Culmination of Our Transformation: A Focused Pure Play E&P Company Pure Play E&P Company Focused, higher growth, lower risk portfolio Divest Indonesia and Thailand Pursue monetization of Bakken midstream assets (2015) Exit…
Culmination of Strategic Transformation Integrated Oil Pure Play E&P Company 5-YEAR TRANSFORMATION Company Jan 1, 2010 July 25, 2012 March 4, 2013 Phase I Phase II Phase III Bakken (added 250,000 net acres) Announced…
The Market Recognizes That Our Plan is Working Hess share price increased 34%, outperforming all proxy peers, from our July 25, 2012 strategy update to the last trading day before the announcement of the planned sale of our terminal…
HESS: A PURE PLAY E&P COMPANY 7
Hess: A Pure Play E&P Company Driving Shareholder Value 1 Focused Portfolio 78% of reserves and 84% of production in five key areas 2 Higher Growth, Lower Risk 5-year 5-8% CAGR on production (2012 pro forma 2017) Mid-teens…
1 E&P Portfolio Focused on Five Key Areas 78% of Reserves / 84% of Production Valhall / Bakken South Arne 19% Prod. 8% Prod. 23% Res. Utica 28% Res. Tubular Bells Ghana JDA 17% Prod. Deepwater 11% Res. Gulf of Mexico…
2 A Higher Growth, Lower Risk Portfolio to Deliver Results 5-Year 5-8% CAGR on Production (2012 Pro Forma 2017) A leading acreage position in the premier United States shale oil play BAKKEN SHALE Estimated production of 64 70…
3 The Leading Oil-Linked Asset Base 2013E Hess Production Pro Forma 79% 77% U.S. Gas 6% 72% Int'l Gas 69% 18% Crude Percentage of Reserves that are Liquids Based 76% Oil 69% (85% NGLs Liquids Brent 62% 7% linked)…
4 Hess Has Reduced Well Costs by 30% in 2012 2012 Q4 Bakken Drilling & Completion Costs (mm / well) 10.0 9.4 9.0 Proxy Peers Bakken Hess Pure Play Peers 2012 Q4 Hess is increasingly demonstrating it can deliver…
4 Technical Breadth, Cost Efficient, and Globally Capable Chosen by leading international oil companies, national oil companies, and host governments to operate major new oil & gas developments Chevron endorsed Hess as operator of…
Returning Capital to Shareholders, Retaining 5 Financial Flexibility, and Allocating Capital Efficiently Returning capital to shareholders Increased common stock dividend 150% to 1.00 per share annually, effective third quarter of…
6 The Right Board to Drive Shareholder Value We have identified a team of outstanding and experienced leaders with substantial E&P and business experience to help execute the next phase of our value plan JOHN KRENICKI JR. - 50 Former…
6 The Right Board to Drive Shareholder Value We have identified a team of outstanding and experienced leaders with substantial E&P and business experience to help execute the next phase of our value plan FREDRIC REYNOLDS - 62 Former…
Hess Transformed: A Pure Play E&P Company Driving Shareholder Value 1 Focused Portfolio 2 Higher Growth, Lower Risk 3 Levered to Oil Prices 4 Technical Breadth, Cost Efficient, and Globally Capable 5 Returning Capital to…
HESS ASSESSMENT OF ELLIOTTS RECOMMENDATIONS 19
Elliott Managements Recommendations Are Flawed and Irrelevant Elliotts Central Thesis Facts Deeply flawed idea that undermines the prospect of future value by breaking the Company into two pieces with Immediately break the inadequate…
Elliotts Central Thesis Ignores Key Issues and is Based on Flawed Assumptions Paul Singer plans to immediately break Hess into two pieces, the U.S. unconventional resource spin entity, ResourceCo, and the remaining Hess assets,…
Elliotts Central Thesis Ignores Key Issues and is Based on Flawed Assumptions We believe the Net Asset Valuation assumptions used by Singer to justify a break-up are not analytically sound. Singers target price objective of 126 / share…
Elliotts Central Thesis Ignores Key Issues and is Based on Flawed Assumptions 126 Elliotts NAV / Share of 126 is 60% HIGHER than the median Wall Street Research NAV of 79 100 98 89 87 81 Median NAV: 79 76 72 74 68…
Elliott Overstates its Valuation Case by Focusing on Historical Versus Forward-Looking Multiples Valuation multiples are typically but valuation multiples normalize inflated at the start of growth cycles as growth cycles mature…
Third Parties Agree that Elliotts Central Thesis Does Not Work As the industry shifted to develop the Bakken in earnest, Hess moved quickly to cement its position. Using the strength of cash flows from the international business that…
Hess Has Been Aggressively Focusing its Portfolio Since 2010 UPSTREAM DOWNSTREAM Asset sales (1.7 billion) Closed HOVENSA joint venture Jambi Merang (Indonesia) refinery in St. Croix, U.S. Virgin PHASE I Central & Southern North…
Hess Has Been Aggressively Cutting Capital SpendingWith More to Come in 2014 We are transitioning from a period of intense investment in our high return assets to one of increasing production yield and positive cash generation We…
Hess is an Efficient Operator and Partner of Choice in the Bakken Q4 2012 Bakken Well Costs (mm / Well) Efficient Bakken operator Our Bakken well drilling and completion costs 10.0 are below or in line with our peers 9.4 9.0 We…
The Right Directors and the Right Governance to Lead the Transformed Hess Hess management and Board of Directors have built the Companys world class asset portfolio and led the strategic transformation that has been delivering…
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