barrel the $XX Full oil $XX.XX XXXX. remains oil per to DD&A barrel second full unchanged. equivalent of in expense range range per barrel equivalent unit $XX.XX quarter cash barrel total to of range was year to per in of in quarter $XX.X $XX.XX $XX.XX and per costs the projected for second of of of oil year to oil range the the E&P barrel DD&A X to equivalent of

$X.XXX full the costs, range hole of the dry midstream expected of unchanged. $XXX year remains to full in million excluding be The to and $XXX million million in billion $XXX tariff range of million projected for million million expenses, is $XXX be to second quarter year in to guidance remains the and second quarter Exploration $XX are to of unchanged. the $XX guidance $X.XXX to billion

be to to $XXX to million previous million second the to is $XXX the million quarter for commodity year, million million $XXX the and $XXX expected expense of range which million tax full from up higher is income prices. $XXX in guidance $XXX for E&P to due of

monthly oil During options we for barrels per of monthly WTI XX,XXX XXXX of of $XX put oil XXXX the for average quarter, barrel. average and purchased for barrel options first floor per per with of an barrels Brent $XX an XX,XXX per day with floor put price for day price

We approximately will second million expect prices reflected $XX year $XXX will premium selling full for the the be in million approximately quarter our option which and XXXX. realized non-cash for be amortization,

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

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

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

This concludes my remarks.

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

Operator

question Instructions] Ryan Thank Our with [Operator Todd Piper first you. from comes Sandler.

open. Your line is

Ryan Todd

Thanks. Great.

Sorry, I on there. mute was

Greg Hill

worries. No

Ryan Todd

on guess, sustainably to we off, congratulations what expect quarter. on First as forward? the subsurface going What facility side, you're there, side. about Guyana seen these should talk two I these debottleneck seeing production what this surface on on very productive first both two strong developments, in Can produce facilities as post you well you've capacity reservoir

Greg Hill

Thanks, Yes. Ryan.

have So, expectations. first been well wells of above the performing extremely all,

going Mobil subsurface subsurface to also then, in produce as we Exxon And and further in of opening I see are my continue an the remarks, reliability great, job just debottlenecking upside SBM the mentioned of and doing wells. the So side. as kind outstanding topsides

X the range. of XXX,XXX a XXX,XXX on to barrels. that look debottlenecked Phase Recall if the track And end and barrels, XXX,XXX XXX,XXX XXX,XXX producing at Phase between the that was it year. of then barrels, barrels it's in sort debottlenecked actually It's be nameplate to by has you of towards X,

by And pick upside it's regular but more or Phase again, basis, XXX,XXX by a year. kind towards the end so So, up the been we'll on the up of that barrels of year operating XXX,XXX on barrels -- coming X.

upside, So upside.

Ryan Todd

silos on you of you're and obviously then, now. the of across costs? in And of across well on It's I very seeing kind various terms Awesome. onshore trends can in what Thanks, the cost what just Greg. Bakken service space and inflation as what talk mean, seeing topical leading-edge offshore right one maybe, you're you're seeing. about

Greg Hill

Yes. Sure.

pretty some seeing still in goods, some areas as we're staying flat, such but tubular moderation coming. Onshore country pressure we're expecting inflation So certain rigs in labor. in areas, particularly much some oil

to Now, running. in the between That's specifically where anticipated we Bakken, of inflation year-over-year it's XX%. XX% about

However, application of about remember, of these through strategic impacts half and the technology. we're mitigating lean manufacturing contracting,

Bakken well guidance $X.X our per year, for So, unchanged. the of remains well

XX% XX%. look year-over-year if offshore, at inflation between we're and the So there expecting we industry

a remember, through exposure just have in services execution in the in offshore. using ExxonMobil performance uptick. of that missed and which of like Now four mitigating inflation Guyana, then design limited they'll are of addition, operations, job first in And the we effects FPSOs one, XXXX, doing so outstanding in going is forward. the we their the contracted, manufacturing kind our so Mexico some finally, build of contracted strategy, sort many Gulf is then of And lean our fantastic recent

because So overall remains of year. that, this guidance our of unchanged capital billion $X.X

Ryan Todd

Great. Thanks, Greg.

Operator

One question. moment our next for

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

is line Your open.

Doug Leggate

Thanks. getting Good Thanks morning, for everybody. on. me

John Hess

Good morning.

Doug Leggate

wonder with Guyana. hole you I'm one think I this at nowadays dry I I event of as point. was a a if curve are cleaning carbonate. a the know where on rare kick could that's step bit off you somewhat the flippant, out in little Gents, but to This curious on obviously

billion it. haven't do the I so you just when going And talking XX you have many is about to if about do those that think I the -- more quick could versus talk pursuing, you guess, north be guess. we a in I included really talked about of far. what How You to of are XX you're actually that, barrels, actually discoveries add-on

Greg Hill

Doug. Thanks, Yes.

did hydrocarbons, that but it Liza lot improves located from our didn't subsurface. and that of the a So valuable XX encounter a was commercial provide that [ph] of play carbonate was let miles X first. Recall co-quarry data higher-risk me understanding further it

that that exploration majority changed. upper we're the your barrels reference still XX obviously, program the remains and our that see still upside with. but to Doug, continue what in block, barrels, in we way, hasn't really barrels the we'll forward, a is to lot But this we unchanged. of of multibillion as finally, to multibillion year, Yes, starting And question, campaign. this Going things And play with upside of a different the deep to there's billion have holds. dry across more along holes understand the potential the test additional few

Doug Leggate

rather? wells are point. If talking what's So, of What's or not not is billion two-thirds included? the the like barrels we XX the XX the are my discoveries --

Greg Hill

the that. What's the not lower recent it's included obviously, It's and lower. Campanian, that not the will discoveries Campanian barrels of mainly we've Again, Campanian, there's It's get results, in upper the for incorporated. in as to Upper the encompasses are of Doug, still obviously lower. upper not play billion? multibillion So, the right? XX So, we included as a that be But upside just -- well. additional lot had the

Doug Leggate

with for for question look is, follow-up the a take that. offline. you John, today, the just working that you moves. of your on guess obvious you're NPV the obviously is Guyana, seems in walked I'll the of through I buybacks, John question, I accretion accretion Rielly. is mass being housekeeping the Thank maybe when a at the not value it share lot my reflected. potential My that kind rest it price capital

looking curious the strategy it number pace that's a at, you're buyback meaning, I'm how obviously quarter. is about cash this anticipating little after thinking because quicker is might we what So, move you program, it quarter-to-quarter? that to capital working or a buyback for going around you Just were have are is on -- flow the

John Rielly

Sure Doug.

about financial we priorities back So, up our have. just and that let me talk

obviously cash is grow drive free returns priority that. because that that's opportunities, flow these said to by invest our And driven in obviously value high-return going in growth. and comments and Bakken intrinsic first his the and allow cash Bakken earlier So, as us John we to it's the to Guyana can will Guyana that do

billion $X.X second is position and cash in Again, a cash balance strong balance the want maintain good We a have that. with sheet. to have we also priority position, of on a sheet. do to strong Our we're

that place high-return in fund our we're good projects. a to So, with

going we follow us, and framework, put that we to that, return for out. So, capital have we're this

after year, after XXXX. any our that capital, we million up we capital XX% of we debt do maturities, have even have return what is so basis, And in so $XXX and after to cash an this flow do is annual don't that which is expenditures, free working on

is first of the And so dividend. in on do framework that that thing we'll capital return focused

each in share mentioned increase want thing. increase and going increase XX% year. John that we had so to that the we is do dividend so And did As his $X.XX that in per opening March, first to we be remarks, that

shareholders in did the that we dividend here with first returns quarter our increase. increase So,

the Then remainder be the that you're that we'll with FPSOs. in Payara And will free FPSO us $X accretion having of XX% flow, And generates we to repurchases. remind right, with about cash just coming with share done NAV agree net you that these of here flow. to each everybody, comes on, early billion like have be cash obviously, we year that this

the Payara again, the Yellowtail wireless. So, and

$X our getting a to billion of kind we're So year adding that portfolio.

we as and will forward, be capital repurchases. of returns our so And more more share go

to our in get on, will we that to Payara able deliver shareholders and think, just Uaru, of gets comes those generates advance in -- framework have. as buying $X shares be following significant obviously, that I value we basically of so billion be, Yellowtail And as this front and

Doug Leggate

Okay. clear. Thanks. That’s very

Operator

moment for One our next question.

next Mehta comes Sachs. Neil Our with Goldman from question

Your line is open.

Neil Mehta

to you Good quarter. is lot constructive uncertain an first near-term perspective. a morning business congrats building on there's the downside super be more a is of question – model. team in Yeah. John, for long-term Obviously, and resiliency about economic from reasons

balance I you improving and around think which the through have also the about you about on in as one, lot talked of strategy business how And creating the model? last then think defenses sheet. volatility, we a But with built years defensive gone so attributes? hedging within the that XX having just thoughts any curious is Hess just

John Hess

and focused of opportunities. have a differentiated Look, -- we obviously value we on for highly portfolio question. the of high we you cash down is No. to well. cost cost going fact Obviously, think breakeven low that thank focus $XX and proposition supply our built We return, the years, low-cost our that over get the Brent. XX% model. we Also, The part as the five next can

discipline And I the Reilly think on our keeping capital priority cash price the a strong over buying portfolio balance cash position we position, resilient shareholders at John of downside the talked and end very was by our our about upside. still makes a and quarter low also puts to continue billion. sheet hedge the protect the to environment. in and that $X give will

that to to So strong costs stay our a lot our cost resilient going through I sheet and keep a think going are cycle. are going competitors of to up, having the relative we're balance down, pressures

Neil Mehta

And talk clear. then about very the trajectory on what year? you and that at just think the get plateau a you course the level? Can And what follow-up you That's Yeah. we then Bakken. the to over of anticipate do

Greg Hill

Yeah.

ahead our So of but line was a with of to we see with we forecast, QX the to continue exited we a forecast, in as and the guidance, little steadily bit expect bring it line in our through year build end online. wells

year. second quarter for the the provide rest we'll Now usual, conference our guidance for the of in call Bakken as

of just flat XXXX. with barrels across hold get have. steady XXX,XXX for XXXX increase to Neil, a to expect and able with then a XXXX. four-rig sort And we think, that almost be decade in a that I We'll But inventory program the a day

decade. free of want Bakken I cash reaches that $X billion to when increase it it a for plateau, steady XXX,XXX XXX,XXX, that people will remind hold flat about So flow. to generate

company. steady So generator cash flow for the

Neil Mehta

guys. Thanks

Operator

One our moment for question. next

Our next question comes from Cheng with Paul Scotiabank.

Your open. line is

Paul Cheng

good Hey guys, morning.

John Hess

Good Hi. morning.

Paul Cheng

Two questions.

at the first do I say to even how ownership barrels Hess then, the per John, term day, Midstream I of mean the over especially XXX,XXX for question. company? the to still the need once important mean, the you that, or curious get I we we there, operatorship do Bakken, have Just longer have That's is the mean, need ownership?

John Rielly

differentiated for maximizing key up committed strategic a remain E&P Bakken assets partner in long-term the of value we key mean I Paul. maintaining control Hess it's It's get to with driving to Sure, It down the and value GHG marketing been provides our optionality Midstream. there us. our to in so and Also, that flaring to operational our intensity. emission high-value we capture markets. gas us takeaway adds

on say has been to executing same, position getting ESG the for the they've -- then about been Hess you just production think free think Hess flow us continues about cash doing Midstream more growth. Midstream, brilliantly And and it generate to very markets. when would of strong credit E&P they've also the I So and really a

So the Hess through Midstream, returns for like capital, just of then capital million of the $XXX potential they incremental did XXXX have recent which outline for flexibility that billion the they about did. transaction they financial includes allocation, that $X

so a $XXX of And small that $X flexibility. million that billion is part financial

basically to So has Midstream year XXXX. buybacks each the Hess through potential multiple execute

you way, investment. we can and think think that Paul, So are I same happy it about of the with just more the

Paul Cheng

Okay.

question, first basis? to but this second in also, think of for that kind to be many color it provide? or Yellowtail is bit versus narrower going I've to can be I Any And oil. think half and been Is saying the of any new you Greg, a the I wells, drill between Second XXXX half, Greg. going plan appraisal now how is maybe window? the exploration the not well, exploration the kind exploration expiration of wells, consultant that

Greg Hill

part the me let first. answer exploration So

XXXX. got So The multibillion upside. of of in barrels license expires remember, we've Paul, October

get understand We the five it to four next that will take years locked fully potential down. to

pretty and think about should drill about much XXXX. exploration a we a so So XX three going usually three And rigs exploration wells think year can you through or wells I year. appraisal --

barrels sort of think forward, going continue that So level that again, upside to going after exploration of prospectivity that of we see. multibillion a

Yellowtail. Yellowtail... on question Look, Your

Paul Cheng

Sorry.

year, and -- appraisal? that per split you well the a the do have exploration between For XX roughly

Greg Hill

exploration upon Obviously, right? success, we we going want appraise we when success. an success, So depend that don't. to then to tend to that's No, have

Fangtooth, feet. feet. remember, Southeast Just was XXX Fangtooth like XXX we're Fangtooth was at doing X

a going development. Now to XX probably of feet with we be have pay, Lancetfish

we're want area. appraise going So that around Fangtooth to greater to

So the what we to success depend as forward is. it's upon as really go to going split

Yes.

Now regarding mean Yellowtail, I is of early. look, it's running ahead right Yellowtail too schedule now.

good, are major but Looking these projects.

dates. So those I as just right we'll about think XXXX to further down, obviously, on is get narrow And now, window think the we the right in way it.

Paul Cheng

Right. Thank you.

Operator

One for moment our question. next

Parks comes Tuohy question from Our next with Noel Brothers.

line open. Your is

Noel Parks

morning. Good Hi.

John Hess

Good morning.

Noel Parks

bit I policy. wondered little to a about your hedging I thinking could get if talk on you

You laid options. the in put

new with big you development course, from coming online have, And production that's ahead So Guyana. certainly of ramp-ups interesting.

backwardation thinking certainly So years, balance as and as I what's downside maybe you're over what's How guess say, you and upside so just curve. realizing of on on? about wonder your just to the protection I -- had looking radar if screen? have of -- ahead, the we just versus look you in XXXX, your periods ahead

John Rielly

Sure.

So from we and our the use is view hedging insurance, insurance, downside do we what you we and strategic protection. philosophy on it the said, as just an we We it ensure buy believe importance, is puts. so the like

but to leave Our use strategy to upside for downside, protect the full investors. is puts

that's this again, we So did year. what

year, And We we a very XXX,XXX have you XXX,XXX with barrels comfortable this day a see day had barrels year. last that level.

do that, let's And XXX,XXX go a like question level say, is that that on the way think this look you we'll level can we as we'll of move put approximately more the option. into options, So of your latter just for of do to forward. think And I cost, part for the hedges XXXX. right, value put in XXXX, the because with at the on barrel the about you money time assume put we as of day type insurance year, can or that we the

towards earlier. want insurance again, it like mentioned as really but would we're as be end just our will to on putting XXXX trying early in obviously, we either on typically us protection, to hedge possible, -- did opportunistic see downside the get or that that you Hess as this year. of within get putting So on because eventually so we XXXX, the we John And trying

Noel Parks

I side. And to the turn regulatory to Great. Thanks. on want

even scrutinizing wondering, what for have you expecting a one easier the to dry in Guyana just development, is terms approval shifts it cut officials of are you that have or becoming of was approval is the each their from mentioned process? next, seen the Is any government for I'm what lot teeing over project? pretty keep each You or time development next year. up you and at this from wondering, approvals point as of this -- I sort basis

John Hess

overseeing regulatory the approvals. rigorous No. government The very is Guyana government and and

working a there's ExxonMobil good government as think with very operator itself. I the relationship and

And getting process. and approval the approval we'll hopefully, for think matter about sides. volumes week, the that I the on I is this of process both be the appropriate approval think Uaru, is, speaks fact

has So and The analysis priorities obviously own their going and timing in as the the also those. government. it's appropriately by in government depth operator ExxonMobil of addresses

both process thoughtful the diligent So for that's say approval I'd one and be continues to sides.

Noel Parks

Perfect. Thanks a lot.

Operator

One moment for our question. next

Our comes Arun Jayaram from next question with JPMorgan.

Arun Jayaram

Hey, good morning.

John Hess

morning, Good Arun.

Arun Jayaram

the Greg, for give the kind a vessel barrels I and just to Greg, us XQ And the kind updated of of sense path maybe you've for landed hit in on start-up in required your risked in of April was a for could guidance first Guyana the maybe what at that XX. Payara. us terms give to morning, oil of volumes? if I you know you. John. sense activities you of early wondering guidance Good Payara

Greg Hill

turn. Thanks, Arun. Yeah. I Sorry,

So has first oil Payara, been now from remember brought forward.

the quarter fourth were fourth we quarter saying to So into now. early

few forward already we've months. So pulled it

In X. to is terms Phase remember, done, extensive be Payara of has what more than

wells. X. it's It's So of got XX% leads more got XX% the surf Phase more

hook take And things well to track. a up and But in are so Phase to bit on longer commission it's is. X expected

I think as quarter yeah. confidently ExxonMobil things first at well quarter as this we've the early of year, or adequately point, risked early to say this fourth operator,

Arun Jayaram

in for terms you what of guide the have included Payara? And all updated

Greg Hill

haven't We anything yet. included

we we'll date, get So to at oil the guidance. midyear, obviously, that our updating closer be as first

Arun Jayaram

just maybe And Great. Guyana. Okay. also a in follow-up

I And today's seventh three at a discoveries DST those you all Bacher, and think think, you yet at boat, some resource and Fangtooth? you Southeast will between Lancetfish on Greg, or Fangtooth, mentioned, there's you Lancetfish. to at discoveries enough call. done You've success announced have a Fangtooth underwrite do need

Greg Hill

No.

drill Southeast area core And of are mentioned, the the appraisal both Fangtooth at we is a Southeast. about Fangtooth have Fangtooth-X planning underway. stand is also DST. tests as year think do well as terms hub. an the Fangtooth then in I for And for and X analysis in Lancetfish. big we and Fangtooth later you planned

other obviously, that Lancetfish, out to going really field drill DST intimated that Bacher plan to we're will the add we need what you be. but hub in there, when and wells development data you as So figure the there's potential a for

Arun Jayaram

Great. Thanks a lot.

Operator

next our question. for moment One

Scotiabank. Our next with Paul from Cheng question comes

is line open. Your

Paul Cheng

Hey, for is Rielly. John thanks. This

have -- next whether follow-up. you. maybe next quarters shape some years? going over give you how and assume quick it I correct? several to will several deferred the catch up guys the that XXXX, Related to Thank you or be ballpark us over been by a on that point, at the will booking Can looks some up tax a that on like that it Just there. trajectory Guyana, is XXXX

John Rielly

we tax Guyana a are booking Guyana. you're right, has deferred in rate. statutory So XX%

we So rate just XX% similar. effective recording will be a and it's

deduction purposes you for fixed Let just to the you like get the can assets so basis, tax me the say book. tax depreciation, higher quicker tax amortize the US, for for where rules versus a

you And so we the rate your Guyana. first current that, rest therefore, I can $XX a cash similar bring to for obviously the Paul, guidance just result for as million, use but boats, as and see level let's of in more this for purposes, change lower that tax just of would, book deferred the year, a deferred say, and is continue than it more quarter we on taxes. tax

Paul Cheng

years? John, how next about several the for

John Rielly

to year capital add you higher and you're years go base, next the going and over depreciation. we want changes every so I several when because in it get the depreciable five the years, don't

that So the of to to couple it's difficult for you next provide years.

boats you So the we'll as come on. year-by-year try to guide

Paul Cheng

still projects, go from rising. this up maybe projects in two Can so way to projects we you three is assume time, your CapEx say, and the ramping as at and that same more

of a investment? to until as result, the a your we're deferred see be passive So tax to going that you sort stabilizing continue

John Rielly

that. you Yes, assume Yes. can

Paul Cheng

good. Very you. Okay. Thank

Operator

participation. conference. no today's further you Thank are this concludes questions much. Thank at There This your time. very you for

great and a You day. may disconnect, have now

Hess (HES) 26 Apr 232023 Q1 Earnings call transcript