Hess Reports Estimated Results for the Second Quarter of 2022

Jul 27th, 2022 11:30 EST

NEW YORK--(BUSINESS WIRE)--Hess Corporation (NYSE: HES) today reported net income of $667 million, or $2.15 per common share, in the second quarter of 2022, compared with a net loss of $73 million, or $0.24 per common share, in the second quarter of 2021. On an adjusted basis, the Corporation had net income of $74 million, or $0.24 per common share, in the second quarter of 2021. The improvement in after-tax earnings compared with the prior-year quarter adjusted results was primarily due to higher realized selling prices in the second quarter of 2022.

1.  

“Adjusted net income (loss)” is a non-GAAP financial measure. The definition of this non-GAAP measure and a reconciliation to its nearest GAAP equivalent measure appears on pages 6 and 8.

   “In a world that needs reliable, low cost oil and gas resources now and for decades to come, Hess offers a highly differentiated value proposition,” CEO John Hess said. “As our portfolio becomes increasingly free cash flow positive, we will continue both to invest to grow our company’s intrinsic value and to return capital to our shareholders through further dividend increases and share repurchases.”

   After-tax income (loss) by major operating activity was as follows:

 

Three Months Ended

June 30,

(unaudited)

 

Six Months Ended

June 30,

(unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess Corporation

 

 

 

 

Exploration and Production

$

723

 

$

(25)

 

$

1,183

 

$

283

Midstream

 

65

 

 

76

 

 

137

 

 

151

Corporate, Interest and Other

 

(121)

 

 

(124)

 

 

(236)

 

 

(255)

Net income (loss) attributable to Hess Corporation

$

667

 

$

(73)

 

$

1,084

 

$

179

Net income (loss) per common share (diluted)

$

2.15

 

$

(0.24)

 

$

3.49

 

$

0.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income (Loss) Attributable to Hess Corporation

 

 

 

 

Exploration and Production

$

723

 

$

122

 

$

1,183

 

$

430

Midstream

 

65

 

 

76

 

 

137

 

 

151

Corporate, Interest and Other

 

(121)

 

 

(124)

 

 

(249)

 

 

(255)

Adjusted net income (loss) attributable to Hess Corporation

$

667

 

$

74

 

$

1,071

 

$

326

Adjusted net income (loss) per common share (diluted)

$

2.15

 

$

0.24

 

$

3.45

 

$

1.06

 

 

 

 

 

 

 

 

Weighted average number of shares (diluted)

 

310.9

 

 

307.5

 

 

310.6

 

 

308.7

 

 

 

 

 

 

 

 

Exploration and Production:

   E&P net income was $723 million in the second quarter of 2022, compared with a net loss of $25 million in the second quarter of 2021. On an adjusted basis, E&P second quarter 2021 net income was $122 million. The Corporation’s average realized crude oil selling price, including the effect of hedging, was $99.16 per barrel in the second quarter of 2022, compared with $59.79 per barrel in the prior-year quarter. The average realized natural gas liquids (NGL) selling price in the second quarter of 2022 was $40.92 per barrel, compared with $23.12 per barrel in the prior-year quarter, while the average realized natural gas selling price was $6.45 per mcf, compared with $4.05 per mcf in the second quarter of 2021.

   Net production, excluding Libya, was 303,000 boepd in the second quarter of 2022, compared with 307,000 boepd in the second quarter of 2021, or 302,000 boepd proforma for assets sold.

   Cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $13.90 per boe (excluding Libya: $14.56 per boe) in the second quarter of 2022, compared with $11.63 per boe (excluding Libya: $12.16 per boe) in the prior-year quarter. The increase in cash operating costs in the second quarter of this year, compared with the second quarter of last year, reflects higher production and severance taxes in North Dakota due to higher realized selling prices, and higher workover activity in North Dakota and the Gulf of Mexico.

Operational Highlights for the Second Quarter of 2022:

   Bakken (Onshore U.S.): Net production from the Bakken was 140,000 boepd, which remained within our guidance range for the second quarter, reflecting unplanned production shut-ins caused by severe weather in April and May. Net production in the second quarter of 2021 was 159,000 boepd. During the second quarter of 2022, the Corporation operated three rigs and drilled 20 wells, completed 19 wells, and brought 19 new wells online. In July, the Corporation added a fourth drilling rig.

   Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 29,000 boepd, compared with 52,000 boepd in the prior-year quarter, primarily due to field decline and unplanned downtime at the Stampede and Penn State fields.

   Guyana (Offshore): At the Stabroek Block (Hess – 30%), net production totaled 67,000 bopd in the second quarter of 2022 compared with 26,000 bopd in the prior-year quarter. Production from the Liza Destiny FPSO reached its new production capacity of more than 140,000 gross bopd in the second quarter of 2022 following the completion of production optimization work initiated in March. Net production from the Liza Unity FPSO, which commenced in February, was 35,000 bopd in the second quarter of 2022, and reached its production capacity of 220,000 gross bopd in July. In the second quarter, we sold 6 one-million barrel cargos of crude oil from Guyana compared with 2 one-million barrel cargos in the prior year quarter.

   Net production guidance for Guyana for the full year 2022 is expected to be approximately 75,000 bopd, which includes approximately 6,000 bopd of tax barrels. Net production guidance for the third quarter of 2022 is expected to be in the range of 90,000 bopd to 95,000 bopd, which includes approximately 7,000 bopd of tax barrels. There were no tax barrels in the first or second quarters.

   The third development, Payara, will utilize the Prosperity FPSO with an expected capacity of 220,000 gross bopd, with first production expected in late 2023. The fourth development, Yellowtail, was sanctioned in April and will utilize the ONE GUYANA FPSO with an expected capacity of approximately 250,000 gross bopd, with first production expected in 2025.

   Two new discoveries were announced at Seabob and Kiru-Kiru, which add to the previously announced gross discovered recoverable resource estimate for the Stabroek Block of approximately 11 billion boe. The Seabob-1 well encountered 131 feet of high quality oil bearing sandstone reservoirs. The well was drilled in 4,660 feet of water and is located approximately 12 miles southeast of the Yellowtail Field. Drilling operations at Kiru-Kiru are ongoing. The Kiru-Kiru-1 well has thus far encountered 98 feet of high quality hydrocarbon bearing sandstone reservoirs. The well is being drilled in 5,760 feet of water and is located approximately 3 miles southeast of the Cataback-1 discovery.

   Southeast Asia (Offshore): Net production at North Malay Basin and JDA was 67,000 boepd in the second quarter of 2022 compared with 66,000 boepd in the prior-year quarter.

Midstream:

   The Midstream segment had net income of $65 million in the second quarter of 2022, compared with net income of $76 million in the prior-year quarter.

Corporate, Interest and Other:

   After-tax expense for Corporate, Interest and Other was $121 million in the second quarter of 2022, compared with $124 million in the second quarter of 2021.

Capital and Exploratory Expenditures:

   E&P capital and exploratory expenditures were $622 million in the second quarter of 2022 compared with $429 million in the prior-year quarter, primarily due to higher drilling and development activities in the Bakken, Gulf of Mexico, Guyana, and Malaysia and JDA. Midstream capital expenditures were $72 million in the second quarter of 2022, up from $47 million in the prior-year quarter.

Liquidity:

   Excluding the Midstream segment, Hess Corporation had cash and cash equivalents of $2.16 billion and debt and finance lease obligations totaling $5.61 billion at June 30, 2022. The Midstream segment had cash and cash equivalents of $3 million and total debt of $2.9 billion at June 30, 2022. The Corporation’s debt to capitalization ratio as defined in its debt covenants was 37.9% at June 30, 2022 and 42.3% at December 31, 2021.

   Net cash provided by operating activities was $1,509 million in the second quarter of 2022, up from $785 million in the second quarter of 2021. Net cash provided by operating activities before changes in operating assets and liabilities2 was $1,463 million in the second quarter of 2022, compared with $659 million in the prior-year quarter primarily due to higher realized selling prices. Changes in operating assets and liabilities increased cash flow from operating activities by $46 million during the second quarter of 2022 and increased cash flow from operating activities by $126 million during the prior-year quarter.

   The Corporation commenced common stock repurchases in the second quarter with the purchase of approximately 1.8 million shares for $190 million under the Corporation’s existing $650 million board authorized stock repurchase program. The Corporation intends to utilize the remaining amount under the stock repurchase program by the end of this year. Total cash returned to shareholders in the second quarter amounted to $306 million including dividends.

   In April 2022, the Corporation received net proceeds of $346 million from the public offering of approximately 5.1 million Hess Midstream LP (HESM) Class A shares held by the Corporation and the repurchase by Hess Midstream Operations LP (HESM Opco) of approximately 6.8 million HESM Opco Class B units held by the Corporation. The repurchase of approximately 6.8 million HESM Opco Class B units was financed by the issuance of $400 million of 5.500% senior unsecured notes due 2030 by HESM Opco. After giving effect to the above transactions, the Corporation owns approximately 41% of HESM on a consolidated basis.

   In July 2022, the Corporation replaced its $3.5 billion revolving credit facility expiring in May 2024 with a new $3.25 billion revolving credit facility maturing in July 2027. In July 2022, HESM Opco extended the maturity of its $1.4 billion credit facilities, consisting of a $1.0 billion revolving credit facility and a fully drawn $400 million term loan, through July 2027. Borrowings under both revolving credit facilities, including the fully drawn five-year term loan, will bear interest based on the Secured Overnight Financing Rate plus an applicable margin.

2.  

“Net cash provided by (used in) operating activities before changes in operating assets and liabilities” is a non-GAAP financial measure. The definition of this non-GAAP measure and a reconciliation to its nearest GAAP equivalent measure appears on pages 7 and 8.

Items Affecting Comparability of Earnings Between Periods:

   The following table reflects the total after-tax income (expense) of items affecting comparability of earnings between periods:

 

Three Months Ended

June 30,

(unaudited)

 

Six Months Ended

June 30,

(unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(In millions)

Exploration and Production

$

 

$

(147)

 

$

 

$

(147)

Midstream

 

 

 

 

 

 

 

Corporate, Interest and Other

 

 

 

 

 

13

 

 

Total items affecting comparability of earnings between periods

$

 

$

(147)

 

$

13

 

$

(147)

   Second Quarter 2021: E&P results included a charge of $147 million ($147 million after income taxes) in connection with abandonment obligations in the West Delta 79/86 field in the Gulf of Mexico. These abandonment obligations were assigned to the Corporation as a former owner after they were discharged from Fieldwood Energy LLC (Fieldwood) as part of Fieldwood's approved bankruptcy plan.

Reconciliation of U.S. GAAP to Non-GAAP Measures:

   The following table reconciles reported net income (loss) attributable to Hess Corporation and adjusted net income (loss):

 

Three Months Ended

June 30,

(unaudited)

 

Six Months Ended

June 30,

(unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(In millions)

Net income (loss) attributable to Hess Corporation

$

667

 

$

(73)

 

$

1,084

 

$

179

Less: Total items affecting comparability of earnings between periods

 

 

 

(147)

 

 

13

 

 

(147)

Adjusted net income (loss) attributable to Hess Corporation

$

667

 

$

74

 

$

1,071

 

$

326

   The following table reconciles reported net cash provided by (used in) operating activities from net cash provided by (used in) operating activities before changes in operating assets and liabilities:

 

Three Months Ended

June 30,

(unaudited)

 

Six Months Ended

June 30,

(unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(In millions)

Net cash provided by (used in) operating activities before changes in operating assets and liabilities

$

1,463

 

$

659

 

$

2,415

 

$

1,474

Changes in operating assets and liabilities

 

46

 

 

126

 

 

(1,062)

 

 

(98)

Net cash provided by (used in) operating activities

$

1,509

 

$

785

 

$

1,353

 

$

1,376

Hess Corporation will review second quarter financial and operating results and other matters on a webcast at 10 a.m. today (EDT). For details about the event, refer to the Investor Relations section of our website at www.hess.com.

Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information on Hess Corporation is available at www.hess.com.

Forward-looking Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “would,” “believe,” “intend,” “project,” “plan,” “predict,” “will,” “target” and similar expressions identify forward-looking statements, which are not historical in nature. Our forward-looking statements may include, without limitation: our future financial and operational results; our business strategy; estimates of our crude oil and natural gas reserves and levels of production; benchmark prices of crude oil, NGL and natural gas and our associated realized price differentials; our projected budget and capital and exploratory expenditures; expected timing and completion of our development projects; and future economic and market conditions in the oil and gas industry.

Forward-looking statements are based on our current understanding, assessments, estimates and projections of relevant factors and reasonable assumptions about the future. Forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations of future results expressed or implied by these forward-looking statements. The following important factors could cause actual results to differ materially from those in our forward-looking statements: fluctuations in market prices of crude oil, NGL and natural gas and competition in the oil and gas exploration and production industry, including as a result of COVID-19; reduced demand for our products, including due to COVID-19, perceptions regarding the oil and gas industry, competing or alternative energy products and political conditions and events; potential failures or delays in increasing oil and gas reserves, including as a result of unsuccessful exploration activity, drilling risks and unforeseen reservoir conditions, and in achieving expected production levels; changes in tax, property, contract and other laws, regulations and governmental actions applicable to our business, including legislative and regulatory initiatives regarding environmental concerns, such as measures to limit greenhouse gas emissions and flaring, fracking bans as well as restrictions on oil and gas leases; operational changes and expenditures due to climate change and sustainability related initiatives; disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks, health measures related to COVID-19, or climate change; the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures under which we may not control and exposure to decommissioning liabilities for divested assets in the event the current or future owners are unable to perform; unexpected changes in technical requirements for constructing, modifying or operating exploration and production facilities and/or the inability to timely obtain or maintain necessary permits; availability and costs of employees and other personnel, drilling rigs, equipment, supplies and other required services; any limitations on our access to capital or increase in our cost of capital, including as a result of limitations on investment in oil and gas activities or negative outcomes within commodity and financial markets; liability resulting from environmental obligations and litigation, including heightened risks associated with being a general partner of Hess Midstream LP; and other factors described in Item 1A—Risk Factors in our Annual Report on Form 10-K and any additional risks described in our other filings with the Securities and Exchange Commission (SEC).

As and when made, we believe that our forward-looking statements are reasonable. However, given these risks and uncertainties, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur and actual results may differ materially from those contained in any forward-looking statement we make. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

Non-GAAP financial measures

The Corporation has used non-GAAP financial measures in this earnings release. “Adjusted net income (loss)” presented in this release is defined as reported net income (loss) attributable to Hess Corporation excluding items identified as affecting comparability of earnings between periods. “Net cash provided by (used in) operating activities before changes in operating assets and liabilities” presented in this release is defined as Net cash provided by (used in) operating activities excluding changes in operating assets and liabilities. Management uses adjusted net income (loss) to evaluate the Corporation’s operating performance and believes that investors’ understanding of our performance is enhanced by disclosing this measure, which excludes certain items that management believes are not directly related to ongoing operations and are not indicative of future business trends and operations. Management believes that net cash provided by (used in) operating activities before changes in operating assets and liabilities demonstrates the Corporation’s ability to internally fund capital expenditures, pay dividends and service debt. These measures are not, and should not be viewed as, a substitute for U.S. GAAP net income (loss) or net cash provided by (used in) operating activities. A reconciliation of reported net income (loss) attributable to Hess Corporation (U.S. GAAP) to adjusted net income (loss), and a reconciliation of net cash provided by (used in) operating activities (U.S. GAAP) to net cash provided by (used in) operating activities before changes in operating assets and liabilities are provided in the release.

Cautionary Note to Investors

We use certain terms in this release relating to resources other than proved reserves, such as unproved reserves or resources. Investors are urged to consider closely the oil and gas disclosures in Hess Corporation’s Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Second

Quarter

2022

 

Second

Quarter

2021

 

First

Quarter

2022

Income Statement

 

 

 

 

 

 

 

 

 

 

 

Revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

2,955

 

$

1,579

 

$

2,313

Gains (losses) on asset sales, net

 

3

 

 

 

 

22

Other, net

 

30

 

 

19

 

 

36

Total revenues and non-operating income

 

2,988

 

 

1,598

 

 

2,371

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas

 

843

 

 

322

 

 

682

Operating costs and expenses

 

356

 

 

315

 

 

313

Production and severance taxes

 

67

 

 

44

 

 

61

Exploration expenses, including dry holes and lease impairment

 

33

 

 

48

 

 

43

General and administrative expenses

 

95

 

 

84

 

 

110

Interest expense

 

121

 

 

118

 

 

123

Depreciation, depletion and amortization

 

391

 

 

385

 

 

337

Impairment and other

 

 

 

147

 

 

Total costs and expenses

 

1,906

 

 

1,463

 

 

1,669

Income (loss) before income taxes

 

1,082

 

 

135

 

 

702

Provision (benefit) for income taxes

 

328

 

 

122

 

 

197

Net income (loss)

 

754

 

 

13

 

 

505

Less: Net income (loss) attributable to noncontrolling interests

 

87

 

 

86

 

 

88

Net income (loss) attributable to Hess Corporation

$

667

 

$

(73)

 

$

417

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

Income Statement

 

 

 

 

 

 

 

Revenues and non-operating income

 

 

 

Sales and other operating revenues

$

5,268

 

$

3,477

Gains (losses) on asset sales, net

 

25

 

 

Other, net

 

66

 

 

40

Total revenues and non-operating income

 

5,359

 

 

3,517

Costs and expenses

 

 

 

Marketing, including purchased oil and gas

 

1,525

 

 

840

Operating costs and expenses

 

669

 

 

580

Production and severance taxes

 

128

 

 

81

Exploration expenses, including dry holes and lease impairment

 

76

 

 

81

General and administrative expenses

 

205

 

 

178

Interest expense

 

244

 

 

235

Depreciation, depletion and amortization

 

728

 

 

781

Impairment and other

 

 

 

147

Total costs and expenses

 

3,575

 

 

2,923

Income (loss) before income taxes

 

1,784

 

 

594

Provision (benefit) for income taxes

 

525

 

 

245

Net income (loss)

 

1,259

 

 

349

Less: Net income (loss) attributable to noncontrolling interests

 

175

 

 

170

Net income (loss) attributable to Hess Corporation

$

1,084

 

$

179

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

June 30,

2022

 

December 31,

2021

Balance Sheet Information

 

 

 

Assets

 

 

 

Cash and cash equivalents

$

2,159

 

$

2,713

Other current assets

 

1,810

 

 

1,633

Property, plant and equipment – net

 

14,818

 

 

14,182

Operating lease right-of-use assets – net

 

446

 

 

352

Finance lease right-of-use assets – net

 

136

 

 

144

Other long-term assets

 

1,811

 

 

1,491

Total assets

$

21,180

 

$

20,515

Liabilities and equity

 

 

 

Current maturities of long-term debt

$

 

$

517

Current portion of operating and finance lease obligations

 

114

 

 

89

Other current liabilities

 

2,241

 

 

2,458

Long-term debt

 

8,332

 

 

7,941

Long-term operating lease obligations

 

457

 

 

394

Long-term finance lease obligations

 

190

 

 

200

Other long-term liabilities

 

2,088

 

 

1,890

Total equity excluding other comprehensive income (loss)

 

7,621

 

 

6,706

Accumulated other comprehensive income (loss)

 

(485)

 

 

(406)

Noncontrolling interests

 

622

 

 

726

Total liabilities and equity

$

21,180

 

$

20,515

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

June 30,

2022

 

December 31,

2021

Total Debt

 

 

 

Hess Corporation

$

5,395

 

$

5,894

Midstream (a)

 

2,937

 

 

2,564

Hess Consolidated

$

8,332

 

$

8,458

(a) Midstream debt is non-recourse to Hess Corporation.

 

June 30,

2022

 

December 31,

2021

Debt to Capitalization Ratio (a)

 

 

 

Hess Consolidated

 

52.4 %

 

 

55.3 %

Hess Corporation as defined in debt covenants

 

37.9 %

 

 

42.3 %

(a) Includes finance lease obligations.

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Interest Expense

 

 

 

 

 

 

 

Gross interest expense – Hess Corporation

$

86

 

$

95

 

$

178

 

$

189

Less: Capitalized interest – Hess Corporation

 

(3)

 

 

 

 

(3)

 

 

Interest expense – Hess Corporation

 

83

 

 

95

 

 

175

 

 

189

Interest expense – Midstream (a)

 

38

 

 

23

 

 

69

 

 

46

Interest expense – Hess Consolidated

$

121

 

$

118

 

$

244

 

$

235

(a) Midstream interest expense is reported in the Midstream operating segment.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Second

Quarter

2022

 

Second

Quarter

2021

 

First

Quarter

2022

Cash Flow Information

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

Net income (loss)

$

754

 

$

13

 

$

505

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

(Gains) losses on asset sales, net

 

(3)

 

 

 

 

(22)

Depreciation, depletion and amortization

 

391

 

 

385

 

 

337

Impairment and other

 

 

 

147

 

 

Exploratory dry hole costs

 

 

 

9

 

 

Exploration lease and other impairment

 

4

 

 

6

 

 

6

Pension settlement loss

 

2

 

 

3

 

 

Stock compensation expense

 

16

 

 

19

 

 

33

Noncash (gains) losses on commodity derivatives, net

 

163

 

 

64

 

 

55

Provision (benefit) for deferred income taxes and other tax accruals

 

136

 

 

13

 

 

38

Net cash provided by (used in) operating activities before changes in operating assets and liabilities

 

1,463

 

 

659

 

 

952

Changes in operating assets and liabilities

 

46

 

 

126

 

 

(1,108)

Net cash provided by (used in) operating activities

 

1,509

 

 

785

 

 

(156)

Cash Flows from Investing Activities

 

 

 

 

 

Additions to property, plant and equipment - E&P

 

(607)

 

 

(329)

 

 

(491)

Additions to property, plant and equipment - Midstream

 

(56)

 

 

(26)

 

 

(55)

Proceeds from asset sales, net of cash sold

 

4

 

 

297

 

 

24

Other, net

 

 

 

(2)

 

 

Net cash provided by (used in) investing activities

 

(659)

 

 

(60)

 

 

(522)

Cash Flows from Financing Activities

 

 

 

 

 

Net borrowings (repayments) of debt with maturities of 90 days or less

 

(14)

 

 

(65)

 

 

1

Debt with maturities of greater than 90 days:

 

 

 

 

 

Borrowings

 

400

 

 

 

 

Repayments

 

(5)

 

 

(2)

 

 

(505)

Proceeds from sale of Class A shares of Hess Midstream LP

 

146

 

 

 

 

Employee stock options exercised

 

7

 

 

63

 

 

33

Payments on finance lease obligations

 

(2)

 

 

(2)

 

 

(2)

Common stock acquired and retired

 

(190)

 

 

 

 

Cash dividends paid

 

(116)

 

 

(77)

 

 

(119)

Noncontrolling interests, net

 

(277)

 

 

(70)

 

 

(74)

Other, net

 

(10)

 

 

(8)

 

 

1

Net cash provided by (used in) financing activities

 

(61)

 

 

(161)

 

 

(665)

Net Increase (Decrease) in Cash and Cash Equivalents

 

789

 

 

564

 

 

(1,343)

Cash and Cash Equivalents at Beginning of Period

 

1,370

 

 

1,866

 

 

2,713

Cash and Cash Equivalents at End of Period

$

2,159

 

$

2,430

 

$

1,370

 

 

 

 

 

 

Additions to Property, Plant and Equipment included within Investing Activities

Capital expenditures incurred

$

(665)

 

$

(443)

 

$

(580)

Increase (decrease) in related liabilities

 

2

 

 

88

 

 

34

Additions to property, plant and equipment

$

(663)

 

$

(355)

 

$

(546)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

Cash Flow Information

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

Net income (loss)

$

1,259

 

$

349

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

(Gains) losses on asset sales, net

 

(25)

 

 

Depreciation, depletion and amortization

 

728

 

 

781

Impairment and other

 

 

 

147

Exploratory dry hole costs

 

 

 

9

Exploration lease and other impairment

 

10

 

 

10

Pension settlement loss

 

2

 

 

4

Stock compensation expense

 

49

 

 

44

Noncash (gains) losses on commodity derivatives, net

 

218

 

 

88

Provision (benefit) for deferred income taxes and other tax accruals

 

174

 

 

42

Net cash provided by (used in) operating activities before changes in operating assets and liabilities

 

2,415

 

 

1,474

Changes in operating assets and liabilities

 

(1,062)

 

 

(98)

Net cash provided by (used in) operating activities

 

1,353

 

 

1,376

Cash Flows from Investing Activities

 

 

 

Additions to property, plant and equipment - E&P

 

(1,098)

 

 

(687)

Additions to property, plant and equipment - Midstream

 

(111)

 

 

(53)

Proceeds from asset sales, net of cash sold

 

28

 

 

297

Other, net

 

 

 

(2)

Net cash provided by (used in) investing activities

 

(1,181)

 

 

(445)

Cash Flows from Financing Activities

 

 

 

Net borrowings (repayments) of debt with maturities of 90 days or less

 

(13)

 

 

(75)

Debt with maturities of greater than 90 days:

 

 

 

Borrowings

 

400

 

 

Repayments

 

(510)

 

 

(5)

Proceeds from sale of Class A shares of Hess Midstream LP

 

146

 

 

70

Employee stock options exercised

 

40

 

 

75

Payments on finance lease obligations

 

(4)

 

 

(4)

Common stock acquired and retired

 

(190)

 

 

Cash dividends paid

 

(235)

 

 

(157)

Noncontrolling interests, net

 

(351)

 

 

(137)

Other, net

 

(9)

 

 

(7)

Net cash provided by (used in) financing activities

 

(726)

 

 

(240)

Net Increase (Decrease) in Cash and Cash Equivalents

 

(554)

 

 

691

Cash and Cash Equivalents at Beginning of Period

 

2,713

 

 

1,739

Cash and Cash Equivalents at End of Period

$

2,159

 

$

2,430

 

 

 

 

Additions to Property, Plant and Equipment included within Investing Activities

Capital expenditures incurred

$

(1,245)

 

$

(746)

Increase (decrease) in related liabilities

 

36

 

 

6

Additions to property, plant and equipment

$

(1,209)

 

$

(740)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Second

Quarter

2022

 

Second

Quarter

2021

 

First

Quarter

2022

Capital and Exploratory Expenditures

 

 

 

 

 

 

 

 

 

 

 

E&P Capital and Exploratory Expenditures

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

188

 

$

112

 

$

135

Offshore and Other

 

72

 

 

25

 

 

56

Total United States

 

260

 

 

137

 

 

191

Guyana

 

286

 

 

250

 

 

319

Malaysia and JDA

 

66

 

 

36

 

 

59

Other

 

10

 

 

6

 

 

11

E&P Capital and exploratory expenditures

$

622

 

$

429

 

$

580

 

 

 

 

 

 

Total exploration expenses charged to income included above

$

29

 

$

33

 

$

37

 

 

 

 

 

 

Midstream Capital expenditures

$

72

 

$

47

 

$

37

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

Capital and Exploratory Expenditures

 

 

 

 

 

 

 

E&P Capital and exploratory expenditures

 

 

 

United States

 

 

 

North Dakota

$

323

 

$

200

Offshore and Other

 

128

 

 

56

Total United States

 

451

 

 

256

Guyana

 

605

 

 

422

Malaysia and JDA

 

125

 

 

49

Other

 

21

 

 

11

E&P Capital and exploratory expenditures

$

1,202

 

$

738

 

 

 

 

Total exploration expenses charged to income included above

$

66

 

$

62

 

 

 

 

Midstream Capital expenditures

$

109

 

$

70

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

 

 

Second Quarter 2022

Income Statement

United States

 

International

 

Total

 

 

 

 

 

 

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

1,860

 

$

1,095

 

$

2,955

Other, net

 

25

 

 

1

 

 

26

Total revenues and non-operating income

 

1,885

 

 

1,096

 

 

2,981

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

 

827

 

 

31

 

 

858

Operating costs and expenses

 

175

 

 

116

 

 

291

Production and severance taxes

 

65

 

 

2

 

 

67

Midstream tariffs

 

296

 

 

 

 

296

Exploration expenses, including dry holes and lease impairment

 

24

 

 

9

 

 

33

General and administrative expenses

 

40

 

 

7

 

 

47

Depreciation, depletion and amortization

 

192

 

 

153

 

 

345

Total costs and expenses

 

1,619

 

 

318

 

 

1,937

Results of operations before income taxes

 

266

 

 

778

 

 

1,044

Provision (benefit) for income taxes

 

 

 

321

 

 

321

Net income (loss) attributable to Hess Corporation

$

266

(b)

$

457

(c)

$

723

 

 

 

 

 

 

 

Second Quarter 2021

Income Statement

United States

 

International

 

Total

 

 

 

 

 

 

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

1,088

 

$

491

 

$

1,579

Other, net

 

11

 

 

3

 

 

14

Total revenues and non-operating income

 

1,099

 

 

494

 

 

1,593

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

 

335

 

 

8

 

 

343

Operating costs and expenses

 

158

 

 

96

 

 

254

Production and severance taxes

 

42

 

 

2

 

 

44

Midstream tariffs

 

270

 

 

 

 

270

Exploration expenses, including dry holes and lease impairment

 

26

 

 

22

 

 

48

General and administrative expenses

 

41

 

 

8

 

 

49

Depreciation, depletion and amortization

 

260

 

 

84

 

 

344

Impairment and other

 

147

 

 

 

 

147

Total costs and expenses

 

1,279

 

 

220

 

 

1,499

Results of operations before income taxes

 

(180)

 

 

274

 

 

94

Provision (benefit) for income taxes

 

 

 

119

 

 

119

Net income (loss) attributable to Hess Corporation

$

(180)

(d)

$

155

(e)

$

(25)

(a) Includes amounts charged from the Midstream segment. (b) Includes after-tax losses from realized crude oil hedging activities of $99 million (noncash premium amortization: $99 million; cash settlement: $0 million). (c) Includes after-tax losses from realized crude oil hedging activities of $64 million (noncash premium amortization: $64 million; cash settlement: $0 million). (d) Includes after-tax losses from realized crude oil hedging activities of $51 million (noncash premium amortization: $51 million; cash settlement: $0 million). (e) Includes after-tax losses from realized crude oil hedging activities of $13 million (noncash premium amortization: $13 million; cash settlement: $0 million).

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

 

 

First Quarter 2022

Income Statement

United States

 

International

 

Total

 

 

 

 

 

 

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

1,704

 

$

609

 

$

2,313

Other, net

 

27

 

 

6

 

 

33

Total revenues and non-operating income

 

1,731

 

 

615

 

 

2,346

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

 

701

 

 

2

 

 

703

Operating costs and expenses

 

144

 

 

107

 

 

251

Production and severance taxes

 

58

 

 

3

 

 

61

Midstream tariffs

 

287

 

 

 

 

287

Exploration expenses, including dry holes and lease impairment

 

32

 

 

11

 

 

43

General and administrative expenses

 

49

 

 

8

 

 

57

Depreciation, depletion and amortization

 

195

 

 

97

 

 

292

Total costs and expenses

 

1,466

 

 

228

 

 

1,694

Results of operations before income taxes

 

265

 

 

387

 

 

652

Provision (benefit) for income taxes

 

 

 

192

 

 

192

Net income (loss) attributable to Hess Corporation

$

265

(b)

$

195

(c)

$

460

(a) Includes amounts charged from the Midstream segment. (b) Includes after-tax losses from realized crude oil hedging activities of $57 million (noncash premium amortization: $34 million; cash settlement: $23 million). (c) Includes after-tax losses from realized crude oil hedging activities of $35 million (noncash premium amortization: $21 million; cash settlement: $14 million).

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

 

 

Six Months Ended June 30, 2022

Income Statement

United States

 

International

 

Total

 

 

 

 

 

 

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

3,564

 

$

1,704

 

$

5,268

Other, net

 

52

 

 

7

 

 

59

Total revenues and non-operating income

 

3,616

 

 

1,711

 

 

5,327

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

 

1,528

 

 

33

 

 

1,561

Operating costs and expenses

 

319

 

 

223

 

 

542

Production and severance taxes

 

123

 

 

5

 

 

128

Midstream tariffs

 

583

 

 

 

 

583

Exploration expenses, including dry holes and lease impairment

 

56

 

 

20

 

 

76

General and administrative expenses

 

89

 

 

15

 

 

104

Depreciation, depletion and amortization

 

387

 

 

250

 

 

637

Total costs and expenses

 

3,085

 

 

546

 

 

3,631

Results of operations before income taxes

 

531

 

 

1,165

 

 

1,696

Provision (benefit) for income taxes

 

 

 

513

 

 

513

Net income (loss) attributable to Hess Corporation

$

531

(b)

$

652

(c)

$

1,183

 

 

 

 

 

 

 

Six Months Ended June 30, 2021

Income Statement

United States

 

International

 

Total

 

 

 

 

 

 

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

2,486

 

$

991

 

$

3,477

Other, net

 

23

 

 

7

 

 

30

Total revenues and non-operating income

 

2,509

 

 

998

 

 

3,507

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

 

855

 

 

30

 

 

885

Operating costs and expenses

 

293

 

 

169

 

 

462

Production and severance taxes

 

78

 

 

3

 

 

81

Midstream tariffs

 

532

 

 

 

 

532

Exploration expenses, including dry holes and lease impairment

 

56

 

 

25

 

 

81

General and administrative expenses

 

83

 

 

15

 

 

98

Depreciation, depletion and amortization

 

528

 

 

171

 

 

699

Impairment and other

 

147

 

 

 

 

147

Total costs and expenses

 

2,572

 

 

413

 

 

2,985

Results of operations before income taxes

 

(63)

 

 

585

 

 

522

Provision (benefit) for income taxes

 

 

 

239

 

 

239

Net income (loss) attributable to Hess Corporation

$

(63)

(d)

$

346

(e)

$

283

(a) Includes amounts charged from the Midstream segment. (b) Includes after-tax losses from realized crude oil hedging activities of $156 million (noncash premium amortization: $133 million; cash settlement: $23 million). (c) Includes after-tax losses from realized crude oil hedging activities of $99 million (noncash premium amortization: $85 million; cash settlement: $14 million). (d) Includes after-tax losses from realized crude oil hedging activities of $90 million (noncash premium amortization: $90 million; cash settlement: $0 million). (e) Includes after-tax losses from realized crude oil hedging activities of $21 million (noncash premium amortization: $21 million; cash settlement: $0 million).

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Second

Quarter

2022

 

Second

Quarter

2021

 

First

Quarter

2022

Net Production Per Day (in thousands)

 

 

 

 

 

 

 

 

 

 

 

Crude oil - barrels

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

68

 

79

 

77

Offshore

20

 

33

 

22

Total United States

88

 

112

 

99

Guyana

67

 

26

 

30

Malaysia and JDA

4

 

4

 

3

Other (a)

17

 

24

 

19

Total

176

 

166

 

151

 

 

 

 

 

 

Natural gas liquids - barrels

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

47

 

52

 

49

Offshore

2

 

5

 

1

Total United States

49

 

57

 

50

 

 

 

 

 

 

Natural gas - mcf

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

147

 

167

 

158

Offshore

41

 

85

 

43

Total United States

188

 

252

 

201

Malaysia and JDA

381

 

371

 

364

Other (a)

11

 

9

 

12

Total

580

 

632

 

577

 

 

 

 

 

 

Barrels of oil equivalent

322

 

328

 

297

(a) Other includes production from Libya and the Corporation's former interests in Denmark, which were sold in the third quarter of 2021. Libya net production was 19,000 boepd in the second quarter of 2022, 21,000 boepd in the second quarter of 2021 and 21,000 boepd in the first quarter of 2022. Denmark net production was 4,000 boepd in the second quarter of 2021.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Six Months Ended

June 30,

 

2022

 

2021

Net Production Per Day (in thousands)

 

 

 

 

 

 

 

Crude oil - barrels

 

 

 

United States

 

 

 

North Dakota

73

 

82

Offshore

20

 

34

Total United States

93

 

116

Guyana

49

 

29

Malaysia and JDA

3

 

4

Other (a)

18

 

23

Total

163

 

172

 

 

 

 

Natural gas liquids - barrels

 

 

 

United States

 

 

 

North Dakota

48

 

50

Offshore

2

 

5

Total United States

50

 

55

 

 

 

 

Natural gas - mcf

 

 

 

United States

 

 

 

North Dakota

152

 

159

Offshore

41

 

90

Total United States

193

 

249

Malaysia and JDA

373

 

366

Other (a)

12

 

10

Total

578

 

625

 

 

 

 

Barrels of oil equivalent

309

 

331

(a) Other includes production from Libya and the Corporation's former interests in Denmark, which were sold in the third quarter of 2021. Libya net production was 20,000 boepd in the first six months of 2022 and 20,000 boepd in the first six months of 2021. Denmark net production was 5,000 boepd in the first six months of 2021.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Second

Quarter

2022

 

Second

Quarter

2021

 

First

Quarter

2022

Sales Volumes Per Day (in thousands) (a)

 

 

 

 

 

Crude oil – barrels

173

 

157

 

140

Natural gas liquids – barrels

46

 

57

 

50

Natural gas – mcf

580

 

632

 

577

Barrels of oil equivalent

316

 

319

 

286

 

 

 

 

 

 

Sales Volumes (in thousands) (a)

 

 

 

 

 

Crude oil – barrels

15,763

 

14,293

 

12,580

Natural gas liquids – barrels

4,180

 

5,142

 

4,539

Natural gas – mcf

52,811

 

57,557

 

51,898

Barrels of oil equivalent

28,745

 

29,028

 

25,769

 

Six Months Ended

June 30,

 

2022

 

2021

Sales Volumes Per Day (in thousands) (a)

 

 

 

Crude oil – barrels

157

 

192

Natural gas liquids – barrels

48

 

55

Natural gas – mcf

578

 

625

Barrels of oil equivalent

301

 

351

 

 

 

 

Sales Volumes (in thousands) (a)

 

 

 

Crude oil – barrels (b)

28,343

 

34,688

Natural gas liquids – barrels

8,719

 

9,944

Natural gas – mcf

104,709

 

113,070

Barrels of oil equivalent

54,514

 

63,477

(a) Sales volumes from purchased crude oil, natural gas liquids, and natural gas are not included in the sales volumes reported. (b) Sales volumes for the first six months of 2021 include 4.2 million barrels of crude oil that were stored on very large crude carriers (VLCC) at December 31, 2020 and sold in the first quarter of 2021.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Second

Quarter

2022

 

Second

Quarter

2021

 

First

Quarter

2022

Average Selling Prices

 

 

 

 

 

 

 

 

 

 

 

Crude oil - per barrel (including hedging)

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

93.60

 

$

56.75

 

$

84.77

Offshore

 

95.22

 

 

59.33

 

 

85.17

Total United States

 

93.96

 

 

57.52

 

 

84.85

Guyana

 

104.19

 

 

65.63

 

 

90.90

Malaysia and JDA

 

106.21

 

 

65.88

 

 

89.27

Other (a)

 

105.21

 

 

64.16

 

 

90.91

Worldwide

 

99.16

 

 

59.79

 

 

86.75

 

 

 

 

 

 

Crude oil - per barrel (excluding hedging)

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

106.01

 

$

61.88

 

$

91.55

Offshore

 

107.58

 

 

64.42

 

 

91.52

Total United States

 

106.37

 

 

62.63

 

 

91.54

Guyana

 

112.57

 

 

68.44

 

 

99.76

Malaysia and JDA

 

106.21

 

 

65.88

 

 

89.27

Other (a)

 

114.93

 

 

68.08

 

 

101.04

Worldwide

 

109.51

 

 

64.27

 

 

94.04

 

 

 

 

 

 

Natural gas liquids - per barrel

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

40.96

 

$

23.23

 

$

39.88

Offshore

 

39.88

 

 

21.84

 

 

37.48

Worldwide

 

40.92

 

 

23.12

 

 

39.79

 

 

 

 

 

 

Natural gas - per mcf

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

6.89

 

$

2.40

 

$

4.32

Offshore

 

7.63

 

 

2.35

 

 

4.46

Total United States

 

7.06

 

 

2.38

 

 

4.35

Malaysia and JDA

 

6.18

 

 

5.22

 

 

5.81

Other (a)

 

5.36

 

 

2.96

 

 

4.79

Worldwide

 

6.45

 

 

4.05

 

 

5.28

(a) Other includes prices related to production from Libya and the Corporation's former interests in Denmark, which were sold in the third quarter of 2021.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

Average Selling Prices

 

 

 

 

 

 

 

Crude oil - per barrel (including hedging)

 

 

 

United States

 

 

 

North Dakota (a)

$

88.98

 

$

49.35

Offshore

 

90.21

 

 

55.99

Total United States

 

89.25

 

 

51.00

Guyana

 

100.55

 

 

62.48

Malaysia and JDA

 

97.73

 

 

64.69

Other (b)

 

98.14

 

 

60.94

Worldwide

 

93.65

 

 

54.04

 

 

 

 

Crude oil - per barrel (excluding hedging)

 

 

 

United States

 

 

 

North Dakota (a)

$

98.46

 

$

52.91

Offshore

 

99.58

 

 

60.24

Total United States

 

98.70

 

 

54.73

Guyana

 

109.06

 

 

64.48

Malaysia and JDA

 

97.73

 

 

64.69

Other (b)

 

108.06

 

 

63.88

Worldwide

 

102.65

 

 

57.36

 

 

 

 

Natural gas liquids - per barrel

 

 

 

United States

 

 

 

North Dakota

$

40.40

 

$

26.65

Offshore

 

38.68

 

 

21.55

Worldwide

 

40.33

 

 

26.20

 

 

 

 

Natural gas - per mcf

 

 

 

United States

 

 

 

North Dakota

$

5.57

 

$

4.06

Offshore

 

6.02

 

 

2.66

Total United States

 

5.67

 

 

3.56

Malaysia and JDA

 

6.00

 

 

5.13

Other (b)

 

5.07

 

 

2.82

Worldwide

 

5.87

 

 

4.47

(a) Excluding the two VLCC cargo sales totaling 4.2 million barrels sold in the first quarter of 2021, the North Dakota crude oil price excluding hedging was $57.39 per barrel and $53.08 per barrel including hedging. (b) Other includes prices related to production from Libya and the Corporation's former interests in Denmark, which were sold in the third quarter of 2021.

The following is a summary of the Corporation’s outstanding commodity hedging program for the remainder of calendar 2022:

 

WTI

 

Brent

Barrels of oil per day

90,000

 

60,000

Average monthly floor price

$60

 

$65

 

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