Hess Presents at Bank of America Merrill Lynch 2017 Global Energy Conference
November 16 2017 - 8:49AM
Business Wire
- Highlights Company’s High Graded
Portfolio, Proforma Cash Flow Growth and Prefunding of
“Transformative” Guyana Opportunity
- Announces $500 Million Share
Repurchase Plan in addition to $500 Million in Debt
Reduction
In a presentation at the Bank of America Merrill Lynch 2017
Global Energy Conference today, Hess Corporation (NYSE:HES) Chief
Executive Officer John Hess reviewed the company’s progress in
executing its strategy to deliver significant value to
shareholders.
Financial strength and shareholder focus
This year, the company has announced sales of mature, lower
growth assets that will result in proceeds of $3.4 billion and the
release of $1.3 billion of asset retirement obligations (excluding
the sale of its interests in Denmark expected in 2018). The company
plans to use these proceeds to:
- Prefund a world class oil development
in Guyana
- Increase to a total of six rigs from
four rigs currently in the Bakken during 2018, where the company
has a robust inventory of high return drilling locations in the
core of the play
- Return cash to shareholders through a
share repurchase program of up to $500 million of stock to be
completed in 2018
- Reduce Hess Corporation debt (excluding
midstream) by $500 million in 2018
High graded, focused portfolio
“We have moved aggressively to focus and high grade our
portfolio with asset sales that exceeded expectations in terms of
value and timing,” John Hess said. “Investing in our highest return
assets and divesting mature, higher cost assets are significantly
lowering our cash unit costs and bolstering our company’s balance
sheet, as well as enabling us to prefund Guyana oil developments,
return capital to shareholders and reduce debt.”
The company’s portfolio will be focused on Guyana and the Bakken
as growth engines and Malaysia and deepwater Gulf of Mexico as cash
engines. On a pro forma basis, this high graded portfolio is
expected to generate capital efficient annual production growth of
approximately 10 percent per year through 2020. Assuming a $50 per
barrel oil price (Brent), cash flow is expected to grow at an
annual rate of more than 20 percent over the same period.
The high graded portfolio combined with a planned $150 million
annual cost reduction program is expected to drive down cash unit
production costs by approximately 30 percent – to less than $10 per
barrel of oil equivalent – by 2020. This improvement will enable
the company to generate free cash flow at a $50 per barrel oil
price (Brent) after 2020.
Prefunding Guyana, one of the industry’s largest oil
discoveries in a decade
Hess has a 30 percent interest in the Stabroek Block offshore
Guyana, where gross discovered recoverable resources are currently
estimated to be 2.5 billion to 2.8 billion barrels of oil
equivalent. The company also sees multi billion barrels of
additional unrisked exploration potential on the block.
“The Stabroek Block is a massive world class resource that keeps
getting bigger and better,” Hess said. “Guyana is an extraordinary
oil investment opportunity that is uniquely advantaged by its
scale, reservoir quality, cost advantages, rapid cash paybacks and
strong financial returns, which we believe will create significant
value for our shareholders for many years to come.”
A replay of the company’s presentation at the Bank of America
Merrill Lynch 2017 Global Energy Conference is available via Hess
Corporation’s website at www.hess.com.
Hess Corporation is a leading global independent energy company
engaged in the exploration and production of crude oil and natural
gas. More information is available at www.hess.com.
Cautionary Statements
This news release contains projections and other forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
These projections and statements reflect the company’s current
views with respect to future events and financial performance. No
assurances can be given, however, that these events will occur or
that these projections will be achieved, and actual results could
differ materially from those projected as a result of certain risk
factors. A discussion of these risk factors is included in the
company’s periodic reports filed with the Securities and Exchange
Commission. We use certain terms in this release relating to
reserves other than proved, such as unproved resources. Investors
are urged to consider closely the disclosure relating to proved
reserves in Hess’ Form 10-K, File No. 1-1204, available from Hess
Corporation, 1185 Avenue of the Americas, New York, New York 10036
c/o Corporate Secretary and on our website at www.hess.com. You can
also obtain this form from the SEC on the EDGAR system.
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version on businesswire.com: http://www.businesswire.com/news/home/20171116005830/en/
Hess CorporationInvestors:Jay Wilson,
212-536-8940jrwilson@hess.comorMedia:Lorrie Hecker,
212-536-8250lhecker@hess.com
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