Hess Corporation First Quarter 2023 Results

Bakken (Onshore U.S.)

 Net production from the Bakken was 163,000 boepd in the first quarter of 2023 compared with 152,000 boepd in the prior-year quarter, primarily due to higher NGL volumes received under percentage of proceeds contracts and increased drilling and completion activity. The Corporation added a fourth drilling rig in July 2022 and drilled 25 wells, completed 26 wells, and brought 24 new wells online during the first quarter of 2023.

Gulf of Mexico (Offshore U.S.)

 Net production from the Gulf of Mexico in the first quarter of 2023 was 33,000 boepd, compared with 30,000 boepd in the prior-year quarter.

Guyana (Offshore)

At the Stabroek Block (Hess - 30%), net production from the Liza Destiny and the Liza Unity FPSOs totaled 112,000² bopd in the first quarter of 2023 compared with 30,000 bopd in the prior-year quarter. The Liza Unity FPSO, which commenced production in February 2022, reached its production capacity of approximately 220,000 gross bopd in July 2022. In the first quarter of 2023, we sold nine cargos of crude oil from Guyana compared with two cargos in the prior year quarter.

The third development, Payara, which will utilize the Prosperity FPSO with a production capacity of approximately 220,000 gross bopd, is targeted for startup early in the fourth quarter. The Prosperity FPSO arrived at the Stabroek Block on April 11th and hook-up and commissioning activities have commenced. The fourth development, Yellowtail, was sanctioned in April 2022 and will utilize the ONE GUYANA FPSO with a production capacity of approximately 250,000 gross bopd, with first production expected in 2025. Government and regulatory approvals are expected very soon for a fifth development, Uaru, with a production capacity of approximately 250,000 gross bopd.

The Corporation today announced an oil discovery at the Lancetfish-1 well on the Stabroek Block, offshore Guyana. The Lancetfish-1 well encountered approximately 92 feet of oil bearing sandstone reservoir. The well was drilled in 5,843 feet of water by the Noble Don Taylor and is located approximately 4 miles southeast of the Fangtooth discovery.

The Kokwari-1 exploration well was drilled during the quarter and did not encounter commercial quantities of hydrocarbons.

2. Net production from Guyana in the first quarter of 2023 included 15,000 bopd of tax barrels. There were no tax barrels in the first quarter of 2022.

Southeast Asia (Offshore)

Net production at North Malay Basin and JDA was 66,000 boepd in the first quarter of 2023 compared with 64,000 boepd in the prior-year quarter.

Midstream

The Midstream segment had net income of $61 million in the first quarter of 2023, compared with net income of $72 million in the prior-year quarter.

In March 2023, Hess Midstream Operations LP (HESM Opco), a consolidated subsidiary of Hess Midstream LP (HESM), repurchased approximately 3.6 million HESM Opco Class B units from Hess Corporation and Global Infrastructure Partners for $100 million, of which the Corporation received net proceeds of $50 million. The purchase was financed by HESM Opco's revolving credit facility. After giving effect to this transaction, the Corporation continues to own approximately 41% of HESM on a consolidated basis.

Corporate, Interest and Other

After-tax expense for Corporate, Interest and Other was $120 million in the first quarter of 2023, compared with $115 million in the first quarter of 2022. On an adjusted basis, after-tax expense for Corporate, Interest and Other was $128 million in the first quarter of 2022.

Capital and Exploratory Expenditures

E&P capital and exploratory expenditures were $765 million in the first quarter of 2023 compared with $580 million in the prior-year quarter, primarily due to higher drilling in the Bakken and development activities in Guyana. Midstream capital expenditures were $57 million in the first quarter of 2023 and $37 million in the prior-year quarter.

Liquidity

Excluding the Midstream segment, Hess Corporation had cash and cash equivalents of $2.1 billion and debt and finance lease obligations totaling $5.6 billion at March 31, 2023. The Midstream segment had cash and cash equivalents of $4 million and total debt of $3.0 billion at March 31, 2023. The Corporation's debt to capitalization ratio as defined in its debt covenants was 35.4% at March 31, 2023 and 36.1% at December 31, 2022. In March, the Corporation increased its quarterly dividend to $0.4375 per share commencing in the first quarter.

Net cash provided by operating activities was $638 million in the first quarter of 2023, compared with $156 million of net cash used in operating activities in the first quarter of 2022. Net cash provided by operating activities before changes in operating assets and liabilities³ was $1,032 million in the first quarter of 2023, compared with $952 million in the prior-year quarter. During the first quarter of 2023, changes in operating assets and liabilities decreased cash flow from operating activities by $394 million. During the first quarter of 2022 changes in operating assets and liabilities decreased cash flow from operating activities by $1,108 million, reflecting payments of approximately $470 million for accrued Libyan income tax and royalties at December 31, 2021.

3. "Net cash provided by (used in) operating activities before changes in operating assets and liabilities" is a non-GAAP financial measure. The reconciliation to its nearest GAAP equivalent measure, and its definition, appear on pages 6 and 7, respectively.