Hess(HES) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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 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 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 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] Notes to Consolidated Financial Statements (Unaudited) Note 1 - Basis of Presentation - 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][21] Note 2 - Inventories 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 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] - 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][25][26][27][28] Note 4 - Hess Midstream LP - 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] - Hess Corporation owns an approximate 38% interest in Hess Midstream LP on a consolidated basis[29] - 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] - 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][33] Note 5 - Accrued Liabilities 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 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] - 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] Note 7 - Impairment and Other - 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] Note 8 - Retirement Plans 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] - The HOVENSA Legacy Employees' Pension Plan was terminated, resulting in an $11 million noncash settlement gain[47] Note 9 - Weighted Average Common Shares 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 - The company is involved in ongoing MTBE lawsuits in Pennsylvania and Maryland, with the Pennsylvania suit forwarded to multidistrict litigation[52] - 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] - 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] - 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] Note 11 - Segment Information 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 - 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] 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] 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 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 - 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] - 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] - 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] 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] - The Pickerel-1 exploration well in the Gulf of Mexico was an oil discovery in July 2023, with first oil expected mid-2024[83] - 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] - The Payara development is on track for startup early Q4 2023, Yellowtail for 2025, and Uaru for 2026, all on the Stabroek Block[83] Consolidated Results of Operations 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 - 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] 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] 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] 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] - 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] Comparison of Results - Midstream - 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] - 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] - 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] Comparison of Results - Corporate, Interest and Other - 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] - 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][126] - 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] Other Items Potentially Affecting Future Results - 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] Liquidity and Capital Resources 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][135] - 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] - Common stock dividends paid were $271 million in YTD 2023, reflecting a 17% increase in the dividend[136] - 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] - 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] 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] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] - 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] - 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] - 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] Item 4. Controls and Procedures 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] - 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] PART II - OTHER INFORMATION Item 1. Legal Proceedings 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] Item 2. Share Repurchase Activities 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] - There were no shares of common stock repurchased during the second quarter of 2023[161] Item 5. Other Information 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] Item 6. Exhibits 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] 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]