Hess Corporation

Good day, ladies and gentlemen, and welcome to the first quarter 2019 HESS Corporation conference call. My name is Amanda, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If at any time you require operator assistance, please press star followed by zero, and we will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I will now turn the conference over to Jay Wilson, Vice President of Investor Relations. Please proceed.

Thank you, Amanda. Good morning, everyone, and thank you for participating in our first quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hess.com. Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the risk factor section of HESA's annual and quarterly reports filed with the SEC. Also, on today's conference call, we may discuss our non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website. Now, as usual with me today are John Hess, Chief Executive Officer, Greg Hill, Chief Operating Officer, and John Riley, Chief Financial Officer. I will now turn the call over to John Hess.

Thank you, Jay. Welcome to our first quarter conference call. I will review our continued progress in executing our strategy. Greg Hill will then discuss our operating performance and John Riley will review our financial results. Our company delivered strong performance this quarter. Our portfolio, which is balanced between our growth engines in Guyana and the Bakken and our cash engines in the deep-water Gulf of Mexico and the Gulf of Thailand, is positioned to deliver approximately 20% compound annual cash flow growth and more than 10% compound annual production growth through 2025-2030. at a $65 per barrel Brent oil price. In addition, we project that our portfolio break-even will decrease to less than $40 per barrel Brent by 2025. A key driver of our strategy is offshore Guyana, an extraordinary investment opportunity that is uniquely advantaged by its scale, reservoir quality, low cost, rapid cash paybacks, and superior financial returns. The Staybrook block in Guyana, where Hess has a 30% interest in ExxonMobil is the operator, covers 6.6 million acres and contains a massive world-class resource that keeps getting bigger and better. We continue to have exploration success on the block with three new discoveries since the start of 2019 at Tilapia, Humira, and Yellowtail. Last Thursday, we announced that the Yellowtail No. 1 well, located about six miles from Tilapia, encountered approximately 292 feet of high-quality, oil-bearing sandstone reservoir. This discovery is the fifth in the Greater Turbo Area, which is expected to become another major development hub. In February, we announced that the Tilapia No. 1 well encountered approximately 305 feet of high-quality oil-bearing sandstone reservoir, the thickest net pay of any well yet drilled on the block. Tilapia is located approximately three miles west of the Longtail No. 1 well, which is also in the greater Turbo area. In February, we also announced that the Hamayra No. 1 well, located in the southeastern part of the block, encountered approximately 207 feet of high-quality gas condensate-bearing sandstone reservoir. We have now made 13 significant discoveries on the block since 2015, which will underpin at least five floating production storage and offloading vessels to produce more than 750,000 gross barrels of oil per day by 2025. Gross discovered recoverable resources on the block are estimated to be more than 5.5 billion barrels of oil equivalent with multi-billion barrels of future exploration potential remaining. The LISA Phase I development is progressing well and remains on track to achieve first oil by the first quarter of 2020, less than five years after discovery. This phase will develop approximately 500 million barrels of oil utilizing the LISA Destiny FPSO, which will have the capacity to produce up to 120,000 gross barrels of oil per day. The Lisa Phase 2 development will use the Lisa Unity FPSO, which will have the capacity to produce up to 220,000 gross barrels of oil per day, with startup expected by mid-2022. A final investment decision is expected soon, subject to government and regulatory approvals. Planning is also underway for a third phase of development at the Giant Payara Field in which is expected to have the capacity to produce between 180,000 and 220,000 gross barrels of oil per day from a third FBSO. Sanction is expected to occur before the end of this year with first oil in 2023. Also key to our long-term strategy is the Bakken, where we have a 15-year inventory of high-return drilling locations. Our transition this year to plug-and-perf completions from our previous 60 stage sliding sleeve design is expected to increase the net present value of the asset by approximately $1 billion. Bakken net production is expected to grow approximately 20% per year to 200,000 barrels of oil equivalent per day by 2021, generating approximately $1 billion of annual free cash flow post 2020 at a $60 per barrel WTI oil price. Now, turning to our financial results. In the first quarter of 2019, we posted net income of $32 million, or 9 cents per share, versus an adjusted net loss of $72 million, or 27 cents per share, in the year-ago quarter. Compared to 2018, our first quarter financial results primarily reflect our strong production performance, which was partially offset by lower oil prices and higher DD&A expenses. First quarter net production averaged 278,000 barrels of oil equivalent per day, excluding Libya, above our guidance of approximately 270,000 barrels of oil equivalent per day and up from 220,000 barrels of oil equivalent per day in the year-ago quarter, pro forma for the sale of our Utica joint venture interests. Bakken net production averaged 130,000 barrels of oil equivalent per day, up from 111,000 barrels of oil equivalent per day in the first quarter of 2018. In closing, our company remains committed to executing our strategy that will deliver increasing financial returns, visible and low-risk production growth, and accelerating free cash flow well into the next decade. I will now turn the call over to Greg for an operational update.