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 income(1) 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

Hess Corporation 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.

“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.”

1. “Adjusted net income (loss)” is a non-GAAP financial measure. 

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 the company's 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 onemillion 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.

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