Todays Agenda 1:00 pm Introduction Jay Wilson VP Investor Relations Strategy & Business Environment John Hess Chief Executive Officer Portfolio & Capabilities Greg Hill President & Chief Operating Officer Global Exploration Barbara…
Emergency Exits STAGE YOU ARE HERE 3
Strategy & Business Environment John Hess Chief Executive Officer 5
Hess Senior Leadership Executive John Hess Greg Hill John Tim Leadership Chief Executive President & Rielly Goodell Officer Chief Operating SVP Chief SVP General Officer Financial Officer Counsel Mike Barbara Richard Andy Turner…
Hess Strategic Priorities Invest only in High Return, Low Cost Opportunities Prioritize Return Build Focused and of Capital to Balanced Portfolio Shareholders Robust at Low Prices Commitment to Sustainability Grow Free…
Why Hess Balance between growth engines and cash engines leverage to Brent oil pricing Focused, High Return 20% cash flow CAGR, 10% production CAGR, through 20251 Portfolio Structurally lowering costs…
Macro Oil Environment Global investment insufficient to address demand growth and natural production declines Annual Global Upstream Investment1 Substantial decrease in investment, below level needed to billion meet global oil & gas…
Sustained Growth in Production and Cash Flow 20% cash flow CAGR outpaces 10% production CAGR through 2025 Production1 Guyana growing to MBOED 2017 to 20251 750 MBOD gross Production grows at 10% CAGR 600 by 2025 Cash flow grows at 20%…
Leverage to High Value Brent Oil Leading liquids weighted resource base Leading Liquids Weighting Among Peers Liquids % of Commercial Resources1 Liquids 80% of 80% production mix by 2025 Brent pricing exposure 40% increasing to 65%…
Continuing Reduction in Unit Costs Significant cost reductions, improved profitability Cash Costs1 /BOE 30% reduction 15 Investing in low unit cost assets 10 Divested higher cost assets 5 - 50% workforce 2017 2018 2019 2020…
Portfolio Delivers Market Leading EBITDA Growth 38% EBITDA CAGR to 2020 leads key sectors of S&P 500 EBITDA CAGR1 Peers 45% EBITDA CAGR1 2017 to 2020 2017 to 2020 30% Average 23% 38% 15% 23% 0% HES Peer 1 2 3 4 5 6 Peers7 8…
Significant Free Cash Flow Growth Cash returns increase more than 250% by 2025 CFFO billions Significant Investment Return of Capital CROCE at 65/bbl cash flow growth 8 30% Brent CROCE 20% CAGR 25% 75/bbl through 20252 6 65/bbl…
Transformative Inflection Point Return on capital increases substantially CROCE by over 3.5x to 30% by 2025 Industry leading cash flow growth through 2025 with low execution risk Portfolio breakeven decreases…
Portfolio & Capabilities Greg Hill Chief Operating Officer 16
Focused, High Return Portfolio Balance between cash engines and growth engines Cash Engines1 Growth Engines Lower Growth Higher Growth 2019 to 2025 2019 to 2025 Deepwater 9 billion free cash flow 8 billion free cash flow Bakken…
Onshore and Offshore World class assets and top quartile capabilities North America South America Bakken Guyana Bakken, North Dakota Guyana 5 FPSOs 200 MBOED production by 2021 750 MBOD gross production by 2025 20% production CAGR…
Guyana World class investment opportunity Among industrys largest offshore oil discoveries in the past decade - 5 BBOE gross discovered recoverable resource - Multi billion barrels of unrisked exploration upside Exceptional…
Guyana Low development costs and outstanding financial returns Guyana Delaware Basin Liza Phase 1 - Cumulative Cash Flow Liza Illustrative Phase 1 50,000 Net Acre Development1 Development2 75 Brent Peak Production 120,000 BOED…
Bakken Competitively advantaged position in premium tight oil play Improving Type Curves Production Increases to Premier Bakken Position in the Core 200 MBOED by 2021 Type Curves Bakken Production Average IP180 Cum. Oil Curve; MBO;…
Sustainability Commitment Across Our Company Values drive value Safety Climate Change & Environment Social Responsibility Enterprise-wide focus on continuous Board evaluates Fundamental to the way we do improvement to ensure everyone,…
Safety and Environment License to operate, core to our values Hess Safety over Time Hess vs. Other Operators Total Recordable Incident Rate (TRIR) TRIR Worldwide2 E&P, 2017 4th quartile 3rd quartile 2nd quartile First quartile 1.0…
Technology, Innovation and Lean Capability Drive Returns Value focused, driving efficiencies and continuous improvement Results Future Opportunities Exploration Repeatable, rapid de-risking of Rapid data processing in the Cloud…
Global Exploration Barbara Lowery-Yilmaz Senior Vice President Exploration Guyana Development Richard Lynch Senior Vice President Technology & Services 26
Hess Exploration Strategy Create value in advantaged basins with material yet to find oil volumes Maintain focused strategy to generate material long term value Delivered 5+ BBOE gross discovered resource1 since 2015 Newfoundland 5…
Industry Leading Exploration Performance High success rate with material resource add at low cost Industry Leading Success Rate Transformational Value Creation and Finding Cost for Hess 70% 1600 High Success Rate Large Discovered…
Deepwater Guyana and Suriname One of the industrys major offshore discoveries over the past decade N 10 Discoveries 350 miles 1 Liza 6 Ranger 3500 m 3000 m 2 Liza Deep 7 Pacora 3 Payara 8 Longtail 4 Snoek 9 Hammerhead Kaieteur 5…
Guyana: Stabroek Block Guyana resources 5 BBOE and growing rapidly Water Depth: 5,500 - 11,000 ft Drilling TD: 17,000 - 23,000 ft Discovered Recoverable Resource Guyana Production Capacity Cumulative BBOE1 Gross Production Capacity;…
Guyana: Strategy Execution Application of technology and top quartile execution Guyana Basin + Execution = Value Creation Guyana and Suriname Prospect Inventory Liza Destiny FPSO (by play type) Volume Liza Reservoirs…
Regional to Prospect Scale Exploration Risk reduction driven by bottoms up and top down approach Depositional Environment and Reservoir Prediction 125 miles Quantitative Geophysics Abyssal Plain Basin Floor Demerara high Shale…
Subsequent Development Phases 5+ FPSOs develop 5 BBOE and deliver 750 MBOD gross production Guyana Production Capacity Pacora-1 Payara-2 Cum. MBOD Installed Future Payara-1 Liza and 750 3 Liza-5 Payara Payara 500 Liza Liza-3 /…
Liza: A World Class Development Scale, quality, top quartile execution & pace drive low breakevens Exceptional Reservoir1 Best In Class Drilling Performance2 Permeability (mD) Drilling Days 4th 4000 200 quartile 400 3rd quartile 40…
Development Strategy Exceptional costs, standardized, repeatable design, first quartile execution Liza Phase 1 Development: World Class Delivery Industry Leading Noble Bob Douglas First Tree System Metrics Delivering 1st quartile…
Development Strategy: Phases 1 & 2 Phase 2 building on World Class Phase 1 development Water Depth: 5,000-6,250 Liza Phase 1 Drilling TVD 17,000 5 miles Drilling MD 25,000 17 wells: 8 producers, 6 water injectors, 3 gas injectors…
Guyana Developments Manageable pace and exceptional free cash flow generation Guyana Developments Schedule Guyana Developments Capital billions net 2018 2019 2020 2021 2022 2023 2024 2025 Developments 1 - 3 Phase 1 Cum. Liza Area…
Deepwater Guyana and Suriname E&A program continues to delineate multi billion barrels of unrisked exploration upside N 350 miles 30 prospects 3500 3500 m m 10 discoveries to date 3000 3000 m m Play diversity across basin 7,500…
Beyond Liza: Significant Remaining Resource Hammerhead, Longtail, Turbot and Pluma discoveries under appraisal in 2019 Liza / Payara Area N Hammerhead Pacora Payara 2 Payara 1 Miocene Play Opener 3 L5 Stabroek 195 ft of stacked…
Guyana / Suriname: Carbonate Plays Appraisal of Ranger oil discovery in 2019, similar structures mapped in Suriname Ranger Appraisal (Stabroek) Walker Exploration Prospect (Suriname) Ranger Walker Ranger-2 Ranger-1 N N 3…
GoM Exploration Explore for exceptional rocks at unexceptional depths GoM Deepwater Creaming Curve1 Large yet to find Cum. Resource BBOE 26 BBOE found Seismic imaging breakthrough 25 to date 20 Performance & standard 15 design…
GoM Exploration: Targeting Miocene and Cretaceous Prospects Inventory of high value tie-back and material hub class opportunities Proven Miocene Play Emerging Cretaceous Play Esox 2019 ILX Well Salt Salt N N 1mile 3…
Hess Exploration Strategy Create value in advantaged basins with material yet to find oil volumes Maintain focused strategy to generate material long term value Delivered 5+ BBOE gross discovered resource1 since 2015 Newfoundland…
Gulf of Mexico, SE Asia Gerbert Schoonman Vice President Offshore 45
Gulf of Mexico Significant free cash flow generation, high returns with upside Strategic/ Sustain net production 65 MBOED through 2025 through infills & tiebacks Portfolio Generates 5 billion FCF 2019 to 20251, for annual average Capex…
Gulf of Mexico Favorable cost environment, established capability Rebased Offshore Service Costs Proven Offshore Capabilities Creates attractive investment opportunity Major project delivery, best-in-class deepwater drilling North…
Gulf of Mexico Extensive inventory of high return infill and tiebacks to producing hubs 15 Conger 10 (2016) Penn State Deep 6 (2018) Esox (2019) infill / ILX opportunities Online late 2016 Online March 2018 Tieback to Tubular Bells…
South East Asia: JDA and North Malay Basin Stable long term free cash flow generation JDA Established operator, strong partnership with PETRONAS Strategic/ Premium gas market oil linked pricing Portfolio Context Generates 2 billion…
South East Asia: JDA and North Malay Basin Continuing development to maintain long term, oil linked, gas sales Stable Production Though 2025 Low Risk, Low Cost, Ongoing Development Activities 50 Net Production (MBOED) 40 Operated by…
Bakken Strategy Michael Turner Senior Vice President Production 51
Competitively Advantaged Position Hess positioned to capture significant value uplift in the Bakken Established track record of asset optimization, cost reductions and value creation Top Tier Operator Operational excellence & lean…
Leading Acreage Holding, Advantaged Infrastructure Development strategy to maximize DSU value Strategy / Maximize NPV per DSU Tioga Gas Portfolio Focus on efficiencies via Lean principles to enhance returns Tioga Rail Plant Context…
Bakken: Bigger and Better Optimized development delivers significant FCF and production growth Production to 200 MBOED by 2021 Premier Bakken Position Bakken Production 20% MBOED CAGR Generates 1 billion of annual 2018-21 FCF post…
Top Tier Operator: Lean Capability Lean drives efficiencies and continuous improvement Lean Principles Driving Tangible Results Embedded throughout the company Via an army of problem solvers Drilling & Completions Culture of…
Bakken Barry Biggs Vice President Onshore 56
Bakken Study Results Focus on maximizing value drives development strategy 1 3 Best-in-class Lean Execution, Top Tier Operator Evolution of Completion Technology Historic SS D&C cost per Well (MM) Hess vs. Competitors 2015 2016…
Top Tier Operator in the Bakken Established track record of continuous improvement, cost reduction and value creation Drilling Cycle Time Drilling & Completion Costs Spud-to-spud days MM per well Increases Further 60% NPV by NPV upside…
Extensive, Robust Drilling Inventory 50% average IRR over the next 60+ rig years of drilling inventory Significant Inventory of High Return Locations Focused 2019 Bakken Development Well Plan Number of Locations with IRRs at 15% or…
Significant Growth in Production and Free Cash Flow Optimized development delivers significant FCF and production growth Transition to Plug & Perf P&P Increases Production to Premier Bakken Position Maximizes NPV 200 MBOED by 2021…
Financials John Rielly Chief Financial Officer 62
Hess Financial Priorities Financial strategy integral to delivering compelling shareholder value Strategic Priorities Financial Priorities Disciplined Capital Allocation Strategy 75% of capital allocated to high return Guyana & Bakken…
Disciplined Capital Allocation: 2019 Incremental 2019 capital allocated to high return investments in Guyana and Bakken Capital & Exploratory Spend 2019 Capital Highlights Incremental MM Capital 2019 vs. 2018 3,000 Shift to P&P…
Disciplined Capital Allocation: Longer Term 75% of capital allocated to high return investments in Guyana and Bakken Capital & Exploratory Spend 2020-2025 Capital Highlights MM 3,000 6 rig program through 2020 2,900 360 Bakken 200…
Focus on Cost Reductions and Profitability Industry leading cash flow growth of 20% CAGR CFFO CFFO billions Increases +300% 6 CFFO grows at Reduced annual CFFO 20% CAGR1 2017-25 costs by 150 MM Increases at 65/bbl Brent +100% 4…
Hess Performance Dashboard Investment in high return projects drives superior shareholder returns and cash flow Debt-adjusted Production Growth1 EBITDAX1 20% CAGR from 2017 pro forma billion CAGR 25% 19% 15% 12% 1.6 NA 0 2017…
Financial Strength and Flexibility Strong liquidity, balance sheet and flexibility 3.8 B of asset monetizations since 2017 Net Debt / Capitalization1 Robust 7.0 B of liquidity 100% Liquidity - 2.6 B cash at September 30, 2018,…
Significant Free Cash Flow Growth Cash returns increase more than 250% by 2025 CFFO billions Significant Investment Return of Capital CROCE at 65/bbl cash flow growth 8 30% Brent CROCE 20% CAGR 25% 75/bbl through 20252 6 65/bbl…
Summary & Conclusions John Hess Chief Executive Officer 70
Transformative Inflection Point Return on capital increases substantially CROCE by over 3.5x to 30% by 2025 Industry leading cash flow growth through 2025 with low execution risk Portfolio breakeven decreases…
Appendix: Reconciliations of Non-GAAP Measures Net Debt to Capitalization Ratio September 30, 2018 (in millions) Hess Consolidated Total debt 6,694 Less: cash and cash equivalents 3,004 Net debt 3,690 Total debt 6,694 Add:…
Appendix: Reconciliations of Non-GAAP Measures Cash Return on Capital Employed Ratio December 31, 2017 (in millions) Hess Consolidated Net cash provided by (used in) operating activities 945 Add: Changes in operating assets and…
Appendix: Reconciliations of Non-GAAP Measures Debt/EBITDAX December 31, 2017 (in millions) Hess Consolidated Net income (loss) (3,941) Add: Provision (benefit) for income taxes (1,837) Add: Impairment 4,203 Add: Depreciation,…
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