Hess(US:HES)2023-01-25 18:54Financial 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]