UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-1204 Hess Corporation (Exact name of Registrant as specified in its charter) | DELAWARE | 13-4921002 | | --- | --- | | (State or other jurisdictio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-1204 HESS CORPORATION (Exact Name of Registrant as Specified in Its Charter) DELAWARE (State or Other Jurisdiction of Incorporation or Organizatio ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of Hess Corporation, including the balance sheet, income statement, comprehensive income statement, cash flow statement, and equity statement, along with detailed notes providing context and breakdowns for various financial line items [Consolidated Balance Sheet](index=4&type=section&id=Consolidated%20Balance%20Sheet) Consolidated Balance Sheet (Unaudited) - Key Figures (In millions) | Item | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $2,226 | $2,486 | | Total current assets | $3,704 | $3,931 | | Property, plant and equipment — net | $15,741 | $15,098 | | Total Assets | $22,230 | $21,695 | | Total current liabilities | $2,403 | $2,396 | | Long-term debt | $8,459 | $8,278 | | Total Liabilities | $13,328 | $13,199 | | Total Hess Corporation stockholders' equity | $8,272 | $7,855 | | Total Equity | $8,902 | $8,496 | | Total Liabilities and Equity | $22,230 | $21,695 | [Statement of Consolidated Income](index=5&type=section&id=Statement%20of%20Consolidated%20Income) Statement of Consolidated Income (Unaudited) - Key Figures (In millions, except per share amounts) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales and other operating revenues | $2,289 | $2,955 | $4,700 | $5,268 | | Total revenues and non-operating income | $2,320 | $2,988 | $4,773 | $5,359 | | Total costs and expenses | $1,955 | $1,906 | $3,804 | $3,575 | | Income Before Income Taxes | $365 | $1,082 | $969 | $1,784 | | Provision for income taxes | $160 | $328 | $336 | $525 | | Net Income | $205 | $754 | $633 | $1,259 | | Net Income Attributable to Hess Corporation | $119 | $667 | $465 | $1,084 | | Basic EPS | $0.39 | $2.15 | $1.52 | $3.50 | | Diluted EPS | $0.39 | $2.15 | $1.51 | $3.49 | | Common Stock Dividends Per Share | $0.4375 | $0.3750 | $0.8750 | $0.7500 | [Statement of Consolidated Comprehensive Income](index=6&type=section&id=Statement%20of%20Consolidated%20Comprehensive%20Income) Statement of Consolidated Comprehensive Income (Unaudited) - Key Figures (In millions) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $205 | $754 | $633 | $1,259 | | Other Comprehensive Income (Loss) | $(33) | $281 | $(16) | $(79) | | Comprehensive Income | $172 | $1,035 | $617 | $1,180 | | Comprehensive Income Attributable to Hess Corporation | $86 | $948 | $449 | $1,005 | [Statement of Consolidated Cash Flows](index=7&type=section&id=Statement%20of%20Consolidated%20Cash%20Flows) Statement of Consolidated Cash Flows (Unaudited) - Key Figures (In millions) | Item | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $1,612 | $1,353 | | Net cash provided by (used in) investing activities | $(1,662) | $(1,181) | | 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 End of Period | $2,226 | $2,159 | [Statement of Consolidated Equity](index=8&type=section&id=Statement%20of%20Consolidated%20Equity) Statement of Consolidated Equity (Unaudited) - Key Figures (In millions) | Item | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :---------------- | | Total Hess Corporation stockholders' equity | $8,272 | $7,855 | | Noncontrolling interests | $630 | $641 | | Total Equity | $8,902 | $8,496 | - For the **six months ended June 30, 2023**, Hess Corporation's **total equity increased from $8,496 million to $8,902 million**, driven by **net income of $465 million** and **share-based compensation of $60 million**, partially offset by **dividends on common stock of $269 million** and net cash outflows to noncontrolling interests[18](index=18&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1 - Basis of Presentation](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation) - The **interim financial statements are prepared** in accordance with SEC requirements for interim reporting, with certain GAAP information **condensed or omitted**, and should be **read in conjunction with** the Corporation's Annual Report on Form **10-K** for the year ended **December 31, 2022**[20](index=20&type=chunk)[21](index=21&type=chunk) [Note 2 - Inventories](index=9&type=section&id=Note%202%20-%20Inventories) Inventories (In millions) | Item | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Crude oil and natural gas liquids | $84 | $63 | | Materials and supplies | $194 | $154 | | Total Inventories | $278 | $217 | [Note 3 - Property, Plant and Equipment](index=9&type=section&id=Note%203%20-%20Property,%20Plant%20and%20Equipment) Capitalized Exploratory Well Costs (In millions) | Item | Amount | | :---------------------------------------------------------------- | :----- | | Balance at January 1, 2023 | $886 | | Additions to capitalized exploratory well costs pending determination of proved reserves | $128 | | Reclassifications to wells, facilities and equipment based on determination of proved reserves | $(78) | | Capitalized exploratory well costs charged to expense | $(6) | | Balance at June 30, 2023 | $930 | - **Additions to capitalized exploratory well costs** in the first **six months of 2023** primarily relate to **wells** drilled on the Stabroek Block (Guyana) and the Pickerel-1 exploration **well** in the Gulf of Mexico. **Reclassifications were due to the sanction** of the Uaru Field development project on the Stabroek Block[23](index=23&type=chunk) - At **June 30, 2023**, **$653 million of exploratory well costs capitalized** for over **one year** include approximately **85%** for successful **wells** on the Stabroek Block (Guyana), **8%** for the Huron-1 **well** in the U.S. Gulf of Mexico, **6%** for the JDA in the Gulf of Thailand, and **1%** for the North Malay Basin in Malaysia[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 4 - Hess Midstream LP](index=11&type=section&id=Note%204%20-%20Hess%20Midstream%20LP) - Hess Midstream LP, a **fully consolidated variable interest entity**, had **$3,201 million** in **nonrecourse liabilities** to Hess Corporation at **June 30, 2023**, with **assets including $3,188 million** in property, plant and equipment[29](index=29&type=chunk) - Hess Corporation **owns an approximate 38% interest** in Hess Midstream LP on a consolidated basis[29](index=29&type=chunk) - Hess Midstream LP **completed a public equity offering** in **May 2023**, selling approximately **12.8 million Class A shares**, **generating net proceeds of $167 million** for Hess Corporation[32](index=32&type=chunk) - HESM Opco **repurchased Class B units totaling $100 million** in **June 2023** and **$100 million** in **March 2023**, with Hess Corporation **receiving $50 million in net proceeds** from the **June** repurchase[31](index=31&type=chunk)[33](index=33&type=chunk) [Note 5 - Accrued Liabilities](index=12&type=section&id=Note%205%20-%20Accrued%20Liabilities) Accrued Liabilities (In millions) | Item | June 30, 2023 | December 31, 2022 | | :------------------------------------------ | :------------ | :---------------- | | Accrued capital expenditures | $589 | $499 | | Accrued operating and marketing expenditures | $400 | $522 | | Current portion of asset retirement obligations | $241 | $207 | | Accrued payments to royalty and working interest owners | $179 | $201 | | Accrued interest on debt | $144 | $143 | | Accrued compensation and benefits | $76 | $132 | | Other accruals | $125 | $136 | | Total Accrued Liabilities | $1,754 | $1,840 | [Note 6 - Revenue](index=13&type=section&id=Note%206%20-%20Revenue) Total Sales and Other Operating Revenues by Segment (In millions) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration and Production | $2,287 | $2,955 | $4,696 | $5,268 | | Midstream | $324 | $314 | $629 | $626 | | Eliminations | $(322) | $(314) | $(625) | $(626) | | Total | $2,289 | $2,955 | $4,700 | $5,268 | - Guyana crude oil revenue from non-customers was **$88 million** for **Q2 2023** and **$196 million** for **YTD 2023**, with no such revenue in the prior-year periods[40](index=40&type=chunk) - Contract liabilities were **$27 million** at **June 30, 2023**, primarily from a **take-or-pay deficiency payment** subject to a **make-up period expiring** in **December 2023**[41](index=41&type=chunk) [Note 7 - Impairment and Other](index=15&type=section&id=Note%207%20-%20Impairment%20and%20Other) - A **pre-tax charge of $82 million** (**$82 million** after income taxes) was **recognized in Q2 2023 due to revised estimated abandonment costs** for wells, pipelines, and production facilities in the West Delta Field, Gulf of Mexico[44](index=44&type=chunk) [Note 8 - Retirement Plans](index=15&type=section&id=Note%208%20-%20Retirement%20Plans) Net Periodic Benefit Cost (Income) (In millions) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $10 | $12 | $19 | $25 | | Interest cost | $25 | $17 | $50 | $33 | | Expected return on plan assets | $(40) | $(52) | $(79) | $(105) | | Amortization of unrecognized net actuarial losses | $1 | $3 | $1 | $6 | | Settlement loss | $0 | $2 | $0 | $2 | | Net periodic benefit cost (income) | $(4) | $(18) | $(9) | $(39) | - In **Q2 2022**, the Hess Corporation Employees' Pension Plan **settled obligations by purchasing** a **$166 million** annuity, resulting in a **$13 million noncash settlement loss**[46](index=46&type=chunk) - The HOVENSA Legacy Employees' Pension Plan was **terminated, resulting in an $11 million noncash settlement gain**[47](index=47&type=chunk) [Note 9 - Weighted Average Common Shares](index=15&type=section&id=Note%209%20-%20Weighted%20Average%20Common%20Shares) Weighted Average Number of Common Shares Outstanding (In millions) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic | 306.0 | 309.7 | 305.7 | 309.3 | | Diluted | 307.5 | 310.9 | 307.4 | 310.6 | Antidilutive Shares Excluded from Diluted EPS (Number of shares) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted common stock | 1,789 | 0 | 61,489 | 48 | | Stock options | 189,479 | 269,748 | 121,226 | 172,581 | | Performance share units | 0 | 29,668 | 0 | 30,510 | [Note 10 - Guarantees and Contingencies](index=16&type=section&id=Note%2010%20-%20Guarantees%20and%20Contingencies) - The company is **involved in ongoing MTBE lawsuits** in Pennsylvania and Maryland, with the Pennsylvania suit **forwarded to multidistrict litigation**[52](index=52&type=chunk) - Hess is **complying with EPA Administrative Orders** for the Gowanus Canal Superfund Site remediation, **contributing funding for design and beginning remedial action**, **not expecting a material liability**[53](index=53&type=chunk) - HONX, Inc., a subsidiary, **initiated Chapter 11 proceedings** in **April 2022** to **resolve asbestos-related claims**, **reaching a mediated resolution** in **February 2023** with a **$116 million provision for the settlement trust**[57](index=57&type=chunk) - **Management believes the outcome of current lawsuits, claims, and proceedings is not expected to have a material adverse effect on financial condition, results of operations, or cash flows**[59](index=59&type=chunk) [Note 11 - Segment Information](index=18&type=section&id=Note%2011%20-%20Segment%20Information) Net Income (Loss) Attributable to Hess Corporation by Segment (In millions) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration and Production | $155 | $723 | $560 | $1,183 | | Midstream | $62 | $65 | $123 | $137 | | Corporate, Interest and Other | $(98) | $(121) | $(218) | $(236) | | Total | $119 | $667 | $465 | $1,084 | Capital Expenditures by Segment (In millions) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration and Production | $904 | $593 | $1,639 | $1,136 | | Midstream | $52 | $72 | $109 | $109 | | Total | $956 | $665 | $1,748 | $1,245 | Identifiable Assets by Operating Segment (In millions) | Segment | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Exploration and Production | $15,792 | $15,022 | | Midstream | $3,864 | $3,775 | | Corporate, Interest and Other | $2,574 | $2,898 | | Total | $22,230 | $21,695 | [Note 12 - Financial Risk Management Activities](index=19&type=section&id=Note%2012%20-%20Financial%20Risk%20Management%20Activities) - Hess Corporation is **exposed to commodity risks (crude oil, natural gas), interest rate risks, and foreign currency risks, managed through financial risk management activities**, including futures, swaps, or option strategies[64](index=64&type=chunk) Notional Amounts of Outstanding Financial Risk Management Derivative Contracts (In millions, except barrels) | Item | June 30, 2023 | December 31, 2022 | | :------------------------------------------ | :------------ | :---------------- | | Commodity - crude oil hedge contracts (millions of barrels) | 23.9 | 0 | | Foreign exchange forwards / swaps | $236 | $177 | | Interest rate swaps | $100 | $100 | - In **Q1 2023**, the company hedged **80,000 bopd** with WTI put options (average floor **$70/barrel**) and **50,000 bopd** with Brent put options (average floor **$75/barrel**) for the remainder of **2023**[65](index=65&type=chunk) Gross Fair Value of Derivative Contracts (In millions) | Item | June 30, 2023 Assets | June 30, 2023 Liabilities | December 31, 2022 Assets | December 31, 2022 Liabilities | | :------------------------------------------ | :------------------- | :---------------------- | :----------------------- | :------------------------ | | Crude oil put options | $100 | $0 | $0 | $0 | | Interest rate swaps | $0 | $(3) | $0 | $(4) | | Foreign exchange forwards and swaps | $0 | $0 | $0 | $(2) | | Gross fair value of derivative contracts | $100 | $(3) | $0 | $(6) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and cash flows for the reported periods, including an overview of business segments, key performance drivers, and future outlook, also reconciling GAAP and non-GAAP measures and discussing factors affecting comparability [Overview](index=21&type=section&id=Overview) - Hess Corporation is a **global E&P company** with production in the U.S., Guyana, Malaysia/Thailand JDA, and Malaysia, and exploration activities offshore Guyana, U.S. Gulf of Mexico, Suriname, and Canada[76](index=76&type=chunk) - The company plans for **six FPSOs** with **over 1.2 million gross bopd capacity** on the Stabroek Block by end of **2027**, with **potential for up to ten FPSOs**[76](index=76&type=chunk) - For **2023**, E&P capital and exploratory expenditures are **forecast at approximately $3.7 billion**, with oil and gas net production **expected between 385,000 and 390,000 boepd**[78](index=78&type=chunk) Second Quarter Results (In millions, except per share amounts) | Item | Q2 2023 | Q2 2022 | | :------------------------------------ | :------ | :------ | | Net Income | $119 | $667 | | Adjusted Net Income (excluding comparability items) | $201 | $667 | | E&P Net Income | $155 | $723 | | E&P Adjusted Net Income (excluding comparability items) | $237 | N/A | | Total Net Production (boepd) | 387,000 | 303,000 | | Average Realized Crude Oil Selling Price (including hedging) | $71.13/barrel | $99.16/barrel | | Average Realized NGL Selling Price | $17.95/barrel | $40.92/barrel | | Average Realized Natural Gas Selling Price | $3.82/mcf | $6.45/mcf | - Bakken **net production averaged 181,000 boepd** in **Q2 2023** (**up from 140,000 boepd** in **Q2 2022**) due to **increased drilling**, **higher NGL/natural gas volumes** from percentage of proceeds contracts, and **improved uptime**[81](index=81&type=chunk) - The Pickerel-1 exploration well in the Gulf of Mexico was an **oil discovery** in **July 2023**, with first oil expected **mid-2024**[83](index=83&type=chunk) - Guyana net production from Liza Destiny and Liza Unity FPSOs totaled **110,000 bopd** in **Q2 2023** (**up from 67,000 bopd** in **Q2 2022**), with Liza Unity expected to increase **capacity to 250,000 gross bopd** by end of **2023**[83](index=83&type=chunk) - The Payara development is **on track for startup early Q4 2023**, Yellowtail for **2025**, and Uaru for **2026**, all on the Stabroek Block[83](index=83&type=chunk) [Consolidated Results of Operations](index=23&type=section&id=Consolidated%20Results%20of%20Operations) Net Income Attributable to Hess Corporation by Segment (In millions, except per share amounts) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration and Production | $155 | $723 | $560 | $1,183 | | Midstream | $62 | $65 | $123 | $137 | | Corporate, Interest and Other | $(98) | $(121) | $(218) | $(236) | | Total | $119 | $667 | $465 | $1,084 | | Basic EPS | $0.39 | $2.15 | $1.52 | $3.50 | | Diluted EPS | $0.39 | $2.15 | $1.51 | $3.49 | Items Affecting Comparability of Earnings Between Periods, After-Tax (In millions) | Segment | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploration and Production | $(82) | $0 | $(82) | $0 | | Midstream | $0 | $0 | $0 | $0 | | Corporate, Interest and Other | $0 | $0 | $0 | $13 | | Total | $(82) | $0 | $(82) | $13 | Adjusted Net Income Attributable to Hess Corporation (Non-GAAP) (In millions) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to Hess Corporation | $119 | $667 | $465 | $1,084 | | Less: Total items affecting comparability | $(82) | $0 | $(82) | $13 | | Adjusted Net Income Attributable to Hess Corporation | $201 | $667 | $547 | $1,071 | Net Cash Provided by (Used in) Operating Activities Before Changes in Operating Assets and Liabilities (Non-GAAP) (In millions) | Item | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $1,612 | $1,353 | | Changes in operating assets and liabilities | $394 | $1,062 | | Net cash provided by (used in) operating activities before changes in operating assets and liabilities | $2,006 | $2,415 | [Comparison of Results - Exploration and Production](index=24&type=section&id=Comparison%20of%20Results%20-%20Exploration%20and%20Production) - **Lower realized selling prices** in **Q2** and **YTD 2023 reduced after-tax earnings** by approximately **$840 million** and **$1,250 million**, respectively, compared to **2022**[98](index=98&type=chunk) Worldwide Average Selling Prices (Including Hedging) | Product | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Crude Oil – Per Barrel | $71.13 | $99.16 | $72.66 | $93.65 | | Natural Gas Liquids – Per Barrel | $17.95 | $40.92 | $21.02 | $40.33 | | Natural Gas – Per Mcf | $3.82 | $6.45 | $4.09 | $5.87 | - Crude oil hedging activities resulted in **net losses of $52 million** (**Q2 2023**) and **$86 million** (**YTD 2023**) after income taxes, compared to **losses of $163 million** (**Q2 2022**) and **$255 million** (**YTD 2022**)[100](index=100&type=chunk) Daily Worldwide Net Production (In thousands of barrels of oil equivalent per day) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Crude Oil – Barrels | 216 | 176 | 216 | 163 | | Natural Gas Liquids – Barrels | 69 | 49 | 66 | 50 | | Natural Gas – Mcf | 610 | 580 | 592 | 578 | | Barrels of Oil Equivalent | 387 | 322 | 381 | 309 | - **Higher sales volumes** in **Q2** and **YTD 2023 increased after-tax earnings** by approximately **$620 million** and **$1,210 million**, respectively, compared to **2022**[108](index=108&type=chunk) Total Production Unit Costs (Per boe) | Item | Q2 2023 Actual | Q2 2022 Actual | YTD 2023 Actual | YTD 2022 Actual | Q3 2023 Forecast Range | FY 2023 Forecast Range | | :-------------------------- | :------------- | :------------- | :-------------- | :-------------- | :--------------------- | :--------------------- | | Cash operating costs | $13.97 | $13.90 | $13.48 | $13.84 | $14.00 - $14.50 | $13.50 - $14.00 | | DD&A | $12.79 | $11.79 | $12.97 | $11.39 | $12.50 - $13.00 | $13.00 - $13.50 | | Total Production Unit Costs | $26.76 | $25.69 | $26.45 | $25.23 | $26.50 - $27.50 | $26.50 - $27.50 | Exploration Expenses (In millions) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Exploratory dry hole costs | $62 | $0 | $93 | $0 | | Exploration lease impairment | $8 | $4 | $13 | $10 | | Geological and geophysical expense and exploration overhead | $29 | $29 | $59 | $66 | | Total Exploration Expense | $99 | $33 | $165 | $76 | - **E&P income tax expense decreased** in **Q2** and **YTD 2023** compared to **2022**, primarily due to the **sale of Libya operations** in **November 2022**, partially offset by **higher income tax expense in Guyana**[116](index=116&type=chunk) - A **pre-tax charge of $82 million** (**$82 million** after income taxes) was recognized in **Q2 2023** for revised abandonment obligations in the West Delta Field[119](index=119&type=chunk) [Comparison of Results - Midstream](index=29&type=section&id=Comparison%20of%20Results%20-%20Midstream) - **Midstream sales and other operating revenues increased** in **Q2** and **YTD 2023** due to higher throughput volumes and tariff rates, partially offset by lower fees from minimum volume commitments[122](index=122&type=chunk) - **Midstream interest expense increased** in **Q2** and **YTD 2023** due to higher interest rates on term loan and revolving credit facilities, and the issuance of **$400 million** in senior unsecured notes in **April 2022**[122](index=122&type=chunk) - **Net income attributable to Hess Corporation from the Midstream segment is estimated** to be **$55 million to $60 million** in **Q3 2023** and **$240 million to $250 million** for the full year **2023**[123](index=123&type=chunk) [Comparison of Results - Corporate, Interest and Other](index=29&type=section&id=Comparison%20of%20Results%20-%20Corporate,%20Interest%20and%20Other) - **Corporate and other expenses (excluding comparability items) were lower** in **Q2** and **YTD 2023**, primarily due to **higher interest income**, partially offset by **higher legal and professional fees** in **YTD 2023**[124](index=124&type=chunk) - **Net interest expense was lower** in **Q2** and **YTD 2023**, primarily due to **capitalized interest associated with the Yellowtail and Uaru developments in Guyana**[124](index=124&type=chunk)[126](index=126&type=chunk) - In **YTD 2022**, results **included a $22 million pre-tax gain from real property sale** and a **$9 million charge for litigation costs related to former downstream business**[127](index=127&type=chunk) [Other Items Potentially Affecting Future Results](index=30&type=section&id=Other%20Items%20Potentially%20Affecting%20Future%20Results) - Future results may be **impacted by volatility in commodity prices**, reserve and production changes, asset sales, impairment charges, exploration expenses, industry cost inflation/deflation, changes in foreign exchange and income tax rates, deferred tax asset valuation allowances, **weather, crude oil storage capacity, political risk, environmental risk, and catastrophic risk**[128](index=128&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity and Capital Resources (In millions, except ratio) | Item | June 30, 2023 | December 31, 2022 | | :------------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $2,226 | $2,486 | | Total debt | $8,467 | $8,281 | | Total equity | $8,902 | $8,496 | | Debt to capitalization ratio for debt covenants | 35.1% | 36.1% | - **Net cash provided by operating activities** was **$1,612 million** in **YTD 2023**, **up from $1,353 million** in **YTD 2022**[132](index=132&type=chunk)[135](index=135&type=chunk) - **Additions to property, plant and equipment increased** by **$449 million** to **$1,658 million** in **YTD 2023**, primarily due to **development activities in Guyana and higher drilling in the Bakken**[136](index=136&type=chunk) - **Common stock dividends paid** were **$271 million** in **YTD 2023**, reflecting a **17% increase** in the dividend[136](index=136&type=chunk) - At **June 30, 2023**, Hess Corporation had **$2.2 billion** in cash and cash equivalents (excluding Midstream) and **total liquidity of approximately $5.6 billion**, **including available committed credit facilities**[138](index=138&type=chunk) - The company **plans to return up to 75%** of annual adjusted free cash flow to shareholders through dividend increases and common stock repurchases, with a **new $1 billion repurchase authorization approved** in **March 2023**[138](index=138&type=chunk) Committed and Uncommitted Credit Facilities at June 30, 2023 (In millions) | Facility | Capacity | Borrowings | Letters of Credit Issued | Total Used | Available Capacity | | :-------------------------- | :------- | :--------- | :----------------------- | :--------- | :----------------- | | Hess Corporation Revolving credit facility | $3,250 | $0 | $0 | $0 | $3,250 | | Hess Corporation Committed lines | $100 | $0 | $2 | $2 | $98 | | Hess Corporation Uncommitted lines | $87 | $0 | $87 | $87 | $0 | | Midstream Revolving credit facility | $1,000 | $198 | $0 | $198 | $802 | - Hess Corporation maintains **investment grade credit ratings** from all three major agencies (**BBB- stable** at S&P, **Baa3 stable** at Moody's, **BBB- positive** at Fitch)[144](index=144&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, including commodity price, interest rate, and foreign currency risks, and outlines the strategies and derivative instruments used to manage these exposures - Hess Corporation is **exposed to commodity risks (crude oil, natural gas), interest rate risks, and foreign currency risks, managed through financial risk management activities**[147](index=147&type=chunk) - **Outstanding foreign exchange contracts totaled $236 million** at **June 30, 2023**; a **10% strengthening/weakening in the U.S. Dollar exchange rate could result in a gain/loss of approximately $20 million/$25 million**[148](index=148&type=chunk) - **Long-term debt, primarily fixed-rate, had a carrying value of $8,467 million** and a **fair value of $8,374 million** at **June 30, 2023**. A **15% increase/decrease in interest rates would decrease/increase fair value by approximately $445 million/$490 million**[149](index=149&type=chunk) - At **June 30, 2023**, **crude oil put options (WTI $70/bbl, Brent $75/bbl) were in place**. A **10% increase in forward crude oil prices would reduce fair value by $50 million**, while a **10% decrease would increase fair value by $100 million**[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2023, and states that there were no material changes in internal control over financial reporting during the quarter - The CEO and CFO **concluded that the Corporation's disclosure controls and procedures were effective** as of **June 30, 2023**[157](index=157&type=chunk) - There was **no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2023**[158](index=158&type=chunk) [PART II - OTHER INFORMATION](index=36&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the detailed information regarding legal proceedings from Note 10 of the Notes to Consolidated Financial Statements - **Information regarding legal proceedings is contained in Note 10, Guarantees and Contingencies, in the Notes to Consolidated Financial Statements and is incorporated by reference**[160](index=160&type=chunk) [Item 2. Share Repurchase Activities](index=36&type=section&id=Item%202.%20Share%20Repurchase%20Activities) This section reports on the Board of Directors' approval of a new $1 billion common stock repurchase authorization in March 2023, replacing the previous fully utilized authorization, with no repurchases made in Q2 2023 - On **March 1, 2023**, the **Board of Directors approved a new authorization for the repurchase of common stock up to $1 billion**, **replacing the previous fully utilized authorization**[161](index=161&type=chunk) - There were **no shares of common stock repurchased during the second quarter of 2023**[161](index=161&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section states that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - **No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2023**[162](index=162&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including certifications, XBRL documents, and the cover page - **Exhibits include certifications (Rule 13a-14(a), Rule 13a-14(b) and Section 1350), Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Label Linkbase, Presentation Linkbase, Definition Linkbase, and the Inline XBRL formatted cover page**[165](index=165&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) - The **report was signed by John B. Hess, Chief Executive Officer, and John P. Rielly, Executive Vice President and Chief Financial Officer, on August 3, 2023**[168](index=168&type=chunk)

Hess Corporation (NYSE:HES) Q2 2023 Earnings Conference Call July 26, 2023 10:00 AM ET Company Participants Jay Wilson - Vice President of Investor Relations John Hess - Chief Executive Officer Greg Hill - Chief Operating Officer John Rielly - Chief Financial Officer Conference Call Participants Doug Leggate - Bank of America Arun Jayaram - JPMorgan Paul Cheng - Scotiabank Ryan Todd - Piper Sandler Neil Mehta - Goldman Sachs Roger Read - Wells Fargo Kevin MacCurdy - Pickering Energy Partners Biju Perincheri ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-1204 HESS CORPORATION (Exact Name of Registrant as Specified in Its Charter) DELAWARE (State or Other Jurisdiction of Incorporation or Organization) 1 ...

Supplemental Earnings Information 1 HESS Reported Net Income, Items Affecting Comparability and Adjusted Net Income by Operating Activity Exploration and Production $ - $ - $ 76 Total items affecting comparability of earnings between periods $ - $ 13 $ (25) 2 * The Corporation has used a non-GAAP financial measure in this supplemental earnings information. "Adjusted Net Income" presented throughout this supplemental information is defined as reported net income attributable to Hess Corporation excluding ite ...

Production Capacity and Reserves - Hess Corporation plans to have six Floating Production Storage and Offloading (FPSO) units with an aggregate expected production capacity of over 1.2 million gross barrels of oil per day (bopd) on the Stabroek Block by 2027[31]. - The company has a 30% interest in the Stabroek Block offshore Guyana, where significant resource discoveries have been made, with potential for up to ten FPSOs to develop the current discovered recoverable resource base[31]. - Proved reserves at December 31, 2022, totaled 1,256 million barrels of oil equivalent (boe), a decrease from 1,309 million boe in 2021[33]. - Proved undeveloped reserves accounted for 43% of total proved reserves on a boe basis as of December 31, 2022, up from 41% in 2021[34]. - The Stabroek Block in Guyana is expected to support up to ten Floating Production Storage and Offloading (FPSO) units, with first production from the Payara development anticipated by the end of 2023[41][43]. - The Liza Phase 1 development reached an expanded production capacity of over 140,000 gross barrels of oil per day (bopd) in June 2022[42]. - The Liza Phase 2 development in Guyana reached its expected production capacity of 220,000 gross bopd in July 2022[42]. - The Payara development project in Guyana is expected to have a production capacity of approximately 220,000 gross bopd, with first production anticipated by the end of 2023[43]. Exploration and Development Activities - In 2023, the company plans to operate four rigs in the Bakken, drilling approximately 110 wells and bringing the same number on production[39]. - The company drilled a total of ten successful exploration and appraisal wells in Guyana in 2022, with plans for six drillships to drill approximately ten exploration and appraisal wells in 2023[46][47]. - The company holds a 33% non-operated interest in Block 42 offshore Suriname, where an exploration well encountered oil pay in 2022[50]. - The company holds a 25% non-operated participating interest in two exploration licenses offshore Newfoundland, with plans to drill one exploration well in 2023[51]. - In 2023, Hess Corporation plans to drill approximately eight development wells in the Malaysia/Thailand Joint Development Area[48]. Production and Pricing - Worldwide crude oil production in 2022 was 70,676 thousand barrels, an increase from 59,602 thousand barrels in 2021[36]. - Average selling prices for crude oil per barrel in the United States increased from $56.64 in 2021 to $81.14 in 2022, representing a 43.4% increase[55]. - Average production costs per barrel of oil equivalent in the United States rose from $23.27 in 2021 to $28.16 in 2022, an increase of 21.0%[55]. - The average selling price for natural gas in the United States increased from $3.82 per Mcf in 2021 to $5.66 per Mcf in 2022, a rise of 48.3%[55]. Midstream Operations - Hess Corporation holds approximately 41% consolidated ownership interest in Hess Midstream LP, providing fee-based services in the Bakken shale play[32]. - Hess Midstream's public shareholders owned approximately 18% of the consolidated entity, while Hess and GIP each owned about 41% as of December 31, 2022[70]. - The natural gas gathering and compression system in North Dakota has a capacity of approximately 590 mmcfd, with 85 mmcfd of compression capacity added in 2022[71]. - Hess Midstream has long-term, fee-based commercial agreements with Hess subsidiaries, effective January 1, 2014, with an initial ten-year term[72]. - The Tioga Gas Plant's total processing capacity is approximately 400 mmcfd, with an NGL fractionation capacity of about 60,000 boepd[74]. - In 2022, the total processing capacity of the Tioga Gas Plant became available, following an expansion from 250 mmcfd to 400 mmcfd[74]. - Hess Midstream LP owns a 50% interest in the Little Missouri 4 natural gas processing plant, which has a processing capacity of approximately 200 mmcfd[74]. Environmental and Social Responsibility - The company spent approximately $23 million in 2022 for environmental remediation[85]. - The total percentage of women in the workforce remained at 27% in 2022, while minorities constituted 25% of U.S. based employees[93]. - The DEI Council at Hess drives progress in diversity, equity, and inclusion, with a focus on fostering a sustainable culture of inclusion[91]. - Hess's strategic focus on DEI has led to maintained or improved diversity across most workforce levels in 2022[92]. - The company has implemented a hybrid work schedule to adapt to changing work environments and prioritize employee well-being[89]. Leadership and Governance - The Corporation's Chief Executive Officer, John B. Hess, has over 45 years of experience in the oil and gas industry, having been with the Corporation since 1977 and serving as CEO since 1995[95]. - Gregory P. Hill has been the President and Chief Operating Officer since 2014, with a total of 25 years of experience at Royal Dutch Shell prior to joining the Corporation in 2009[95]. - The Corporation's Chief Financial Officer, John P. Rielly, has been in this role since 2004 and has a background as a Partner at Ernst & Young, LLP for 17 years[95]. - The Corporation's executive officers have extensive experience, with most having been employed in managerial and executive roles for over five years[96]. - The Corporation's governance documents, including the Code of Business Conduct and Ethics, are available on its website, promoting corporate governance standards[97]. Financial Transparency and Risk Management - The Corporation provides free access to its annual report on Form 10-K and quarterly reports on Form 10-Q through its website, ensuring transparency and compliance with SEC regulations[97]. - The Corporation's forward-looking statements include projections about future financial and operational results, which are subject to various risks and uncertainties[10]. - Key risks affecting the Corporation's operations include fluctuations in market prices of crude oil and natural gas, reduced demand for products, and potential regulatory changes[11]. - The Corporation emphasizes the importance of sustainability goals and initiatives in its business strategy, addressing environmental concerns and climate change[11]. - The Corporation's operational strategies are influenced by market conditions, including competition in the oil and gas exploration and production industry[11].

Supplemental Earnings Information Fourth Quarter 2022 HESS OPERATING RESULTS 1 Reported Net Income, Items Affecting Comparability and Adjusted Net Income by Operating Activity Items Affecting Comparability of Earnings - Income (Expense) Exploration and Production $ 76 $ - $ (54) Midstream - - - Corporate and Other - - (14) Total items affecting comparability of earnings between periods $ 76 $ - $ (68) | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - The company reported net income of $624 million in Q4 2022, up from $515 million in Q3 2022, while adjusted net income was $548 million compared to $583 million in the previous quarter [87] - E&P adjusted net income was $591 million in Q4 compared to $626 million in Q3, with higher sales volumes increasing earnings by $246 million but lower realized selling prices decreasing earnings by $288 million [88] - Cash and cash equivalents stood at $2.48 billion, with total liquidity of $5.73 billion and debt obligations totaling $5.6 billion [90] Business Line Data and Key Metrics Changes - E&P sales volumes were overlifted by approximately 1.3 million barrels, increasing after-tax income by about $60 million [88] - Midstream segment net income was $64 million in Q4, down from $68 million in Q3, with EBITDA before non-controlling interest at $244 million compared to $252 million [89] Market Data and Key Metrics Changes - Company-wide net production averaged 376,000 barrels of oil equivalent per day in Q4 2022, exceeding guidance of approximately 370,000 barrels [71] - For 2023, net production is forecasted to average between 355,000 and 365,000 barrels of oil equivalent per day, representing a 10% increase from 2022 [71] Company Strategy and Development Direction - The company aims to grow its resource base, deliver low-cost supply, and generate industry-leading cash flow growth while maintaining leadership in environmental, social, and governance performance [58] - The strategy includes significant investments in Guyana, the Bakken, and the Gulf of Mexico, with a focus on high-return, low-cost opportunities [60] Management's Comments on Operating Environment and Future Outlook - Management highlighted the need for approximately 20% more energy globally by 2050 while achieving net-zero emissions, indicating a structural deficit in energy supply [50][56] - The company plans to continue increasing its regular dividend and share repurchases as free cash flow generation increases [60][68] Other Important Information - The company completed a $650 million stock repurchase program in 2022 and plans to return up to 75% of annual free cash flow to shareholders [59][60] - The company has a robust inventory of high-return drilling locations, particularly in the Bakken, with plans to average 200,000 barrels of oil equivalent per day by 2025 [64][74] Q&A Session Summary Question: What is the impact of the winter storm on Bakken production? - Management noted that severe winter weather significantly impacted the ability to mobilize resources, resulting in a backlog of down wells and a reduction in new wells brought online [22][72] Question: How does the appreciation of share price affect stock buybacks? - Management confirmed that the appreciation of share price has not changed their commitment to the return framework, which includes dividends and share repurchases [26] Question: What are the expected cash costs for E&P in 2023? - E&P cash costs are projected to be in the range of $13.50 to $14.50 per barrel of oil equivalent for the full year 2023 [92] Question: What is the status of the Uaru project? - Management indicated that the Uaru project remains on track for world-class returns despite cost inflation, with final details to be provided once the project is sanctioned [45][46]

2 Accelerating Share Repurchases ▪ Flexibility for further returns subject to commodity price environment Commitment to Strong Balance Sheet Growing dividend and ongoing commitment to increase return of capital to shareholders 6 (1) Free cash flow is defined as net cash provided by operating activities less capital expenditures and adjusted for debt repayments and net Midstream financing activities. (2) Assumes $65/BBL Brent, $62/BBL WTI; excluding Libya. Stated Policies Net Zero Announced Pledges 800 | --- ...