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Hess Reports Estimated Results for the Second Quarter of 2023

Key Developments:

  • Sanctioned development of Uaru, the fifth development on the Stabroek Block, offshore Guyana, with a production capacity of approximately 250,000 gross barrels of oil per day (bopd); first oil is expected in 2026
  • Extension granted for the Stabroek Block exploration license by one year to October 2027
  • Oil discovery at the Pickerel-1 exploration well in the Gulf of Mexico, which will be a tie-back to the Tubular Bells production facility with first oil expected in mid-2024

Second Quarter Financial and Operational Highlights:

  • Net income was $119 million, or $0.39 per share, compared with net income of $667 million, or $2.15 per share, in the second quarter of 2022; adjusted net income1 in the second quarter of 2023 was $201 million, or $0.65 per share
  • Oil and gas net production was 387,000 barrels of oil equivalent per day (boepd), up 28% from 303,000 boepd, proforma for asset sold, in the second quarter of 2022
  • Bakken net production was 181,000 boepd, up 29% from 140,000 boepd in the second quarter of 2022; Guyana net production was 110,000 bopd, compared with 67,000 bopd in the prior-year quarter
  • E&P capital and exploratory expenditures were $933 million compared with $622 million in the prior-year quarter

2023 Updated Guidance:

  • Full year net production is now forecast to be in the range of 385,000 boepd to 390,000 boepd, compared with previous guidance of 365,000 boepd to 375,000 boepd primarily due to strong operational performance and the expected startup of the Payara development early in the fourth quarter

   Hess Corporation (NYSE: HES) today reported net income of $119 million, or $0.39 per share, in the second quarter of 2023, compared with net income of $667 million, or $2.15 per share, in the second quarter of 2022. On an adjusted basis, the Corporation reported net income of $201 million or $0.65 per share in the second quarter of 2023. The decrease in adjusted after-tax results compared with the prior-year quarter reflects lower realized selling prices, partially offset by the net impact of higher production volumes in the second quarter of 2023.

  1. “Adjusted net income” is a non-GAAP financial measure. The reconciliation to its nearest GAAP equivalent measure, and its definition, appear on pages 6 and 8, respectively.

   CEO John Hess said: "We continue to successfully execute our strategy to deliver industry leading cash flow growth and financial returns to our shareholders while safely and responsibly producing oil and gas to help meet the world’s growing energy needs.”

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

 

 

Three Months Ended

June 30,

(unaudited)

 

Six Months Ended

June 30,

(unaudited)

 

 

2023

 

2022

 

2023

 

2022

 

 

(In millions, except per share amounts)

Net Income Attributable to Hess Corporation

 

 

 

 

Exploration and Production

 

$

 

155

 

$

 

723

 

$

 

560

 

$

 

1,183

Midstream

 

 

 

62

 

 

 

65

 

 

 

123

 

 

 

137

Corporate, Interest and Other

 

 

 

(98)

 

 

 

(121)

 

 

 

(218)

 

 

 

(236)

Net income attributable to Hess Corporation

 

$

 

119

 

$

 

667

 

$

 

465

 

$

 

1,084

Net income per share (diluted)

 

$

 

0.39

 

$

 

2.15

 

$

 

1.51

 

$

 

3.49

 

 

 

 

 

 

 

 

 

Adjusted Net Income Attributable to Hess Corporation

 

 

 

 

Exploration and Production

 

$

 

237

 

$

 

723

 

$

 

642

 

$

 

1,183

Midstream

 

 

 

62

 

 

 

65

 

 

 

123

 

 

 

137

Corporate, Interest and Other

 

 

 

(98)

 

 

 

(121)

 

 

 

(218)

 

 

 

(249)

Adjusted net income attributable to Hess Corporation

 

$

 

201

 

$

 

667

 

$

 

547

 

$

 

1,071

Adjusted net income per share (diluted)

 

$

 

0.65

 

$

 

2.15

 

$

 

1.78

 

$

 

3.45

 

 

 

 

 

 

 

 

 

Weighted average number of shares (diluted)

 

 

 

307.5

 

 

 

310.9

 

 

 

307.4

 

 

 

310.6

 

 

 

 

 

 

 

 

 

Exploration and Production:

   E&P net income was $155 million in the second quarter of 2023, compared with $723 million in the second quarter of 2022. On an adjusted basis, E&P second quarter 2023 net income was $237 million. The Corporation’s average realized crude oil selling price, including the effect of hedging, was $71.13 per barrel in the second quarter of 2023, compared with $99.16 per barrel in the prior-year quarter. The average realized natural gas liquids (NGL) selling price in the second quarter of 2023 was $17.95 per barrel, compared with $40.92 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.82 per mcf, compared with $6.45 per mcf in the second quarter of 2022.

   Net production was 387,000 boepd in the second quarter of 2023, compared with 303,000 boepd, proforma for asset sold, in the second quarter of 2022, primarily due to higher production in Guyana and the Bakken.

   Cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $13.97 per barrel of oil equivalent (boe) in the second quarter of 2023, compared with $14.56 per boe, proforma for asset sold, in the prior-year quarter. The decrease in cash operating costs reflects the higher production volumes, partially offset by higher workover activity in the Gulf of Mexico.

Operational Highlights for the Second Quarter of 2023:

   Bakken (Onshore U.S.): Net production from the Bakken was 181,000 boepd in the second quarter of 2023 compared with 140,000 boepd in the prior-year quarter, reflecting increased drilling and completion activity, higher NGL and natural gas volumes received under percentage of proceeds contracts due to lower commodity prices, and higher uptime after weather related shut-ins in the prior-year quarter. NGL and natural gas volumes received under percentage of proceeds contracts were 22,000 boepd in the second quarter of 2023 compared with 7,000 boepd in the second quarter of 2022 due to lower realized NGL and natural gas prices increasing volumes received as consideration for gas processing fees. During the second quarter of 2023, the Corporation drilled 32 wells, completed 28 wells, and brought 30 new wells online. Bakken net production is forecast to be in the range of 175,000 boepd to 180,000 boepd for the full year 2023, up from our previous guidance range of 165,000 boepd to 170,000 boepd.

   Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico in the second quarter of 2023 was 32,000 boepd, compared with 29,000 boepd in the prior-year quarter.

   In July 2023, the Pickerel-1 exploration well (Hess – 100%) located in Mississippi Canyon Block 727 was an oil discovery. The well encountered approximately 90 feet of net pay in high quality, oil bearing, Miocene age reservoir. Planning is underway to tie-back the well to the Tubular Bells production facility with first oil expected in mid-2024.

   Guyana (Offshore): At the Stabroek Block (Hess – 30%), net production from the Liza Destiny and the Liza Unity floating production, storage and offloading vessels (FPSOs) totaled 110,0002 bopd in the second quarter of 2023 compared with 67,0002 bopd in the prior-year quarter. The Liza Unity FPSO, which commenced production in February 2022, reached its production capacity of approximately 220,000 gross bopd in July 2022. In the second quarter of 2023, we sold nine cargos of crude oil from Guyana compared with six cargos in the prior-year quarter. Net production guidance for Guyana for the full year 2023 is expected to be approximately 115,0002 bopd, compared to our previous guidance range of 105,000 bopd to 110,000 bopd.

   The third development, Payara, with a production capacity of approximately 220,000 gross bopd, remains on track for startup early in the fourth quarter. The fourth development, Yellowtail, was sanctioned in April 2022 with a production capacity of approximately 250,000 gross bopd and first production expected in 2025. The fifth development, Uaru, was sanctioned in April 2023 with a production capacity of approximately 250,000 gross bopd and first production expected in 2026.

   The expiration of the exploration license for the Stabroek Block was extended one year from October 2026 to October 2027, and the end of the first renewal period of the exploration license, which requires the relinquishment of 20% of the acreage not held by discoveries, was extended one year from October 2023 to October 2024, both as a result of force majeure due to the COVID-19 pandemic.

   Southeast Asia (Offshore): Net production at North Malay Basin and JDA was 64,000 boepd in the second quarter of 2023 compared with 67,000 boepd in the prior-year quarter.

   Canada (Offshore): The operator, BP Canada, drilled the Ephesus exploration well, offshore Newfoundland (Hess – 25%) in the second quarter of 2023. The well did not encounter commercial quantities of hydrocarbons and well costs incurred of $36 million were recorded to exploration expense.

Midstream:

   The Midstream segment had net income of $62 million in the second quarter of 2023, compared with net income of $65 million in the prior-year quarter.

   During the second quarter of 2023, the Corporation received total net proceeds of $217 million from the public offering of approximately 6.4 million Hess Midstream LP (HESM) Class A shares held by the Corporation in May 2023 and the repurchase by Hess Midstream Operations LP (HESM Opco), a consolidated subsidiary of HESM, of approximately 1.7 million HESM Opco Class B units held by the Corporation in June 2023. The repurchase of the Class B units was financed by HESM Opco’s revolving credit facility. After giving effect to the above transactions, the Corporation owns approximately 38% of HESM on a consolidated basis.

Corporate, Interest and Other:

   After-tax expense for Corporate, Interest and Other was $98 million in the second quarter of 2023, compared with $121 million in the second quarter of 2022. Corporate and other expenses decreased by $18 million in the second quarter of 2023 primarily due to higher interest income. Interest expense decreased by $5 million in the second quarter of 2023 reflecting higher capitalized interest.

Capital and Exploratory Expenditures:

   E&P capital and exploratory expenditures were $933 million in the second quarter of 2023 compared with $622 million in the prior-year quarter, primarily due to development activities in Guyana and higher drilling activity in the Bakken. Midstream capital expenditures were $52 million in the second quarter of 2023 and $72 million in the prior-year quarter.

Liquidity:

   Excluding the Midstream segment, Hess Corporation had cash and cash equivalents of $2.2 billion and debt and finance lease obligations totaling $5.6 billion at June 30, 2023. The Midstream segment had cash and cash equivalents of $4 million and total debt of $3.1 billion at June 30, 2023. The Corporation’s debt to capitalization ratio as defined in its debt covenants was 35.1% at June 30, 2023 and 36.1% at December 31, 2022.

   Net cash provided by operating activities was $974 million in the second quarter of 2023, compared with $1,509 million in the second quarter of 2022. Net cash provided by operating activities before changes in operating assets and liabilities3 was $974 million in the second quarter of 2023, compared with $1,463 million in the prior-year quarter.

2. Net production from Guyana in the second quarter of 2023 included 13,000 bopd of tax barrels. There were no tax barrels in the second quarter of 2022. Net production guidance for Guyana for the full year 2023 includes tax barrels of approximately 15,000 bopd.

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

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)

 

2023

2022

2023

2022

 

(In millions)

Exploration and Production

$

(82)

$

$

(82)

$

Midstream

 

 

 

Corporate, Interest and Other

 

 

 

13

Total items affecting comparability of earnings between periods

$

(82)

$

$

(82)

$

13

   Second Quarter 2023: E&P results include a charge of $82 million ($82 million after income taxes) that resulted from updates to the Corporation’s estimated abandonment obligations in the West Delta 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 as part of its approved bankruptcy plan in 2021.

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

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

 

Three Months Ended

June 30,

(unaudited)

Six Months Ended

June 30,

(unaudited)

 

2023

2022

2023

2022

 

(In millions)

Net income attributable to Hess Corporation

$

119

$

667

$

465

$

1,084

Less: Total items affecting comparability of earnings between periods

(82)

 

(82)

13

Adjusted net income attributable to Hess Corporation

$

201

 $

667

$

547

$

1,071

   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)

 

2023

2022

2023

2022

 

(In millions)

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

$

974

$

1,463

$

2,006

$

2,415

Changes in operating assets and liabilities

 

46

 

(394)

 

(1,062)

Net cash provided by (used in) operating activities

$

974

$

1,509

$

1,612

$

1,353

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; information about sustainability goals and targets and planned social, safety and environmental policies, programs and initiatives; 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; reduced demand for our products, including due to 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 and other events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks, public health measures, 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, rising interest rates 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 HESM; 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” presented in this release is defined as reported net income 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 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 or net cash provided by (used in) operating activities. A reconciliation of reported net income attributable to Hess Corporation (U.S. GAAP) to adjusted net income, 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

2023

Second

Quarter

2022

First

Quarter

2023

Income Statement

 

 

 

 

 

Revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

2,289

$

2,955

$

2,411

Gains on asset sales, net

 

3

 

Other, net

31

 

30

 

42

Total revenues and non-operating income

2,320

 

2,988

 

2,453

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas

547

 

843

 

603

Operating costs and expenses

454

 

356

 

382

Production and severance taxes

46

 

67

 

48

Exploration expenses, including dry holes and lease impairment

99

 

33

 

66

General and administrative expenses

108

 

95

 

136

Interest expense

122

 

121

 

123

Depreciation, depletion and amortization

497

 

391

 

491

Impairment and other

82

 

 

Total costs and expenses

1,955

 

1,906

 

1,849

Income before income taxes

365

 

1,082

 

604

Provision for income taxes

160

 

328

 

176

Net income

205

 

754

 

428

Less: Net income attributable to noncontrolling interests

86

 

87

 

82

Net income attributable to Hess Corporation

$

119

$

667

$

346

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Six Months Ended

June 30,

Income Statement

2023

2022

Revenues and non-operating income

 

 

 

Sales and other operating revenues

$

4,700

$

5,268

Gains on asset sales, net

 

25

Other, net

73

 

66

Total revenues and non-operating income

4,773

 

5,359

Costs and expenses

 

 

 

Marketing, including purchased oil and gas

1,150

 

1,525

Operating costs and expenses

836

 

669

Production and severance taxes

94

 

128

Exploration expenses, including dry holes and lease impairment

165

 

76

General and administrative expenses

244

 

205

Interest expense

245

 

244

Depreciation, depletion and amortization

988

 

728

Impairment and other

82

 

Total costs and expenses

3,804

 

3,575

Income before income taxes

969

 

1,784

Provision for income taxes

336

 

525

Net income

633

 

1,259

Less: Net income attributable to noncontrolling interests

168

 

175

Net income attributable to Hess Corporation

$

465

$

1,084

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

June 30,

2023

December 31,

2022

Balance Sheet Information

 

 

 

Assets

 

 

 

Cash and cash equivalents

$

2,226

$

2,486

Other current assets

1,478

 

1,445

Property, plant and equipment – net

15,741

 

15,098

Operating lease right-of-use assets – net

515

 

570

Finance lease right-of-use assets – net

117

 

126

Other long-term assets

2,153

 

1,970

Total assets

$

22,230

$

21,695

Liabilities and equity

 

 

 

Current portion of long-term debt

$

8

$

3

Current portion of operating and finance lease obligations

222

 

221

Other current liabilities

2,173

 

2,172

Long-term debt

8,459

 

8,278

Long-term operating lease obligations

407

 

469

Long-term finance lease obligations

168

 

179

Other long-term liabilities

1,891

 

1,877

Total equity excluding accumulated other comprehensive income (loss)

8,419

 

7,986

Accumulated other comprehensive income (loss)

(147)

 

(131)

Noncontrolling interests

630

 

641

Total liabilities and equity

$

22,230

$

21,695

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

June 30,

2023

December 31,

2022

Total Debt

 

 

 

Hess Corporation

$

5,398

$

5,395

Midstream (a)

3,069

2,886

Hess Consolidated

$

8,467

$

8,281

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

 

June 30,

2023

December 31,

2022

Debt to Capitalization Ratio (a)

 

 

 

Hess Consolidated

49.3%

 

50.0%

Hess Corporation as defined in debt covenants

35.1%

 

36.1%

  1. Includes finance lease obligations.

 

Three Months Ended

June 30,

Six Months Ended

June 30,

 

2023

2022

2023

2022

Interest Expense

 

 

 

 

 

 

 

Gross interest expense – Hess Corporation

$

88

$

86

$

174

$

178

Less: Capitalized interest – Hess Corporation

(10)

 

(3)

 

(15)

 

(3)

Interest expense – Hess Corporation

78

 

83

 

159

 

175

Interest expense – Midstream (a)

44

 

38

 

86

 

69

Interest expense – Hess Consolidated

$

122

$

121

$

245

$

244

  1. Midstream interest expense is reported in the Midstream operating segment.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Second

Quarter

2023

Second

Quarter

2022

First

Quarter

2023

Cash Flow Information

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

Net income

$

205

$

754

$

428

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

 

 

 

 

 

(Gains) losses on asset sales, net

 

(3)

 

Depreciation, depletion and amortization

497

 

391

 

491

Impairment and other

82

 

 

Exploratory dry hole costs

62

 

 

31

Exploration lease impairment

8

 

4

 

5

Pension settlement loss

 

2

 

Stock compensation expense

18

 

16

 

35

Noncash (gains) losses on commodity derivatives, net

52

 

163

 

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

50

 

136

 

42

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

974

 

1,463

 

1,032

Changes in operating assets and liabilities

 

46

 

(394)

Net cash provided by (used in) operating activities

974

 

1,509

 

638

Cash Flows from Investing Activities

 

 

 

 

 

Additions to property, plant and equipment - E&P

(778)

 

(607)

 

(773)

Additions to property, plant and equipment - Midstream

(43)

 

(56)

 

(64)

Proceeds from asset sales, net of cash sold

 

4

 

Other, net

 

 

(4)

Net cash provided by (used in) investing activities

(821)

 

(659)

 

(841)

Cash Flows from Financing Activities

 

 

 

 

 

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

77

 

(14)

 

103

Debt with maturities of greater than 90 days:

 

 

 

 

 

Borrowings

 

400

 

Repayments

 

(5)

 

Cash dividends paid

(134)

 

(116)

 

(137)

Common stock acquired and retired

 

(190)

 

(20)

Proceeds from sale of Class A shares of Hess Midstream LP

167

 

146

 

Noncontrolling interests, net

(132)

 

(277)

 

(131)

Employee stock options exercised

1

 

7

 

3

Payments on finance lease obligations

(2)

 

(2)

 

(2)

Other, net

(4)

 

(10)

 

1

Net cash provided by (used in) financing activities

(27)

 

(61)

 

(183)

Net Increase (Decrease) in Cash and Cash Equivalents

126

 

789

 

(386)

Cash and Cash Equivalents at Beginning of Period

2,100

 

1,370

 

2,486

Cash and Cash Equivalents at End of Period

$

2,226

$

2,159

$

2,100

 

 

 

 

 

 

Additions to Property, Plant and Equipment included within Investing Activities

Capital expenditures incurred

$

(956)

$

(665)

$

(792)

Increase (decrease) in related liabilities

135

 

2

 

(45)

Additions to property, plant and equipment

$

(821)

$

(663)

$

(837)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Six Months Ended

June 30,

 

2023

2022

Cash Flow Information

 

 

 

Cash Flows from Operating Activities

 

 

 

Net income

$

633

$

1,259

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

 

 

 

(Gains) losses on asset sales, net

 

(25)

Depreciation, depletion and amortization

988

 

728

Impairment and other

82

 

Exploratory dry hole costs

93

 

Exploration lease impairment

13

 

10

Pension settlement loss

 

2

Stock compensation expense

53

 

49

Noncash (gains) losses on commodity derivatives, net

52

 

218

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

92

 

174

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

2,006

 

2,415

Changes in operating assets and liabilities

(394)

 

(1,062)

Net cash provided by (used in) operating activities

1,612

 

1,353

Cash Flows from Investing Activities

 

 

 

Additions to property, plant and equipment - E&P

(1,551)

 

(1,098)

Additions to property, plant and equipment - Midstream

(107)

 

(111)

Proceeds from asset sales, net of cash sold

 

28

Other, net

(4)

 

Net cash provided by (used in) investing activities

(1,662)

 

(1,181)

Cash Flows from Financing Activities

 

 

 

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

180

 

(13)

Debt with maturities of greater than 90 days:

 

 

 

Borrowings

 

400

Repayments

 

(510)

Cash dividends paid

(271)

 

(235)

Common stock acquired and retired

(20)

 

(190)

Proceeds from sale of Class A shares of Hess Midstream LP

167

 

146

Noncontrolling interests, net

(263)

 

(351)

Employee stock options exercised

4

 

40

Payments on finance lease obligations

(4)

 

(4)

Other, net

(3)

 

(9)

Net cash provided by (used in) financing activities

(210)

 

(726)

Net Increase (Decrease) in Cash and Cash Equivalents

(260)

 

(554)

Cash and Cash Equivalents at Beginning of Period

2,486

 

2,713

Cash and Cash Equivalents at End of Period

$

2,226

$

2,159

 

 

 

 

Additions to Property, Plant and Equipment included within Investing Activities

Capital expenditures incurred

$

(1,748)

$

(1,245)

Increase (decrease) in related liabilities

90

 

36

Additions to property, plant and equipment

$

(1,658)

$

(1,209)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

 

 

Second

Quarter

2023

Second

Quarter

2022

First

Quarter

2023

Capital and Exploratory Expenditures

 

 

 

 

 

E&P Capital and exploratory expenditures

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

264

$

188

$

232

Offshore and Other

82

 

72

 

29

Total United States

346

 

260

 

261

Guyana

508

 

286

 

454

Malaysia and JDA

44

 

66

 

47

Other (a)

35

 

10

 

3

E&P Capital and exploratory expenditures

$

933

$

622

$

765

 

 

 

 

 

 

Total exploration expenses charged to income included above

$

29

$

29

$

30

 

 

 

 

 

 

Midstream Capital expenditures

$

52

$

72

$

57

  1. Other includes capital and exploratory expenditures associated with Canada.

 

Six Months Ended

June 30,

 

2023

2022

Capital and Exploratory Expenditures

 

 

 

E&P Capital and exploratory expenditures

 

 

 

United States

 

 

 

North Dakota

$

496

$

323

Offshore and Other

111

 

128

Total United States

607

 

451

Guyana

962

 

605

Malaysia and JDA

91

 

125

Other (a)

38

 

21

E&P Capital and exploratory expenditures

$

1,698

$

1,202

 

 

 

 

Total exploration expenses charged to income included above

$

59

$

66

 

 

 

 

Midstream Capital expenditures

$

109

$

109

  1. Other includes capital and exploratory expenditures associated with Canada.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

 

 

Second Quarter 2023

Income Statement

United States

 

International

 

 

Total

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

1,299

 

$

988

 

$

2,287

Other, net

6

 

2

 

8

Total revenues and non-operating income

1,305

 

990

 

2,295

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

537

 

27

 

564

Operating costs and expenses

241

 

143

 

384

Production and severance taxes

45

 

1

 

46

Midstream tariffs

302

 

 

302

Exploration expenses, including dry holes and lease impairment

23

 

76

 

99

General and administrative expenses

50

 

11

 

61

Depreciation, depletion and amortization

212

 

238

 

450

Impairment and other

82

 

 

82

Total costs and expenses

1,492

 

496

 

1,988

Results of operations before income taxes

(187)

 

494

 

307

Provision for income taxes

 

152

 

152

Net income (loss) attributable to Hess Corporation

$

(187)

(b)

$

342

(c)

$

155

 

 

 

 

 

 

 

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 for income taxes

 

321

 

321

Net income (loss) attributable to Hess Corporation

$

266

(d)

$

457

(e)

$

723

  1. Includes amounts charged from the Midstream segment.
  2. Includes after-tax losses from realized crude oil hedging activities of $34 million (noncash premium amortization: $34 million; cash settlement: $0 million).
  3. Includes after-tax losses from realized crude oil hedging activities of $18 million (noncash premium amortization: $18 million; cash settlement: $0 million).
  4. Includes after-tax losses from realized crude oil hedging activities of $99 million (noncash premium amortization: $99 million; cash settlement: $0 million).
  5. Includes after-tax losses from realized crude oil hedging activities of $64 million (noncash premium amortization: $64 million; cash settlement: $0 million).

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

 

 

First Quarter 2023

Income Statement

United States

 

International

 

Total

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

1,365

 

$

1,044

 

$

2,409

Other, net

9

 

5

 

14

Total revenues and non-operating income

1,374

 

1,049

 

2,423

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

584

 

35

 

619

Operating costs and expenses

205

 

118

 

323

Production and severance taxes

46

 

2

 

48

Midstream tariffs

283

 

 

283

Exploration expenses, including dry holes and lease impairment

20

 

46

 

66

General and administrative expenses

54

 

12

 

66

Depreciation, depletion and amortization

203

 

240

 

443

Total costs and expenses

1,395

 

453

 

1,848

Results of operations before income taxes

(21)

 

596

 

575

Provision for income taxes

 

170

 

170

Net income (loss) attributable to Hess Corporation

$

(21)

(b)

$

426

(c)

$

405

  1. Includes amounts charged from the Midstream segment.
  2. Includes after-tax losses from realized crude oil hedging activities of $27 million (noncash premium amortization: $27 million; cash settlement: $0 million).
  3. Includes after-tax losses from realized crude oil hedging activities of $7 million (noncash premium amortization: $7 million; cash settlement: $0 million).

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

 

 

Six Months Ended June 30, 2023

Income Statement

United States

 

International

 

Total

Total revenues and non-operating income

 

 

 

 

 

Sales and other operating revenues

$

2,664

 

$

2,032

 

$

4,696

Other, net

15

 

7

 

22

Total revenues and non-operating income

2,679

 

2,039

 

4,718

Costs and expenses

 

 

 

 

 

Marketing, including purchased oil and gas (a)

1,121

 

62

 

1,183

Operating costs and expenses

446

 

261

 

707

Production and severance taxes

91

 

3

 

94

Midstream tariffs

585

 

 

585

Exploration expenses, including dry holes and lease impairment

43

 

122

 

165

General and administrative expenses

104

 

23

 

127

Depreciation, depletion and amortization

415

 

478

 

893

Impairment and other

82

 

 

82

Total costs and expenses

2,887

 

949

 

3,836

Results of operations before income taxes

(208)

 

1,090

 

882

Provision for income taxes

 

322

 

322

Net income (loss) attributable to Hess Corporation

$

(208)

(b)

$

768

(c)

$

560

 

 

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 for income taxes

 

513

 

513

Net income (loss) attributable to Hess Corporation

$

531

(d)

$

652

(e)

$

1,183

  1. Includes amounts charged from the Midstream segment.
  2. Includes after-tax losses from realized crude oil hedging activities of $61 million (noncash premium amortization: $61 million; cash settlement: $0 million).
  3. Includes after-tax losses from realized crude oil hedging activities of $25 million (noncash premium amortization: $25 million; cash settlement: $0 million).
  4. Includes after-tax losses from realized crude oil hedging activities of $156 million (noncash premium amortization: $133 million; cash settlement: $23 million).
  5. Includes after-tax losses from realized crude oil hedging activities of $99 million (noncash premium amortization: $85 million; cash settlement: $14 million).

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Second

Quarter

2023

 

Second

Quarter

2022

 

First

Quarter

2023

Net Production Per Day (in thousands)

 

 

 

 

 

Crude oil - barrels

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

79

 

68

 

76

Offshore

23

 

20

 

24

Total United States

102

 

88

 

100

Guyana (a)

110

 

67

 

112

Malaysia and JDA

4

 

4

 

4

Other (b)

 

17

 

Total

216

 

176

 

216

 

 

 

 

 

 

Natural gas liquids - barrels

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

68

 

47

 

61

Offshore

1

 

2

 

1

Total United States

69

 

49

 

62

 

 

 

 

 

 

Natural gas - mcf

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

206

 

147

 

158

Offshore

45

 

41

 

47

Total United States

251

 

188

 

205

Malaysia and JDA

359

 

381

 

369

Other (b)

 

11

 

Total

610

 

580

 

574

 

 

 

 

 

 

Barrels of oil equivalent

387

 

322

 

374

  1. Production from Guyana includes 13,000 bopd of tax barrels in the second quarter of 2023 and 15,000 bopd of tax barrels in the first quarter of 2023. There were no tax barrels in the second quarter of 2022.
  2. Other includes production from Libya. The Corporation sold its interest in the Waha Concession in Libya in November 2022. Libya net production was 19,000 boepd in the second quarter of 2022.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Six Months Ended

June 30,

 

2023

 

2022

Net Production Per Day (in thousands)

 

 

 

Crude oil - barrels

 

 

 

United States

 

 

 

North Dakota

78

 

73

Offshore

23

 

20

Total United States

101

 

93

Guyana (a)

111

 

49

Malaysia and JDA

4

 

3

Other (b)

 

18

Total

216

 

163

 

 

 

 

Natural gas liquids - barrels

 

 

 

United States

 

 

 

North Dakota

64

 

48

Offshore

2

 

2

Total United States

66

 

50

 

 

 

 

Natural gas - mcf

 

 

 

United States

 

 

 

North Dakota

182

 

152

Offshore

47

 

41

Total United States

229

 

193

Malaysia and JDA

363

 

373

Other (b)

 

12

Total

592

 

578

 

 

 

 

Barrels of oil equivalent

381

 

309

  1. Production from Guyana includes 14,000 bopd of tax barrels in the first six months of 2023. There were no tax barrels in the first six months of 2022.
  2. Other includes production from Libya. The Corporation sold its interest in the Waha Concession in Libya in November 2022. Libya net production was 20,000 boepd in the first six months of 2022.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Second

Quarter

2023

Second

Quarter

2022

First

Quarter

2023

Sales Volumes Per Day (in thousands) (a)

 

 

Crude oil – barrels

217

173

213

Natural gas liquids – barrels

67

46

64

Natural gas – mcf

610

580

574

Barrels of oil equivalent

386

316

373

 

 

 

Sales Volumes (in thousands) (a)

 

 

Crude oil – barrels

19,740

15,763

19,161

Natural gas liquids – barrels

6,084

4,180

5,761

Natural gas – mcf

55,548

52,811

51,692

Barrels of oil equivalent

35,082

28,745

33,537

 

 

 

 

Six Months Ended

June 30,

 

 

2023

2022

Sales Volumes Per Day (in thousands) (a)

 

 

Crude oil – barrels

 

215

157

Natural gas liquids – barrels

 

65

48

Natural gas – mcf

 

592

578

Barrels of oil equivalent

 

379

301

 

 

 

Sales Volumes (in thousands) (a)

 

 

Crude oil – barrels

 

38,901

28,343

Natural gas liquids – barrels

 

11,845

8,719

Natural gas – mcf

 

107,240

104,709

Barrels of oil equivalent

 

68,619

54,514

  1. Sales volumes from purchased crude oil, natural gas liquids, and natural gas are not included in the sales volumes reported.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Second

Quarter

2023

Second

Quarter

2022

First

Quarter

2023

Average Selling Prices

 

 

 

 

 

Crude oil - per barrel (including hedging)

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

65.67

$

93.60

$

68.63

Offshore

68.32

 

95.22

 

68.12

Total United States

66.24

 

93.96

 

68.50

Guyana

75.82

 

104.19

 

79.15

Malaysia and JDA

68.87

 

106.21

 

72.91

Other (a)

 

105.21

 

Worldwide

71.13

 

99.16

 

74.23

 

 

 

 

 

 

Crude oil - per barrel (excluding hedging)

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

69.22

$

106.01

$

71.78

Offshore

71.86

 

107.58

 

71.27

Total United States

69.79

 

106.37

 

71.65

Guyana

77.64

 

112.57

 

79.86

Malaysia and JDA

68.87

 

106.21

 

72.91

Other (a)

 

114.93

 

Worldwide

73.74

 

109.51

 

76.02

 

 

 

 

 

 

Natural gas liquids - per barrel

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

17.90

$

40.96

$

24.25

Offshore

20.17

 

39.88

 

24.28

Worldwide

17.95

 

40.92

 

24.25

 

 

 

 

 

 

Natural gas - per mcf

 

 

 

 

 

United States

 

 

 

 

 

North Dakota

$

1.29

$

6.89

$

2.54

Offshore

1.62

 

7.63

 

2.42

Total United States

1.35

 

7.06

 

2.51

Malaysia and JDA

5.56

 

6.18

 

5.44

Other (a)

 

5.36

 

Worldwide

3.82

 

6.45

 

4.39

  1. Other includes prices related to production from Libya. The Corporation sold its interest in the Waha Concession in Libya in November 2022.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION OPERATING DATA

 

 

Six Months Ended

June 30,

 

2023

2022

Average Selling Prices

 

 

 

Crude oil - per barrel (including hedging)

 

 

 

United States

 

 

 

North Dakota

$

67.05

$

88.98

Offshore

68.22

 

90.21

Total United States

67.32

 

89.25

Guyana

77.50

 

100.55

Malaysia and JDA

71.02

 

97.73

Other (a)

 

98.14

Worldwide

72.66

 

93.65

 

 

 

 

Crude oil - per barrel (excluding hedging)

 

 

 

United States

 

 

 

North Dakota

$

70.41

$

98.46

Offshore

71.55

 

99.58

Total United States

70.68

 

98.70

Guyana

78.76

 

109.06

Malaysia and JDA

71.02

 

97.73

Other (a)

 

108.06

Worldwide

74.87

 

102.65

 

 

 

 

Natural gas liquids - per barrel

 

 

 

United States

 

 

 

North Dakota

$

20.99

$

40.40

Offshore

22.20

 

38.68

Worldwide

21.02

 

40.33

 

 

 

 

Natural gas - per mcf

 

 

 

United States

 

 

 

North Dakota

$

1.83

$

5.57

Offshore

2.03

 

6.02

Total United States

1.87

 

5.67

Malaysia and JDA

5.50

 

6.00

Other (a)

 

5.07

Worldwide

4.09

 

5.87

  1. Other includes prices related to production from Libya. The Corporation sold its interest in the Waha Concession in Libya in November 2022.

The following is a summary of the Corporation’s outstanding commodity hedging program for the remainder of calendar 2023:

 

WTI

Brent

Barrels of oil per day

80,000

 

50,000

Average monthly floor price

$

70

$

75

 

Contacts

For Hess Corporation

Investors:

Jay Wilson

(212) 536-8940

Media:

Lorrie Hecker

(212) 536-8250

Jamie Tully

Sard Verbinnen & Co

(917) 679-7908

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