Hess Reports Estimated Results for the Second Quarter of 2022

Rhea-AI Summary

Hess Corporation (NYSE: HES) reported a substantial turnaround in its second quarter 2022 results, posting a net income of $667 million or $2.15 per share, compared to a net loss of $73 million or $0.24 per share in the same quarter of 2021. This improvement was primarily driven by higher realized oil and gas prices. Key operational developments include two new discoveries in the Stabroek Block offshore Guyana, with total recoverable resources now estimated at 11 billion barrels of oil equivalent. The company also commenced stock buybacks, purchasing 1.8 million shares for $190 million.

Positive

• Net income increased to $667 million in Q2 2022, a significant recovery from a $73 million loss in Q2 2021.
• Increased production capacity with Liza Unity and Liza Destiny FPSOs now exceeding 360,000 barrels of oil per day.
• Two new oil discoveries announced at Seabob and Kiru-Kiru, enhancing resource estimates in the Stabroek Block.
• Total cash returned to shareholders amounted to $306 million in the quarter, including dividends.
• Forecast for 2022 net production increased to an estimated range of 320,000 to 370,000 barrels of oil equivalent per day.

Negative

• Bakken net production decreased to 140,000 barrels of oil equivalent per day, down from 159,000 boepd year-over-year.
• Gulf of Mexico production fell to 29,000 boepd, down from 52,000 boepd in Q2 2021 due to field declines.
• Operating costs rose to $13.90 per barrel of oil equivalent from $11.63 per boe in the previous year, driven by higher production taxes.

Key Developments:

• Commenced common stock repurchases in the quarter of approximately 1.8 million shares for $190 million; total cash returned to shareholders in the quarter amounted to $306 million including dividends
• Announced two new discoveries at Seabob and Kiru-Kiru on the Stabroek Block, offshore Guyana; adds to the previous gross discovered recoverable resource estimate for the Block of approximately 11 billion barrels of oil equivalent (boe)
• The Liza Unity and Liza Destiny floating production, storage and offloading vessels (FPSOs) on the Stabroek Block have reached their combined production capacity of more than 360,000 gross barrels of oil per day (bopd)

Second Quarter Financial and Operational Highlights:

• Net income was $667 million, or $2.15 per common share, compared with a net loss of $73 million, or $0.24 per common share, in the second quarter of 2021; Adjusted net income¹ in the second quarter of 2021 was $74 million, or $0.24 per common share
• Oil and gas net production, excluding Libya, was 303,000 barrels of oil equivalent per day (boepd); Bakken net production was 140,000 boepd
• E&P capital and exploratory expenditures were $622 million compared with $429 million in the prior-year quarter
• Cash and cash equivalents, excluding Midstream, were $2.16 billion at June 30, 2022

2022 Updated Guidance:

• Net production, excluding Libya, is forecast to be in the range of 330,000 boepd to 335,000 boepd in the third quarter, in the range of 365,000 boepd to 370,000 boepd in the fourth quarter, and approximately 320,000 boepd for the full year
• Bakken net production is forecast to be in the range of 155,000 boepd to 160,000 boepd in the third quarter, in the range of 160,000 boepd to 165,000 boepd in the fourth quarter, and in the range of 150,000 boepd to 155,000 boepd for the full year
• Full year E&P capital and exploratory expenditures are expected to be approximately $2.7 billion; a fourth rig was added in the Bakken in July

 

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220727005043/en/

For Hess Corporation

Investor Contact:

Jay Wilson

(212) 536-8940

Media Contacts:

Lorrie Hecker

(212) 536-8250

Jamie Tully

Sard Verbinnen & Co

(917) 679-7908

Source: Hess Corporation

FAQ

What were Hess Corporation's net income results for Q2 2022?

Hess Corporation reported a net income of $667 million, or $2.15 per share, in Q2 2022.

What significant oil discoveries were made by Hess Corporation recently?

Hess Corporation announced two new discoveries at Seabob and Kiru-Kiru on the Stabroek Block, adding to their resource estimates.

How much cash did Hess Corporation return to shareholders in Q2 2022?

Total cash returned to shareholders in Q2 2022 amounted to $306 million, including dividends.

What is Hess Corporation's production forecast for the rest of 2022?

Hess Corporation's net production forecast for 2022 is expected to range between 320,000 and 370,000 barrels of oil equivalent per day.

What caused the increase in Hess Corporation's operating costs in Q2 2022?

Operating costs rose due to higher production and severance taxes in North Dakota and increased workover activity.