false Q1 0000004447 --12-31 Large Accelerated Filer DE NY 0000004447 2020-01-01 2020-03-31 xbrli:shares 0000004447 2020-03-31 iso4217:USD 0000004447 2019-12-31 iso4217:USD xbrli:shares 0000004447 2019-01-01 2019-03-31 0000004447 2018-12-31 0000004447 2019-03-31 0000004447 us-gaap:PreferredStockMember 2019-12-31 0000004447 us-gaap:CommonStockMember 2019-12-31 0000004447 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000004447 us-gaap:RetainedEarningsMember 2019-12-31 0000004447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000004447 us-gaap:ParentMember 2019-12-31 0000004447 us-gaap:NoncontrollingInterestMember 2019-12-31 0000004447 us-gaap:PreferredStockMember 2020-01-01 2020-03-31 0000004447 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0000004447 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0000004447 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0000004447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0000004447 us-gaap:ParentMember 2020-01-01 2020-03-31 0000004447 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-03-31 0000004447 us-gaap:PreferredStockMember 2020-03-31 0000004447 us-gaap:CommonStockMember 2020-03-31 0000004447 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000004447 us-gaap:RetainedEarningsMember 2020-03-31 0000004447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000004447 us-gaap:ParentMember 2020-03-31 0000004447 us-gaap:NoncontrollingInterestMember 2020-03-31 0000004447 us-gaap:PreferredStockMember 2018-12-31 0000004447 us-gaap:CommonStockMember 2018-12-31 0000004447 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000004447 us-gaap:RetainedEarningsMember 2018-12-31 0000004447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000004447 us-gaap:ParentMember 2018-12-31 0000004447 us-gaap:NoncontrollingInterestMember 2018-12-31 0000004447 us-gaap:PreferredStockMember 2019-01-01 2019-03-31 0000004447 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000004447 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000004447 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000004447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000004447 us-gaap:ParentMember 2019-01-01 2019-03-31 0000004447 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0000004447 us-gaap:PreferredStockMember 2019-03-31 0000004447 us-gaap:CommonStockMember 2019-03-31 0000004447 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000004447 us-gaap:RetainedEarningsMember 2019-03-31 0000004447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000004447 us-gaap:ParentMember 2019-03-31 0000004447 us-gaap:NoncontrollingInterestMember 2019-03-31 0000004447 us-gaap:OilAndGasPropertiesMember hes:NorthMalayBasinFieldMember country:MY 2020-01-01 2020-03-31 0000004447 us-gaap:OilAndGasPropertiesMember hes:SouthArneFieldMember country:DK 2020-01-01 2020-03-31 0000004447 us-gaap:OilAndGasPropertiesMember hes:StampedeFieldMember hes:GulfOfMexicoRegionMember 2020-01-01 2020-03-31 0000004447 us-gaap:OilAndGasPropertiesMember hes:TubularBellsFieldMember 2020-01-01 2020-03-31 0000004447 us-gaap:OilAndGasPropertiesMember 2020-01-01 2020-03-31 iso4217:USD utr:bbl 0000004447 us-gaap:OilAndGasPropertiesMember hes:WTIMember 2020-03-31 0000004447 us-gaap:OilAndGasPropertiesMember hes:BrentMember 2020-03-31 xbrli:pure 0000004447 hes:BakkenMember 2020-01-01 2020-03-31 0000004447 hes:ProjectSevenMember 2020-01-01 2020-03-31 0000004447 hes:ProjectSevenMember 2020-03-31 0000004447 hes:OldfieldOneExplorationWellInGulfOfMexicoMember 2020-01-01 2020-03-31 0000004447 hes:SuccessfulExplorationWellsOnStabroekBlockOffshoreGuyanaMember 2020-03-31 0000004447 hes:ProjectEightMember 2020-03-31 0000004447 hes:NorthMalayBasinMember 2020-03-31 0000004447 hes:HessMidstreamLPMember 2020-03-31 0000004447 hes:HessMidstreamLPMember 2019-12-31 0000004447 hes:JPMorganChaseBankNATermLoanAgreementMember 2020-03-31 0000004447 hes:JPMorganChaseBankNATermLoanAgreementMember 2020-01-01 2020-03-31 0000004447 us-gaap:RevolvingCreditFacilityMember 2020-03-31 0000004447 us-gaap:RevolvingCreditFacilityMember 2020-01-01 2020-03-31 0000004447 srt:MaximumMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:US 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:GY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:MY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:DK 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:LY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember 2020-01-01 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersegmentEliminationMember srt:CrudeOilMember 2020-01-01 2020-03-31 0000004447 srt:CrudeOilMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:US 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:GY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:MY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:DK 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:LY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember 2020-01-01 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersegmentEliminationMember hes:NaturalGasLiquidsRevenueMember 2020-01-01 2020-03-31 0000004447 hes:NaturalGasLiquidsRevenueMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:US 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:GY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:MY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:DK 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:LY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember 2020-01-01 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersegmentEliminationMember hes:NaturalGasRevenueMember 2020-01-01 2020-03-31 0000004447 hes:NaturalGasRevenueMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:US 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:GY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:MY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:DK 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:LY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember 2020-01-01 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersegmentEliminationMember hes:SalesOfPurchasedOilAndGasMember 2020-01-01 2020-03-31 0000004447 hes:SalesOfPurchasedOilAndGasMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:US 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:GY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:MY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:DK 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:LY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember 2020-01-01 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersegmentEliminationMember us-gaap:IntersubsegmentEliminationsMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersubsegmentEliminationsMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:US 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:GY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:MY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:DK 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:LY 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember 2020-01-01 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember 2020-01-01 2020-03-31 0000004447 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:US 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:GY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:MY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:DK 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember country:LY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember 2019-01-01 2019-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember srt:CrudeOilMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersegmentEliminationMember srt:CrudeOilMember 2019-01-01 2019-03-31 0000004447 srt:CrudeOilMember 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:US 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:GY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:MY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:DK 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember country:LY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember 2019-01-01 2019-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember hes:NaturalGasLiquidsRevenueMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersegmentEliminationMember hes:NaturalGasLiquidsRevenueMember 2019-01-01 2019-03-31 0000004447 hes:NaturalGasLiquidsRevenueMember 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:US 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:GY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:MY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:DK 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember country:LY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember 2019-01-01 2019-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember hes:NaturalGasRevenueMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersegmentEliminationMember hes:NaturalGasRevenueMember 2019-01-01 2019-03-31 0000004447 hes:NaturalGasRevenueMember 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:US 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:GY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:MY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:DK 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember country:LY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember 2019-01-01 2019-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember hes:SalesOfPurchasedOilAndGasMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersegmentEliminationMember hes:SalesOfPurchasedOilAndGasMember 2019-01-01 2019-03-31 0000004447 hes:SalesOfPurchasedOilAndGasMember 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:US 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:GY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:MY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:DK 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember country:LY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember 2019-01-01 2019-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember us-gaap:IntersubsegmentEliminationsMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersegmentEliminationMember us-gaap:IntersubsegmentEliminationsMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersubsegmentEliminationsMember 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:US 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:GY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:MY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:DK 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember country:LY 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000004447 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-03-31 0000004447 us-gaap:RestrictedStockMember 2020-01-01 2020-03-31 0000004447 us-gaap:RestrictedStockMember 2019-01-01 2019-03-31 0000004447 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0000004447 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0000004447 us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0000004447 us-gaap:PerformanceSharesMember 2019-01-01 2019-03-31 0000004447 us-gaap:RestrictedStockMember 2020-01-01 2020-03-31 0000004447 us-gaap:RestrictedStockMember 2019-01-01 2019-03-31 0000004447 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0000004447 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0000004447 us-gaap:PerformanceSharesMember 2020-01-01 2020-03-31 0000004447 us-gaap:PerformanceSharesMember 2019-01-01 2019-03-31 0000004447 hes:CommonSharesFromConversionOfPreferredStocksMember 2020-01-01 2020-03-31 0000004447 hes:CommonSharesFromConversionOfPreferredStocksMember 2019-01-01 2019-03-31 hes:Case 0000004447 hes:MTBECasesMember 2020-03-31 0000004447 hes:LowerPassaicRiverMember 2016-03-04 2016-03-04 0000004447 hes:GowanusCanalSuperfundSiteMember 2020-01-01 2020-03-31 hes:Segment 0000004447 us-gaap:CorporateAndOtherMember us-gaap:OperatingSegmentsMember 2020-01-01 2020-03-31 0000004447 us-gaap:CorporateAndOtherMember us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember 2020-03-31 0000004447 hes:ExplorationAndProductionMember us-gaap:OperatingSegmentsMember 2019-12-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember 2020-03-31 0000004447 hes:MidstreamMember us-gaap:OperatingSegmentsMember 2019-12-31 0000004447 us-gaap:CorporateAndOtherMember us-gaap:OperatingSegmentsMember 2020-03-31 0000004447 us-gaap:CorporateAndOtherMember us-gaap:OperatingSegmentsMember 2019-12-31 utr:MMBbls 0000004447 us-gaap:CommodityContractMember 2020-03-31 0000004447 us-gaap:CommodityContractMember 2019-12-31 0000004447 us-gaap:ForeignExchangeContractMember 2020-03-31 0000004447 us-gaap:ForeignExchangeContractMember 2019-12-31 0000004447 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember 2020-03-31 0000004447 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember 2019-12-31 0000004447 hes:EnergyDerivativeTwoThousandTwentySettlementMember us-gaap:CashFlowHedgingMember hes:WTIMember 2020-03-31 0000004447 hes:EnergyDerivativeTwoThousandTwentySettlementMember us-gaap:CashFlowHedgingMember hes:BrentMember 2020-03-31 utr:bbl utr:D 0000004447 hes:EnergyDerivativeTwoThousandTwentySettlementMember us-gaap:CashFlowHedgingMember hes:WTIMember 2020-01-01 2020-03-31 0000004447 hes:EnergyDerivativeTwoThousandTwentySettlementMember us-gaap:CashFlowHedgingMember hes:BrentMember 2020-01-01 2020-03-31 0000004447 us-gaap:DesignatedAsHedgingInstrumentMember srt:CrudeOilMember 2020-03-31 0000004447 hes:InterestRateMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentAssetsMember 2020-03-31 0000004447 us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0000004447 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-03-31 0000004447 us-gaap:NondesignatedMember 2020-03-31 0000004447 us-gaap:DesignatedAsHedgingInstrumentMember srt:CrudeOilMember 2019-12-31 0000004447 hes:InterestRateMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentAssetsMember 2019-12-31 0000004447 us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000004447 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-12-31 0000004447 us-gaap:NondesignatedMember 2019-12-31 0000004447 us-gaap:DesignatedAsHedgingInstrumentMember srt:CrudeOilMember 2020-01-01 2020-03-31 0000004447 us-gaap:DesignatedAsHedgingInstrumentMember srt:CrudeOilMember 2019-01-01 2019-03-31 0000004447 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember 2020-01-01 2020-03-31 0000004447 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember 2019-01-01 2019-03-31 0000004447 us-gaap:ForeignExchangeContractMember 2020-01-01 2020-03-31 0000004447 us-gaap:ForeignExchangeContractMember 2019-01-01 2019-03-31 0000004447 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-03-31 0000004447 us-gaap:FairValueInputsLevel2Member 2020-03-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended March 31, 2020

or

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-1204

 

HESS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE

(State or Other Jurisdiction of Incorporation or Organization)

13-4921002

(I.R.S. Employer Identification Number)

1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y.

(Address of Principal Executive Offices)

10036

(Zip Code)

(Registrant’s Telephone Number, Including Area Code is (212) 997-8500)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock

HES

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

At March 31, 2020, there were 307,158,340 shares of Common Stock outstanding.

 

 

 

 

 

 


 

HESS CORPORATION

Form 10-Q

TABLE OF CONTENTS

 

Item

No.

 

Page

Number

 

PART I - FINANCIAL INFORMATION

 

1.

Financial Statements (Unaudited)

 

 

Consolidated Balance Sheet at March 31, 2020, and December 31, 2019

2

 

Statement of Consolidated Income for the Three Months Ended March 31, 2020, and 2019

3

 

Statement of Consolidated Comprehensive Income for the Three Months Ended March 31, 2020, and 2019

4

 

Statement of Consolidated Cash Flows for the Three Months Ended March 31, 2020, and 2019

5

 

Statement of Consolidated Equity for the Three Months Ended March 31, 2020, and 2019

6

 

Notes to Consolidated Financial Statements (Unaudited)

7

 

Note 1 - Basis of Presentation

7

 

Note 2 - Impairment

7

 

Note 3 - Inventories

7

 

Note 4 – Property Plant and Equipment

8

 

Note 5 - Hess Midstream LP

8

 

Note 6 - Debt

8

 

Note 7 - Retirement Plans

9

 

Note 8 - Revenue

9

 

Note 9 - Weighted Average Common Shares

10

 

Note 10 - Guarantees and Contingencies

10

 

Note 11 - Segment Information

12

 

Note 12 - Financial Risk Management Activities

12

 

 

 

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

3.

Quantitative and Qualitative Disclosures about Market Risk

30

4.

Controls and Procedures

30

 

 

 

 

PART II - OTHER INFORMATION

 

1.

Legal Proceedings

31

1A.

Risk Factors

31

2.

Share Repurchase Activities

32

5.

Other Information

32

6.

Exhibits

33

 

Signatures

34

 

 

Unless the context indicates otherwise, references to “Hess”, the “Corporation”, “Registrant”, “we”, “us”, “our” and “its” refer to the consolidated business operations of Hess Corporation and its subsidiaries.

 


PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(In millions,

 

 

 

except share amounts)

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,080

 

 

$

1,545

 

Accounts receivable:

 

 

 

 

 

 

 

 

From contracts with customers

 

 

600

 

 

 

940

 

Joint venture and other

 

 

194

 

 

 

230

 

Crude oil derivative contracts

 

 

1,098

 

 

 

125

 

Inventories

 

 

230

 

 

 

261

 

Other current assets

 

 

68

 

 

 

55

 

Total current assets

 

 

4,270

 

 

 

3,156

 

Property, plant and equipment:

 

 

 

 

 

 

 

 

Total — at cost

 

 

31,704

 

 

 

35,820

 

Less: Reserves for depreciation, depletion, amortization and lease impairment

 

 

16,893

 

 

 

19,006

 

Property, plant and equipment — net

 

 

14,811

 

 

 

16,814

 

Operating lease right-of-use assets — net

 

 

386

 

 

 

447

 

Finance lease right-of-use assets — net

 

 

187

 

 

 

299

 

Goodwill

 

 

360

 

 

 

360

 

Deferred income taxes

 

 

77

 

 

 

80

 

Other assets

 

 

626

 

 

 

626

 

Total Assets

 

$

20,717

 

 

$

21,782

 

Liabilities

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

431

 

 

$

411

 

Accrued liabilities

 

 

1,334

 

 

 

1,803

 

Taxes payable

 

 

33

 

 

 

97

 

Current maturities of long-term debt

 

 

3

 

 

 

 

Current portion of operating and finance lease obligations

 

 

146

 

 

 

199

 

Total current liabilities

 

 

1,947

 

 

 

2,510

 

Long-term debt

 

 

8,191

 

 

 

7,142

 

Long-term operating lease obligations

 

 

357

 

 

 

353

 

Long-term finance lease obligations

 

 

233

 

 

 

238

 

Deferred income taxes

 

 

328

 

 

 

415

 

Asset retirement obligations

 

 

929

 

 

 

897

 

Other liabilities and deferred credits

 

 

554

 

 

 

521

 

Total Liabilities

 

 

12,539

 

 

 

12,076

 

Equity

 

 

 

 

 

 

 

 

Hess Corporation stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $1.00; Authorized — 600,000,000 shares

 

 

 

 

 

 

 

 

Issued — 307,158,340 shares (2019: 304,955,472)

 

 

307

 

 

 

305

 

Capital in excess of par value

 

 

5,633

 

 

 

5,591

 

Retained earnings

 

 

1,021

 

 

 

3,535

 

Accumulated other comprehensive income (loss)

 

 

239

 

 

 

(699

)

Total Hess Corporation stockholders’ equity

 

 

7,200

 

 

 

8,732

 

Noncontrolling interests

 

 

978

 

 

 

974

 

Total equity

 

 

8,178

 

 

 

9,706

 

Total Liabilities and Equity

 

$

20,717

 

 

$

21,782

 

See accompanying Notes to Consolidated Financial Statements.

 

2

 


PART I - FINANCIAL INFORMATION (CONT’D.)

 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(In millions, except per share amounts)

 

Revenues and Non-Operating Income

 

 

 

 

 

 

 

 

Sales and other operating revenues

 

$

1,354

 

 

$

1,572

 

Other, net

 

 

15

 

 

 

27

 

Total revenues and non-operating income

 

 

1,369

 

 

 

1,599

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

Marketing, including purchased oil and gas

 

 

378

 

 

 

408

 

Operating costs and expenses

 

 

303

 

 

 

266

 

Production and severance taxes

 

 

42

 

 

 

39

 

Exploration expenses, including dry holes and lease impairment

 

 

189

 

 

 

34

 

General and administrative expenses

 

 

102

 

 

 

87

 

Interest expense

 

 

113

 

 

 

98

 

Depreciation, depletion and amortization

 

 

561

 

 

 

498

 

Impairment

 

 

2,126

 

 

 

 

Total costs and expenses

 

 

3,814

 

 

 

1,430

 

Income (Loss) Before Income Taxes

 

 

(2,445

)

 

 

169

 

Provision (benefit) for income taxes

 

 

(79

)

 

 

94

 

Net Income (Loss)

 

 

(2,366

)

 

 

75

 

Less: Net income (loss) attributable to noncontrolling interests

 

 

67

 

 

 

43

 

Net Income (Loss) Attributable to Hess Corporation

 

 

(2,433

)

 

 

32

 

Less: Preferred stock dividends

 

 

 

 

 

4

 

Net Income (Loss) Attributable to Hess Corporation Common Stockholders

 

$

(2,433

)

 

$

28

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Attributable to Hess Corporation Per Common Share:

 

 

 

 

 

 

 

 

Basic

 

$

(8.00

)

 

$

0.09

 

Diluted

 

$

(8.00

)

 

$

0.09

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

304.0

 

 

 

297.4

 

Diluted

 

 

304.0

 

 

 

299.7

 

Common Stock Dividends Per Share

 

$

0.25

 

 

$

0.25

 

See accompanying Notes to Consolidated Financial Statements.

 

3

 


PART I - FINANCIAL INFORMATION (CONT’D.)

 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(In millions)

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

(2,366

)

 

$

75

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as cash flow hedges

 

 

 

 

 

 

 

 

Effect of hedge (gains) losses reclassified to income

 

 

(64

)

 

 

(15

)

Income taxes on effect of hedge (gains) losses reclassified to income

 

 

 

 

 

 

Net effect of hedge (gains) losses reclassified to income

 

 

(64

)

 

 

(15

)

Change in fair value of cash flow hedges

 

 

990

 

 

 

(346

)

Income taxes on change in fair value of cash flow hedges

 

 

 

 

 

 

Net change in fair value of cash flow hedges

 

 

990

 

 

 

(346

)

Change in derivatives designated as cash flow hedges, after taxes

 

 

926

 

 

 

(361

)

 

 

 

 

 

 

 

 

 

Pension and other postretirement plans

 

 

 

 

 

 

 

 

(Increase) reduction in unrecognized actuarial losses

 

 

 

 

 

6

 

Income taxes on actuarial changes in plan liabilities

 

 

 

 

 

 

(Increase) reduction in unrecognized actuarial losses, net

 

 

 

 

 

6

 

Amortization of net actuarial losses

 

 

12

 

 

 

11

 

Income taxes on amortization of net actuarial losses

 

 

 

 

 

 

Net effect of amortization of net actuarial losses

 

 

12

 

 

 

11

 

Change in pension and other postretirement plans, after taxes

 

 

12

 

 

 

17

 

Other Comprehensive Income (Loss)

 

 

938

 

 

 

(344

)

 

 

 

 

 

 

 

 

 

Comprehensive Income (Loss)

 

 

(1,428

)

 

 

(269

)

Less: Comprehensive income (loss) attributable to noncontrolling interests

 

 

67

 

 

 

43

 

Comprehensive Income (Loss) Attributable to Hess Corporation

 

$

(1,495

)

 

$

(312

)

See accompanying Notes to Consolidated Financial Statements.

 

4

 


PART I - FINANCIAL INFORMATION (CONT’D.)

 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(In millions)

 

Cash Flows From Operating Activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(2,366

)

 

$

75

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

561

 

 

 

498

 

Impairment

 

 

2,126

 

 

 

 

Exploratory dry hole costs

 

 

135

 

 

 

 

Exploration lease and other impairment

 

 

32

 

 

 

7

 

Stock compensation expense

 

 

29

 

 

 

27

 

Noncash (gains) losses on commodity derivatives, net

 

 

70

 

 

 

29

 

Provision (benefit) for deferred income taxes and other tax accruals

 

 

(85

)

 

 

(1

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in accounts receivable

 

 

258

 

 

 

(117

)

(Increase) decrease in inventories

 

 

31

 

 

 

(29

)

Increase (decrease) in accounts payable and accrued liabilities

 

 

(263

)

 

 

(204

)

Increase (decrease) in taxes payable

 

 

(63

)

 

 

8

 

Changes in other operating assets and liabilities

 

 

(20

)

 

 

(55

)

Net cash provided by (used in) operating activities

 

 

445

 

 

 

238

 

 

 

 

 

 

 

 

 

 

Cash Flows From Investing Activities

 

 

 

 

 

 

 

 

Additions to property, plant and equipment - E&P

 

 

(740

)

 

 

(521

)

Additions to property, plant and equipment - Midstream

 

 

(78

)

 

 

(150

)

Payments for Midstream equity investments

 

 

 

 

 

(7

)

Other, net

 

 

 

 

 

(2

)

Net cash provided by (used in) investing activities

 

 

(818

)

 

 

(680

)

 

 

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 

 

 

Net borrowings (repayments) of debt with maturities of 90 days or less

 

 

60

 

 

 

199

 

Debt with maturities of greater than 90 days:

 

 

 

 

 

 

 

 

Borrowings

 

 

1,000

 

 

 

 

Repayments

 

 

 

 

 

(3

)

Payments on finance lease obligations

 

 

(1

)

 

 

(23

)

Common stock acquired and retired

 

 

 

 

 

(25

)

Cash dividends paid

 

 

(81

)

 

 

(88

)

Noncontrolling interests, net

 

 

(63

)

 

 

(13

)

Other, net

 

 

(7

)

 

 

1

 

Net cash provided by (used in) financing activities

 

 

908

 

 

 

48

 

 

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

 

535

 

 

 

(394

)

Cash and Cash Equivalents at Beginning of Year

 

 

1,545

 

 

 

2,694

 

Cash and Cash Equivalents at End of Period

 

$

2,080

 

 

$

2,300

 

See accompanying Notes to Consolidated Financial Statements.

5

 


PART I - FINANCIAL INFORMATION (CONT’D.)

 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED EQUITY (UNAUDITED)

 

 

 

Mandatory Convertible Preferred Stock

 

 

Common Stock

 

 

Capital in Excess of Par

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total Hess Stockholders' Equity

 

 

Noncontrolling Interests

 

 

Total Equity

 

 

 

(In millions)

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

$

 

 

$

305

 

 

$

5,591

 

 

$

3,535

 

 

$

(699

)

 

$

8,732

 

 

$

974

 

 

$

9,706

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(2,433

)

 

 

 

 

 

(2,433

)

 

 

67

 

 

 

(2,366

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

938

 

 

 

938

 

 

 

 

 

 

938

 

Share-based compensation

 

 

 

 

 

2

 

 

 

42

 

 

 

(5

)

 

 

 

 

 

39

 

 

 

 

 

 

39

 

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(76

)

 

 

 

 

 

(76

)

 

 

 

 

 

(76

)

Noncontrolling interests, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(63

)

 

 

(63

)

Balance at March 31, 2020

 

$

 

 

$

307

 

 

$

5,633

 

 

$

1,021

 

 

$

239

 

 

$

7,200

 

 

$

978

 

 

$

8,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

$

1

 

 

$

291

 

 

$

5,386

 

 

$

4,257

 

 

$

(306

)

 

$

9,629

 

 

$

1,259

 

 

$

10,888

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

32

 

 

 

43

 

 

 

75

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(344

)

 

 

(344

)

 

 

 

 

 

(344

)

Preferred stock conversion

 

 

(1

)

 

 

12

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

1

 

 

 

28

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

29

 

Dividends on preferred stock

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(78

)

 

 

 

 

 

(78

)

 

 

 

 

 

(78

)

Sale of water business to Hess Infrastructure Partners

 

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

 

 

78

 

 

 

(78

)

 

 

 

Noncontrolling interests, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

(13

)

Balance at March 31, 2019

 

$

 

 

$

304

 

 

$

5,481

 

 

$

4,207

 

 

$

(650

)

 

$

9,342

 

 

$

1,211

 

 

$

10,553

 

See accompanying Notes to Consolidated Financial Statements.

 

 

6

 


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.  Basis of Presentation

The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position at March 31, 2020 and December 31, 2019, the consolidated results of operations for the three months ended March 31, 2020 and 2019, and consolidated cash flows for the three months ended March 31, 2020 and 2019.  The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (SEC) for interim reporting.  As permitted under those rules, certain notes or other financial information that are normally required by generally accepted accounting principles (GAAP) in the United States have been condensed or omitted from these interim financial statements.  These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

In the first quarter of 2020, we adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses.  This ASU makes changes to the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments.  The standard requires the use of a forward-looking "expected loss" model compared with the prior "incurred loss" model.  We calculate expected credit losses for our receivables using the probability of default and the expected loss given default.  Historical data, current market conditions, and forecasts of future economic conditions are used to determine the probability of default and the expected loss given default.  The adoption of this ASU did not have a material impact to our financial statements.

 

2.  Impairment

Oil and Gas Properties:

As a result of the significant decline in crude oil prices due to the global economic slowdown from the coronavirus (COVID-19) pandemic, we reviewed our oil and gas properties within the Exploration and Production operating segment for impairment.  In the first quarter of 2020, we recognized pre-tax impairment charges to reduce the carrying value of our oil and gas properties and certain related right-of-use assets at the North Malay Basin in Malaysia by $755 million ($755 million after income taxes), the South Arne Field in Denmark by $670 million ($594 million after income taxes), and in the Gulf of Mexico, the Stampede Field by $410 million ($410 million after income taxes) and the Tubular Bells Field by $270 million ($270 million after income taxes) primarily as a result of a lower long-term crude oil price outlook.  The impairment charges were based on estimates of fair value determined by discounting internally developed future net cash flows, a Level 3 fair value measurement.  The total of the fair value estimates was approximately $1.05 billion.  Significant inputs used in determining the discounted future net cash flows include future prices, projected production volumes using risk adjusted oil and gas reserves, and discount rates.  The future pricing assumptions used were based on forward strip crude oil prices as of March 31, 2020 for the remainder of 2020 through 2022, and $50 per barrel for WTI ($55 per barrel for Brent) in 2023 and thereafter to the end of field life.  The weighted average crude oil benchmark price based on total projected crude oil volumes for the impaired assets was $48.82 per barrel.  A discount rate of 10% was used in each of the fair value measurements which represents the estimated discount rate a market participant would use.  We determined the discount rate by considering the weighted average cost of capital for a group of peer companies.

Other Assets:

In the first quarter of 2020, we recognized impairment charges totaling $21 million pre-tax ($20 million after income taxes) related to drilling rig right-of-use assets in the Bakken and surplus materials and supplies.

 

 3.  Inventories

Inventories consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(In millions)

 

Crude oil and natural gas liquids

 

$

74

 

 

$

92

 

Materials and supplies

 

 

156

 

 

 

169

 

Total Inventories

 

$

230

 

 

$

261

 

In the first quarter of 2020, we recognized charges of $53 million ($52 million after income taxes) recorded in Marketing, including purchased oil and gas to reflect crude oil inventories at quarter-end market value.

7

 


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

4.  Property Plant and Equipment

Capitalized Exploratory Well Costs:  

The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves during the three months ended March 31, 2020 (in millions):

 

Balance at January 1, 2020

 

$

584

 

Additions to capitalized exploratory well costs pending the determination of proved reserves

 

 

47

 

Capitalized exploratory well costs charged to expense

 

 

(125

)

Balance at March 31, 2020

 

$

506

 

In the first quarter of 2020, the Corporation expensed previously capitalized well costs of $125 million, primarily related to the northern portion of the Shenzi Field (Hess 28%) in the Gulf of Mexico due to reprioritization of the Corporation’s forward capital program in response to the significant decline in crude oil prices.  The table above does not include well costs incurred and expensed during 2020 of $10 million associated with the Oldfield-1 well in the Gulf of Mexico.  Capitalized exploratory well costs capitalized for greater than one year following completion of drilling were $319 million at March 31, 2020 and primarily related to:  

Guyana: Approximately 80% of the capitalized well costs in excess of one year relate to twelve successful exploration wells where hydrocarbons were encountered on the Stabroek Block (Hess 30%), offshore Guyana.  The operator plans further appraisal drilling for certain fields and is conducting pre-development planning for additional phases of development beyond the two existing sanctioned phases of development.

Joint Development Area (JDA):  Approximately 10% of the capitalized well costs in excess of one year relates to the JDA (Hess 50%) in the Gulf of Thailand, where hydrocarbons were encountered in three successful exploration wells drilled in the western part of Block A-18.  The operator has submitted a development plan concept to the regulator to facilitate ongoing commercial negotiations for an extension of the existing gas sales contract to include development of the western part of the Block.

Malaysia:  Approximately 10% of the capitalized well costs in excess of one year relate to the North Malay Basin (Hess 50%), offshore Peninsular Malaysia, where hydrocarbons were encountered in five successful exploration wells.  Subsurface evaluation and pre-development studies for future phases of development are ongoing. 

5.  Hess Midstream LP

At March 31, 2020 Hess Midstream LP (Hess Midstream), a variable interest entity that is fully consolidated by Hess Corporation, had liabilities totaling $1,971 million (December 31, 2019: $1,941 million) that are on a nonrecourse basis to Hess Corporation, while Hess Midstream assets available to settle the obligations of Hess Midstream include cash and cash equivalents totaling $3 million (December 31, 2019: $3 million) and property, plant and equipment with a carrying value of $3,029 million (December 31, 2019: $3,010 million).

6.  Debt

In the first quarter of 2020, the Corporation entered into a $1.0 billion three year term loan agreement with JPMorgan Chase Bank N.A. with a maturity date of March 16, 2023.  The term loan contains provisions that require us to reduce JPMorgan’s initial funded amount of $1.0 billion.  The Corporation is currently in the process of syndicating with other lenders.  Borrowings under the term loan bear interest at the applicable interest rates either, at the Corporation’s option, the adjusted LIBOR rate in effect from time to time or the alternate base rate (as described in the term loan agreement) plus the applicable margins specified in the term loan agreement, which generally vary based on the credit rating of the Corporation’s senior, unsecured, non-credit enhanced long-term debt.  This loan has been classified as noncurrent in the consolidated balance sheet due to the Corporation’s ability and intent to refinance any amount we are unable to syndicate to other banks on a long-term basis through the Corporation’s existing $3.5 billion revolving credit facility with a maturity date of May 15, 2023.  The term loan agreement contains customary representations, warranties and covenants, including a financial covenant limiting the ratio of Total Consolidated Debt to Total Capitalization (as such terms are defined in the term loan agreement) of the Corporation and its consolidated subsidiaries to 65%, and customary events of default.  At March 31, 2020, Hess Corporation had borrowings of $1.0 billion under this term loan agreement and was in compliance with this financial covenant.

8

 


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. Retirement Plans

Components of net periodic pension cost consisted of the following:

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(In millions)

 

Service cost

 

$

14

 

 

$

10

 

Interest cost (a)

 

 

18

 

 

 

24

 

Expected return on plan assets (a)

 

 

(45

)

 

 

(45

)

Amortization of unrecognized net actuarial losses (a)

 

 

12

 

 

 

11

 

Pension (income) expense (a)

 

$

(1

)

 

$

 

(a)  Net non-service pension cost included in Other, net in the Statement of Consolidated Income in the first quarter of 2020 was income of $15 million (2019: $10 million of income).

To preserve cash in 2020, we are minimizing non-required cash contributions to funded pension plans.  In 2020, we expect to contribute approximately $2 million to our funded pension plans.  Through March 31, 2020, we have contributed less than $1 million.

 

8.  Revenue

Revenue from contracts with customers on a disaggregated basis was as follows:

 

 

Exploration and Production

 

 

Midstream