Willisto n Ba sin Pe tro le um Co nfe re nc e , 2018 Ba c k to the - - PowerPoint PPT Presentation

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Gr eg Hill, Pr esident & COO Willisto n Ba sin Pe tro le um Co nfe re nc e , 2018 Ba c k to the Future : T he Ba kke n - a n Eng ine o f G ro wth Forward-Looking Statements and Other Information This presentation contains projections

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SLIDE 1

Gr eg Hill, Pr esident & COO

Willisto n Ba sin Pe tro le um Co nfe re nc e , 2018

Ba c k to the Future : T he Ba kke n - a n Eng ine o f G ro wth

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SLIDE 2

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This presentation contains projections and other forward-looking statements within the meaning

  • f 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 presentation 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.

Forward-Looking Statements and Other Information

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SLIDE 3

Outlook for Global Energy Demand is Robust

Global Demand for Energy Global Oil Demand

….global oil demand continues to grow but energy mix changes

5 10 15 20

1970 1980 1990 2000 2010 2020 2030 2040

Billion TOE 2014 2020 2025 2030 2035 2040

Road & Air Transportation Industry & PetroChem, Buildings & Power, Other 42% 58% 45% 55% 92 MMBD ~100 MMBD

Source: IEA WEO 2016

3

Percentage of Primary Energy Demand

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SLIDE 4

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  • Global investment in oil & gas insufficient to meet

future demand and production declines

  • Upstream industry investment down ~40% since 2014
  • OPEC financial reserves down ~30%
  • Exploration spend depressed ; not expected to

recover

  • Only U.S. shale has seen resurgence in capital

investment; 75% increase since 2016

  • $540 Billion investment p.a. needed to meet global oil

and gas demand

Investment Needed to Meet Global Demand

410 380 350 450 600 100 200 300 400 500 600

2015 2018 ~40% 2014 $B 2016 2017

Source: IEA, IHS, Woodmac

Global Annual Upstream Investment

…renewed investment & growth in U.S. shale, lacking elsewhere

$540 B

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SLIDE 5

All Sources Required to Meet Demand

US Crude Oil Production

… demand growth requires supply from conventional and tight oil production

Source: EIA, IEA

2 4 6 8 10 12 14

Tight oil Other

MMBD

Forecast

2017 2035 2018 2016 2020 2030 2025 5

Global Oil Production

Other Tight Oil

20 40 60 80 100 120

4.25% MMBD

2015 2040 2016 2000 2025 2035 2030

Forecast*

* Assumes investment recovers to average $540B p.a.

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SLIDE 6

Southwest and Dakotas Drive U.S. Tight Oil Outlook

…Southwest leads growth in U.S. tight oil production but Dakotas/Rocky Mountains second largest contributor over the next 3 decades

Source: U.S EIA 2018 Outlook

Lower 48 Onshore Crude Oil Production by Region

6

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SLIDE 7

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  • Rig counts are increasing
  • Dramatic improvement in 30 day average initial

production rates (IP)

  • Improving price differentials due to expanding

infrastructure/market access

  • Over $5 billion in announced 2017 M&A
  • 2018 Bakken output set to exceed 2014 record -

1.23 MMBOED

  • Bakken to reach ~2.0 MMBDOE post 2030

Back to the Bakken

…Bakken positioned for long-term growth; renewed focus and interest in near term

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SLIDE 8

Bakken Competitively Positioned

…Permian faces headwinds

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Bakken – strong existing capability:

  • Significant existing takeaway capacity
  • Regulatory framework encouraging investment
  • Market connectivity capturing higher net backs

Permian – faces near term challenges:

  • Geologic uncertainty (GoRs, sweet spots etc)
  • Availability of proppant, pressure pumping equipment
  • Infrastructure / roads / truck constraints
  • Workforce (frac crews / truckers) and pipeline capacity
  • High cost of entry ; rising development & operating costs
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SLIDE 9

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Hess: Bakken a Key Asset in High Graded Portfolio

  • ~70% of Cash Flow from

Operations through 2020

  • ~20% of Capex through 2020
  • Cash Costs <$10/BOE
  • ~20% Production CAGR

Cumulative

  • Est. E&P Capital Allocation

2018 - 2020

¹ Includes exploration costs directly associated with Guyana and Suriname. ² Cash Engines include Deepwater Gulf of Mexico, Malaysia and Utica. ³ Excludes exploration costs directly associated with Guyana and Suriname.

Growth Engines

Bakken Guyana

Cash Engines

Gulf of Mexico Malaysia Utica

Cash Engines 20% Exploration 8% Bakken 43% Guyana 29%

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SLIDE 10

Hess Positioned to Leverage Bakken Growth

Petroleum net imports/exports as a percentage of product supplied

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Premier position in the Bakken

  • 554,000 net acres
  • Net EUR: ~2.0 BBOE
  • ~1.7 BBOE yet to produce
  • ~2,900 future operated drilling locations

Growth engine for Hess portfolio

  • Increasing rig count from 4 to 6 rigs in 2018
  • Growing production to ~175 Mboep/d by 2021
  • 2018 Bakken E&P Capex: ~$900MM
  • 2018 net production: 115-120 Mboep/d
  • Investing in midstream infrastructure to support

growth – doubling CAPEX to $300M in 2018

New Town Keene Stanley Watford City Williston Kenmare Grassy Butte Killdeer Buelah

Hess Acreage Tioga Rail Terminal 30 Miles Tioga Gas Plant

Dickinson Tioga

Dunn McKenzie Mountrail Williams Burke Billings Stark Mercer Divide Ramberg Terminal Facility Hawkeye Oil Facility Hawkeye Gas Facility Johnson’s Corner Header System Little Missouri 4 (under construction)

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SLIDE 11

$40 $50 $60 $70 $80 $90-100 Source: NDIC and Hess analysis; DSU: 1,280 acre Drilling Spacing Unit ¹ PF Jan 2018, assumes 25 wells/rig-year.

More DSUs in the Core than any Other Operator

WTI $/bbl

100% (116 rig-yrs) 97% (112 rig-yrs) 87% (102 rig-yrs) 77% (89 rig-yrs) 61% (71 rig-yrs) 24% (28 rig-yrs) Middle Bakken

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Hess Positioned to Leverage Bakken Growth

Abundant Inventory of Economic Locations

~2,900 Future Operated Drilling Locations¹ % of Total Inventory & Implied Rig-Years vs WTI (≥15% After-Tax IRR Threshold)

Three Forks

100 200 300 400

Bakken Operators

  • No. of DSUs
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Bakken: Enhanced Completions Driving Higher EURs and Returns

2018 Bakken Drilling Program

Keene (Antelope/Blue Buttes) Stony Creek Capa East Nesson South

  • 20

40 60 80 100 120

02468 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100 102 104 106 108 110 112 114 116 118 120 122 124 126 128 130 132 134 136 138 140 142 144 146 148 150 152 154 156 158 160 162 164 166 168 170 172 174 176 178 180 Keene (Antelope/Blue Buttes) Stony Creek East Nesson South Capa

  • Avg. Well Cumulative Oil Forecast by Field

MBO 180 Days

Keene Stony Creek East Nesson South Capa EUR (MBOE) 1125 1110 925 970 IP180 (MBO) 115 105 100 95 IRR @ $50 WTI (%) >50% 50% 40% 45% 2018 Wells Online

1

~40 ~25 ~20 ~10

1 Includes ~25 limited entry plug and perf wells.

Bakken oil cut expected to average in low 60% range for next several years

Goliath Red Sky

Producing Days

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SLIDE 13

Midstream Infrastructure Supports Growth

Midstream strategic infrastructure in the core of the Bakken

  • Offers export optionality to Hess and Third Parties
  • Optionality offered both north and south of the Missouri River

Significant capacity with room to grow

Gas Processing and Gathering

  • Tioga Gas Plant (TGP) & Little Missouri 4 (LM4)
  • 350 MMcf/d gas processing capacity

Oil Terminaling and Gathering

  • Ramberg Terminal Facility (RTF) & Johnson’s Corner
  • Combined 382 MBbl/d of oil terminaling

Looking to the future

  • Aligned with Hess Upstream plan to grow to 175 Mboep/d
  • Continue to offer processing, terminaling, and export optionality for

Hess and Third Parties to multiple end markets

Ross Cherry Creek Blue Buttes Hawkeye Myrtle Wheelock Silurian Sorkness

High Pressure Gas Infrastructure Map TGP

Cherry Creek Blue Buttes Hawkeye Red Sky Goliath

High Pressure Oil Infrastructure Map

East Nesson Stoney Creek

RTF TRT HOF

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SLIDE 14

Outlook for the Bakken

  • The world needs production from the Bakken
  • Bakken remains a premier shale play & investment opportunity
  • Renewed industry focus on Bakken
  • 2018 output set to exceed 2014 record of 1.23 mb/d
  • Improving price differentials due to expanding infrastructure /

market access

  • Permian growing pains
  • Hess enhancing its industry leading Bakken position
  • Expanding production to meet demand growth
  • Investing in the Midstream to improved export optionality and

connectivity to markets

  • Relentless focus on reducing costs and enhancing well

productivity

…Bakken is a key growth engine for the U.S. & Hess

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SLIDE 15

Questions?