Hess(US:HES)2024-02-26 21:04Production and Reserves - Hess Corporation has a significant resource base in the Stabroek Block offshore Guyana, with a current production capacity of over 1.2 million gross barrels of oil per day (bopd) expected by the end of 2027[30]. - The company plans to increase its floating production, storage, and offloading vessels (FPSOs) from three to six, supporting the anticipated production growth[30]. - Hess Corporation's exploration activities are primarily focused offshore Guyana, in the U.S. Gulf of Mexico, and offshore Suriname, indicating a strategic focus on high-potential regions[30]. - Hess Corporation's total proved reserves as of December 31, 2023, were 1,370 million barrels of oil equivalent (boe), an increase from 1,256 million boe in 2022[33]. - Proved reserves as of December 31, 2023, included 859 million barrels of crude oil and condensate, 262 million barrels of natural gas liquids, and 1,492 billion cubic feet of natural gas, totaling 1,370 million barrels of oil equivalent (boe)[33]. - Proved undeveloped reserves accounted for 41% of total proved reserves on a boe basis as of December 31, 2023, down from 43% in 2022[33]. - Worldwide crude oil production in 2023 was 81,941 thousand barrels, an increase from 70,676 thousand barrels in 2022, with significant contributions from Guyana[35]. - Hess's total natural gas production in the United States reached 85,346 thousand mcf in 2023, compared to 72,927 thousand mcf in 2022, marking a 17% increase[35]. - Hess's net production averaged 182,000 boepd in the Bakken shale play during 2023, with 118 wells drilled and 113 wells brought on production[37]. - The Stabroek Block in Guyana is expected to support up to ten Floating Production Storage and Offloading (FPSO) units, with the first six expected to have a combined production capacity of over 1.2 million gross barrels of oil per day by the end of 2027[39]. - The Liza Phase 1 development increased its production capacity to 150,000-160,000 gross bopd in Q4 2023, while Liza Phase 2 reached approximately 250,000 gross bopd in Q3 2023[40]. - The Payara development began production in November 2023, achieving an initial capacity of approximately 220,000 gross bopd in January 2024[40]. - The Yellowtail development, sanctioned in April 2022, is expected to have an initial production capacity of approximately 250,000 gross bopd, with first production anticipated in 2025[41]. - The Uaru development, sanctioned in April 2023, is projected to have an initial production capacity of approximately 250,000 gross bopd, with first production expected in 2026[42]. Financial Performance - Average selling price of crude oil per barrel in the United States decreased to $70.80 in 2023 from $81.14 in 2022, a decline of approximately 12.4%[54]. - Average production costs per barrel of oil equivalent in the United States increased slightly to $27.61 in 2023 from $28.16 in 2022, an increase of about 1.8%[54]. - Average selling price of natural gas in the United States decreased to $1.76 per Mcf in 2023 from $5.66 per Mcf in 2022, a decline of about 68.9%[54]. - Average production costs in Guyana decreased to $9.60 per barrel in 2023 from $11.23 in 2022, a decrease of approximately 14.5%[54]. Strategic Initiatives - The company is executing a multi-phased development strategy in the Stabroek Block, which is expected to underpin the potential for up to ten FPSOs[30]. - The company is actively involved in the transportation, purchase, and sale of crude oil, natural gas liquids, and natural gas, highlighting its integrated operations in the energy sector[30]. - The company anticipates continued growth in production levels, driven by successful exploration and development activities in key regions[30]. - The company entered into a Merger Agreement with Chevron, where shareholders will receive 1.025 shares of Chevron common stock for each share of the company's stock, with the transaction expected to close in mid-2024[32]. - The proposed merger with Chevron Corporation is expected to provide significant synergies and benefits, although it is subject to regulatory approvals[8]. Environmental and Social Responsibility - Hess Corporation's operational strategy includes a focus on sustainability and environmental responsibility, aligning with industry trends and regulatory expectations[30]. - In 2023, the company spent approximately $28 million on environmental remediation, up from $23 million in 2022 and $16 million in 2021[84]. - The company is involved in industry-wide task forces to improve oil spill prevention and response processes[78]. - The company has a commitment to diversity, equity, and inclusion (DEI), with ongoing training and initiatives to foster a sustainable culture of inclusion[89]. - The total percentage of women in executive and senior officer positions increased to 17% in 2023 from 16% in 2022, while the percentage of minorities among U.S. based employees rose to 20% from 19%[92]. - The company maintains an annual incentive plan for all employees, including executive officers, with shared enterprise performance metrics[93]. - The wellness program has been enhanced to support the physical, financial, social, and emotional well-being of employees[93]. Workforce and Human Capital - As of December 31, 2023, the company had 1,756 employees globally, with 1,594 in the United States[86]. - The company emphasizes compliance with environmental, health, and safety regulations, which may lead to higher capital expenditures and operating expenses[84]. - The company’s human capital strategy focuses on professional development and engagement, utilizing the Life at Hess framework to enhance employee experience[85]. - The company has established formalized individual and team learning paths to enhance employee development and effectiveness in a hybrid work environment[93]. - The company provides comprehensive training and development programs to help leaders navigate a dynamic and diverse work environment[93]. - The company maintained or improved diversity metrics across most workforce levels, with women representing 27% of the total workforce in 2023, unchanged from 2022, and minorities at 26%, up from 25%[92]. - The executive team has extensive experience, with the CEO having over 45 years in the oil and gas industry and other executives averaging over 25 years in their respective fields[94]. - The company is focused on attracting and retaining a highly skilled workforce through competitive compensation and benefits programs[93]. Midstream Operations - Hess Corporation holds approximately 38% consolidated ownership interest in Hess Midstream LP, providing fee-based services in the Bakken shale play[31]. - Hess Midstream completed two public equity offerings in 2023, raising approximately $400 million through the repurchase of Class B units[68]. - The Midstream segment earns revenues primarily from fees for gathering, processing natural gas, and transporting crude oil, with minimum volume commitments set at 80% of nominations[71][72]. - The natural gas gathering and compression system has a current capacity of approximately 660 mmcfd, with an aggregate compression capacity of approximately 480 mmcfd[72]. - The crude oil gathering system has a current capacity of approximately 290,000 bopd, connecting to multiple terminal facilities[72]. - The Tioga Gas Plant has a total processing capacity of approximately 400 mmcfd and an NGL fractionation capacity of approximately 60,000 boepd[72].