Hess Announces 2022 E&P Capital and Exploratory Budget

Majority Allocated to World Class Guyana Developments and Bakken Three Rig Program

Hess Corporation (NYSE: HES) today announced a 2022 Exploration & Production capital and exploratory budget of $2.6 billion, of which approximately 80% will be allocated to Guyana and the Bakken.

Net production is forecast to average between 330,000 and 340,000 barrels of oil equivalent per day in 2022, excluding Libya. Bakken net production is forecast to average between 165,000 and 170,000 barrels of oil equivalent per day in 2022.

“Our capital program reflects our continued discipline in investing in high return, low cost opportunities within our portfolio,” CEO John Hess said. “The majority of our 2022 budget is allocated to Guyana, which is positioned to be one of the highest margin, lowest carbon intensity oil developments in the world, and to the Bakken, our largest operated asset where we have a robust inventory of high return future drilling locations.”

Chief Operating Officer Greg Hill said: “In the Bakken, we plan to operate a three rig program, which will enable us to generate significant free cash flow, lower our unit cash costs and further optimize our infrastructure. In Guyana, our focus in 2022 will be on advancing our high value oil developments on the Stabroek Block, which have a Brent breakeven oil price of between $25 and $35 per barrel, and continuing our active exploration and appraisal program.”

The $2.6 billion budget is allocated as follows: $1,150 million (44%) for production, $1,000 million (39%) for offshore Guyana developments and $450 million (17%) for exploration and appraisal activities.

Production

• $790 million to fund a three rig program in the Bakken. The company expects to drill approximately 90 gross operated wells and to bring online approximately 85 wells in 2022. Funds are also included for investment in nonoperated wells.
• $270 million for production activities at North Malay Basin (Hess 50% and operator) offshore Peninsular Malaysia and the Malaysia/Thailand Joint Development Area (Hess 50%) in the Gulf of Thailand. Funds are included for drilling and facilities and also for work that was previously deferred due to COVID-19 and low commodity prices.
• $90 million for production activities in the Gulf of Mexico, including drilling one tieback well at the Llano Field (Hess 50%) and seismic acquisition and processing.

Developments

• $25 million associated with the Liza Phase 1 development on the Stabroek Block (Hess 30%), where production optimization work is planned in the first quarter of 2022.
• $190 million for the Liza Phase 2 development with a capacity of approximately 220,000 gross barrels of oil per day, and first production expected in the first quarter of 2022.
• $400 million for the Payara development with a capacity of approximately 220,000 gross barrels of oil per day, and first production expected in 2024.
• $210 million for the Yellowtail development with a capacity of approximately 250,000 gross barrels of oil per day, and first production expected in 2025.
• $175 million primarily for front end engineering and design work for future development phases on the Stabroek Block.

Exploration and Appraisal

• $450 million to drill approximately 12 exploration and appraisal wells on the Stabroek Block in Guyana (Hess 30%), the Huron-1 well in the Green Canyon area of the Gulf of Mexico (Hess 40%) and the Zanderij-1 well on Block 42 in Suriname (Hess 33%). Funds are also included for seismic acquisition and processing in Guyana, Suriname and the deepwater Gulf of Mexico, and for license acquisitions.
  
  

Note: This budget excludes expenditures associated with the Midstream segment.

Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information on Hess Corporation is available at http://www.hess.com.

Cautionary Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “would,” “believe,” “intend,” “project,” “plan,” “predict,” “will,” “target” and similar expressions identify forward-looking statements, which are not historical in nature. Our forward-looking statements may include, without limitation: our future financial and operational results; our business strategy; estimates of our crude oil and natural gas reserves and levels of production; benchmark prices of crude oil, natural gas liquids and natural gas and our associated realized price differentials; our projected budget and capital and exploratory expenditures; expected timing and completion of our development projects; and future economic and market conditions in the oil and gas industry.

Forward-looking statements are based on our current understanding, assessments, estimates and projections of relevant factors and reasonable assumptions about the future. Forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations of future results expressed or implied by these forward-looking statements. The following important factors could cause actual results to differ materially from those in our forward-looking statements: fluctuations in market prices of crude oil, natural gas liquids and natural gas and competition in the oil and gas exploration and production industry, including as a result of the global COVID-19 pandemic; reduced demand for our products, including due to the global COVID-19 pandemic or the outbreak of any other public health threat, or due to the impact of competing or alternative energy products and political conditions and events; potential failures or delays in increasing oil and gas reserves, including as a result of unsuccessful exploration activity, drilling risks and unforeseen reservoir conditions, and in achieving expected production levels; changes in tax, property, contract and other laws, regulations and governmental actions applicable to our business, including legislative and regulatory initiatives regarding environmental concerns, such as measures to limit greenhouse gas emissions and flaring as well as fracking bans; disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks or health measures related to COVID-19; the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures under which we may not control; unexpected changes in technical requirements for constructing, modifying or operating exploration and production facilities and/or the inability to timely obtain or maintain necessary permits; availability and costs of employees and other personnel, drilling rigs, equipment, supplies and other required services; any limitations on our access to capital or increase in our cost of capital, including as a result of weakness in the oil and gas industry or negative outcomes within commodity and financial markets; liability resulting from litigation, including heightened risks associated with being a general partner of Hess Midstream LP; and other factors described in Item 1A—Risk Factors in our Annual Report on Form 10-K and any additional risks described in our other filings with the Securities and Exchange Commission.

As and when made, we believe that our forward-looking statements are reasonable. However, given these risks and uncertainties, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur and actual results may differ materially from those contained in any forward-looking statement we make. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

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