Hess

2021 ANNUAL REPORT

Our Company

Hess Corporation is a leading global independent energy 
company engaged in the exploration and production of 
crude oil and natural gas.

Our company’s purpose is to be the world’s most trusted 
energy partner. We are committed to meeting the highest 
standards of corporate citizenship by protecting the health 
and safety of our employees, safeguarding the environment 
and making a positive impact on the communities where  
we operate.

Table of Contents

1

Financial and Operating Highlights

2

Letter to Shareholders

5

Global Operations

9

Sustainability

12

Board of Directors and Corporate Officers

Cover: Drilling Operations North Dakota

Financial and Operating Highlights

Hess Corporation

Amounts in millions, except pe r share data

FINANCIAL — for the year

Sales and other operating revenues

Net income (loss) attributable to Hess Corporation

Net income (loss) per share diluted

Common stock dividends per share

Net cash provided by operating activities

Exploration & Production capital and exploratory expenditures

Midstream capital expenditures

Weighted average diluted shares outstanding

FINANCIAL — at year end

Total assets

Cash and cash equivalents

Total debt and finance lease obligations

Total equity

Debt to capitalization ratio for debt covenants (a)

Common stock price

OPERATING — for the year

Net production

Crude oil and natural gas liquids (thousands of barrels per day)

United States

International

Total

Natural gas (millions of cubic feet per day)

United States

International

Total

Barrels of oil equivalent (thousands of barrels per day)

$

$

$

$

$

$

$

$

$

$

$

$

2021

7,473

559

1.81

1.00

2,890

1,829

183

309.30

2021

20,515

2,713

8,677

7,026

2020

4,667

(3,093)

(10.15)

1.00

1,333

1,786

253

304.80

2020

18,821

1,739

8,534

6,335

$

$

$

$

$

$

$

$

$

$

$

42.30%

74.03

47.50%

$

52.79

2021

2020

162

54

216

234

357

591

315

206

33

239

256

298

554

331

(a)  Total debt (including finance lease obligations and excluding Midstream nonrecourse debt) as a percentage of Total Capitalization of Hess Corporation as defined  
under Hess Corporation’s term loan and revolving credit facility financial covenants. Total Capitalization excludes the impact of noncash impairment charges and  
noncontrolling interests.

2021 ANNUAL REPORT

1

Letter to Shareholders

In 2021, our company continued to successfully execute our 

flow annually at $65 per barrel Brent. Following startup,  

strategy and achieve strong operational performance. We are 

we repaid the remaining $500 million of our term loan, and  

proud of our employees for their commitment to keeping our 

in March 2022, we announced a 50% increase in our 

workplace and the communities where we operate safe 

quarterly dividend. As our portfolio becomes increasingly  

throughout the COVID-19 pandemic.

free cash flow positive in the coming years, we commit to 

Our strategy has been and continues to be to deliver high 

return resource growth, a low cost of supply and industry 

leading cash flow growth. We have built a differentiated 

return up to 75% of our adjusted free cash flow annually  

to shareholders by continuing to grow the dividend and 

accelerating share repurchases.

portfolio offering a unique value proposition – delivering 

Key to our strategy is Guyana, the largest new oil province 

durable cash flow growth that enables us to invest in some  

discovered in the last decade, which is positioned to be  

of the highest return projects in the industry and also to grow 

one of the highest margin, lowest carbon intensity oil 

cash returns to our shareholders.

developments in the world according to Wood Mackenzie 

In terms of resource growth, we have been disciplined in 

allocating capital to the best rocks for the best returns.  

Our portfolio is focused on the Bakken, the deepwater Gulf of 

Mexico, Southeast Asia and Guyana, with its multiple phases  

of low cost oil developments, and we expect all four of these 

assets to be free cash flow generative in 2022. Our 2022 capital 

and exploratory budget is $2.6 billion, of which approximately 

80% will be allocated to Guyana and the Bakken. 

Because of the investments we are making, we are well 

positioned to significantly lower our cost of supply. By 2026, 

our cash costs are forecast to decline approximately 25% 

compared with 2021 to $9 per barrel of oil equivalent. In 

addition, our portfolio’s breakeven oil price is expected to  

be one of the lowest in the industry by 2026, decreasing  

to $45 per barrel Brent. 

In terms of cash flow growth, we have an industry leading rate 

of change and durability story. Our company is positioned to 

grow our cash flow at a compound rate of 25% per year out  

to 2026 based on a Brent oil price of $65 per barrel. 

Our second offshore development in Guyana, Liza Phase 2, 

began producing oil in February 2022 and, at capacity, is 

expected to add more than $1 billion of net operating cash 

data. On the Stabroek Block, where Hess has a 30% interest 

and ExxonMobil is the operator, we continued our extraordinary 

string of exploration successes with five significant discoveries in 

2021 and two additional significant discoveries in January 2022. 

Our four sanctioned oil developments on the block have world 

class economics, with a Brent breakeven oil price of between 

$25 and $35 per barrel. In 2027, at least six floating 

production, storage and offloading vessels (FPSOs)  

are expected to be online on the Stabroek Block with a 

production capacity of more than 1 million gross barrels of  

oil per day, with the potential for up to 10 FPSOs to develop 

the gross discovered recoverable resources of more than  

10 billion barrels of oil equivalent.

The Bakken, our largest operated asset, remains an important 

part of our portfolio with a robust inventory of high return future 

drilling locations. In 2021, with continued strength in oil prices, 

we added a second and third rig, which will enable us to 

accelerate cash flow growth, lower our unit cash costs and 

further optimize our infrastructure.

Turning to our 2021 financial results, our adjusted net  

income was $677 million compared with an adjusted net loss  

of $894 million in 2020, primarily due to higher realized prices. 

Cash flow from operations, before changes in working capital, 

was $3.0 billion, compared with $1.8 billion in the prior year. 

2

2021 ANNUAL REPORT

Proved reserves at the end of 2021 stood at 1.31 billion barrels 

We have tested the resilience of Hess’ portfolio under the 

of oil equivalent, up from 1.17 billion barrels of oil equivalent at 

supply and demand scenarios from the International Energy 

the end of 2020. Net proved reserve additions in 2021 totaled 

Agency (IEA). In the IEA’s Sustainable Development Scenario, 

348 million barrels of oil equivalent, including positive net 

which assumes all the pledges of the Paris Agreement are met, 

price revisions of 107 million barrels of oil equivalent, resulting 

oil and gas will still be 40% of the global energy mix in 2040.  

in an overall 2021 production replacement ratio of 295% at  

In the IEA’s newest Net Zero Scenario, oil and gas will still be 

a finding and development cost of approximately $5.25 per 

29% of the energy mix in 2040. In either scenario, oil and gas 

barrel of oil equivalent.

SUSTAINABILITY

As we continue to execute our strategy, our company will  

be guided by our longstanding commitment to sustainability. 

Our strategy aligns with the world’s growing need for 

will be needed for decades to come. Hess’ strategic priorities – 

to grow our resource base, have a low cost of supply and 

sustain cash flow growth – are aligned with the energy 

transition needed to achieve the IEA’s scenarios and position 

us well for the coming decades.

affordable, reliable and cleaner energy that is necessary  

We are honored to have been recognized throughout 2021  

for human prosperity and global economic development.  

as an industry leader in our environmental, social and 

We recognize that climate change is the greatest scientific 

governance performance and disclosure. In keeping with  

challenge of the 21st century and support the aim of the 

our Hess Values, we are committed to diversity, equity  

Paris Agreement and a global ambition to achieve net zero 

and inclusion, which we believe creates value for all of our 

emissions by 2050. Our business planning includes actions 

stakeholders, and to the safety of our workforce and the 

we will undertake to continue reducing our carbon footprint.

communities where we operate. A multidisciplinary team 

Our Board of Directors is climate change literate and actively 

engaged in overseeing Hess’ sustainability practices. We are 

committed to transparency – our strategy and reporting are 

continues to update our COVID-19 prevention protocols 

based on current conditions and guidance from public health 

authorities and our medical advisors.

closely aligned with the recommendations of the Task Force 

COMMITMENT TO SHAREHOLDERS

on Climate-Related Financial Disclosures.

We are proud of our company’s 2021 performance and 

Our Board and senior leadership have set aggressive targets 

for greenhouse gas (GHG) emissions reduction. After our 

company significantly outperformed our five year emissions 

reduction targets for 2020, we announced new five year GHG 

reduction targets for 2025, which are to reduce operated 

Scope 1 and 2 GHG emissions intensity and methane 

emissions intensity by approximately 50% from 2017 and  

to eliminate routine flaring from our operations by the end of 

2025. In addition, we are contributing to groundbreaking work 

grateful for the counsel of our Directors and the dedication  

of our employees. Thank you, our shareholders, for your 

continued support and interest in our company.

James H. Quigley 

John B. Hess 

Chairman of the Board

Chief Executive Officer

by the Salk Institute to develop plants with larger root systems 

that are capable of absorbing and storing potentially billions  

April 2022

of tons of carbon per year from the atmosphere.

2021 ANNUAL REPORT

3

Offshore Operations Gulf of Thailand

Global Operations

PRODUCTION

Offshore Guyana, production from the Liza Phase I development 

In 2021, net production averaged 315,000 barrels of oil equivalent 

on the Stabroek Block (30% interest) averaged 117,000 gross 

per day, including Libya, compared with 331,000 barrels of oil 

barrels of oil per day for the full year, compared with 74,000 

equivalent per day in 2020. The year over year decrease was 

gross barrels of oil per day for the full year in 2020. Net 

primarily the result of lower Bakken production and the sale 

production averaged 30,000 barrels of oil per day in 2021, 

of our interests in the Shenzi Field in the Gulf of Mexico in 2020 

compared with 20,000 barrels of oil per day in 2020.

and the South Arne Field in Denmark in 2021, which was partially 

offset by higher production from the Liza Phase 1 development 

in Guyana and more stable operations in Libya.

In the deepwater Gulf of Mexico, net production averaged 

45,000 barrels of oil equivalent per day in 2021, compared with 

56,000 barrels of oil equivalent per day in 2020. This decrease 

In the Bakken, Hess’ operated rig count averaged 2.3 in 2021, 

was primarily due to the sale of our interests in the Shenzi Field 

compared with 2.6 in 2020. As West Texas Intermediate oil 

in the fourth quarter of 2020 and natural well declines.

prices moved above $50 per barrel, the company added a 

second operated rig in February 2021 and a third operated 

rig in September 2021. We brought 51 new wells on production 

in 2021, compared with 111 wells in 2020. Net production from 

the Bakken averaged 156,000 barrels of oil equivalent per 

day in 2021, compared with 193,000 barrels of oil equivalent 

per day in 2020. The decrease was due to a lower average 

rig count, higher prices for natural gas liquids that increased 

the company’s earnings and cash flow but lowered production 

entitlements under the company’s percentage of proceeds 

contracts, the planned turnaround of the Tioga Gas Plant, and 

the sale of the company’s Little Knife and Murphy Creek 

nonstrategic acreage interests.

We reduced our average drilling and completion costs in the 

Bakken to $5.8 million per well in 2021, down from $6.2 million 

in 2020. Through the continued application of technology and 

Lean manufacturing techniques, we expect to offset forecasted 

inflation in 2022 and maintain average drilling and completion 

costs at approximately $5.8 million per well. We continue to 

optimize the development of our acreage through a combination 

of well spacing and well completion design. The overall 

productivity of wells drilled in 2022 is forecast to be in line with 

the 2021 program, with average 180 day initial production rates 

of approximately 120,000 barrels of oil. Our estimate of net 

ultimate recovery from our Bakken acreage is approximately 

2.2 billion barrels of oil equivalent, with approximately 1.8 billion 

Production Operations North Dakota

barrels yet to be produced.

2021 ANNUAL REPORT

5

Net production from Libya averaged 20,000 barrels of oil 

equivalent per day in 2021, compared with 4,000 barrels of oil 

equivalent in 2020 when production operations were largely 

shut in due to civil unrest.

DEVELOPMENTS

Offshore Guyana, Hess holds a 30% interest in the 6.6 million 

acre Stabroek Block. Esso Exploration and Production Guyana 

Limited, a subsidiary of ExxonMobil, is operator and holds a 

45% interest. CNOOC Petroleum Guyana Limited, a wholly 

owned subsidiary of CNOOC Limited, holds the remaining 

25% interest.

First oil from the Liza Phase 2 development was achieved  

in February 2022, utilizing the Liza Unity floating production, 

storage and offloading vessel (FPSO) with production capacity 

of approximately 220,000 gross barrels of oil per day. A third 

development at the Payara Field, also with production capacity 

of 220,000 gross barrels of oil per day, was sanctioned in 

September 2020 with first oil expected in 2024. Our three 

sanctioned oil developments on the block have a Brent 

breakeven oil price of between $25 and $35 per barrel.

A fourth development at the Yellowtail Field will be the largest  

to date on the Stabroek Block, developing nearly 1 billion 

barrels of oil, with a production capacity of approximately 

250,000 gross barrels of oil per day. The Yellowtail 

development is on track to achieve first oil in 2025.

We continue to see the potential for at least six FPSOs on the 

Stabroek Block in 2027 with a production capacity of more 

than 1 million gross barrels of oil per day and up to 10 FPSOs 

to develop the discovered resources on the block.

Offshore Operations Gulf of Mexico

In Southeast Asia, net production in 2021 from the Hess 

operated North Malay Basin development project (50% 

working interest) and the Carigali Hess operated Malaysia/

Thailand Joint Development Area (50% working interest) 

EXPLORATION

averaged 61,000 barrels of oil equivalent per day, compared 

At the Stabroek Block, offshore Guyana, Hess has 

with 52,000 barrels of oil equivalent per day in 2020. 

participated in 21 major discoveries through the end of 2021, 

Production at both assets increased as demand recovered 

and gross discovered recoverable resources are currently 

from the impacts of COVID-19.

estimated to be more than 10 billion barrels of oil equivalent.

In the Danish North Sea, net production from the South Arne 

In April 2021, Hess announced an oil discovery at the Uaru-2 

Field (61.5% working interest, operator) averaged 3,000 

well. The Uaru-2 well encountered approximately 120 feet of 

barrels of oil equivalent per day in 2021, compared with 

high quality, oil bearing sandstone reservoirs, including newly 

6,000 barrels of oil equivalent per day in 2020. In the first 

identified intervals below the original Uaru-1 discovery. The well 

quarter of 2021, we announced the sale of our interests in 

was drilled in 5,659 feet of water and is located approximately 

Denmark and the transaction closed in August 2021.

6.8 miles south of the Uaru-1 well.

6

2021 ANNUAL REPORT

Another discovery at the Longtail-3 well was announced in 

In addition to successfully appraising the Turbot discovery, 

June 2021. Drilling at Longtail-3 encountered 230 feet of net 

the Turbot-2 well encountered 43 feet of net pay in newly 

pay, including a newly identified high quality, hydrocarbon 

identified high quality, oil bearing sandstone reservoirs separate 

bearing reservoir below the original Longtail-1 discovery 

from the 75 feet of high quality, oil bearing sandstone reservoir 

intervals. The well was drilled in more than 6,100 feet of water 

pay encountered in the original Turbot-1 discovery well.  

and is located approximately 2 miles south of the Longtail-1 well.

The Turbot-2 discovery was drilled in 5,790 feet of water and  

The Whiptail-1 discovery well encountered 246 feet of net pay  

in a high quality, oil bearing sandstone reservoir. A second 

is located approximately 37 miles southeast of the Liza Phase 1  

development and 2.5 miles from Turbot-1.

Whiptail well, Whiptail-2, which is located 3 miles northeast  

Another significant discovery was made on the Stabroek 

of Whiptail-1, encountered 167 feet of net pay in a high quality, 

Block at the Cataback-1 well in October 2021. The well 

oil bearing sandstone reservoir. The Whiptail discovery is 

encountered 243 feet of net pay in a high quality, hydrocarbon 

located approximately 4 miles southeast of the Uaru-1 discovery 

bearing sandstone reservoir of which 102 feet is oil bearing. 

announced in January 2020 and approximately 3 miles west of 

Cataback was drilled in 5,928 feet of water and is located 

the Yellowtail Field.

approximately 3.7 miles east of Turbot-1.

In September 2021, an additional discovery was made with 

An active exploration and appraisal program is planned in 

the Pinktail-1 well. The Pinktail well encountered 220 feet of 

Guyana in 2022 that will include drilling approximately 12 wells. 

net pay in a high quality, oil bearing sandstone reservoirs. 

Other 2022 exploration drilling will include the Zanderij-1 

Pinktail was drilled in 5,938 feet of water and is located 

exploration well on Block 42 in Suriname and the Huron-1 

approximately 21.7 miles southeast of the Liza Phase 1 

exploration well on Green Canyon Block 69 in the deepwater 

development and 3.7 miles southeast of Yellowtail-1.

Gulf of Mexico.

Liza Unity FPSO Guyana

2021 ANNUAL REPORT

7

Hess Toy Truck Educational Program North Dakota

Sustainability

Our company’s purpose is to be the world’s most trusted 

initiative with a commitment to achieve zero routine flaring from 

energy partner. This year we will publish our 25th annual 

our operations by the end of 2025. These targets are designed 

sustainability report, demonstrating our longstanding 

to exceed the carbon intensity reductions by 2030 in the 

commitment to sustainability and the value we believe it 

International Energy Agency’s (IEA) Sustainable Development 

creates for all of our stakeholders.

and Net Zero Scenarios, which are consistent with the Paris 

Sustainability starts at the top of our company and is 

reinforced at every level. Our Board of Directors is climate 

change literate and actively engaged in overseeing Hess’ 

Agreement’s aim to limit the global average temperature rise to 

well below 2°C. Our progress against these new targets will be 

shared in our sustainability report.

environment, health, safety and social responsibility (EHS  

Continued flaring reduction, particularly from our Bakken 

& SR) practices, working alongside senior management.

operations, is a key driver for reducing our GHG emissions 

ENVIRONMENT AND CLIMATE CHANGE

Climate change is one of the greatest scientific challenges of  

the 21st century. We believe climate risks can and should be 

addressed while at the same time meeting the growing 

demand for safe, affordable and reliable energy, which is 

necessary to ensure a just and secure energy transition in the 

intensity. For that reason, Bakken flaring reduction was one of 

the performance metrics in our company’s 2021 annual incentive 

plan with a target to achieve a 7% flaring rate from our operated 

Bakken wells and pads as reported to the North Dakota 

Industrial Commission. We surpassed this target, ultimately 

reducing our flaring rate to approximately 4% by the end of 2021. 

context of the United Nations Sustainable Development Goals. 

As part of our sustainability commitment, we seek to fund 

Governments, businesses and civil society must work together 

innovation to mitigate societal emissions, including the Salk 

on cost effective policies to meet this dual challenge, and we 

Institute’s Harnessing Plants Initiative, which aims to develop 

support transparent carbon pricing as an economically 

plants with larger root systems that are capable of absorbing 

efficient method for managing carbon emissions.

and storing potentially billions of tons of carbon per year  

We support the aim of the Paris Agreement and a global 

ambition to achieve net zero emissions by 2050. Our climate 

strategy is closely aligned with the recommendations of the 

Task Force on Climate-Related Financial Disclosures (TCFD) 

established by the G20 Financial Stability Board, and its 

implementation is led by senior members of our leadership 

from the atmosphere. In 2020, we announced a $12.5 million 

gift to the Salk Institute, and in 2021, we announced another  

$3 million gift. We also address 100% of the indirect 

emissions from our purchased electricity through a 

combination of renewable energy generated from the grid  

and the purchase of renewable energy certificates.

team with oversight by our Board. As part of our commitment  

We account for the cost of carbon in capital investment 

to implement a substantive climate strategy, an executive led 

decisions. We conduct scenario planning that includes the 

taskforce is currently developing a plan for our company to 

Sustainable Development and Net Zero Scenarios developed 

achieve net zero Scope 1 and 2 emissions. 

by the IEA to test the resilience of Hess’ portfolio against a 

Our Board and senior leadership have set aggressive targets  

for greenhouse gas (GHG) emissions reduction. After our 

company significantly outperformed our five year emissions 

reduction targets for 2020, we set new five year GHG 

reduction targets for 2025, which are to reduce operated 

Scope 1 and 2 GHG emissions intensity by approximately 50% 

from 2017 to 17 kg/BOE and methane emissions intensity by 

approximately 50% from 2017 to an intensity of 0.19%. We also 

endorsed the World Bank’s “Zero Routine Flaring by 2030” 

range of environmental policies and market conditions in a 

lower carbon economy. According to the IEA’s World Energy 

Outlook 2021, oil and gas are essential to meet the world’s 

growing demand for safe, affordable and reliable energy and 

will be part of the energy mix through 2050. Hess’ strategic 

priorities – to grow our resource base, have a low cost of 

supply and sustain cash flow growth – are aligned with the 

energy transition needed to achieve the IEA’s scenarios and 

position us well for the coming decades. We also consider 

2021 ANNUAL REPORT

9

Production Operations North Dakota

physical risks associated with climate change, such as 

In 2021, we achieved a 9% reduction in our workforce total 

increased severity of storms, drought and flooding, for new 

recordable incident rate (TRIR) from 2020, driven by a year 

projects and existing operations. 

over year decrease in our employee TRIR. We reached a six 

We regularly bring in subject matter experts to advise our 

Board on climate and other sustainability issues to be 

considered in the development of company strategies and 

policies. The EHS Committee of our Board provides oversight 

and makes recommendations to the full Board with respect 

year low in our severe and significant safety incident rate, 

achieving a 14% reduction from 2020. We continue to improve 

our process safety performance and between 2016 and 2021 

have reduced the number of Tier 1 process safety incidents by 

60% based on our current portfolio of operated assets.

to Hess’ policies, positions and systems for EHS & SR, 

The safety performance of our contractors, who represent 

compliance and risk management. The Board’s 

approximately 70% of our total workforce hours, is critical to 

Compensation and Management Development Committee 

achieving our safety goals. In 2021, we successfully completed 

has tied executive compensation to advancing the company’s 

a number of operational milestones in which contractor 

EHS and climate change goals.

engagement was vital to our strong safety performance. These 

SAFETY AND HEALTH 

Hess’ safety programs and practices aim to maintain a 

culture in which employees and contractors keep each other 

included onboarding two drilling rigs in the Bakken and one in 

North Malay Basin and completion of the Tioga Gas Plant 

turnaround – all with zero recordable safety incidents.

safe on the job and work together to continuously improve 

SOCIAL RESPONSIBILITY

our performance. In 2021, our multidisciplinary emergency 

As part of our company’s commitment to social responsibility 

response team continued to oversee our pandemic response, 

we participate in multistakeholder initiatives designed to advance 

which was highly effective in reducing the risks of COVID-19 

transparency, environmental protection, human rights and 

in our workplace and ensuring business continuity.

good governance. For example, we are a member of IPIECA, 

10

2021 ANNUAL REPORT

the global oil and gas industry organization for environmental 

we contributed to its food aid program for families in need and  

and social issues, as well as the U.N. Global Compact and the 

to the Fulbright English Teaching Assistant Program, which 

Global Compact U.S. Network, which share best practices in 

places recent graduates from U.S. universities into public 

sustainable business conduct across the private sector. 

secondary schools in the Kelantan region to teach English.  

In keeping with our company values and purpose, we have a 

longstanding commitment to diversity, equity and inclusion in 

In 2021, Hess also provided support for disaster relief and 

pandemic response.

our workplace and through social investment programs that 

In Guyana, Hess and our two Stabroek Block coventurers 

make a positive and lasting impact on the communities where 

launched the Greater Guyana Initiative (GGI), a 10 year 

we operate. In 2021, we announced a $1.4 million grant to the 

commitment of $100 million to support capacity building with  

Jackie Robinson Foundation to provide four year scholarships 

a focus on education and training, sustainable economic 

and internship opportunities to underrepresented college 

development and health. The GGI expands our current 

students and to support the new Jackie Robinson Museum 

support for the Centre for Local Business Development  

that will serve as a venue for educational programming.

and will deliver additional programs with the University of 

In 2021, Hess announced a $9 million financial commitment 

Guyana and other institutions.

over three years as part of our Learning for Life Partnership 

to fund educational programs and support services in three 

ENVIRONMENTAL, SOCIAL AND  
GOVERNANCE (ESG) DISCLOSURE

economically disadvantaged Houston communities. Our 

Learning for Life Partnership will benefit 22 schools and more 

than 13,000 children from prekindergarten through high 

school. The company also donated $1 million to the Houston 

Harris County 2021 Winter Storm Relief Fund and $1 million 

to the Houston Food Bank following the severe winter storm 

that significantly impacted local communities already suffering 

from the economic effects of the COVID-19 pandemic.

In North Dakota, we provided Hess toy trucks to every 

elementary school in the state for the fourth consecutive year 

with a related curriculum designed by Baylor College of 

Medicine’s Center for Educational Outreach. In 2021, Hess  

also supported grant requests from the Minot Public School 

Foundation to assist teachers in providing school supplies 

and basic resources to students impacted financially by  

the pandemic.

In Louisiana, Hess partnered with the Gulf of Mexico Alliance 

(GOMA) to support a microgrant program for Hurricane Ida 

relief that reached multiple communities and nontraditional 

partners that might not have qualified for larger assistance 

programs. These projects addressed needs that aligned with 

GOMA priorities such as water quality, wildlife, fisheries, 

natural habitats and community resilience.

In Malaysia, Hess supports the My Kasih Foundation “Love  

My School” Student Bursary Program, which provides 

financial assistance to underprivileged children. In 2021,  

We see transparency in reporting as an important part  

of being a trusted energy partner. Our reporting aligns  

with a number of frameworks, including oil and gas industry 

metrics from the Sustainability Accounting Standards Board  

and TCFD recommendations. Our sustainability report is 

prepared in accordance with the Core option of the Global 

Reporting Initiative Standards. Details of our EHS & SR 

strategy and performance, including how our plans and 

actions support the U.N. Sustainable Development Goals,  

are discussed in our sustainability report, available at  

www.hess.com/sustainability.

In 2021, we continued to be recognized for the quality of  

our ESG performance and disclosure. For example, we 

achieved leadership status in the CDP’s annual Global 

Climate Analysis for the 13th consecutive year and earned 

a place on the Dow Jones Sustainability Index for North 

America for the 12th consecutive year. After receiving an 

MSCI ESG rating of AA for 10 consecutive years, Hess’  

rating was upgraded to AAA in 2021 to signify our industry 

leadership. The Transition Pathway Initiative, which 

independently assesses companies on their efforts to 

support the transition to a low carbon economy and  

mitigate climate change in line with TCFD recommendations, 

rated Hess as top Level 4 status in its November 2021 report.

2021 ANNUAL REPORT

11

Hess Corporation

BOARD OF DIRECTORS

James H. Quigley(1) (2) (3)
Chairman of the Board;  
Former Chief Executive Officer, 
Deloitte Touche Tohmatsu Limited

John B. Hess(1)
Chief Executive Officer

Terrence J. Checki(1) (2) (3) (4)
Former Executive  
Vice President and Head, 
Emerging Markets and  
International Affairs,  
Federal Reserve Bank  
of New York

Leonard S. Coleman, Jr.(4) (5)
Former President, National League  
of Major League Baseball;  
Former Commissioner,  
New Jersey Department of Energy

Edith E. Holiday(1) (4) 
Former Assistant to the 
President of the United States 
and Secretary of the Cabinet; 
Former General Counsel, 
United States Department 
of the Treasury

Marc S. Lipschultz(1) (3)
Co-President and Director,  
Blue Owl Capital Inc.

Raymond J. McGuire
Former Vice Chairman  
of Citigroup

David McManus(3) (5)
Former Executive Vice 
President, Pioneer Natural 
Resources

(1) (2) (5)

Dr. Kevin O. Meyers
Former Senior Vice President of E&P  
for the Americas, ConocoPhillips

Karyn F. Ovelmen(2)
Former Gas and Power Transformation 
Leader, General Electric Company; 
Former Executive Vice President and 
Chief Financial Officer, Flowserve 
Corporation

William G. Schrader(2) (5)
Former Chief Operating Officer, 
TNK-BP Russia

(1) Member of Executive Committee  

(2) Member of Audit Committee 

(3) Member of Compensation and 

  Management Development Committee 

(4)  Member of Corporate Governance 

and Nominating Committee

(5)  Member of Environmental, Health and  

Safety Committee

CORPORATE OFFICERS

John B. Hess
Chief Executive Officer

Gregory P. Hill
Chief Operating Officer 
and President, 
Exploration & Production 

Barbara Lowery-Yilmaz 

Richard Lynch

Gerbert Schoonman

Senior Vice Presidents 

Vice Presidents 

Eric Fishman 
Treasurer

Lorrie Hecker

Alex Mistri

Alex Sagebien

David Shan

Kevin B. Wilcox  
Controller

Jay R. Wilson

Timothy B. Goodell 
General Counsel, Corporate Secretary 
and Chief Compliance Officer 

Andrew Slentz

Jonathan C. Stein

John P. Rielly 
Chief Financial Officer 

12

2021 ANNUAL REPORT

Annual Report
FORM 10-K

THIS PAGE IS INTENTIONALLY LEFT BLANK

92416 10K 03.8.2022

1

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

Form 10-K

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

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

☑

For the fiscal year ended December 31, 2021
For the fiscal year ended December 31, 2021
or
or

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

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

☐

1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

☑

☐

For the transition period from                 to             
Commission File Number 1-1204

For the transition period from                 to             
Commission File Number 1-1204

Hess Corporation
(Exact name of Registrant as specified in its charter)

Hess Corporation
(Exact name of Registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)
1185 AVENUE OF THE AMERICAS,

DELAWARE
(State or other jurisdiction of
incorporation or organization)
1185 AVENUE OF THE AMERICAS,

NEW YORK, NY

NEW YORK, NY

(Address of principal executive offices)

(Address of principal executive offices)

13-4921002
(I.R.S. Employer
Identification Number)
10036
(Zip Code)

13-4921002
(I.R.S. Employer
Identification Number)
10036
(Zip Code)

Registrant’s telephone number, including area code (212) 997-8500
Securities registered pursuant to Section 12(b) of the Act:

Registrant’s telephone number, including area code (212) 997-8500
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Title of Each Class

Common Stock  (par value $1.00)

Common Stock  (par value $1.00)

Trading Symbol(s)
HES

Trading Symbol(s)
HES

Name of Each Exchange on Which Registered
New York Stock Exchange

Name of Each Exchange on Which Registered
New York Stock Exchange

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Securities registered pursuant to Section 12(g) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Act. Yes ☑ No ☐

Act. Yes ☑ No ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange

Act. Yes ☐ No ☑

Act. Yes ☐ No ☑

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 (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 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
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 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:
reporting company” and “emerging growth company” -  in Rule 12b-2 of the Exchange Act:

Large accelerated filer
Large accelerated filer
☑
Non-accelerated filer
Non-accelerated filer
☐
☐
Emerging Growth Company ☐
Emerging Growth Company ☐

☑

Accelerated filer            
☐
Smaller reporting company ☐

Accelerated filer            
☐
Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period

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. ☐

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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. Yes ☑ No ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. Yes ☑ No ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of voting stock held by non-affiliates of the Registrant amounted to $24,239,000,000, computed
using the outstanding Common Stock and closing market price on June 30, 2021, the last business day of the Registrant’s most
recently completed second fiscal quarter.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of voting stock held by non-affiliates of the Registrant amounted to $24,239,000,000, computed
using the outstanding Common Stock and closing market price on June 30, 2021, the last business day of the Registrant’s most
recently completed second fiscal quarter.

At January 31, 2022, there were 309,745,523 shares of Common Stock outstanding.
Part III is incorporated by reference from the Proxy Statement for the 2022 annual meeting of stockholders.

At January 31, 2022, there were 309,745,523 shares of Common Stock outstanding.
Part III is incorporated by reference from the Proxy Statement for the 2022 annual meeting of stockholders.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 1

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

1

3/23/22 1:34 PM

 
 
 
 
92416 10K 03.8.2022

2

2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Item No.

1 and 2.

1A.
1B.
3.
4.

5.

6.
7.
7A.
8.
9.
9A.
9B.
9C.

10.
11.
12.
13.
14.

15.

HESS CORPORATION
Form 10-K
TABLE OF CONTENTS

PART I
Business and Properties ...........................................................................................................................
Information about our Executive Officers ...............................................................................................
Risk Factors .............................................................................................................................................
Unresolved Staff Comments ....................................................................................................................
Legal Proceedings....................................................................................................................................
Mine Safety Disclosures ..........................................................................................................................
PART II

Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of
Equity Securities ......................................................................................................................................
[Reserved] ................................................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations..................
Quantitative and Qualitative Disclosures About Market Risk.................................................................
Financial Statements and Supplementary Data........................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................
Controls and Procedures ..........................................................................................................................
Other Information ....................................................................................................................................
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections............................................
PART III
Directors, Executive Officers and Corporate Governance.......................................................................
Executive Compensation .........................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence ........................................
Principal Accounting Fees and Services..................................................................................................
PART IV
Exhibits, Financial Statement Schedules .................................................................................................
Signatures.................................................................................................................................................

Page

6
17
19
23
24
25

26
27
28
48
49
99
99
99
99

99
99
99
99
99

100
103

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.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2

2

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 2

3/23/22 1:34 PM

2

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

3

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K,

including information incorporated by reference herein, 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
to certain known and unknown risks and
Forward-looking statements are subject
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:

the future.

• 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 (COVID-19);

• reduced demand for our products, including due to COVID-19, perceptions regarding the oil and gas industry, 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, fracking bans as well as restrictions on oil and gas leases;

• operational changes and expenditures due to climate change and sustainability related initiatives;

• disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events,

shortages of skilled labor, cyber-attacks, health measures related to COVID-19, or climate change;

• the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures under which
we may not control and exposure to decommissioning liabilities for divested assets in the event the current or future owners are
unable to perform;

• 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 limitations on investment in oil

and gas activities or negative outcomes within commodity and financial markets;

• liability resulting from environmental obligations and litigation, including heightened risks associated with being a general partner

of Hess Midstream LP; and

• other factors described in Item 1A—Risk Factors in this 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.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3

3

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 3

3/23/22 1:34 PM

3

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

4

4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Glossary

Throughout this report, the following company or industry specific terms and abbreviations are used:

API – American Petroleum Institute.

Appraisal well – An exploration well drilled to confirm the results of a discovery well, or a well that is used to determine the
boundaries of a productive formation.

Bbl – One stock tank barrel, which is 42 United States gallons liquid volume.

Barrel of oil equivalent or Boe – This reflects natural gas reserves converted on the basis of relative energy content of six mcf equals
one barrel of oil equivalent (one mcf represents one thousand cubic feet). Barrel of oil equivalence does not necessarily result in price
equivalence, as the equivalent price of natural gas on a barrel of oil equivalent basis has been substantially lower than the
corresponding price for crude oil over the recent past.

Boepd – Barrels of oil equivalent per day.

Bopd – Barrels of oil per day.

BSEE – Bureau of Safety and Environmental Enforcement.

CGA – Clean Gulf Associates.

Condensate – A mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that when
produced, is in the liquid phase at surface pressure and temperature.

DD&A – Depreciation, depletion and amortization.

DEI – Diversity, Equity and Inclusion.

Development well – A well drilled within the proved area of an oil and/or natural gas reservoir with the intent of producing oil and/or
natural gas from that area of the reservoir.

Dry hole – An exploratory or development well that does not find oil or natural gas in commercial quantities.

EPA – Environmental Protection Agency.

EHS & SR – Environment, health, safety and social responsibility.

Exploratory well – A well drilled to find oil or natural gas in an unproved area or find a new reservoir in a field previously found to be
productive by another reservoir.

E&P – Exploration and production.

Field – An area consisting of a single reservoir or multiple reservoirs all grouped or related to the same individual geological structural
feature and/or stratigraphic condition.

FPSO – Floating production, storage, and offloading vessel.

Fractionation – A process by which the mixture of natural gas liquids that results from natural gas processing is separated into the
NGL components, such as ethane, propane, butane, isobutane, and natural gasoline, prior to their sale to various petrochemical and
industrial end users. Fractionation is accomplished by controlling the temperature of the stream of mixed liquids in order to take
advantage of the difference in boiling points of separate products.

GHG – Greenhouse gas.

Gross acres – Acreage in which a working interest is held by the Corporation.

Gross well – A well in which a working interest is held by the Corporation.

ICE – Integrity critical equipment.

IEA – International Energy Agency.

JOA – Joint operating agreement.

LIBOR – The London Interbank Offered Rate.

Mcf – One thousand cubic feet of natural gas.

Mmcfd – One thousand mcf of natural gas per day.

MSRC – Marine Spill Response Corporation.

MTBE – Methyl tertiary butyl ether.

4

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4

4

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 4

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

5

5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

MWCC – Marine Well Containment Company.

Net acreage or Net wells – The sum of the fractional working interests owned by the Corporation in gross acres or gross wells.

NGL or Natural gas liquids – Naturally occurring hydrocarbon substances that are separated and produced by fractionating natural
gas, including ethane, butane, isobutane, propane and natural gasoline.  NGL do not sell at prices equivalent to crude oil.

NJDEP – New Jersey Department of Environmental Protection.

Non-operated – Projects in which the Corporation has a working interest but does not perform the role of Operator.

OPEC – Organization of Petroleum Exporting Countries.

Operator – The entity responsible for conducting and managing exploration, development, and/or production operations for an oil or
gas project.

OSHA – Occupational Safety and Health Administration.

OSRL – Oil Spill Response Limited.

Participating interest – Reflects the proportion of exploration and production costs each party will bear as set out in an operating
agreement.

Plug and perf completion – A well completion technique which involves creating perforations in the well casing that penetrate the
hydrocarbon reservoir section between set plugs.

Production sharing contract – An agreement between a host government and the owners (or co-owners) of a well or field regarding
the percentage of production each party will receive after the parties have recovered a specified amount of capital and operational
expenses.

Productive well – A well that is capable of producing hydrocarbons in sufficient quantities to justify commercial exploitation.

Proved properties – Properties with proved reserves.

Proved reserves – In accordance with the Securities and Exchange Commission regulations and practices recognized in the publication
of the Society of Petroleum Engineers entitled, “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves
Information,” those quantities of crude oil and condensate, NGL and natural gas, which, by analysis of geoscience and engineering
data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and
under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the
right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic
methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be
reasonably certain that it will commence the project within a reasonable time.

Proved developed reserves – Proved reserves that can be expected to be recovered through existing wells with existing equipment and
operating methods or for which the cost of the required equipment is relatively minor compared to the cost of a new well.

Proved undeveloped reserves – Proved reserves that are expected to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage shall be limited to
those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using
reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

ROD – Record of Decision.

SOFR – Secured Overnight Financing Rate.

Unproved properties – Properties with no proved reserves.

VLCC – Very large crude carrier.

Working interest – An interest in an oil and gas property that provides the owner of the interest the right to participate in the drilling
for and production of oil and gas on the relevant acreage and requires the owner to pay a share of the costs of drilling and production
operations.

WWCC – Wild Well Control Company.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5

5

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 5

3/23/22 1:34 PM

5

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

6

6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Items 1 and 2.  Business and Properties

PART I

Hess Corporation, incorporated in the State of Delaware in 1920, is a global E&P company engaged in exploration, development,
production, transportation, purchase and sale of crude oil, natural gas liquids, and natural gas with production operations located
primarily in the United States (U.S.), Guyana, the Malaysia/Thailand Joint Development Area (JDA), and Malaysia. We conduct
exploration activities primarily offshore Guyana, in the U.S. Gulf of Mexico, and offshore Suriname and Canada. At the Stabroek
Block (Hess 30%), offshore Guyana, we and our partners have discovered a significant resource base and are executing a multi-phased
development of the Block. The Liza Phase 1 development achieved first production in December 2019, and has a nameplate
production capacity of approximately 120,000 gross bopd. The Liza Phase 2 development achieved first production in February 2022,
and is expected to reach its production capacity of approximately 220,000 gross bopd later in 2022 as operations are safely brought
online. A third development, Payara, was sanctioned in the third quarter of 2020 and is expected to achieve first production in 2024,
with production capacity of approximately 220,000 gross bopd. A fourth development, Yellowtail, was submitted to the government
of Guyana for approval in the fourth quarter of 2021. Pending government approval and project sanctioning, the project is expected to
have a capacity of approximately 250,000 gross bopd with first production anticipated in 2025. We currently plan to have six FPSOs
with an aggregate expected production capacity of more than 1 million gross bopd on the Stabroek Block in 2027, and the potential for
up to ten FPSOs to develop the current discovered recoverable resource base.

Our Midstream operating segment, which is comprised of Hess Corporation’s approximate 43.5% consolidated ownership interest
in Hess Midstream LP at December 31, 2021, provides fee-based services, including gathering, compressing and processing natural
gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and
water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota. See Midstream on page 12.

Exploration and Production

Proved Reserves

Proved reserves are calculated using the average price during the twelve-month period ending December 31 determined as an
unweighted arithmetic average of the price on the first day of each month within the year, unless prices are defined by contractual
agreements, and exclude escalations based on future conditions. Crude oil prices used in the determination of proved reserves at
December 31, 2021 were $66.34 per barrel for West Texas Intermediate (WTI) (2020: $39.77) and $68.92 per barrel for Brent (2020:
$43.43).  Our total proved developed and undeveloped reserves at December 31 were as follows:

Developed

United States............................................................
Guyana (a) ...............................................................
Malaysia and JDA ...................................................
Other (b) ..................................................................

Undeveloped

United States............................................................
Guyana (a) ...............................................................
Malaysia and JDA ...................................................

Total

United States............................................................
Guyana (a) ...............................................................
Malaysia and JDA ...................................................
Other (b) ..................................................................

Crude Oil
& Condensate

Natural Gas Liquids

Natural Gas

Total Barrels of Oil
Equivalent (BOE)

2021

2020

2021

2020

2021

2020

2021

2020

(Millions of bbls)

(Millions of bbls)

(Millions of mcf)

(Millions of bbls)

283
65
3
100
451

215
140
2
357

498
205
5
100
808

282
72
4
134
492

119
132
2
253

401
204
6
134
745

138
—
—
—
138

95
—
—
95

233
—
—
—
233

120
—
—
—
120

42
—
—
42

162
—
—
—
162

568
17
394
98
1,077

367
31
131
529

935
48
525
98
1,606

490
36
543
165
1,234

163
47
132
342

653
83
675
165
1,576

516
68
69
116
769

371
145
24
540

887
213
93
116
1,309

484
78
94
162
818

188
140
24
352

672
218
118
162
1,170

(a) Guyana natural gas reserves will be consumed for fuel.
(b) Other includes our interests in Denmark, which were sold in August 2021, and Libya. At December 31, 2020, total proved reserves for Denmark were 40 million

boe.

Proved undeveloped reserves were 41% of our total proved reserves at December 31, 2021 on a boe basis (2020: 30%). Proved
reserves held under production sharing contracts totaled 26% of our crude oil reserves and 36% of our natural gas reserves at
December 31, 2021 (2020: 28% and 48%, respectively).

6

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6

6

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 6

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

7

For additional information regarding our proved oil and gas reserves, see the Supplementary Oil and Gas Data to the

Consolidated Financial Statements presented on pages 89 through 98.

Production

Worldwide crude oil, NGL, and natural gas net production was as follows:

Crude oil – Thousands of barrels

United States

North Dakota ................................................................................................................................
Offshore (a) ..................................................................................................................................
Total United States ............................................................................................................................
Guyana...............................................................................................................................................
Malaysia and JDA .............................................................................................................................
Other (b) ............................................................................................................................................
Total...................................................................................................................................................

Natural gas liquids – Thousands of barrels

United States

North Dakota ................................................................................................................................
Offshore (a) ..................................................................................................................................
Total United States ............................................................................................................................

Natural gas – Thousands of mcf

United States

North Dakota ................................................................................................................................
Offshore (a) ..................................................................................................................................
Total United States ............................................................................................................................
Malaysia and JDA .............................................................................................................................
Other (b) ............................................................................................................................................
Total...................................................................................................................................................

2021

2020

2019

29,176
10,451
39,627
10,920
1,264
7,791
59,602

17,889
1,517
19,406

59,013
26,276
85,289
126,743
3,557
215,589

39,047
13,961
53,008
7,457
1,287
3,358
65,110

20,514
1,878
22,392

65,786
27,985
93,771
106,618
2,540
202,929

34,299
16,628
50,927
67
1,479
9,161
61,634

15,150
1,942
17,092

40,222
33,212
73,434
128,071
7,144
208,649

Total Barrels of Oil Equivalent (in millions) (a) (b)........................................................................

114.9

121.3

113.5

(a) In November 2020, we sold our working interest in the Shenzi Field in the deepwater Gulf of Mexico. Shenzi net production was 3.3 million boe in 2020 (2019:

4.5 million boe).

(b) Other includes our interests in Denmark, which were sold in August 2021, and Libya. Net production from Denmark was 1.2 million boe for 2021 (2020: 2.2

million boe; 2019: 2.6 million boe).  Net production from Libya was 7.2 million boe for 2021 (2020: 1.6 million boe; 2019: 7.8 million boe).

E&P Operations

At December 31, 2021, our significant E&P assets included the following:

United States

Our production in the U.S. was from the Bakken shale play in the Williston Basin of North Dakota (Bakken) and from offshore

properties in the Gulf of Mexico.

North Dakota:

Bakken: At December 31, 2021, we held approximately 462,000 net acres in the Bakken with varying working interests. Net
production averaged 156,000 boepd in 2021. Prior to COVID-19, we were operating six rigs in the Bakken, but reduced the rig count
to one in May 2020 in response to the sharp decline in crude oil prices. We added a second operated rig in the Bakken in February
2021 and a third operated rig in September 2021. We drilled 63 wells and brought 51 wells on production in 2021, bringing the total
operated production wells to 1,599 at December 31, 2021. During 2022, we plan to operate three rigs, drill approximately 90 wells
and bring approximately 85 wells on production.

Offshore:

Gulf of Mexico: At December 31, 2021, we held approximately 61,000 net developed acres, with our production operations
principally at the Baldpate (Hess 50%), Conger (Hess 38%), Llano (Hess 50%), Penn State (Hess 50%), Stampede (Hess 25%) and
Tubular Bells (Hess 57%) fields. At December 31, 2021, we held approximately 267,000 net undeveloped acres, of which leases
covering approximately 105,000 acres are due to expire in the next three years.
In February 2022, we commenced drilling at the
Huron exploration prospect (Hess 40%) located on Green Canyon Block 69.

7

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7

7

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 7

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

8

Guyana

Stabroek Block: The Stabroek Block (Hess 30%), offshore Guyana, covers approximately 6.6 million acres. The operator, Esso
Exploration and Production Guyana Limited, has made numerous discoveries since 2015, with the discovered resources to date on the
block expected to underpin the potential for up to ten FPSOs. The first six FPSOs are expected to have an aggregate production
capacity of more than 1 million gross bopd in 2027.

The Liza Phase 1 development, which was sanctioned in 2017, began producing oil in December 2019 utilizing the Liza Destiny
FPSO, has a nameplate production capacity of approximately 120,000 gross bopd and in 2022 its production capacity is expected to
increase to more than 140,000 gross bopd following production optimization work. The Liza Phase 2 development, which was
sanctioned in 2019, began producing oil in February 2022 from the Liza Unity FPSO. The Liza Unity is expected to reach its
production capacity of approximately 220,000 gross bopd later in 2022 as operations are safely brought online.

The Payara Field development was sanctioned in 2020 and will utilize the Prosperity FPSO, which will have the capacity to
produce up to 220,000 gross bopd, with first production expected in 2024. Ten drill centers with a total of 41 wells are planned,
including 20 production wells and 21 injection wells.

A fourth development, Yellowtail, was submitted to the government of Guyana for approval in the fourth quarter of 2021.
Pending government approval and project sanctioning, the project is expected to have a capacity of 250,000 gross bopd with first
production anticipated in 2025.

The operator is currently utilizing six drillships for exploration, appraisal and development drilling activities.

In 2021, the

following exploration and appraisal wells were drilled on the Stabroek Block (in chronological order):

Hassa: The Hassa-1 well encountered approximately 50 feet of oil bearing reservoir in deeper geologic intervals, although the

well did not encounter oil in the primary target areas.

Koebi:  The operator completed drilling of the Koebi-1 well which did not encounter commercial quantities of hydrocarbons.

Uaru: The Uaru-2 well encountered 120 feet of high quality oil bearing sandstone reservoir, including newly identified
intervals below the original Uaru-1 discovery. The well was drilled in 5,659 feet of water and is located approximately 6.8 miles
south of the Uaru-1 well.

Longtail: The Longtail-2 well commenced drilling in March 2021 and drill stem testing was completed in the fourth quarter of
In the second quarter of 2021, the Longtail-3 well encountered 230 feet of net pay, including newly identified, high quality
2021.
hydrocarbon bearing reservoirs below the original Longtail-1 discovery intervals. The well was drilled in more than 6,100 feet of
water and is located approximately 2 miles south of the Longtail-1 well.

Mako: The Mako-2 well confirmed the quality, thickness and areal extent of the reservoir. When integrated with the results at

Uaru-2, the combined discovered resource at Mako and Uaru is expected to support a fifth FPSO on the Stabroek Block.

Whiptail: The Whiptail-1 well encountered 246 feet of net pay in high quality oil bearing sandstone reservoirs and was drilled
in 5,889 feet of water. The Whiptail-2 well encountered 167 feet of net pay in high quality oil bearing sandstone reservoirs and was
drilled in 6,217 feet of water. The Whiptail discovery is located approximately 4 miles southeast of the Uaru-1 discovery and
approximately 3 miles west of the Yellowtail field.

Pinktail: The Pinktail-1 well encountered 220 feet of net pay in high quality oil bearing sandstone reservoirs. The well was
drilled in 5,938 feet of water and is located approximately 21.7 miles southeast of the Liza Phase 1 development and approximately
3.7 miles southeast of the Yellowtail-1 well.

Turbot: The Turbot-2 well encountered 43 feet of net pay in a newly identified, high quality oil bearing sandstone reservoir
separate from the 75 feet of high quality, oil bearing sandstone reservoir pay encountered in the original Turbot-1 discovery well. The
well was drilled in 5,790 feet of water and is located approximately 37 miles to the southeast of the Liza Phase 1 development and 2.5
miles from the Turbot-1 well.

Cataback: The Cataback-1 well encountered 243 feet of net pay in high quality hydrocarbon bearing sandstone reservoirs of
which 102 feet is oil bearing. The well was drilled in 5,928 feet of water and is located approximately 3.7 miles east of the Turbot-1
well.

Tripletail: The Tripletail-2 well was completed in the fourth quarter and was temporarily abandoned following completion of

logging operations.

8

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 8

3/23/22 1:34 PM

8

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8

 
 
 
 
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

9

In the first quarter of 2022, the following exploration wells were completed on the Stabroek Block:

Fangtooth:  The Fangtooth-1 well encountered 164 feet of net pay in high quality oil bearing sandstone reservoirs, and confirms
the deeper exploration potential of the Stabroek Block. The well was drilled in 6,030 feet of water and is located approximately 11
miles northwest of the Liza Field.

Lau Lau: The Lau Lau-1 well encountered 315 feet of net pay in high quality hydrocarbon bearing sandstone reservoirs. The

well was drilled in 4,793 feet of water and is located approximately 42 miles southeast of the Liza Field.

The operator plans to drill approximately 12 exploration and appraisal wells in 2022 that will target a variety of prospects and play
types. These will include both lower risk wells near existing discoveries and higher risk step-out wells, and several penetrations that
will test deeper Lower Campanian and Santonian intervals.

Kaieteur Block:

In 2021, we acquired an additional 5% participating interest in the Kaieteur Block, which is adjacent to the
Stabroek Block, increasing our total participating interest to 20%. Seismic evaluation and planning for the next exploration well are
ongoing.

Malaysia and JDA

Malaysia/Thailand Joint Development Area (JDA): Production comes from the Carigali Hess operated Block A-18 in the
Malaysia/Thailand joint development area in the Gulf of Thailand (Hess 50%). In 2022, the operator plans to drill approximately four
development wells.

Malaysia: Our production in Malaysia comes from our interest in Block PM302 (Hess 50%) located in the North Malay Basin
(NMB), offshore Peninsular Malaysia and Block PM301 (Hess 50%), which is adjacent to and is unitized with Block A‑18 of the
In 2022, we plan to drill approximately five
JDA.
development wells.

In 2022, we plan to continue drilling and development activities at NMB.

Other

Libya: At the onshore Waha concession in Libya, which includes the Defa, Faregh, Gialo, North Gialo and Belhedan fields (Hess
8%), net production averaged 20,000 boepd in 2021, 4,000 boepd in 2020 and 21,000 boepd in 2019. Production was shut-in by the
operator between January 2020 and October 2020 due to force majeure caused by civil unrest.

Suriname: We hold a 33% non-operated participating interest in Block 42, offshore Suriname. The operator, a subsidiary of
Royal Dutch Shell plc, plans to drill one exploration well in 2022 and one exploration well in 2023. We also hold a 33% non-operated
participating interest in Block 59, offshore Suriname, where the operator, ExxonMobil Exploration and Production Suriname B.V., is
interpreting recently acquired 2D seismic and has completed the acquisition of a 3D seismic survey.

Canada: We hold a 25% non-operated participating interest in three exploration licenses offshore Newfoundland. In 2023, the

operator, BP Canada, plans to drill one exploration well.

Sales Commitments

We have certain long-term contracts with fixed minimum sales volume commitments for natural gas and NGL production. At the
JDA in the Gulf of Thailand, we have annual minimum net sales commitments of approximately 70 billion cubic feet of natural gas
per year through 2025 and approximately 30 billion cubic feet per year in 2026 and 2027. At the North Malay Basin development
project offshore Peninsular Malaysia, we have annual net sales commitments of approximately 55 billion cubic feet per year through
2024. Our estimated total volume of production subject to these sales commitments is approximately 520 billion cubic feet of natural
gas. We also have multiple minimum delivery commitments in the Bakken for natural gas and NGL with various end dates up
through 2032, with total commitments of approximately 90 million boe over the remaining life of the contracts.

We have not experienced any significant constraints in satisfying the committed quantities required by our sales commitments, and
we anticipate being able to meet future requirements from available proved and probable reserves, as well as projected third-party
supply in the case of NGL.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9

9

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 9

3/23/22 1:34 PM

9

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
0

9
2
4
1
6

1
0
K
0
3
.
2
6
.
2
0
2
2

Selling Prices and Production Costs
Selling Prices and Production Costs

The following table presents our average selling prices and average production costs:
The following table presents our average selling prices and average production costs:

Average Selling Prices (a)
Average Selling Prices (a)

Crude Oil - Per Barrel (Including Hedging)
Crude Oil - Per Barrel (Including Hedging)

United States .............................................................................................................................
United States .............................................................................................................................
North Dakota ........................................................................................................................ $
North Dakota ........................................................................................................................ $
Offshore................................................................................................................................
Offshore................................................................................................................................
Total United States ....................................................................................................................
Total United States ....................................................................................................................
Guyana ......................................................................................................................................
Guyana ......................................................................................................................................
Malaysia and JDA .....................................................................................................................
Malaysia and JDA .....................................................................................................................
Other (b) ....................................................................................................................................
Other (b) ....................................................................................................................................
Worldwide .........................................................................................................................
Worldwide .........................................................................................................................

Crude Oil - Per Barrel (Excluding Hedging)
Crude Oil - Per Barrel (Excluding Hedging)

United States
United States

North Dakota ........................................................................................................................ $
North Dakota ........................................................................................................................ $
Offshore................................................................................................................................
Offshore................................................................................................................................
Total United States ....................................................................................................................
Total United States ....................................................................................................................
Guyana ......................................................................................................................................
Guyana ......................................................................................................................................
Malaysia and JDA .....................................................................................................................
Malaysia and JDA .....................................................................................................................
Other (b) ....................................................................................................................................
Other (b) ....................................................................................................................................
Worldwide .........................................................................................................................
Worldwide .........................................................................................................................

Natural Gas Liquids - Per Barrel
Natural Gas Liquids - Per Barrel

United States
United States

North Dakota ........................................................................................................................ $
North Dakota ........................................................................................................................ $
Offshore................................................................................................................................
Offshore................................................................................................................................
Worldwide .........................................................................................................................
Worldwide .........................................................................................................................

Natural Gas - Per Mcf
Natural Gas - Per Mcf

United States
United States

North Dakota ........................................................................................................................ $
North Dakota ........................................................................................................................ $
Offshore................................................................................................................................
Offshore................................................................................................................................
Total United States ....................................................................................................................
Total United States ....................................................................................................................
Malaysia and JDA .....................................................................................................................
Malaysia and JDA .....................................................................................................................
Other (b) ....................................................................................................................................
Other (b) ....................................................................................................................................
Worldwide .........................................................................................................................
Worldwide .........................................................................................................................

Average production (lifting) costs per barrel of oil equivalent produced (c)
Average production (lifting) costs per barrel of oil equivalent produced (c)

United States
United States

North Dakota (d) .................................................................................................................. $
North Dakota (d) .................................................................................................................. $
Offshore................................................................................................................................
Offshore................................................................................................................................
Total United States....................................................................................................................
Total United States ....................................................................................................................
Guyana (e) .................................................................................................................................
Guyana (e) .................................................................................................................................
Malaysia and JDA .....................................................................................................................
Malaysia and JDA .....................................................................................................................
Other (b) ....................................................................................................................................
Other (b) ....................................................................................................................................
Worldwide .........................................................................................................................
Worldwide .........................................................................................................................

92416 10K 03.26.2022

10

2021
2021

2020
2020

2019
2019

$
$

$
$

$
$

$
$

$
$

55.57
55.57
60.09
60.09
56.64
56.64
68.57
68.57
71.00
71.00
66.39
66.39
60.08
60.08

59.90
59.90
64.77
64.77
61.05
61.05
71.07
71.07
71.00
71.00
69.25
69.25
63.90
63.90

30.74
30.74
26.40
26.40
30.40
30.40

4.08
4.08
3.25
3.25
3.82
3.82
5.15
5.15
3.40
3.40
4.60
4.60

25.87
25.87
12.88
12.88
23.27
23.27
17.93
17.93
4.72
4.72
6.34
6.34
17.91
17.91

$
$

$
$

$
$

$
$

$
$

42.63
42.63
45.92
45.92
43.56
43.56
46.41
46.41
37.91
37.91
51.37
51.37
44.28
44.28

33.87
33.87
36.55
36.55
34.63
34.63
37.40
37.40
37.91
37.91
43.42
43.42
35.52
35.52

11.29
11.29
8.94
8.94
11.10
11.10

1.27
1.27
1.23
1.23
1.26
1.26
4.47
4.47
3.41
3.41
2.98
2.98

17.67
17.67
11.27
11.27
16.59
16.59
18.25
18.25
5.77
5.77
22.78
22.78
15.19
15.19

53.19
53.19
59.18
59.18
55.15
55.15
—
—
61.81
61.81
65.22
65.22
56.77
56.77

53.18
53.18
59.17
59.17
55.14
55.14
—
—
61.81
61.81
65.22
65.22
56.76
56.76

13.20
13.20
13.31
13.31
13.21
13.21

1.59
1.59
2.12
2.12
1.83
1.83
5.04
5.04
4.63
4.63
3.90
3.90

19.68
19.68
11.27
11.27
17.66
17.66
—
—
6.07
6.07
8.87
8.87
14.93
14.93

(a) Includes intercompany transfers valued at approximate market prices, primarily onshore U.S., which include certain processing and distribution fees.
(b) Other includes our interests in Denmark, which were sold in August 2021, and Libya.
(a) Includes intercompany transfers valued at approximate market prices, primarily onshore U.S., which include certain processing and distribution fees.
(c) Production (lifting) costs consist of amounts incurred to operate and maintain our producing oil and gas wells, related equipment and facilities and
(b) Other includes our interests in Denmark, which were sold in August 2021, and Libya.
transportation costs, including Midstream tariff expense. Lifting costs do not include costs of finding and developing proved oil and gas reserves, production
(c) Production (lifting) costs consist of amounts incurred to operate and maintain our producing oil and gas wells, related equipment and facilities and
and severance taxes, or the costs of related general and administrative expenses, interest expense and income taxes.
transportation costs, including Midstream tariff expense. Lifting costs do not include costs of finding and developing proved oil and gas reserves, production
and severance taxes, or the costs of related general and administrative expenses, interest expense and income taxes.

(d) Includes Midstream tariff expense of $19.23 per boe in 2021 (2020: $13.42 per boe; 2019: $12.89 per boe).
(e) Includes pre-development costs from the operator for future phases of development and Hess internal costs totaling $5.76 per boe in 2021 (2020: $5.11 per boe).
(d) Includes Midstream tariff expense of $19.23 per boe in 2021 (2020: $13.42 per boe; 2019: $12.89 per boe).
(e) Includes pre-development costs from the operator for future phases of development and Hess internal costs totaling $5.76 per boe in 2021 (2020: $5.11 per boe).

10

92416 10K 03.26.2022

92416_10K_03.30.2022_CO11.indd 10

3/30/22 9:57 PM

10
10

K

8.500 in x 11.000 in

Hess Corp

03.30.2022 22:00PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.26.2022

druggiero

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
6
2
.
3
0
K
0
1

6
1
4
2
9

0
1

 
 
 
 
1
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Gross and Net Undeveloped Acreage

At December 31, 2021, gross and net undeveloped acreage amounted to:

92416 10K 03.8.2022

11

Undeveloped
Acreage (a)

Gross

Net

(In thousands)

United States ..............................................................................................................................................................
Guyana .......................................................................................................................................................................
Malaysia and JDA ......................................................................................................................................................
Libya...........................................................................................................................................................................
Canada........................................................................................................................................................................
Suriname.....................................................................................................................................................................
Total (b)...............................................................................................................................................................

333
9,873
197
3,334
3,405
4,363
21,505

279
2,628
98
272
1,283
1,454
6,014

(a) Includes acreage held under production sharing contracts.
(b) At December 31, 2021, 65% of our net undeveloped acreage, primarily in Suriname, Canada, and Guyana, is scheduled to expire during the next three years

pending results of exploration activities.

Gross and Net Developed Acreage, and Productive Wells

At December 31, 2021 gross and net developed acreage and productive wells amounted to:

Developed Acreage
Applicable to
Productive Wells

Productive Wells (a)

Oil

Gas

Gross

Net

Gross

Net

Gross

Net

(In thousands)

United States..................................................................................................
Guyana...........................................................................................................
Malaysia and JDA .........................................................................................
Libya..............................................................................................................
Total ........................................................................................................

839
95
491
9,564
10,989

512
29
245
782
1,568

2,887
6
—
1,134
4,027

1,358
2
—
93
1,453

11
—
121
10
142

5
—
58
1
64

(a) Includes multiple completion wells (wells producing from different formations in the same bore hole) totaling 33 gross wells and 29 net wells.

Exploratory and Development Wells

Net exploratory and net development wells completed during the years ended December 31 were:

Productive wells

United States..................................................................................................
Guyana...........................................................................................................
Malaysia and JDA .........................................................................................
Libya..............................................................................................................

Dry holes

United States..................................................................................................
Guyana (a) .....................................................................................................
Denmark ........................................................................................................

Total ........................................................................................................

Net Exploratory Wells

Net Development Wells

2021

2020

2019

2021

2020

2019

—
3
—
—
3

—
—
—
—
3

—
1
—
—
1

1
—
—
1
2

—
2
—
—
2

—
—
1
1
3

48
3
2
1
54

—
—
—
—
54

98
—
3
—
101

—
—
—
—
101

140
2
3
2
147

—
—
—
—
147

(a) Includes the Koebi-1 well at the Stabroek Block, offshore Guyana, in 2021 and the Tanager-1 well at the Kaieteur Block, offshore Guyana, in 2020.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
1

11

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 11

3/23/22 1:34 PM

11

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

12

Number of Wells in the Process of Being Drilled

At December 31, 2021, the number of wells in the process of drilling amounted to:

United States ..............................................................................................................................................................
Guyana (a) ..................................................................................................................................................................
Malaysia and JDA ......................................................................................................................................................
Total.....................................................................................................................................................................

115
15
6
136

20
5
3
28

Gross
Wells

Net
Wells

(a) Includes five gross (and two net) water injection and gas injection wells in process at December 31, 2021.

Midstream

Prior to December 16, 2019, the Midstream segment was primarily comprised of Hess Infrastructure Partners LP (HIP), a 50/50
joint venture between Hess Corporation and Global Infrastructure Partners (GIP), formed to own, operate, develop and acquire a
diverse set of midstream assets to provide fee-based services to Hess and third-party customers. HIP was initially formed on May 21,
2015, with Hess selling 50% of HIP to GIP for approximately $2.6 billion on July 1, 2015.

On April 10, 2017, HIP completed an initial public offering (IPO) of 16,997,000 common units, representing 30.5% limited
partnership interests in its subsidiary Hess Midstream Partners LP (Hess Midstream Partners), for net proceeds of approximately
$365.5 million.
In connection with the IPO, HIP contributed a 20% controlling economic interest in each of Hess North Dakota
Pipeline Operations LP, Hess TGP Operations LP, and Hess North Dakota Export Logistics Operations LP, and a 100% economic
interest in Hess Mentor Storage Holdings LLC (collectively the “Contributed Businesses”).
In exchange for the contributed
businesses, Hess and GIP each received common and subordinated units representing a direct 33.75% limited partner interest in Hess
Midstream Partners and a 50% indirect ownership interest through HIP in Hess Midstream Partners’ general partner, which had a 2%
economic interest in Hess Midstream Partners plus incentive distribution rights.

On December 16, 2019, Hess Midstream Partners acquired HIP, including HIP’s 80% interest in Hess Midstream Partners’ oil and
gas midstream assets, HIP’s water services business and the outstanding economic general partner interest and incentive distribution
rights in Hess Midstream Partners LP. In addition, Hess Midstream Partners’ organizational structure converted from a master limited
partnership into an “Up-C” structure in which Hess Midstream Partners’ public unitholders received newly issued Class A shares in a
new public entity named Hess Midstream LP (Hess Midstream), which is taxed as a corporation for U.S. federal and state income tax
purposes. Hess Midstream Partners changed its name to “Hess Midstream Operations LP” (HESM Opco) and became a consolidated
subsidiary of Hess Midstream, the new publicly listed entity. As consideration for the acquisition, Hess received a cash payment of
$301 million and approximately 115 million newly issued HESM Opco Class B units. After giving effect to the acquisition and
related transactions, public shareholders of Class A shares in Hess Midstream owned 6% of the consolidated entity on an as-
exchanged basis and Hess and GIP each owned 47% of the consolidated entity on an as-exchanged basis, primarily through the
sponsors’ ownership of Class B units in HESM Opco that are exchangeable into Class A shares of Hess Midstream on a one-for-one
basis.

In March 2021, Hess Midstream completed an underwritten public equity offering of 6.9 million Class A shares held by Hess and
GIP. These Class A shares of Hess Midstream were obtained by Hess and GIP through the exchange of 6.9 million of their Class B
units of HESM Opco. In August 2021, HESM Opco repurchased 31.25 million Class B units held by Hess and GIP for $750 million.
Hess received net proceeds of $375 million. HESM Opco issued $750 million in aggregate principal amount of 4.250% fixed-rate
In October 2021, Hess Midstream completed an
senior unsecured notes due 2030 in a private offering to finance the repurchase.
underwritten public equity offering of approximately 8.6 million Class A Shares held by Hess and GIP. These Class A shares of Hess
Midstream were obtained by Hess and GIP through the exchange of approximately 8.6 million of their Class B units of HESM Opco.
After giving effect to the above transactions in 2021, public shareholders of Class A shares of Hess Midstream own approximately
13%, and Hess and GIP each own approximately 43.5%, of the consolidated entity on an as-exchanged basis at December 31, 2021.

At December 31, 2021, Midstream assets included the following:

• Natural Gas Gathering and Compression: A natural gas gathering and compression system located primarily in McKenzie,
Williams and Mountrail Counties, North Dakota connecting Hess and third-party owned or operated wells to the Tioga Gas
Plant, Little Missouri 4 Gas Plant, and third-party pipeline facilities. This gathering system consists of approximately 1,350
miles of high and low pressure natural gas and NGL gathering pipelines with a current capacity of up to approximately 450
mmcfd, including an aggregate compression capacity of approximately 325 mmcfd.

• Crude Oil Gathering: A crude oil gathering system located primarily in McKenzie, Williams and Mountrail Counties, North
Dakota, connecting Hess and third-party owned or operated wells to the Ramberg Terminal Facility, the Tioga Rail Terminal
and the Johnson’s Corner Header System. The crude oil gathering system consists of approximately 550 miles of crude oil
gathering pipelines with a current capacity of up to approximately 240,000 bopd.

12

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
1

12

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 12

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:39PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

13

• Tioga Gas Plant: A natural gas processing and fractionation plant located in Tioga, North Dakota, with a current processing
capacity of approximately 400 mmcfd, and cryogenic and fractionation capacity of approximately 80,000 boepd.
In 2020,
facility construction for an expansion of the plant to 400 mmcfd from 250 mmcfd was completed. The incremental gas
processing capacity was placed in service in the fourth quarter of 2021 following completion of a planned maintenance
turnaround which included connecting the expansion and residue NGL takeaway pipelines to the plant. The total processing
capacity of 400 mmcfd became available in February 2022.

• Little Missouri 4: A natural gas processing plant

in McKenzie County, North Dakota, with processing capacity of
approximately 200 mmcfd, which was placed in service during 2019 and is operated by Targa Resources Corp. Hess
Midstream LP owns a 50% interest in Little Missouri 4 through a joint venture with Targa Resources Corp. and is entitled to
half of the plant’s processing capacity.

• Mentor Storage Terminal: A propane storage cavern and rail and truck loading and unloading facility located in Mentor,

Minnesota, with approximately 330,000 boe of working storage capacity.

• Ramberg Terminal Facility: A crude oil pipeline and truck receipt terminal located in Williams County, North Dakota with a
delivery capacity of up to approximately 285,000 bopd of crude oil into an interconnecting pipeline for transportation to the
Tioga Rail Terminal and to multiple third-party pipelines and storage facilities.

• Tioga Rail Terminal: A 140,000 bopd crude oil and 30,000 boepd NGL rail loading terminal in Tioga, North Dakota that is

connected to the Tioga Gas Plant, the Ramberg Terminal Facility and our crude oil gathering system.

• Crude Oil Rail Cars: A total of 550 crude oil rail cars, which are operated as unit trains consisting of approximately 100 to

110 crude oil rail cars.  These crude oil rail cars have been constructed to DOT-117 standards.

• Johnson’s Corner Header System: A crude oil pipeline header system located in McKenzie County, North Dakota that
to third-party interstate pipeline

receives crude oil by pipeline from Hess and third parties and delivers crude oil
systems.  The facility has a delivery capacity of approximately 100,000 bopd of crude oil.

• Produced Water Gathering and Disposal: A produced water gathering system located primarily in Williams and Mountrail
Counties, North Dakota, that transports produced water from the wellsite by approximately 270 miles of pipeline in gathering
systems or by third-party trucking to water handling facilities for disposal.

Hess Midstream has multiple long-term, fee-based commercial agreements effective January 1, 2014 with certain subsidiaries of
Hess for gas gathering, crude oil gathering, gas processing and fractionation, storage services, and terminal and export services, each
generally with an initial ten-year term that can be extended for an additional ten-year term at the unilateral right of Hess Midstream.
These contracts have minimum volumes that the Hess subsidiaries are obligated to provide each calendar quarter. The minimum
volume commitments are subject to fluctuation based on nominations covering substantially all of our E&P segment’s production and
projected third-party volumes that will be purchased in the Bakken. On December 30, 2020, Hess Midstream exercised its renewal
options to extend the terms of certain gas gathering, crude oil gathering, gas processing and fractionation, storage, and terminal and
export commercial agreements for the secondary term through December 31, 2033. There were no changes to any provisions of the
existing commercial agreements as a result of the exercise of the renewal options. Hess Midstream also has long-term, fee based
commercial agreements for water handling services effective January 1, 2019 with a subsidiary of Hess, with an initial 14 year term
that can be extended for an additional ten-year term at the unilateral right of Hess Midstream. Water handling services are provided
for an agreed-upon fee per barrel or the reimbursement of third-party fees.

Competition and Market Conditions

See Item 1A. Risk Factors for a discussion of competition and market conditions.

Emergency Preparedness and Response Plans and Procedures

We have in place a series of business and asset-specific emergency preparedness, response and business continuity plans that
detail procedures for rapid and effective emergency response and environmental mitigation activities. These plans are maintained,
reviewed and updated as necessary to confirm their accuracy and suitability. Where applicable, they are also reviewed and approved
by the relevant host government authorities.

Responder training and drills are routinely held worldwide to assess and continually improve the effectiveness of our plans. Our
contractors, service providers, representatives from government agencies and, where applicable, joint venture partners participate in
the drills to help ensure that emergency procedures are comprehensive and can be effectively implemented.

To complement internal capabilities and to help ensure coverage for our global operations, we maintain membership contracts
with a network of local, regional and global oil spill response and emergency response organizations. At the regional and global level,
these organizations include CGA, MSRC, MWCC, WWCC and OSRL. CGA and MSRC are domestic spill response organizations

13

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
1

13

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 13

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

14

and MWCC provides the equipment and personnel to contain underwater well control incidents in the Gulf of Mexico. WWCC
provides firefighting, well control and engineering services globally. OSRL is a global response organization and is available, when
In addition to owning response assets in their own right, the organization maintains
needed, to assist us with any of our assets.
business relationships that provide immediate access to additional critical response support services if required. OSRL’s response
assets include nearly 300 recovery and storage vessels and barges, more than 250 skimmers, over 600,000 feet of boom, nine capping
stacks and significant quantities of dispersants and other ancillary equipment, including aircraft. In addition to external well control
and oil spill response support, we have contracts with wildlife, environmental, meteorology, incident management, medical and
If we were to engage these organizations to obtain additional critical response support services, we would fund
security resources.
such services and, where appropriate, seek reimbursement under our insurance coverage, as described below.
In certain
circumstances, we pursue and enter into mutual aid agreements with other companies and government cooperatives to receive and
provide oil spill response equipment and personnel support. We maintain close associations with emergency response organizations
through our representation on the Executive Committee and Response Network Committee of MWCC, Technical Operations
Committee of CGA and Oil Spill and Emergency Response Committee of API. We also maintain regular voting membership in CGA,
MSRC and OSRL.

We continue to participate in several industry-wide task forces that are studying better ways to assess the risk of and prevent
onshore and offshore incidents, access and control blowouts in subsea environments, and improve containment and recovery
methods. The task forces are working closely with the oil and gas industry and international government agencies to implement
improvements and increase the effectiveness of oil spill prevention, preparedness, response and recovery processes.

Insurance Coverage and Indemnification

We maintain insurance coverage that includes coverage for physical damage to our property, third-party liability, workers’
compensation and employers’ liability, general liability, sudden and accidental pollution and other coverage. This insurance coverage
is subject to deductibles, exclusions and limitations and there is no assurance that such coverage will adequately protect us against
liability from all potential consequences and damages.

The amount of insurance covering physical damage to our property and liability related to negative environmental effects resulting
from a sudden and accidental pollution event, excluding windstorm coverage for which we are self-insured, varies by asset, based on
the asset's estimated replacement value or the estimated maximum loss.
In the case of a catastrophic event, first party coverage
consists of two tiers of insurance. The first $400 million of coverage is provided through an industry mutual insurance group. Above
this $400 million threshold, insurance is carried which ranges in value up to $535 million in total, depending on the asset coverage
level, as described above. The decrease in the total value of insurance above the $400 million threshold from December 31, 2020 is
primarily driven by the sale of our interests in Denmark in August 2021. The insurance programs covering physical damage to our
property exclude business interruption protection for our E&P operations. Additionally, we carry insurance that provides third-party
coverage for general liability, and sudden and accidental pollution, up to $850 million, which coverage under a standard joint
operating arrangement would be reduced to our participating interest. Our insurance policies renew at various dates each year. Future
insurance coverage could increase in cost and may include higher deductibles or retentions, or additional exclusions or limitations. In
addition, some forms of insurance may become unavailable in the future or unavailable on terms that are deemed economically
acceptable.

Generally, our drilling contracts (and most of our other offshore services contracts) provide for a mutual hold harmless indemnity
structure whereby each party to the contract (the Corporation and Contractor) indemnifies the other party for injuries or damages to
their personnel and property (and, often, those of its contractors/subcontractors) regardless of fault. Variations may include indemnity
exclusions to the extent a claim is attributable to the gross negligence and/or willful misconduct of a party. Third-party claims, on the
other hand, are generally allocated on a fault basis.

We are customarily responsible for, and indemnify the Contractor against, all claims including those from third parties, to the
extent attributable to pollution or contamination by substances originating from our reservoirs or other property and the Contractor is
responsible for and indemnifies us for all claims attributable to pollution emanating from the Contractor’s property. Variations may
include indemnity exclusions to the extent a claim is attributable to the gross negligence and/or willful misconduct of a
party. Additionally, we are generally liable for all of our own losses and most third-party claims associated with catastrophic losses
such as damage to reservoirs, blowouts, cratering and loss of hole, regardless of cause, although exceptions for losses attributable to
gross negligence and/or willful misconduct do exist. Lastly, some offshore services contracts include overall limitations of the
Contractor’s liability equal to a fixed negotiated amount. Variations may include exclusions of all contractual indemnities from the
liability cap.

Under a standard JOA, each party is liable for all claims arising under the JOA, to the extent of its participating interest (operator
or non-operator). Variations include indemnity exclusions when the claim is based upon the gross negligence and/or willful
misconduct of the operator, in which case the operator is solely liable. The parties to the JOA may continue to be jointly and severally
liable for claims made by third parties in some jurisdictions. Further, under some production sharing contracts between a
governmental entity and commercial parties, liability of the commercial parties to the government entity is joint and several.

14

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
1

14

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 14

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

15

1
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Government Regulations

The crude oil and natural gas industry is regulated at federal, state, local and foreign government levels. Regulations affecting
elements of the energy sector are under continuous review for amendment or expansion over time, which may result in incremental
costs of doing business and affect our profitability. See Regulatory, Legal and Environmental Risks in Item 1A. Risk Factors.
Compliance with various existing environmental, health and safety regulations is not expected to have a material adverse effect on our
financial condition or results of operations. However, increasingly stringent environmental regulations have resulted and will likely
continue to result in higher capital expenditures and operating expenses for us and the oil and gas industry in general and may reduce
demand for our products. We spent approximately $16 million in 2021 for environmental remediation. Additionally, we may be
exposed to decommissioning liabilities, including for divested assets. For example, in June 2021, the U.S. Bankruptcy Court approved
the bankruptcy plan for Fieldwood Energy LLC (Fieldwood) which includes transferring abandonment obligations of Fieldwood to
predecessors in title of certain of its assets, including Hess, who are jointly and severally liable for the obligations. As a result, we
recognized a charge of $147 million ($147 million after income taxes) in connection with total estimated abandonment obligations for
seven leases in the West Delta Field in the Gulf of Mexico, which we sold to a Fieldwood predecessor in 2004. See Item 3. Legal
Proceedings and Note 8, Asset Retirement Obligations in the Notes to Consolidated Financial Statements. The level of other
expenditures to comply with federal, state, local and foreign country regulations is difficult to quantify as such costs are captured as
mostly indistinguishable components of our capital expenditures and operating expenses. For further discussion of environmental,
health and safety regulations affecting our business, see Environment, Health and Safety in Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations.

Human Capital Management

Corporate Culture and Overview

Our human capital strategy aims to attract, engage and retain our talent by investing in their professional development and
providing them with challenging and rewarding opportunities for personal growth. Our workplace culture is guided by our
Corporation’s values and reinforced by developing quality leadership, fostering DEI, emphasizing continuous learning, creating
opportunities for engagement, driving innovation and embracing Lean processes. We are pursuing a Life at Hess initiative to optimize
the work experience for our multigenerational workforce and unlock the discretionary effort that is required to perform at a high level
on a sustained basis. The Life at Hess framework encompasses programs, policies and practices, and a listening system that draws on
in-person dialogues, pulse polls and data analytics to help leaders understand employees’ experiences and perspectives to inform their
decision making.

As of December 31, 2021, we had 1,545 employees globally, as detailed below.

Job Category

Executives and Senior Officers ...................
First and Mid-Level Managers....................
Professionals................................................
Other............................................................
Total ..............................................................

Life at Hess

United States

Guyana

Malaysia and JDA

Libya

Total

31
327
699
343
1,400

—
—
—
—
—

1
60
78
3
142

—
1
2
—
3

32
388
779
346
1,545

We prioritize the safety of our workforce. Our safety programs and practices are designed to help ensure that everyone,
everywhere gets home safe every day. Our continued response to COVID-19 reflects this commitment. A multidisciplinary Hess
emergency response team has been overseeing plans and precautions to reduce the risks of COVID-19 in the work environment while
maintaining business continuity based on the most current recommendations by government and public health agencies. The
Corporation has continued to utilize a variety of health and safety measures including enhanced cleaning procedures and modified
work practices such as travel restrictions, health screenings, reduced personnel at offshore platforms and onshore work sites wherever
this can be done safely, and remote working arrangements for office workers. We continue to adapt our work policies and benefits to
prioritize emotional, mental and physical health and well-being. We are taking a deliberate and measured approach to returning to the
physical work environment in each of our office locations.

During 2021, we evolved our Life at Hess initiative for managing culture in periods of change. Particularly in a hybrid remote

working environment, the work experience has changed and continues to evolve through:

• Virtual learning opportunities and training,

15

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
1

15

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 15

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

16

1
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

• Support for remote working effectiveness,

• Mental well-being support, and

• Leadership training and development to help leaders navigate the complex environment of remote working, societal changes,

COVID-19 and market dynamics.

Diversity, Equity and Inclusion

In keeping with our values and purpose, we have a longstanding commitment to DEI and taking action to foster a sustainable
culture of inclusion for everyone. DEI is a business imperative for improved performance and the innovation needed to accomplish
our business goals now and in the future. Additionally, Hess is committed to providing a global workplace free from discrimination
and harassment, where everyone can achieve their full potential. We provide equal employment opportunities for all employees and
job candidates regardless of race, color, religion, gender, age, sexual orientation, gender identity, creed, national origin, genetic
information, disability, veteran status or any other protected status.

Hess’ DEI Council provides executive leadership guidance to embed DEI into our culture and operations to drive progress
throughout the organization. Our expectations for an inclusive and diverse workplace and our culture of mutual respect and trust are
spelled out in our Code of Conduct and Ethics and related policies and reinforced regularly with employees at every level of our
Corporation through regular communication and ongoing training. Additional information regarding our policies and practices,
including training, employee engagement initiatives and workforce data, is included in our annual Sustainability Report and annual
U.S. Equal Employment Opportunity reporting, which is available on our website at www.hess.com.

During 2021, Hess maintained or improved diversity across levels of our workforce. As detailed below, representation of women
and minorities among all employees improved from 2020 to 2021. Overall, women increased by 1% and minorities increased by 2%,
with notable improvements at the Executive and Professional levels. Our increased strategic focus on DEI including our talent
practices and diversity outreach programs contributed to this improvement.
In August 2021, we hired a DEI leader to develop a
tailored, long-term strategy that defines our objectives and strategies to advance DEI now and in the future. Additionally, workforce
activity and trends such as employee turnover, promotions, DEI and development metrics, along with qualitative information such as
program development and progress, are shared with our Board of Directors annually, with more detailed reviews by the Compensation
and Management Development Committee throughout the year.

Women
(U.S. and International)

Minorities (a)
(U.S. Based Employees)

2021

2020

2019

2021

2020

2019

16 %
23 %
34 %
19 %
27 %

13 %
23 %
32 %
17 %
26 %

16 %
22 %
31 %
18 %
26 %

19 %
20 %
30 %
16 %
24 %

13 %
20 %
27 %
16 %
22 %

13 %
19 %
26 %
17 %
22 %

Job Category

Executives and Senior Officers.......................
First and Mid-Level Managers........................
Professionals ...................................................
Other ...............................................................
Total ..................................................................

(a) As defined by the U.S. Department of Labor.

Compensation and Benefits Programs

Our compensation and benefits programs are focused on attracting and retaining a highly skilled workforce in a rapidly changing
industry. We benchmark our compensation programs annually through industry specific surveys and conduct an annual review to
identify and address compensation inequities. Our Corporation maintains an annual incentive plan that applies to all employees,
including executive officers, that shares the same enterprise performance metrics for all participants.
In addition, we provide a
comprehensive wellness program that addresses physical wellness and focuses on the financial, social and emotional well-being of our
employees.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
1

16

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 16

3/23/22 1:34 PM

16

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

17

Information about our Executive Officers

The following table presents information as of March 1, 2022 regarding executive officers of the Corporation:

Name
John B. Hess

Gregory P. Hill

Age
67

60

Timothy B. Goodell

64

John P. Rielly

Richard Lynch

59

64

Gerbert Schoonman

56

Andrew Slentz

60

Barbara Lowery-Yilmaz

65

Office Held* and Business Experience
Chief Executive Officer and Director
Mr. Hess has been Chief Executive Officer of the Corporation since 1995 and
employed by the Corporation since 1977. He has over 40 years of experience in
the oil and gas industry.
President and Chief Operating Officer
Mr. Hill has been Chief Operating Officer since 2014 and President of the
Corporation’s worldwide Exploration and Production business since joining the
Corporation in January 2009. Prior to joining the Corporation, Mr. Hill spent 25
years at Royal Dutch Shell and its affiliates in a variety of operations, engineering,
technical and managerial roles in Asia-Pacific, Europe and the United States.
Executive Vice President, General Counsel, Corporate Secretary and Chief
Compliance Officer
Mr. Goodell has been General Counsel of the Corporation since 2009, Corporate
Secretary since 2016, Chief Compliance Officer since 2017 and Executive Vice
President since 2020. Prior to joining the Corporation in 2009, he was a partner at
the law firm of White & Case, LLP where he spent 25 years.
Executive Vice President and Chief Financial Officer
Mr. Rielly has been Chief Financial Officer of the Corporation since 2004 and
Executive Vice President since 2020. Mr. Rielly previously served as Vice
President and Controller of the Corporation from 2001 to 2004. Prior to joining
the Corporation in 2001, he was a Partner at Ernst & Young, LLP where he was
employed for 17 years.
Senior Vice President, Technology and Services
Mr. Lynch has been Senior Vice President, Technology and Services of the
Corporation since 2018. Mr. Lynch previously was Senior Vice President Global
Prior to joining the
Developments, Drilling and Completions from 2014.
Corporation in 2014, Mr. Lynch spent over 30 years in well delivery and
operations, as well as project and asset management, with BP plc and ARCO.
Senior Vice President, Global Production
Mr. Schoonman has been Senior Vice President, Global Production of the
Corporation since January 2020. Since joining the Company in 2011, he served in
various operational leadership roles, including as Vice President, Production –
Asia Pacific, from January 2011 through August 2012; Vice President, Onshore –
Bakken from September 2012 through December 2016; and most recently, as
Vice President, Offshore since January 2017. Prior to joining the Corporation, he
spent 20 years with Royal Dutch Shell where he served in operational and
leadership roles.
Senior Vice President, Human Resources and Office Management
Mr. Slentz has been Senior Vice President, Human Resources of the Corporation
since April 2016 and responsible for Office Management since 2018. Prior to
joining the Corporation in 2016, Mr. Slentz served as Executive Vice President of
Administration and Human Resources at Peabody Energy since 2010. Mr. Slentz
has over 25 years in human resources experience at large international public
companies.
Senior Vice President and Chief Exploration Officer
Ms. Lowery-Yilmaz has been the Senior Vice President, Exploration of the
Corporation since August 2014. Ms. Lowery-Yilmaz has over 30 years of oil and
gas industry experience in exploration and technology with BP plc and its
affiliates including senior leadership roles.

Year
Individual
Became an
Executive
Officer
1983

2009

2009

2002

2018

2020

2016

2014

* All officers referred to herein hold office in accordance with the By-laws until the first meeting of directors in connection with the annual meeting of stockholders
of the Registrant and until their successors shall have been duly chosen and qualified. Each of said officers was elected to the office opposite their name on June
1, 2021.

Each of the above officers has been employed by the Corporation or its affiliates in various managerial and executive capacities

for more than five years.

17

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 17

3/23/22 1:34 PM

17

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
1

 
 
 
 
92416 10K 03.8.2022

18

1
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Access to Our Reports

We make available free of charge through our website, www.hess.com, our annual report on Form 10‑K, quarterly reports on
Form 10‑Q, current reports on Form 8‑K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and
Exchange Commission. The information on our website is not incorporated by reference in this report. Our Code of Business
Conduct and Ethics, Corporate Governance Guidelines, and the charters for the Audit Committee, Compensation and Management
Development Committee, Corporate Governance and Nominating Committee and Environmental, Health and Safety Committee of the
Board of Directors are available on our website and are also available free of charge upon request to Investor Relations at our principal
executive office. We also file with the New York Stock Exchange (NYSE) an annual certification that our Chief Executive Officer is
unaware of any violation of the NYSE’s corporate governance standards.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
1

18

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 18

3/23/22 1:34 PM

18

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

19

Item 1A.  Risk Factors

Our business activities and the value of our securities are subject to significant risks, including the risk factors described below.
These risk factors could negatively affect our operations, financial condition, liquidity and results of operations, and as a result,
holders and purchasers of our securities could lose part or all of their investments. It is possible that additional risks relating to our
securities may be described in a prospectus supplement if we issue securities in the future.

Market and Third-Party Risks

Our business and operating results are highly dependent on the market prices of crude oil, NGL and natural gas, which
can be very volatile. Our estimated proved reserves, revenue, operating cash flows, operating margins, liquidity, financial condition
and future earnings are highly dependent on the benchmark market prices of crude oil, NGL and natural gas, and our associated
realized price differentials, which are volatile and influenced by numerous factors beyond our control. The major foreign oil
producing countries, including members of OPEC, may exert considerable influence over the supply and price of crude oil and refined
petroleum products. Their ability to agree on a common policy on rates of production and other matters may have a significant impact
on the oil markets. Other factors include, but are not limited to: worldwide and domestic supplies of and demand for crude oil, NGL
and natural gas, political conditions and events (including weather, instability, changes in governments, armed conflict, economic
sanctions and outbreaks of infectious diseases, such as COVID-19) around the world and in particular in crude oil or natural gas
producing regions, the cost of exploring for, developing and producing crude oil, NGL and natural gas, the price and availability of
alternative fuels or other forms of energy, the effect of energy conservation and environmental protection efforts and overall economic
conditions globally. The sentiment of commodities trading markets as well as other supply and demand factors, including COVID-19,
may also influence the selling prices of crude oil, NGL and natural gas. Average benchmark prices for 2021 were $68.08 per barrel
for WTI (2020: $39.34; 2019: $57.04) and $70.95 per barrel for Brent (2020: $43.21; 2019: $64.16). In order to manage the potential
volatility of cash flows and credit requirements, we maintain significant bank credit facilities. An inability to access, renew or replace
such credit facilities or access other sources of funding as they mature would negatively impact our liquidity. Furthermore, from time
to time we have entered into, and may in the future enter into or modify, commodity price hedging arrangements to manage
commodity price volatility. These arrangements may limit potential upside from commodity price increases, or expose us to
additional risks, such as counterparty credit risk, which could adversely impact our cash flow, liquidity or financial condition.

Our business and operations have been and may continue to be adversely affected by COVID-19 or other similar public
health developments and related changes to demand for oil and natural gas. Since 2020, COVID-19 and related actions taken by
governments and businesses, including voluntary and mandatory quarantines and travel and other restrictions, have significantly
impacted economic activity. As a result of COVID-19, our operations, and those of our business partners, service companies and
suppliers, have experienced and may continue to experience further adverse effects, including but not limited to: disruptions, delays or
temporary suspensions of operations, including shut-ins of production; temporary inaccessibility or closures of facilities; supply chain
issues; and workforce impacts from illness, school closures and other community response measures. We have implemented a variety
of health and safety measures, including enhanced cleaning procedures and modified work practices, such as travel restrictions, health
screenings, vaccination policies, reduced personnel at offshore platforms and onshore work sites, wherever such reduction can be done
safely, and remote working arrangements for office workers. There is no certainty that these or any other future measures will be
sufficient to mitigate the risks posed by the virus and its variants, including the risk of infection of key employees, and our ability to
perform certain functions could be impaired by these new business practices. For example, our reliance on technology has necessarily
increased due to our use of remote communications and other work-from-home practices, which could make us more vulnerable to
cyber-attacks. To the extent we or our business partners, service companies or suppliers continue to experience restrictions or other
effects, our financial condition, results of operations and future expansion projects may be adversely affected.

In addition to the global health concerns, COVID-19 negatively affected the U.S. and global economy and the demand for oil and
natural gas. The prolonged continuation or amplification of the outbreak of COVID-19 could result in further economic downturn that
may affect our operating results in the long-term. Furthermore, the effects of COVID-19 and concerns regarding the global spread of
its variants negatively impacted the domestic and international demand for crude oil and natural gas, which has contributed to price
volatility and adversely affected the demand for and marketability of crude oil, natural gas and NGL. Containment measures
implemented to mitigate the spread of COVID-19 and its variants could continue to be widespread and lead to sustained adoption of
certain behavioral changes, such as reduced travel and enhanced work-from-home policies, which could result in further reductions in
demand for and consumption of energy commodities. A reduction in consumer demand for crude oil, natural gas and NGL could
require further curtailments and shut-ins of production by the industry and further increase the costs of commercial storage and
midstream contracts.

The timeline and potential magnitude of COVID-19 remains unknown and will depend on future developments, including, among
others, the global availability of vaccines, the efficacy of vaccines against variants and the extent to which normal economic and
operating conditions resume.
In the event one or more of our business partners is adversely affected by COVID-19 or the current
market environment, that may impact our costs and ability to conduct business with them. In addition, we may face an increased risk
of changes in the regulation related to our business resulting from COVID-19, such as the imposition of limitations on our workforce's
ability to access our facilities. We also are subject to litigation risk and possible loss contingencies related to COVID-19, including
with respect to commercial contracts, employee matters and insurance arrangements. We may experience decreases in production and

19

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
1

19

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 19

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
2
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

20

proved reserves, additional asset impairments, and other accounting charges if demand for crude oil, natural gas and NGL decreases.
A sustained extension of the current market environment may make it more difficult to comply with covenants and other restrictions in
agreements governing our debt, and a lack of confidence in our industry on the part of the financial markets may result in a lack of
access to capital, any of which could lead to reduced liquidity.

As the impact from COVID-19 remains difficult to predict, the extent to which it may negatively affect our operating results is
uncertain. Any impact will depend on future developments and new information that may emerge regarding the severity and duration
of COVID-19 and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control.

We do not always control decisions made under joint operating agreements and the parties under such agreements may
fail to meet their obligations. We conduct many of our E&P operations through joint operating agreements with other parties under
which we may not control decisions, either because we do not have a controlling interest or are not operator under the agreement.
There is risk that these parties may at any time have economic, business, or legal interests or goals that are inconsistent with ours, and
therefore decisions may be made which are not what we believe is in our best interest. Moreover, parties to these agreements may be
unable to meet their economic or other obligations and we may be required to fulfill those obligations alone. For example, in June
2021, the U.S. Bankruptcy Court approved the bankruptcy plan for Fieldwood which includes transferring abandonment obligations of
Fieldwood to us and other predecessors in title of certain of its assets, who are jointly and severally liable for the obligations.  See Note
8, Asset Retirement Obligations in the Notes to Consolidated Financial Statements. As a result, actions of our contractual
counterparties may adversely affect the value of our investments and result in increased costs or liabilities.

Our industry is highly competitive and many of our competitors are larger and have greater resources and more diverse
portfolios than we have. The petroleum industry is highly competitive and very capital intensive. We encounter competition from
numerous companies, including acquiring rights to explore for crude oil and natural gas. To a lesser extent, we are also in competition
with producers of alternative fuels or other forms of energy, including wind, solar and electric power, and in the future, could face
increasing competition due to the development and adoption of new technologies. Many competitors, including national oil
companies, are larger and have substantially greater resources to acquire and develop oil and gas assets. In addition, competition for
drilling services, technical expertise and equipment may affect the availability of technical personnel and drilling rigs, resulting in
increased capital and operating costs. Many of our competitors have a more diverse portfolio of assets, which may minimize the
impact of adverse events occurring at any one location.

Operational and Strategic Risks

If we fail to successfully increase our reserves, our future crude oil and natural gas production will be adversely impacted.
We own or have access to a finite amount of oil and gas reserves, which will be depleted over time. Replacement of oil and gas
production and reserves, including proved undeveloped reserves, is subject to successful exploration drilling, development activities,
and enhanced recovery programs. Therefore, future oil and gas production is dependent on technical success in finding and
developing additional hydrocarbon reserves. Exploration activity involves the interpretation of seismic and other geological and
geophysical data, which does not always successfully predict the presence of commercial quantities of hydrocarbons. Drilling risks
include unexpected adverse conditions, irregularities in pressure or formations, equipment failure, blowouts and weather interruptions.
Future developments may be affected by unforeseen reservoir conditions, which negatively affect recovery factors or flow rates.
Similar risks may be encountered in the production of oil and gas on properties acquired from others. In addition, replacing reserves
and developing future production are also influenced by the price of crude oil and natural gas and costs of drilling and development
activities. Lower crude oil and natural gas prices may reduce capital available for our exploration and development activities, render
certain development projects uneconomic or delay their completion, and result in negative revisions to existing reserves while
increasing drilling and development costs could negatively affect expected economic returns.

There are inherent uncertainties in estimating quantities of proved reserves and discounted future net cash flows, and
actual quantities may be lower than estimated. Numerous uncertainties exist in estimating quantities of proved reserves and future
net revenues from those reserves. Actual future production, oil and gas prices, revenues, taxes, capital expenditures, operating
expenses, and quantities of recoverable oil and gas reserves may vary substantially from those assumed in the estimates and could
materially affect the estimated quantities of our proved reserves and the related future net revenues. In addition, reserve estimates may
be subject to downward or upward changes based on production performance, purchases or sales of properties, results of future
development, prevailing oil and gas prices, production sharing contracts, which may decrease reserves as crude oil and natural gas
prices increase, and other factors. Crude oil prices declined in 2020 and 2019, relative to comparative periods, resulting in reductions
to our reported proved reserves. In contrast, crude oil prices improved in 2021, relative to the preceding year, resulting in increases to
If crude oil prices in 2022 average below prices used to determine proved reserves at December 31, 2021, it
our proved reserves.
could have an adverse effect on our estimates of proved reserve volumes and on the value of our business. See Crude Oil and Natural
Gas Reserves in Critical Accounting Policies and Estimates in Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.

Catastrophic and other events, whether naturally occurring or man-made, may materially affect our operations and
financial condition. Our oil and gas operations are subject to numerous risks and hazards inherent to operating in the crude oil and
natural gas industry, including catastrophic events, which may damage or destroy assets, interrupt operations, result in personal injury

20

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
2

20

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 20

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
2
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

21

and have other significant adverse effects. These events include unexpected drilling conditions, pressure conditions or irregularities in
reservoir formations, equipment malfunctions or failures, derailments, fires, explosions, blowouts, cratering, pipeline interruptions and
ruptures, hurricanes, severe weather, geological events, shortages in availability of skilled labor, cyber-attacks or health measures
related to COVID-19. We maintain insurance coverage against many, but not all, potential losses and liabilities in amounts we deem
prudent, including for property and casualty losses. There can be no assurance that such insurance will adequately protect us against
liability from all potential consequences and damages. For example, we are self-insured against physical damage to property and
In 2021 and 2020, hurricane-related downtime reduced net production by 4,000 boepd and 8,000
liability related to windstorms.
boepd, respectively, and hurricane related maintenance and repair costs were approximately $7 million in both 2021 and 2020.
Moreover, some forms of insurance may be unavailable in the future or be available only on terms that are deemed economically
unacceptable. In addition, the frequency and severity of weather conditions which impact our business activities may also be impacted
by the effects of climate change. Energy needs could increase or decrease as a result of extreme weather conditions depending on the
duration and magnitude of any such climate change. Increased energy use due to weather changes may require us to invest in order to
serve increased demand. A decrease in energy use due to weather changes may affect our financial condition through decreased
revenues. To the extent the frequency of extreme weather events increases, this could adversely impact our business, results of
operations and financial condition.

Significant time delays between the estimated and actual occurrence of critical events associated with development projects
may result in material negative economic consequences. As part of our business, we are involved in large development projects,
the completion of which may be delayed beyond what was originally planned. Such examples include, but are not limited to, delays in
receiving necessary approvals from project members or regulatory or other government agencies, timely access to necessary
equipment, availability of necessary personnel, construction delays, unfavorable weather conditions, equipment failures, and outbreaks
of infectious diseases, such as COVID-19.  These delays could impact our future results of operations and cash flows.

An inability to secure personnel, drilling rigs, equipment, supplies and other required services or to retain key employees
may result in material negative economic consequences. We are dependent on oilfield service companies for items including
drilling rigs, equipment, supplies and skilled labor. The availability and cost of drilling rigs, equipment, supplies and skilled labor will
fluctuate over time given the cyclical nature of the E&P industry. As a result, we may encounter difficulties in obtaining required
services or could face an increase in cost, including as a result of changes to our industry due to COVID-19, which may impact our
ability to run our operations and deliver projects on time with the potential for material negative economic consequences. In addition,
difficulty in recruiting and retaining adequate numbers of experienced technical personnel could negatively impact our ability to
deliver on our strategic goals. Our future success also depends upon the continued service of key members of our senior management
team, who play an important role in developing and implementing our strategy. An inability to recruit and retain adequate numbers of
experienced technical and professional personnel in the necessary locations or the loss or departure of key members of senior
management may prevent us from executing our strategy in full or, in part, which could negatively impact our business.

Disruption, failure or cyber security breaches affecting or targeting computer, telecommunications systems, and
infrastructure used by the Corporation or our business partners may materially impact our business and operations.
Computers and telecommunication systems are an integral part of our exploration, development and production activities and the
activities of our business partners. We use these systems to analyze and store financial and operating data and to communicate within
our corporation and with outside business partners. Our reliance on technology has increased due to the increased use of remote
communications and other work-from-home practices in response to COVID-19. Technical system flaws, power loss, cyber security
risks, including cyber or phishing-attacks, unauthorized access, malicious software, data privacy breaches by employees or others with
authorized access, ransomware, and other cyber security issues could compromise our computer and telecommunications systems or
those of our business partners and result in disruptions to our business operations or the access, disclosure or loss of our data and
proprietary information.
In addition, computers control oil and gas production, processing equipment, and distribution systems
globally and are necessary to deliver our production to market. A disruption, failure or a cyber breach of these operating systems, or
of the networks and infrastructure on which they rely, could damage critical production, distribution and/or storage assets, delay or
prevent delivery to markets, and make it difficult or impossible to accurately account for production and settle transactions. As a
result, any such disruption, failure or cyber breach and any resulting investigation or remediation costs, litigation or regulatory action
could have a material adverse impact on our cash flows and results of operations, reputation and competitiveness. We routinely
experience attempts by external parties to penetrate and attack our networks and systems. Although such attempts to date have not
resulted in any material breaches, disruptions, financial loss, or loss of business-critical information, our systems and procedures for
protecting against such attacks and mitigating such risks may prove to be insufficient in the future and such attacks could have an
adverse impact on our business and operations, including damage to our reputation and competitiveness, remediation costs, litigation
or regulatory actions. In addition, as technologies evolve and these cyber security attacks become more sophisticated, we may incur
significant costs to upgrade or enhance our security measures to protect against such attacks and we may face difficulties in fully
anticipating or implementing adequate preventive measures or mitigating potential harm.

21

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 21

3/23/22 1:34 PM

21

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
2

 
 
 
 
2
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

22

Financial Risks

We have substantial capital requirements, and we may not be able to obtain needed financing on satisfactory terms. The
exploration, development and production of crude oil and natural gas involve substantial costs, which may not be fully funded from
operations. Two of the three major credit rating agencies that rate our debt have assigned an investment grade rating. Although
currently we do not have any borrowings under our long-term credit facility, a ratings downgrade, continued weakness in the oil and
gas industry or negative outcomes within commodity and financial markets could adversely impact our access to capital markets by
increasing the costs of financing, or by impacting our ability to obtain financing on satisfactory terms.
In addition, a ratings
downgrade may require that we issue letters of credit or provide other forms of collateral under certain contractual requirements.
Environmental concerns and other factors have led to lower oil and gas representation in certain key equity market indices and may
increase our costs to access the equity capital markets. Any inability to access capital markets could adversely impact our financial
adaptability and our ability to execute our strategy.

We engage in risk management transactions designed to mitigate commodity price volatility and other risks that may
impede our ability to benefit from commodity price increases and can expose us to similar potential counterparty credit risk as
amounts due from the sale of hydrocarbons. We may enter into commodity price hedging arrangements to protect us from
commodity price declines. These arrangements may, depending on the instruments used and the level of additional hedges involved,
limit any potential upside from commodity price increases. As with accounts receivable from the sale of hydrocarbons, we may be
exposed to potential economic loss should a counterparty be unable or unwilling to perform their obligations under the terms of a
In addition, we are exposed to risks related to changes in interest rates and foreign currency values, and may
hedging agreement.
engage in hedging activities to mitigate related volatility.

The alteration or discontinuation of LIBOR may adversely affect our borrowing costs. Certain borrowings on our credit
facilities may use LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other
regulatory guidance and proposals for reform. These reforms and other pressures are expected to cause LIBOR to be discontinued
after June 30, 2023 or to perform differently than in the past.
In the U.S., the Alternative Reference Rates Committee, which was
convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has proposed SOFR as an alternative to LIBOR.
At this time, the consequences of these developments cannot be entirely predicted, but could include fluctuations in interest rates or an
increase in the cost of our credit facility borrowings.

Regulatory, Legal and Environmental Risks

Our oil and gas operations are subject to environmental risks and environmental, health and safety laws and regulations
that can result in significant costs and liabilities. Our oil and gas operations are subject to environmental risks such as oil spills,
produced water spills, gas leaks and ruptures and discharges of substances or gases that could expose us to substantial liability for
pollution or other environmental damage. Our operations are also subject to numerous U.S. federal, state, local and foreign
environmental, health and safety laws and regulations. Non-compliance with these laws and regulations may subject us to
administrative, civil or criminal penalties, remedial clean-ups, natural resource damages and other liabilities. In addition, increasingly
stringent environmental regulations have resulted and will likely continue to result in higher capital expenditures and operating
expenses for us. Similarly, we have material legal obligations to dismantle, remove and abandon production facilities and wells that
will occur many years in the future, in most cases. These estimates may be impacted by future changes in regulations, solvency of
subsequent owners and partners and other uncertainties.

Concerns have been raised in certain jurisdictions where we have operations concerning the safety and environmental impact of
the drilling and development of shale oil and gas resources, particularly hydraulic fracturing, water usage, flaring of associated natural
gas and air emissions. While we believe that these operations can be conducted safely and with minimal impact on the environment,
regulatory bodies are responding to these concerns and may impose moratoriums and new regulations on such drilling operations that
would likely have the effect of prohibiting or delaying such operations and increasing their cost.

Climate change and sustainability initiatives may result in significant operational changes and expenditures, reduced
demand for our products and adversely affect our business. We recognize that climate change and sustainability is a growing
global environmental concern. Continuing political and social attention to the issue of climate change and sustainability has resulted
in both existing and pending international agreements and national, regional or local legislation and regulatory measures to limit GHG
emissions. These agreements and measures may require, or could result in future legislation and regulatory measures that require,
significant equipment modifications, operational changes, taxes, or purchase of emission credits to reduce emission of GHGs from our
In
operations, which may result in substantial capital expenditures and compliance, operating, maintenance and remediation costs.
addition, our production is sold to third parties that produce petroleum fuels, which through normal end user consumption result in the
emission of GHGs.

We are prioritizing sustainable energy practices to further reduce our carbon footprint while at the same time remaining a
including our stockholders, employees, suppliers,
successful operating public company. However, various key stakeholders,
customers, local communities and others, may have differing approaches to climate change initiatives.
If we do not successfully
manage expectations across these varied stakeholder interests, it could erode our stakeholders' trust and thereby affect our reputation.
As a result of heightened public awareness and attention to climate change and sustainability as well as continued regulatory initiatives

22

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
2

22

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 22

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
2
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

23

to reduce the use of petroleum fuels, demand for crude oil and other hydrocarbons may be reduced, which may have an adverse effect
on our sales volumes, revenues and margins. The imposition and enforcement of stringent GHG emissions reduction requirements
could severely and adversely impact the oil and gas industry and therefore significantly reduce the value of our business. Shareholder
activism has been recently increasing in our industry, and stockholders may attempt to effect changes to our business or governance,
whether by shareholder proposals, public campaigns, proxy solicitations or otherwise.
In addition, certain financial institutions,
institutional investors and other sources of capital have begun to limit or eliminate their investment in oil and gas activities due to
concerns about climate change, which could make it more difficult to finance our business. Furthermore, increasing attention to
climate change risks and sustainability has resulted in governmental investigations, and public and private litigation, which could
increase our costs or otherwise adversely affect our business. For example, beginning in 2017, certain states, municipalities and
private associations in California, Delaware, Maryland, Rhode Island and South Carolina separately filed lawsuits against oil, gas and
coal producers, including us, for alleged damages purportedly caused by climate change. Such actions could adversely impact our
business by distracting management and other personnel from their primary responsibilities, require us to incur increased costs, and/or
result in reputational harm.

We are subject to changing laws and regulations and other governmental actions that can significantly and adversely affect
our business. Political or regulatory developments and governmental actions, including federal, state, local, territorial and foreign
laws and regulations may adversely affect our operations and those of our counterparties with whom we have contracted, which may
affect our financial results. These actions could result in tax increases retroactively through tax claims or prospectively through
changes to applicable statutory tax rates, modification of the tax base, or imposition of new tax types. Additionally, governmental
actions could include post-production deductions from royalty payments; limitations or prohibitions on the sales of new oil and gas
leases or extensions on existing oil and gas leases; adverse court decisions with respect to the sale of new and existing oil and gas
leases; expropriation or nationalization of property; mandatory government participation, cancellation or amendment of contract
rights; imposition of capital controls or blocking of funds; changes in import and export regulations; the imposition of tariffs; and anti-
In recent years, proposals for limitations on access to oil and gas exploration and development
bribery or anti-corruption laws.
opportunities and related litigation have grown in certain areas and may include efforts to reduce access to public and private lands;
restriction of exploration and production activities within government-owned and other lands; delaying or canceling permits for
drilling or pipeline construction; restrictions or changes to existing pipeline easements; limiting or banning industry techniques such as
hydraulic fracturing and/or adding restrictions on the use of water and associated disposal; imposition of set-backs on oil and gas sites;
reduction of sulfur content in bunker fuel; delaying or denying air-quality or siting permits; advocating for increased regulations,
punitive taxation, or citizen ballot initiatives or moratoriums on industry activity; and the use of social media channels to cause
reputational harm. Costs associated with responding to these anti-development efforts or complying with any new legal or regulatory
requirements could significantly and adversely affect our business, financial condition and results of operations.

Political instability in areas where we operate can adversely affect our business. Some of the international areas in which we
operate are politically less stable than other areas and may be subject to civil unrest, conflict, insurgency, corruption, security risks and
labor unrest. Political instability and civil unrest in North Africa, South America and the Middle East has affected and may continue
to affect our interests in these areas as well as oil and gas markets generally. In addition, geographic territorial border disputes may
affect our business in certain areas, such as the border dispute between Guyana and Venezuela over a portion of the Stabroek Block.
Political instability exposes our operations to increased risks, including increased difficulty in obtaining required permits and
government approvals, enforcing our agreements in those jurisdictions and potential adverse actions by local government authorities.
The threat of terrorism around the world also poses additional risks to our operations and the operations of the oil and gas industry in
general.

One of our subsidiaries is the general partner of a publicly traded limited partnership, Hess Midstream LP. The
responsibilities associated with being a general partner expose us to a broader range of legal liabilities. Our control of Hess
Midstream LP bestows upon us additional duties and obligations including, but not limited to, the obligations associated with
managing potential conflicts of interests and additional reporting requirements from the Securities and Exchange Commission. These
heightened duties expose us to additional potential for legal claims that may have a material negative economic impact on our
stockholders.  Moreover, these increased duties may lead to an increase in compliance costs.

Item 1B.  Unresolved Staff Comments

None.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
2

23

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 23

3/23/22 1:34 PM

23

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
2
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

24

Item 3.  Legal Proceedings

We are subject to loss contingencies with respect to various claims, lawsuits and other proceedings. A liability is recognized in
our consolidated financial statements when it is probable that a loss has been incurred and the amount can be reasonably estimated. If
the risk of loss is probable, but the amount cannot be reasonably estimated or the risk of loss is only reasonably possible, a liability is
not accrued; however, we disclose the nature of those contingencies. We cannot predict with certainty if, how or when existing
claims, lawsuits and proceedings will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in
their early stages of development or where plaintiffs seek indeterminate damages.

We, along with many companies that have been or continue to be engaged in refining and marketing of gasoline, have been a party
to lawsuits and claims related to the use of MTBE in gasoline. A series of similar lawsuits, many involving water utilities or
governmental entities, were filed in jurisdictions across the U.S. against producers of MTBE and petroleum refiners who produced
gasoline containing MTBE, including us. The principal allegation in all cases was that gasoline containing MTBE was a defective
product and that these producers and refiners are strictly liable in proportion to their share of the gasoline market for damage to
groundwater resources and are required to take remedial action to ameliorate the alleged effects on the environment of releases of
MTBE. The majority of the cases asserted against us have been settled. There are two remaining active cases, filed by Pennsylvania
and Maryland. In June 2014, the Commonwealth of Pennsylvania filed a lawsuit alleging that we and all major oil companies with
operations in Pennsylvania, have damaged the groundwater by introducing thereto gasoline with MTBE. The Pennsylvania suit has
been forwarded to the existing MTBE multidistrict litigation pending in the Southern District of New York. In December 2017, the
State of Maryland filed a lawsuit alleging that we and other major oil companies damaged the groundwater in Maryland by
introducing thereto gasoline with MTBE. The suit, filed in Maryland state court, was served on us in January 2018 and has been
removed to federal court by the defendants.

In September 2003, we received a directive from the NJDEP to remediate contamination in the sediments of the Lower Passaic
River. The NJDEP is also seeking natural resource damages. The directive, insofar as it affects us, relates to alleged releases from a
petroleum bulk storage terminal in Newark, New Jersey we previously owned. We and over 70 companies entered into an
Administrative Order on Consent with the EPA to study the same contamination; this work remains ongoing. We and other parties
settled a cost recovery claim by the State of New Jersey and agreed with the EPA to fund remediation of a portion of the site. On
March 4, 2016, the EPA issued a ROD in respect of the lower eight miles of the Lower Passaic River, selecting a remedy that includes
bank-to-bank dredging at an estimated cost of $1.38 billion. The ROD does not address the upper nine miles of the Lower Passaic
River or the Newark Bay, which may require additional remedial action. In addition, the federal trustees for natural resources have
begun a separate assessment of damages to natural resources in the Passaic River. Given that the EPA has not selected a final remedy
for the entirety of the Lower Passaic River or the Newark Bay, total remedial costs cannot be reliably estimated at this time. Based on
currently known facts and circumstances, we do not believe that this matter will result in a significant liability to us because our
former terminal did not store or use contaminants which are of concern in the river sediments and could not have contributed
contamination along the river’s length. Further, there are numerous other parties who we expect will bear the cost of remediation and
damages.

In March 2014, we received an Administrative Order from the EPA requiring us and 26 other parties to undertake the Remedial
Design for the remedy selected by the EPA for the Gowanus Canal Superfund Site in Brooklyn, New York. Our alleged liability
derives from our former ownership and operation of a fuel oil terminal and connected shipbuilding and repair facility adjacent to the
Canal. The remedy selected by the EPA includes dredging of surface sediments and the placement of a cap over the deeper sediments
throughout the Canal and in-situ stabilization of certain contaminated sediments that will remain in place below the cap. The EPA’s
original estimate was that this remedy would cost $506 million; however, the ultimate costs that will be incurred in connection with
the design and implementation of the remedy remain uncertain. We have complied with the EPA’s March 2014 Administrative Order
and contributed funding for the Remedial Design based on an allocation of costs among the parties determined by a third-party expert.
In January 2020, we received an additional Administrative Order from the EPA requiring us and several other parties to begin
Remedial Action along the uppermost portion of the Canal. We intend to comply with this Administrative Order. The remediation
work began in the fourth quarter of 2020. Based on currently known facts and circumstances, we do not believe that this matter will
result in a significant liability to us, and the costs will continue to be allocated amongst the parties, as they were for the Remedial
Design.

From time to time, we are involved in other judicial and administrative proceedings relating to environmental matters. We
periodically receive notices from the EPA that we are a “potential responsible party” under the Superfund legislation with respect to
various waste disposal sites. Under this legislation, all potentially responsible parties may be jointly and severally liable. For any site
for which we have received such a notice, the EPA’s claims or assertions of liability against us relating to these sites have not been
fully developed, or the EPA’s claims have been settled or a settlement is under consideration, in all cases for amounts that are not
material. Beginning in 2017, certain states, municipalities and private associations in California, Delaware, Maryland, Rhode Island
and South Carolina separately filed lawsuits against oil, gas and coal producers, including us, for alleged damages purportedly caused
by climate change. These proceedings include claims for monetary damages and injunctive relief. Beginning in 2013, various
parishes in Louisiana filed suit against approximately 100 oil and gas companies, including us, alleging that the companies’ operations
and activities in certain fields violated the State and Local Coastal Resource Management Act of 1978, as amended, and caused

24

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
2

24

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 24

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

25

2
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

contamination, subsidence and other environmental damages to land and water bodies located in the coastal zone of Louisiana. The
plaintiffs seek, among other things, the payment of the costs necessary to clear, re-vegetate and otherwise restore the allegedly
impacted areas. The ultimate impact of such climate and other aforementioned environmental proceedings, and of any related
proceedings by private parties, on our business or accounts cannot be predicted at this time due to the large number of other potentially
responsible parties and the speculative nature of clean-up cost estimates.

In August 2020, Fieldwood and related entities filed for bankruptcy relief under Chapter 11 of the U.S. Bankruptcy Code.
Fieldwood’s Bankruptcy Plan, which was approved by the U.S. Bankruptcy Court in June 2021, includes the abandonment of certain
assets, including seven offshore Gulf of Mexico leases and related facilities in the West Delta Field that were formerly owned by us
and sold to a Fieldwood predecessor in 2004, and the discharge of Fieldwood’s obligation to decommission these facilities. As a
result, in October 2021 and February 2022, we received decommissioning orders from the BSEE requiring us to decommission certain
wells and related facilities located on six of the seven West Delta leases. We expect to receive additional orders covering the
remainder of the West Delta decommissioning obligations in the near future and are actively engaged with the BSEE to agree on the
scope and timing of decommissioning activities. Our decommissioning obligation derives from our former ownership of the facilities.
We are seeking contribution from other parties that owned an interest in the facilities. As of December 31, 2021, we have a liability of
$147 million representing total estimated abandonment obligations in the West Delta Field. Potential recoveries from other parties
that previously owned an interest in the West Delta Field have not been recognized as of December 31, 2021.

We are also involved in other judicial and administrative proceedings from time to time in addition to the matters described above,
including claims related to post-production deductions from royalty payments. We may also be exposed to future decommissioning
liabilities for divested assets in the event the current or future owners of facilities previously owned by us are determined to be unable
to perform such actions, whether due to bankruptcy or otherwise. We cannot predict with certainty if, how or when such proceedings
will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in their early stages of development or
where plaintiffs seek indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy
discovery and determination of important factual matters before a loss or range of loss can be reasonably estimated for any
proceeding.

Subject to the foregoing, in management’s opinion, based upon currently known facts and circumstances, the outcome of lawsuits,
claims and proceedings, including the matters disclosed above, is not expected to have a material adverse effect on our financial
condition, results of operations or cash flows. However, we could incur judgments, enter into settlements, or revise our opinion
regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations in
the period in which the amounts are accrued and our cash flows in the period in which the amounts are paid.

Item 4.  Mine Safety Disclosures

None.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
2

25

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 25

3/23/22 1:34 PM

25

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

26

2
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

PART II

Item 5.  Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Market Information, Holders and Dividends

Our common stock is traded principally on the New York Stock Exchange (ticker symbol: HES). At January 31, 2022, there were
2,725 stockholders (based on the number of holders of record) who owned a total of 309,745,523 shares of common stock. In 2021,
2020 and 2019, cash dividends on common stock totaled $1.00 per share per year ($0.25 per quarter).

Performance Graph

Set forth below is a line graph comparing the five-year shareholder returns on a $100 investment in our common stock assuming

reinvestment of dividends, against the cumulative total returns for the following:

• Standard & Poor’s (S&P) 500 Stock Index, which includes us.
•

2021 Proxy Peer Group comprising 12 oil and gas peer companies, including us, as disclosed in our 2021 Proxy Statement. In
2021, Cabot Oil & Gas Corporation merged with Cimarex Energy Company to form Coterra Energy, Inc.

Comparison of Five-Year Shareholder Returns
Years Ended December 31,

$250

$200

$150

$100

$50

$0

2016

2017

2018

2019

2020

2021

2016

2017

2018

2019

2020

2021

Hess Corporation

$100.00 $77.93

$67.69 $113.54 $91.75 $130.39

S&P 500

$100.00 $121.82 $116.47 $153.13 $181.29 $233.28

Proxy Peer Group

$100.00 $101.02 $88.84

$92.59

$60.57 $113.53

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
2

26

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 26

3/23/22 1:34 PM

26

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

24PARTIIItem5.MarketfortheRegistrant’sCommonStock,RelatedStockholderMattersandIssuerPurchasesofEquitySecuritiesStockMarketInformation,HoldersandDividendsOurcommonstockistradedprincipallyontheNewYorkStockExchange(tickersymbol:HES).AtJanuary31,2020,therewere2,944stockholders(basedonthenumberofholdersofrecord)whoownedatotalof305,214,587sharesofcommonstock.In2019,2018and2017,cashdividendsoncommonstocktotaled$1.00pershareperyear($0.25perquarter).PerformanceGraphSetforthbelowisalinegraphcomparingthefive-yearshareholderreturnsona$100investmentinourcommonstockassumingreinvestmentofdividends,againstthecumulativetotalreturnsforthefollowing:•Standard&Poor’s(S&P)500StockIndex,whichincludesus.•Proxy Peer Group comprising 12oil andgaspeer companies, including us, asdisclosed inour 2019 Proxy Statement,excludingAnadarkoPetroleumCorporation,whichwasacquiredinAugust2019.ComparisonofFive-YearShareholderReturnsYearsEndedDecember31,201420152016201720182019HessCorporation$100.00$66.78$87.42$68.13$59.17$99.25S&P500$100.00$101.37$113.49$138.26$132.19$173.80ProxyPeerGroup$100.00$63.20$88.46$82.83$65.64$69.06$0$50$100$150$20024PARTIIItem5.MarketfortheRegistrant’sCommonStock,RelatedStockholderMattersandIssuerPurchasesofEquitySecuritiesStockMarketInformation,HoldersandDividendsOurcommonstockistradedprincipallyontheNewYorkStockExchange(tickersymbol:HES).AtJanuary31,2020,therewere2,944stockholders(basedonthenumberofholdersofrecord)whoownedatotalof305,214,587sharesofcommonstock.In2019,2018and2017,cashdividendsoncommonstocktotaled$1.00pershareperyear($0.25perquarter).PerformanceGraphSetforthbelowisalinegraphcomparingthefive-yearshareholderreturnsona$100investmentinourcommonstockassumingreinvestmentofdividends,againstthecumulativetotalreturnsforthefollowing:•Standard&Poor’s(S&P)500StockIndex,whichincludesus.•Proxy Peer Group comprising 12oil andgaspeer companies, includingus, asdisclosed inour 2019Proxy Statement,excludingAnadarkoPetroleumCorporation,whichwasacquiredinAugust2019.ComparisonofFive-YearShareholderReturnsYearsEndedDecember31,201420152016201720182019HessCorporation$100.00$66.78$87.42$68.13$59.17$99.25S&P500$100.00$101.37$113.49$138.26$132.19$173.80ProxyPeerGroup$100.00$63.20$88.46$82.83$65.64$69.06$0$50$100$150$20024PARTIIItem5.MarketfortheRegistrant’sCommonStock,RelatedStockholderMattersandIssuerPurchasesofEquitySecuritiesStockMarketInformation,HoldersandDividendsOurcommonstockistradedprincipallyontheNewYorkStockExchange(tickersymbol:HES).AtJanuary31,2020,therewere2,944stockholders(basedonthenumberofholdersofrecord)whoownedatotalof305,214,587sharesofcommonstock.In2019,2018and2017,cashdividendsoncommonstocktotaled$1.00pershareperyear($0.25perquarter).PerformanceGraphSetforthbelowisalinegraphcomparingthefive-yearshareholderreturnsona$100investmentinourcommonstockassumingreinvestmentofdividends,againstthecumulativetotalreturnsforthefollowing:•Standard&Poor’s(S&P)500StockIndex,whichincludesus.•Proxy Peer Group comprising 12oilandgas peercompanies, includingus, asdisclosed inour 2019 Proxy Statement,excludingAnadarkoPetroleumCorporation,whichwasacquiredinAugust2019.ComparisonofFive-YearShareholderReturnsYearsEndedDecember31,201420152016201720182019HessCorporation$100.00$66.78$87.42$68.13$59.17$99.25S&P500$100.00$101.37$113.49$138.26$132.19$173.80ProxyPeerGroup$100.00$63.20$88.46$82.83$65.64$69.06$0$50$100$150$200 
 
 
 
92416 10K 03.8.2022

27

2
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Share Repurchase Activities

Our Board of Directors have authorized common stock repurchases of up to $7.5 billion under our stock repurchase plan. There
were no share repurchases for the year ended December 31, 2021. Since initiation of the buyback program in August 2013, total
shares repurchased through December 31, 2021 amounted to 91.9 million at a total cost of $6.85 billion including transaction fees.

Equity Compensation Plans

Following is information related to our equity compensation plans at December 31, 2021.

Plan Category

Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights *

Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights

Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column*)

Equity compensation plans approved by security holders.................

2,086,722 (a)

$

Equity compensation plans not approved by security holders ..........

—

61.15

—

23,601,465 (b)

—

(a) This amount includes 2,086,722 shares of common stock issuable upon exercise of outstanding stock options. This amount excludes 733,586 performance share
units (PSUs) for which the number of shares of common stock to be issued may range from 0% to 200% based on our total shareholder return (TSR) relative to
the TSR of a predetermined group of peer companies over a three‑year performance period ending December 31 of the year prior to settlement of the
grant. Beginning with the PSUs granted in 2020, the Corporation's TSR is compared to the TSR of a predetermined group of peer companies and the S&P 500
index over the three-year performance period. In addition, this amount also excludes 1,616,316 shares of common stock issued as restricted stock pursuant to our
equity compensation plans.

(b) These securities may be awarded as stock options, restricted stock, PSUs or other awards permitted under our equity compensation plan.

See Note 14, Share‑based Compensation in the Notes to Consolidated Financial Statements for further discussion of our equity

compensation plans.

Item 6.  [Reserved]

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
2

27

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 27

3/23/22 1:34 PM

27

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:40PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

28

2
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read together with the Consolidated Financial Statements and the Notes to Consolidated Financial
Statements, which are included in this Form 10-K in Item 8, and the information set forth in Risk Factors under Item 1A.
The following discussion should be read together with the Consolidated Financial Statements and the Notes to Consolidated Financial
Statements, which are included in this Form 10-K in Item 8, and the information set forth in Risk Factors under Item 1A.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations omits certain discussions
of our financial condition and results of operations for the year ended December 31, 2020 compared with the year ended December 31,
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations omits certain discussions
2019, which can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our
of our financial condition and results of operations for the year ended December 31, 2020 compared with the year ended December 31,
2020 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 1, 2021, and such
2019, which can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our
comparisons are incorporated herein by reference.
2020 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 1, 2021, and such
comparisons are incorporated herein by reference.
Index

Index

Overview

Overview
Consolidated Results of Operations

Consolidated Results of Operations
Liquidity and Capital Resources

Liquidity and Capital Resources
Critical Accounting Policies and Estimates

Critical Accounting Policies and Estimates

Overview

Overview
Hess Corporation is a global E&P company engaged in exploration, development, production, transportation, purchase and sale of
crude oil, natural gas liquids, and natural gas with production operations located primarily in the United States (U.S.), Guyana, the
Hess Corporation is a global E&P company engaged in exploration, development, production, transportation, purchase and sale of
Malaysia/Thailand Joint Development Area (JDA), and Malaysia. We conduct exploration activities primarily offshore Guyana, in the
crude oil, natural gas liquids, and natural gas with production operations located primarily in the United States (U.S.), Guyana, the
U.S. Gulf of Mexico, and offshore Suriname and Canada. At the Stabroek Block (Hess 30%), offshore Guyana, we and our partners
Malaysia/Thailand Joint Development Area (JDA), and Malaysia. We conduct exploration activities primarily offshore Guyana, in the
have discovered a significant resource base and are executing a multi-phased development of the Block. The Liza Phase 1
U.S. Gulf of Mexico, and offshore Suriname and Canada. At the Stabroek Block (Hess 30%), offshore Guyana, we and our partners
development achieved first production in December 2019, and has a nameplate production capacity of approximately 120,000 gross
have discovered a significant resource base and are executing a multi-phased development of the Block. The Liza Phase 1
bopd. The Liza Phase 2 development achieved first production in February 2022, and is expected to reach its production capacity of
development achieved first production in December 2019, and has a nameplate production capacity of approximately 120,000 gross
approximately 220,000 gross bopd later in 2022 as operations are safely brought online. A third development, Payara, was sanctioned
bopd. The Liza Phase 2 development achieved first production in February 2022, and is expected to reach its production capacity of
in the third quarter of 2020 and is expected to achieve first production in 2024, with production capacity of approximately 220,000
approximately 220,000 gross bopd later in 2022 as operations are safely brought online. A third development, Payara, was sanctioned
gross bopd. A fourth development, Yellowtail, was submitted to the government of Guyana for approval in the fourth quarter of 2021.
in the third quarter of 2020 and is expected to achieve first production in 2024, with production capacity of approximately 220,000
Pending government approval and project sanctioning, the project is expected to have a capacity of approximately 250,000 gross bopd
gross bopd. A fourth development, Yellowtail, was submitted to the government of Guyana for approval in the fourth quarter of 2021.
with first production anticipated in 2025. We currently plan to have six FPSOs with an aggregate expected production capacity of
Pending government approval and project sanctioning, the project is expected to have a capacity of approximately 250,000 gross bopd
more than 1 million gross bopd on the Stabroek Block in 2027, and the potential for up to ten FPSOs to develop the current discovered
with first production anticipated in 2025. We currently plan to have six FPSOs with an aggregate expected production capacity of
recoverable resource base.
more than 1 million gross bopd on the Stabroek Block in 2027, and the potential for up to ten FPSOs to develop the current discovered
recoverable resource base.
Our Midstream operating segment, which is comprised of Hess Corporation’s approximate 43.5% consolidated ownership interest
in Hess Midstream LP at December 31, 2021, provides fee-based services, including gathering, compressing and processing natural
Our Midstream operating segment, which is comprised of Hess Corporation’s approximate 43.5% consolidated ownership interest
gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and
in Hess Midstream LP at December 31, 2021, provides fee-based services, including gathering, compressing and processing natural
water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota.
gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and
water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota.
Climate Change, Energy Transition and Our Strategy

Climate Change, Energy Transition and Our Strategy
We believe climate risks can and should be addressed while at the same time providing safe, affordable and reliable energy
necessary to ensure human welfare and global economic development in the context of the United Nations Sustainable Development
We believe climate risks can and should be addressed while at the same time providing safe, affordable and reliable energy
Goals. The IEA's 2021 World Energy Outlook provides four scenarios of global energy demand in 2040 based on varying levels of
necessary to ensure human welfare and global economic development in the context of the United Nations Sustainable Development
global response to climate change. Under all of the IEA scenarios, oil and natural gas are expected to be needed for decades to come
Goals. The IEA's 2021 World Energy Outlook provides four scenarios of global energy demand in 2040 based on varying levels of
and we expect that significant investment will be required to meet the world’s projected growing energy needs, both in renewable
global response to climate change. Under all of the IEA scenarios, oil and natural gas are expected to be needed for decades to come
energy sources and in oil and gas.
and we expect that significant investment will be required to meet the world’s projected growing energy needs, both in renewable
Our strategy is to grow our resource base, have a low cost of supply and sustain cash flow growth. Our strategy aligns with the
energy sources and in oil and gas.
energy transition needed to achieve the IEA's Sustainable Development Scenario, which reflects the major changes that would be
Our strategy is to grow our resource base, have a low cost of supply and sustain cash flow growth. Our strategy aligns with the
required to reach the energy-related Sustainable Development Goals of the United Nations.
energy transition needed to achieve the IEA's Sustainable Development Scenario, which reflects the major changes that would be
required to reach the energy-related Sustainable Development Goals of the United Nations.
Our commitment to sustainability starts with our Board of Directors and senior management and is reinforced throughout our
organization. Our Board of Directors, led by its Environmental, Health and Safety Committee, is actively engaged in overseeing
Our commitment to sustainability starts with our Board of Directors and senior management and is reinforced throughout our
Hess’ sustainability practices so that sustainability risks and opportunities are taken into account when making strategic decisions.
organization. Our Board of Directors, led by its Environmental, Health and Safety Committee, is actively engaged in overseeing
Our Board’s Compensation and Management Development Committee has tied executive compensation to advancing our
Hess’ sustainability practices so that sustainability risks and opportunities are taken into account when making strategic decisions.
environmental, health and safety goals. We also have an executive led task force to consider our medium and longer term climate
Our Board’s Compensation and Management Development Committee has tied executive compensation to advancing our
strategy.
environmental, health and safety goals. We also have an executive led task force to consider our medium and longer term climate
strategy.

28

28

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
2

28

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 28

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

29

2
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

In 2021, we announced our new five year GHG reduction targets for 2025, which are to reduce operated Scope 1 and 2 GHG
emissions intensity by approximately 44% and methane emissions intensity by approximately 52% from 2017. In January 2022, we
announced our plan to reduce routine flaring at Hess operated assets to zero by the end of 2025. Our business planning includes
actions we expect to undertake to continue reducing our carbon footprint consistent with our targets. We also conduct annual scenario
planning as a methodology to assess our portfolio’s resilience to differing scenarios of energy supply and demand over the longer
term, and to inform our understanding of future risks and opportunities in relation to the potential evolution of energy demand, energy
mix, the emergence of new technologies, and possible changes by policymakers with respect to greenhouse gas emissions and climate
change.

2022 Outlook

Following the startup of the Liza Phase 2 project in February 2022, we repaid the remaining $500 million outstanding under our
$1 billion term loan and we announced a 50 percent increase in our quarterly dividend on common stock. Our E&P capital and
exploratory expenditures are projected to be approximately $2.6 billion in 2022. Capital investment for our Midstream operations is
expected to be approximately $235 million. Oil and gas net production in 2022 is forecast to be in the range of 325,000 boepd to
330,000 boepd excluding Libya. For 2022, we have hedged 90,000 bopd with WTI collars with an average monthly floor price of $60
per barrel and an average monthly ceiling price of $100 per barrel, and 60,000 bopd with Brent collars with an average monthly floor
price of $65 per barrel and an average monthly ceiling price of $105 per barrel.

Net cash provided by operating activities was $2,890 million in 2021, compared with $1,333 million in 2020, while net cash
provided by operating activities before changes in operating assets and liabilities was $2,991 million in 2021 and $1,803 million in
2020.
In 2022, based on current forward strip crude oil prices, we expect cash flow from operating activities and cash and cash
equivalents at December 31, 2021 will be sufficient to fund our capital investment program, dividends, and the recent repayment of
the remaining $500 million outstanding under our $1 billion term loan. Depending on market conditions, we may take any of the
following steps, or a combination thereof, to improve our liquidity and financial position: reduce the planned capital program and
other cash outlays, including dividends, pursue asset sales, borrow against our committed revolving credit facility, or issue debt or
equity securities.

Consolidated Results

Net income attributable to Hess Corporation was $559 million in 2021 compared with a net loss of $3,093 million in
2020. Excluding items affecting comparability of earnings between periods summarized on page 32, adjusted net income was $677
million in 2021 compared with an adjusted net loss of $894 million in 2020. Annual net production averaged 315,000 boepd and
331,000 boepd in 2021 and 2020, respectively. Total proved reserves were 1,309 million boe and 1,170 million boe at December 31,
2021 and December 31, 2020, respectively.

Significant 2021 Activities

The following is an update of significant E&P activities during 2021:

E&P assets:

• In North Dakota, net production from the Bakken shale play averaged 156,000 boepd in 2021 (2020: 193,000 boepd),
primarily due to the impact of lower drilling activity caused by a reduction in rig count from six to one during the first half of
2020, lower NGL and natural gas volumes received under percentage of proceeds contracts, curtailed production related to
the planned Tioga Gas Plant maintenance turnaround completed in the third quarter of 2021, and the sale of our Little Knife
and Murphy Creek nonstrategic acreage interests in the second quarter of 2021, which contributed net production of 2,000
boepd in 2021 (2020: 6,000 boepd). Net oil production was 80,000 bopd in 2021 compared with 107,000 bopd in 2020.
NGL and natural gas volumes received under percentage of proceeds contracts were 11,000 boepd in 2021 compared with
21,000 boepd in 2020 as higher realized NGL prices in 2021 reduced the volumes received as consideration for gas
processing fees.

Prior to COVID-19, we were operating six rigs in the Bakken, but reduced the rig count to one in May 2020 in response to
the sharp decline in crude oil prices. We added a second operated rig in the Bakken in February 2021 and a third operated rig
in September 2021. We drilled 63 wells and brought 51 wells on production in 2021, bringing the total operated production
wells to 1,599 at December 31, 2021. We forecast net production from the Bakken to be in the range of 160,000 boepd to
165,000 boepd in 2022.

• In the Gulf of Mexico, net production averaged 45,000 boepd in 2021 (2020: 56,000 boepd) primarily due to the sale of the

Shenzi Field in November 2020. Net production from the Shenzi Field was 9,000 boepd in 2020.

• At the Stabroek Block (Hess 30%), offshore Guyana, net production from the Liza Phase 1 development averaged 30,000
bopd in 2021 (2020: 20,000 bopd) following first production in December 2019 from the Liza Destiny FPSO. The Liza

29

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
2

29

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 29

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

30

Destiny has a nameplate production capacity of approximately 120,000 gross bopd and in 2022 its production capacity is
expected to increase to more than 140,000 gross bopd following production optimization work.

The Liza Phase 2 development, which was sanctioned in 2019, began producing oil in February 2022 from the Liza Unity
FPSO. The Liza Unity is expected to reach its production capacity of approximately 220,000 gross bopd later in 2022 as
operations are safely brought online.

For 2022, net production from Guyana is expected to be in the range of 65,000 bopd to 70,000 bopd, reflecting the ramp in
production during the year from Liza Phase 2.

The Payara Field development was sanctioned in 2020 and will utilize the Prosperity FPSO, which will have the capacity to
produce up to 220,000 gross bopd, with first production expected in 2024. Ten drill centers with a total of 41 wells are
planned, including 20 production wells and 21 injection wells.

A fourth development, Yellowtail, was submitted to the government of Guyana for approval in the fourth quarter of 2021.
Pending government approval and project sanctioning, the project is expected to have a capacity of 250,000 gross bopd with
first production anticipated in 2025.

In addition to the first four developments, planning is underway for additional FPSOs. The ultimate sizing and order of these
potential developments will be a function of further exploration and appraisal drilling.

In 2021, four successful exploration wells and seven successful appraisal wells were drilled on the Stabroek Block. For 2022,
the operator plans to operate six drillships and drill approximately 12 exploration and appraisal wells during the year.

• In the Gulf of Thailand, net production from Block A‑18 of the JDA averaged 36,000 boepd in 2021 (2020: 29,000 boepd),
including contribution from unitized acreage in Malaysia, while net production from North Malay Basin averaged 25,000
boepd in 2021 (2020: 23,000 boepd). During 2021, we continued the drilling program at North Malay Basin, and we
commenced a multi-year drilling program at JDA in the first half of the year.

• We completed the sale of our interests in Denmark in August for net cash consideration of approximately $130 million, after

normal closing adjustments. Net production from Denmark was 3,000 boepd in 2021.

The following is an update of significant Midstream activities during 2021:

• In March 2021, Hess Midstream completed an underwritten public offering of 6.9 million Class A shares held by Hess and

GIP. As a result of this transaction, Hess received net proceeds of $70 million.

• In August 2021, HESM Opco repurchased 31.25 million Class B units held by Hess and GIP for $750 million, with Hess
receiving net proceeds of $375 million. HESM Opco issued $750 million in aggregate principal amount of 4.250% fixed-rate
senior unsecured notes due 2030 in a private offering to finance the repurchase.

• In October 2021, Hess Midstream completed an underwritten public offering of approximately 8.6 million Class A shares

held by Hess and GIP. As a result of this transaction, Hess received net proceeds of $108 million.

• Facility construction for an expansion of the Tioga Gas Plant to 400 mmcfd from 250 mmcfd was completed in 2020. The
incremental gas processing capacity was placed in service in the fourth quarter of 2021 following completion of a planned
maintenance turnaround which included connecting the expansion and residue NGL takeaway pipelines to the plant. The
total processing capacity of 400 mmcfd became available in February 2022.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
3

30

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 30

3/23/22 1:34 PM

30

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

31

Liquidity and Capital and Exploratory Expenditures

At December 31, 2021, cash and cash equivalents were $2,713 million (2020: $1,739 million), consolidated debt was $8,458
million (2020: $8,296 million), and our debt to capitalization ratio (as defined in the credit agreement for our revolving credit facility
and the term loan agreement) was 42.3% (2020: 47.5%). Hess Midstream debt, which is nonrecourse to Hess Corporation, was $2,564
million at December 31, 2021 (2020: $1,910 million).

Capital and exploratory expenditures were as follows (in millions):

2021

2020

2019

E&P Capital and Exploratory Expenditures:

United States

North Dakota ............................................................................................................................. $
Offshore and other.....................................................................................................................
Total United States ..........................................................................................................................
Guyana ............................................................................................................................................
Malaysia and JDA ...........................................................................................................................
Other (a) ..........................................................................................................................................
E&P Capital and Exploratory Expenditures...................................................................................... $

Exploration Expenses Charged to Income Included Above:

United States ................................................................................................................................... $
International ....................................................................................................................................

Total Exploration Expenses Charged to Income included above ................................................ $

522
103
625
1,016
154
34
1,829

90
41
131

$

$

$

$

661
258
919
743
99
25
1,786

91
17
108

$

$

$

$

1,312
471
1,783
783
109
68
2,743

105
62
167

Midstream Capital Expenditures:

Midstream Capital Expenditures (b) ............................................................................................... $

183

$

253

$

416

(a) Other includes our interests in Denmark (which were sold in August 2021), Libya and certain non-producing countries.
(b) Excludes equity investments of $33 million in 2019.

In 2022, we project our E&P capital and exploratory expenditures will be approximately $2.6 billion and Midstream capital

expenditures to be approximately $235 million.

Consolidated Results of Operations

Results by Segment:

The after-tax income (loss) by major operating activity is summarized below:

2021

2020

2019

(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess Corporation:

Exploration and Production............................................................................................................. $
Midstream........................................................................................................................................
Corporate, Interest and Other ..........................................................................................................

Total............................................................................................................................................. $
Net Income (Loss) Attributable to Hess Corporation Per Common Share - Diluted (a) ............ $

770
286
(497)
559
1.81

$

$
$

(2,841) $
230
(482)
(3,093) $
(10.15) $

53
144
(605)
(408)
(1.37)

(a) Calculated as net income (loss) attributable to Hess Corporation less preferred stock dividends, divided by weighted average number of diluted shares.

In the following discussion and elsewhere in this report, the financial effects of certain transactions are disclosed on an after-tax
basis. Management reviews segment earnings on an after-tax basis and uses after-tax amounts in its review of variances in segment
earnings. Management believes that after-tax amounts are a preferable method of explaining variances in earnings, since they show
the entire effect of a transaction rather than only the pre-tax amount. After-tax amounts are determined by applying the income tax
rate in each tax jurisdiction to pre-tax amounts.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
3

31

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 31

3/23/22 1:34 PM

31

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:41PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

32

3
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Items Affecting Comparability of Earnings Between Periods:

The following table summarizes items of income (expense) that are included in net income (loss) and affect comparability of

earnings between periods. The items in the table below are explained on pages 37 through 40.

Items Affecting Comparability of Earnings Between Periods, After Income Taxes:

Exploration and Production............................................................................................................. $
Midstream........................................................................................................................................
Corporate, Interest and Other ..........................................................................................................

Total............................................................................................................................................. $

(118) $
—
—
(118) $

(2,198) $
—
(1)
(2,199) $

63
(16)
(174)
(127)

The following table presents the pre-tax amount of items affecting comparability of income (expense) by financial statement line

item in the Statement of Consolidated Income on page 55.  The items in the table below are explained on pages 37 through 40.

2021

2020

2019

(In millions)

Gains on asset sales, net ....................................................................................................................... $
Other, net..............................................................................................................................................
Marketing, including purchased oil and gas.........................................................................................
Operating costs and expenses...............................................................................................................
Exploration expenses, including dry holes and lease impairment .......................................................
General and administrative expenses ...................................................................................................
Impairment and other ...........................................................................................................................
Total Items Affecting Comparability of Earnings Between Periods, Pre-Tax ............................. $

Reconciliations of GAAP and Non-GAAP Measures:

Before Income Taxes
2020

2019

2021

$

(In millions)
79
—
(53)
(20)
(153)
(6)
(2,126)
(2,279) $

$

29
—
—
—
—
—
(147)
(118) $

22
(88)
(21)
—
—
(30)
—
(117)

The following table reconciles reported net income (loss) attributable to Hess Corporation and adjusted net income (loss)

attributable to Hess Corporation:

Adjusted Net Income (Loss) Attributable to Hess Corporation:

Net income (loss) attributable to Hess Corporation ........................................................................ $
Less: Total items affecting comparability of earnings between periods, after-tax .........................

Adjusted Net Income (Loss) Attributable to Hess Corporation ............................................ $

559
(118)
677

$

$

(3,093) $
(2,199)

(894) $

(408)
(127)
(281)

The following table reconciles reported net cash provided by (used in) operating activities and net cash provided by (used in)

operating activities before changes in operating assets and liabilities:

2021

2020

2019

(In millions)

2021

2020

2019

(In millions)

Net cash provided by operating activities before changes in operating assets and liabilities:

Net cash provided by (used in) operating activities .......................................................................... $
Changes in operating assets and liabilities........................................................................................
Net cash provided by (used in) operating activities before changes in operating assets and
liabilities ......................................................................................................................................... $

$

2,890
101

$

1,333
470

1,642
595

2,991

$

1,803

$

2,237

Adjusted net income (loss) attributable to Hess Corporation is a non-GAAP financial measure, which we define as reported net
income (loss) attributable to Hess Corporation excluding items identified as affecting comparability of earnings between periods,
which are summarized on pages 37 through 40. Management uses adjusted net income (loss) to evaluate the Corporation’s operating
performance and believes that investors’ understanding of our performance is enhanced by disclosing this measure, which excludes
certain items that management believes are not directly related to ongoing operations and are not indicative of future business trends
and operations.

Net cash provided by (used in) operating activities before changes in operating assets and liabilities presented in this report is a
non-GAAP measure, which we define as reported net cash provided by (used in) operating activities excluding changes in operating
assets and liabilities. Management uses net cash provided by (used in) operating activities before changes in operating assets and

32

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
3

32

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 32

3/23/22 1:34 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

33

3
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

liabilities to evaluate the Corporation’s ability to internally fund capital expenditures, pay dividends and service debt and believes that
investors’ understanding of our ability to generate cash to fund these items is enhanced by disclosing this measure, which excludes
working capital and other movements that may distort assessment of our performance between periods.

These measures are not, and should not be viewed as, substitutes for U.S. GAAP net income (loss) and net cash provided by (used

in) operating activities.

Comparison of Results

Exploration and Production

Following is a summarized statement of income for our E&P operations:

Revenues and Non-Operating Income

Sales and other operating revenues ................................................................................................. $
Gains on asset sales, net ..................................................................................................................
Other, net.........................................................................................................................................
Total revenues and non-operating income ................................................................................
Costs and Expenses ............................................................................................................................
Marketing, including purchased oil and gas....................................................................................
Operating costs and expenses..........................................................................................................
Production and severance taxes.......................................................................................................
Midstream tariffs .............................................................................................................................
Exploration expenses, including dry holes and lease impairment ..................................................
General and administrative expenses ..............................................................................................
Depreciation, depletion and amortization .......................................................................................
Impairment and other ......................................................................................................................
Total costs and expenses ...........................................................................................................
Results of Operations Before Income Taxes ....................................................................................
Provision (benefit) for income taxes ...............................................................................................
Net Income (Loss) Attributable to Hess Corporation..................................................................... $

2021

2020

2019

(In millions)

7,473
29
64
7,566

2,119
965
172
1,094
162
191
1,361
147
6,211
1,355
585
770

$

$

$

4,667
79
31
4,777

1,067
895
124
946
351
206
1,915
2,126
7,630
(2,853)
(12)
(2,841) $

6,495
22
51
6,568

1,849
971
184
722
233
204
1,977
—
6,140
428
375
53

Excluding the E&P items affecting comparability of earnings between periods in the table on page 37, the changes in E&P results
are primarily attributable to changes in selling prices, production and sales volumes, marketing expenses, cash operating costs,
Midstream tariffs, DD&A expense, exploration expenses and income taxes, as discussed below.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
3

33

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 33

3/23/22 1:34 PM

33

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

34

Selling Prices: Average worldwide realized crude oil selling prices, including hedging, were 36% higher in 2021 compared with
the prior year, primarily due to the increase in Brent and WTI crude oil prices. In addition, realized worldwide selling prices for NGL
increased in 2021 by 174% and worldwide natural gas prices increased in 2021 by 54%, compared with the prior year. In total, higher
realized selling prices improved after-tax results by approximately $1,430 million, compared with 2020. Our average selling prices
were as follows:

2021

2020

2019

Average Selling Prices (a)

Crude Oil - Per Barrel (Including Hedging)

United States

North Dakota ............................................................................................................................. $
Offshore.....................................................................................................................................
Total United States ..........................................................................................................................
Guyana ............................................................................................................................................
Malaysia and JDA ...........................................................................................................................
Other (b) ..........................................................................................................................................
Worldwide............................................................................................................................

Crude Oil - Per Barrel (Excluding Hedging)

United States

North Dakota ............................................................................................................................. $
Offshore.....................................................................................................................................
Total United States ..........................................................................................................................
Guyana ............................................................................................................................................
Malaysia and JDA ...........................................................................................................................
Other (b) ..........................................................................................................................................
Worldwide............................................................................................................................

Natural Gas Liquids - Per Barrel

United States

North Dakota ............................................................................................................................. $
Offshore.....................................................................................................................................
Worldwide............................................................................................................................

Natural Gas - Per Mcf

United States

North Dakota ............................................................................................................................. $
Offshore.....................................................................................................................................
Total United States ..........................................................................................................................
Malaysia and JDA ...........................................................................................................................
Other (b) ..........................................................................................................................................
Worldwide............................................................................................................................

$

$

$

$

55.57
60.09
56.64
68.57
71.00
66.39
60.08

59.90
64.77
61.05
71.07
71.00
69.25
63.90

30.74
26.40
30.40

4.08
3.25
3.82
5.15
3.40
4.60

$

$

$

$

42.63
45.92
43.56
46.41
37.91
51.37
44.28

33.87
36.55
34.63
37.40
37.91
43.42
35.52

11.29
8.94
11.10

1.27
1.23
1.26
4.47
3.41
2.98

53.19
59.18
55.15
—
61.81
65.22
56.77

53.18
59.17
55.14
—
61.81
65.22
56.76

13.20
13.31
13.21

1.59
2.12
1.83
5.04
4.63
3.90

(a) Selling prices in the United States are adjusted for certain processing and distribution fees included in Marketing expenses. Excluding these fees worldwide
selling prices for 2021 would be $64.25 per barrel for crude oil (including hedging) (2020: $47.54; 2019: $59.95), $68.07 per barrel for crude oil (excluding
hedging) (2020: $38.78; 2019: $59.94), $30.61 per barrel for NGL (2020: $11.29; 2019: $13.40) and $4.71 per mcf for natural gas (2020: $3.11; 2019: $3.97).

(b) Other includes our interests in Denmark, which were sold in August 2021, and Libya.

Crude oil hedging activities in 2021 were a net loss of $243 million before and after income taxes, and a net gain of $547 million
before and after income taxes in 2020. For calendar year 2022, we have WTI collars with an average monthly floor price of $60 per
barrel and an average monthly ceiling price of $100 per barrel for 90,000 bopd, and Brent collars with an average monthly floor price
of $65 per barrel and an average monthly ceiling price of $105 per barrel for 60,000 bopd. We expect premium amortization, which
will be reflected in realized selling prices, to reduce our 2022 results by approximately $225 million.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
3

34

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 34

3/23/22 1:34 PM

34

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Production Volumes: Our daily worldwide net production was as follows:

92416 10K 03.8.2022

35

2021

2020

2019

(In thousands)

Crude Oil - Barrels
United States

North Dakota .............................................................................................................................
Offshore (a) ...............................................................................................................................
Total United States ..........................................................................................................................
Guyana ............................................................................................................................................
Malaysia and JDA ...........................................................................................................................
Other (b) ..........................................................................................................................................
Total ................................................................................................................................................

Natural Gas Liquids - Barrels

United States

North Dakota .............................................................................................................................
Offshore (a) ...............................................................................................................................
Total United States ..........................................................................................................................

Natural Gas - Mcf
United States

North Dakota .............................................................................................................................
Offshore (a) ...............................................................................................................................
Total United States ..........................................................................................................................
Malaysia and JDA ...........................................................................................................................
Other (b) ..........................................................................................................................................
Total ................................................................................................................................................

Barrels of Oil Equivalent...................................................................................................................

80
29
109
30
3
21
163

49
4
53

162
72
234
347
10
591

315

107
38
145
20
4
9
178

56
5
61

180
76
256
291
7
554

331

94
46
140
—
4
25
169

42
5
47

110
91
201
351
20
572

311

Crude oil and natural gas liquids as a share of total production ..........................................................

69 %

72 %

69 %

(a) In November 2020, we sold our working interest in the Shenzi Field in the deepwater Gulf of Mexico. Net production from the Shenzi Field was 9,000 boepd for

the year ended December 31, 2020 (2019: 12,000 boepd).

(b) Other includes our interests in Denmark, which were sold in August 2021, and Libya. Net production from Denmark was 3,000 boepd for 2021 (2020: 6,000

boepd; 2019: 7,000 boepd).  Net production from Libya was 20,000 boepd for 2021 (2020: 4,000 boepd; 2019: 21,000 boepd).

In 2022, we expect net production, excluding Libya, to be in the range of 325,000 boepd to 330,000 boepd, compared with 2021

net production, excluding Libya and assets sold, of 290,000 boepd.

Net production variances related to 2021 and 2020 are summarized as follows:

United States: North Dakota net production was lower in 2021, primarily due to the impact of lower drilling activity caused by a
reduction in rig count from six to one during the first half of 2020, lower NGL and natural gas volumes received under percentage of
proceeds contracts due to higher commodity prices, curtailed production related to the planned Tioga Gas Plant maintenance
turnaround completed in the third quarter of 2021, and the sale of our Little Knife and Murphy Creek nonstrategic acreage interests in
the second quarter of 2021. Total offshore net production was lower in 2021 primarily due to the sale of the Shenzi Field in
November 2020.

International: Net crude oil production from Guyana was higher in 2021, due to the production ramp up from the Liza Phase 1
development in 2020. Net oil production in Libya was higher in 2021 due to force majeure declared on production operations between
January 2020 and October 2020. Net natural gas production was higher at Malaysia and JDA reflecting higher natural gas
nominations due to a recovery in economic activity which had been impacted by COVID-19.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
3

35

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 35

3/23/22 1:34 PM

35

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

36

Sales Volumes: Net worldwide sales volumes from Hess net production, which excludes sales volumes of crude oil, NGLs and

natural gas purchased from third parties, were as follows:

2021

2020

2019

Crude oil – barrels (a)...........................................................................................................................
Natural gas liquids – barrels.................................................................................................................
Natural gas – mcf .................................................................................................................................
Barrels of Oil Equivalent..............................................................................................................

63,540
19,406
215,589
118,878

(In thousands)
60,924
22,397
202,917
117,141

Crude oil - barrels per day....................................................................................................................
Natural gas liquids - barrels per day.....................................................................................................
Natural gas - mcf per day .....................................................................................................................
Barrels of Oil Equivalent Per Day...............................................................................................

174
53
591
326

167
61
554
320

61,061
17,067
208,665
112,906

167
47
572
309

(a) At December 31, 2020, we had 4.2 million barrels of crude oil transported and stored on two chartered VLCCs for sale in Asian markets. The two VLCC cargos

were sold in the first quarter of 2021.

Marketing, including purchased oil and gas (Marketing expense): Marketing expense is mainly comprised of costs to purchase
crude oil, NGL and natural gas from our partners in Hess operated wells or other third parties, primarily in the U.S., and transportation
and other distribution costs for U.S. marketing activities. Marketing expense was higher in 2021 compared to 2020 primarily due to
higher third party crude oil volumes purchased and prices paid for purchased volumes. Marketing expenses in 2021 included $173
million related to the cost of 4.2 million barrels of crude oil stored on two VLCCs in 2020 that were sold in 2021. Marketing expense
in 2020 was reduced by $164 million for the net cost of crude oil inventory that was capitalized for the barrels loaded on VLCCs.

Cash Operating Costs: Cash operating costs consist of operating costs and expenses, production and severance taxes and E&P
general and administrative expenses. Excluding items affecting comparability described in Items Affecting Comparability of Earnings
Between Periods on page 37, cash operating costs increased primarily due to higher maintenance and workover activity in 2021
compared with the prior year due to reduced activity in 2020 related to COVID-19, and higher production and severance taxes
associated with higher crude oil prices in 2021. On a per-unit basis, cash operating costs were higher in 2021 due to the higher costs
and the impact of lower 2021 production volumes.

Midstream Tariffs Expense: Tariffs expense increased from 2020, primarily due to higher tariff rates and minimum volume

commitments in 2021.  In 2022, we estimate Midstream tariffs expense to be in the range of $1,190 million to $1,215 million.

DD&A Expense: DD&A expense was lower in 2021 primarily due to the impact to DD&A rates resulting from year-end 2020
revisions and additions to proved reserves, lower production volumes in 2021, and the impact of impairment charges recognized in the
first quarter of 2020.

Unit Costs: Unit cost per boe information is based on total E&P net production volumes and excludes items affecting

comparability of earnings as disclosed on page 37.  Actual and forecast unit costs are as follows:

Cash operating costs (b) .................................................................... $
DD&A expense (c) ............................................................................

Total Production Unit Costs ........................................................ $

2021

11.55
11.84
23.39

$

$

Actual

2020

9.91
15.80
25.71

$

$

2019

11.99
17.43
29.42

Forecast range (a)

2022
$12.50 — $13.00
$11.50 — $12.50
$24.00 — $25.50

(a) Forecast information excludes any contribution from Libya.
(b) Cash operating costs per boe, excluding Libya, were $12.11 in 2021 (2020: $9.85; 2019: $12.54).
(c) DD&A expense per boe, excluding Libya, was $12.43 in 2021 (2020: $15.98; 2019: $18.52).

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
3

36

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 36

3/23/22 1:35 PM

36

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
3
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

37

Exploration Expenses: Exploration expenses, including items affecting comparability of earnings described below, were as

follows:

Exploratory dry hole costs (a).............................................................................................................. $
Exploration lease and other impairment (b).........................................................................................
Geological and geophysical expense and exploration overhead..........................................................

$

2021

2020

2019

(In millions)
192
51
108
351

$

$

$

$

11
20
131
162

49
17
167
233

(a) In 2021, dry hole costs primarily related to the Koebi-1 well in the Stabroek Block, offshore Guyana. In 2020, dry hole costs primarily related to the Tanager-1
well in the Kaieteur Block, offshore Guyana, the Galapagos Deep and Oldfield-1 wells in the Gulf of Mexico and the write-off of previously capitalized
exploratory wells (see Items Affecting Comparability of Earnings Between Periods below).

(b) In 2020, exploration lease and other impairment included impaired leasehold costs due to a reprioritization of the Corporation’s forward capital program (see

Items Affecting Comparability of Earnings Between Periods below).

In 2022, we estimate exploration expenses, excluding dry hole expense, to be in the range of $170 million to $180 million.

Income Taxes:

In 2021, income tax expense was $585 million compared with an income tax benefit of $12 million in 2020,
primarily due to higher pre-tax income in Libya and Guyana. Income tax expense from Libya operations was $436 million in 2021
compared with $38 million in 2020. We are generally not recognizing deferred tax benefit or expense in certain countries, primarily
the U.S. (non-Midstream), Denmark (sold in August 2021), and Malaysia, while we maintain valuation allowances against net
deferred tax assets in these jurisdictions in accordance with the requirements of U.S. accounting standards. See E&P Items Affecting
Comparability of Earnings Between Periods below.

Actual effective tax rates are as follows:

Effective income tax benefit (expense) rate.........................................................................................
Adjusted effective income tax benefit (expense) rate (a).....................................................................

(a) Excludes any contribution from Libya and items affecting comparability of earnings.

2021
%
(43)
(15)

2020
%
—
(5)

2019
%
(88)
(36)

In 2022, we estimate income tax expense, excluding Libya and items affecting comparability of earnings between periods, to be in

the range of $300 million to $310 million.

Items Affecting Comparability of Earnings Between Periods: Reported E&P earnings include the following items affecting

comparability of income (expense):

Before Income Taxes

After Income Taxes

2021

2020

2019

2021

2020

2019

Impairment and other ........................................................................................ $
Dry hole and lease impairment expenses ..........................................................
Crude oil inventories write-down......................................................................
Severance costs .................................................................................................
Cost recovery settlement ...................................................................................
Reversal of deferred tax asset valuation allowance ..........................................
Gains on asset sales, net ....................................................................................

(147) $ (2,126) $

—
—
—
—
—
29

(152)
(53)
(26)
—
—
79

$

(118) $ (2,278) $

(In millions)
— $
—
—
—
(21)
—
22
1

$

(147) $ (2,049) $

—
—
—
—
—
29

(150)
(52)
(26)
—
—
79

(118) $ (2,198) $

—
—
—
—
(19)
60
22
63

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
3

37

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 37

3/23/22 1:35 PM

37

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

38

3
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

The pre-tax amounts of E&P items affecting comparability of income (expense) as presented in the Statement of Consolidated

Income are as follows:

Gains on asset sales, net ....................................................................................................................... $
Marketing, including purchased oil and gas.........................................................................................
Operating costs and expenses...............................................................................................................
Exploration expenses, including dry holes and lease impairment .......................................................
General and administrative expenses ...................................................................................................
Impairment and other ...........................................................................................................................

$

2021:

Before Income Taxes
2020

2019

2021

$

(In millions)
79
(53)
(20)
(153)
(5)
(2,126)
(2,278) $

$

29
—
—
—
—
(147)
(118) $

22
(21)
—
—
—
—
1

• Gains on asset sales, net: We recognized a pre-tax gain of $29 million ($29 million after income taxes) associated with the

sale of our interests in Denmark.

• Impairment and other: We recorded a charge of $147 million ($147 million after income taxes) for the total estimated future
abandonment obligations of the West Delta Field in the Gulf of Mexico. In June 2021, the U.S. Bankruptcy Court approved
Fieldwood’s bankruptcy plan which included discharging decommissioning obligations, subject to conditions precedent, for
certain of Fieldwood’s assets. Those obligations will transfer to former owners of the properties, including us with respect to
the West Delta Field, which we sold in 2004. Potential recoveries from other parties that previously owned an interest in the
West Delta Field have not been recognized as of December 31, 2021. See Note 12, Impairment and Other in the Notes to
Consolidated Financial Statements.

2020:

• Impairment and other: We recorded noncash impairment charges totaling $2.1 billion ($2.0 billion after income taxes)
related to our oil and gas properties at North Malay Basin in Malaysia, the South Arne Field in Denmark, and the Stampede
and Tubular Bells fields in the Gulf of Mexico, primarily as a result of a lower long-term crude oil price outlook. Other
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.  See Note 12, Impairment and Other in the Notes to Consolidated Financial Statements.

• Dry hole and lease impairment expenses: We incurred pre-tax charges totaling $152 million ($150 million after income
taxes) in the first quarter to write-off previously capitalized exploratory well costs of $125 million ($123 million after income
taxes) primarily related to the northern portion of the Shenzi Field in the Gulf of Mexico and to impair certain exploration
leasehold costs by $27 million ($27 million after income taxes) due to a reprioritization of our capital program.

• Crude oil inventories write-down: We incurred a pre-tax charge of $53 million ($52 million after income taxes) to adjust
crude oil inventories to their net realizable value at the end of the first quarter following the significant decline in crude oil
prices.

• Severance costs: We recorded a pre-tax charge of $26 million ($26 million after income taxes) for employee termination

benefits incurred related to cost reduction initiatives.

• Gains on asset sales, net: We recorded a pre-tax gain of $79 million ($79 million after income taxes) associated with the sale

of our 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico.

2019:

• Cost recovery settlement: We recorded a pre-tax charge of $21 million ($19 million after income taxes) related to a

settlement on historical cost recovery balances in the JDA that was paid in cash.

• Reversal of deferred tax asset valuation allowance: We recorded a noncash income tax benefit of $60 million, which
resulted from the reversal of a valuation allowance against net deferred tax assets in Guyana upon achieving first production
from the Liza Phase 1 development.

• Gains on asset sales, net: We recorded a pre-tax gain of $22 million ($22 million after income taxes) associated with the sale

of our remaining acreage in the Utica shale play.

38

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 38

3/23/22 1:35 PM

38

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
3

 
 
 
 
3
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

39

Midstream

Following is a summarized statement of income for our Midstream operations:

2021

2020

2019

(In millions)

Revenues and Non-Operating Income

Sales and other operating revenues ................................................................................................. $
Other, net.........................................................................................................................................
Total revenues and non-operating income ................................................................................

$

1,204
10
1,214

$

1,092
10
1,102

Costs and Expenses

Operating costs and expenses..........................................................................................................
General and administrative expenses ..............................................................................................
Depreciation, depletion and amortization .......................................................................................
Interest expense ...............................................................................................................................
Total costs and expenses ...........................................................................................................
Results of Operations Before Income Taxes ....................................................................................
Provision (benefit) for income taxes ...............................................................................................
Net income (loss) .................................................................................................................................
Less: Net income (loss) attributable to noncontrolling interests.....................................................
Net Income (Loss) Attributable to Hess Corporation..................................................................... $

289
22
166
105
582
632
15
617
331
286

$

338
21
157
95
611
491
7
484
254
230

$

848
4
852

279
56
142
63
540
312
—
312
168
144

Sales and other operating revenues increased from 2020 primarily due to higher tariff rates and minimum volume commitments
partially offset by lower pass-through rail transportation revenue. Operating costs and expenses decreased from 2020 primarily due to
lower pass-through transportation costs, which were partially offset by the costs incurred associated with the planned Tioga Gas Plant
maintenance turnaround in 2021. DD&A expense increased from 2020 primarily due to additional assets placed in service. Interest
expense increased from 2020 primarily due to the $750 million of 4.250% fixed-rate senior unsecured notes due 2030 issued in August
2021.

In 2022, we estimate net income attributable to Hess Corporation from the Midstream segment to be in the range of $275 million

to $285 million.

Items Affecting Comparability of Earnings Between Periods:

In 2019, we recognized a pre-tax charge of $30 million ($16
million after income taxes and noncontrolling interests) in General and Administrative Expenses for transaction related costs for Hess
Midstream Partners LP’s acquisition of HIP and the associated corporate restructuring. See Note 4, Hess Midstream LP in the Notes
to Consolidated Financial Statements.

Corporate, Interest and Other

The following table summarizes Corporate, Interest and Other expenses:

Corporate and other expenses (excluding items affecting comparability)........................................... $
Interest expense ....................................................................................................................................
Less: Capitalized interest .....................................................................................................................
Interest expense, net ........................................................................................................................
Corporate, Interest and Other expenses before income taxes ..............................................................
Provision (benefit) for income taxes ...............................................................................................
Net Corporate, Interest and Other expenses after income taxes ..........................................................
Items affecting comparability of earnings between periods, after income taxes ............................
Total Corporate, Interest and Other Expenses After Income Taxes ............................................ $

2021

2020

2019

(In millions)
114
373
—
373
487
(6)
481
1
482

$

$

$

$

121
376
—
376
497
—
497
—
497

114
355
(38)
317
431
—
431
174
605

Corporate and other expenses, excluding items affecting comparability, were higher in 2021 compared to 2020 primarily due to a
gain from the sale of a property related to a former downstream business in 2020. In 2022, after-tax Corporate and other expenses,
excluding items affecting comparability of earnings between periods, are estimated to be in the range of $120 million to $130 million.
Interest expense, net is estimated to be in the range of $350 million to $360 million in 2022.

39

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 39

3/23/22 1:35 PM

39

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
3

 
 
 
 
4
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

40

Items Affecting Comparability of Earnings Between Periods: Corporate, Interest and Other results included the following items

affecting comparability of income (expense):

2020:

• Severance costs: We incurred a pre-tax charge of $1 million ($1 million after income taxes) for employee termination

benefits related to cost reduction initiatives.

2019:

• Pension settlement: We recorded a noncash pension settlement charge of $88 million ($88 million after income taxes)
associated with the purchase of a single premium annuity contract by the Hess Corporation Employees’ Pension Plan to settle
and transfer certain of its obligations to a third party. The charge is included in Other, net in the Statement of Consolidated
Income.

• Income tax: We recorded an allocation of noncash income tax expense of $86 million that was previously a component of

accumulated other comprehensive income related to our 2019 crude oil hedge contracts.

Liquidity and Capital Resources

The following table sets forth certain relevant measures of our liquidity and capital resources at December 31:

2021

2020

(In millions, except ratio)

Cash and cash equivalents (a) ......................................................................................................................................... $
Current portion of long-term debt (b) .............................................................................................................................
Total debt (c) ...................................................................................................................................................................
Total equity .....................................................................................................................................................................
Debt to capitalization ratio for debt covenants (d)..........................................................................................................

$

2,713
517
8,458
7,026
42.3 %

1,739
10
8,296
6,335
47.5 %

(a) Includes $2 million of cash attributable to our Midstream Segment at December 31, 2021 (2020: $4 million) of which, $2 million is held by Hess Midstream LP at

December 31, 2021 (2020: $3 million).

(b) Includes the remaining $500 million outstanding under our $1 billion term loan maturing in March 2023 that we repaid in February 2022.
(c) Includes $2,564 million of debt outstanding from our Midstream Segment at December 31, 2021 (2020: $1,910 million) that is non-recourse to Hess Corporation.
(d) Total Consolidated Debt of Hess Corporation (including finance leases and excluding Midstream non-recourse debt) as a percentage of Total Capitalization of
Hess Corporation as defined under Hess Corporation's term loan and revolving credit facility financial covenants. Total Capitalization excludes the impact of
noncash impairment charges and non-controlling interests.  See Note 7, Debt in the Notes to Consolidated Financial Statements.

Cash Flows

The following table sets forth a summary of our cash flows:

2021

2020

2019

(In millions)

Net cash provided by (used in):

Operating activities ........................................................................................................................... $
Investing activities.............................................................................................................................
Financing activities ...........................................................................................................................
Net Increase (Decrease) in Cash and Cash Equivalents ............................................................ $

2,890
(1,325)
(591)
974

$

$

1,333
(1,707)
568
194

$

$

1,642
(2,843)
52
(1,149)

Operating Activities: Net cash provided by operating activities was $2,890 million in 2021 (2020: $1,333 million), while net cash
provided by operating activities before changes in operating assets and liabilities was $2,991 million in 2021 (2020: $1,803
million). Net cash provided by operating activities before changes in operating assets and liabilities increased from 2020 primarily
due to higher realized selling prices. Changes in operating assets and liabilities in 2021 reduced net cash provided by operating
activities by $101 million, primarily from higher receivables which includes premiums paid on crude oil hedge contracts, and
abandonment expenditures, partially offset by accrued income taxes and royalties payable, an increase in accrued liabilities, and a
decrease in crude oil inventory resulting from our VLCC transactions. Changes in operating assets and liabilities in 2020 reduced net
cash provided by operating activities by $470 million, primarily from a decrease in accounts payable and accrued liabilities, an
increase in crude oil inventory resulting from our VLCC transactions, and abandonment expenditures, partially offset by lower
receivables. At December 31, 2021, we have accrued income taxes and royalties payable of approximately $470 million in Libya
related to operations for the period December 2020 through November 2021, which we paid in January 2022.

Investing Activities: Total Additions to Property, Plant and Equipment were $1,747 million in 2021 (2020: $2,197 million). The

decrease primarily reflects lower drilling activity.  Proceeds from asset sales were $427 million in 2021 (2020: $493 million).

40

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
4

40

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 40

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
4
1

9
2
4
1
6

1
0
K
0
3
.
2
6
.
2
0
2
2
C
O
9

2020:

2019:

Income.

Items Affecting Comparability of Earnings Between Periods: Corporate, Interest and Other results included the following items

affecting comparability of income (expense):

• Severance costs: We incurred a pre-tax charge of $1 million ($1 million after income taxes) for employee termination

benefits related to cost reduction initiatives.

• Pension settlement: We recorded a noncash pension settlement charge of $88 million ($88 million after income taxes)
associated with the purchase of a single premium annuity contract by the Hess Corporation Employees’ Pension Plan to settle
and transfer certain of its obligations to a third party. The charge is included in Other, net in the Statement of Consolidated

• Income tax: We recorded an allocation of noncash income tax expense of $86 million that was previously a component of

accumulated other comprehensive income related to our 2019 crude oil hedge contracts.

Liquidity and Capital Resources

The following table sets forth certain relevant measures of our liquidity and capital resources at December 31:

Cash and cash equivalents (a) ......................................................................................................................................... $

$

Current portion of long-term debt (b) .............................................................................................................................

Total debt (c) ...................................................................................................................................................................

Total equity .....................................................................................................................................................................

Debt to capitalization ratio for debt covenants (d)..........................................................................................................

42.3 %

47.5 %

(a) Includes $2 million of cash attributable to our Midstream Segment at December 31, 2021 (2020: $4 million) of which, $2 million is held by Hess Midstream LP at

December 31, 2021 (2020: $3 million).

(b) Includes the remaining $500 million outstanding under our $1 billion term loan maturing in March 2023 that we repaid in February 2022.

(c) Includes $2,564 million of debt outstanding from our Midstream Segment at December 31, 2021 (2020: $1,910 million) that is non-recourse to Hess Corporation.
(d) Total Consolidated Debt of Hess Corporation (including finance leases and excluding Midstream non-recourse debt) as a percentage of Total Capitalization of
Hess Corporation as defined under Hess Corporation's term loan and revolving credit facility financial covenants. Total Capitalization excludes the impact of

noncash impairment charges and non-controlling interests.  See Note 7, Debt in the Notes to Consolidated Financial Statements.

2021

2020

(In millions, except ratio)

2,713

517

8,458

7,026

1,739

10

8,296

6,335

Cash Flows

The following table sets forth a summary of our cash flows:

2021

2020

2019

(In millions)

Net cash provided by (used in):

Operating activities ........................................................................................................................... $

2,890

$

1,333

$

Investing activities.............................................................................................................................

Financing activities ...........................................................................................................................

(1,325)

(591)

Net Increase (Decrease) in Cash and Cash Equivalents ............................................................ $

974

$

(1,707)

568

194

$

1,642
(2,843)
52
(1,149)

Operating Activities: Net cash provided by operating activities was $2,890 million in 2021 (2020: $1,333 million), while net cash
provided by operating activities before changes in operating assets and liabilities was $2,991 million in 2021 (2020: $1,803
million). Net cash provided by operating activities before changes in operating assets and liabilities increased from 2020 primarily
due to higher realized selling prices. Changes in operating assets and liabilities in 2021 reduced net cash provided by operating
activities by $101 million, primarily from higher receivables which includes premiums paid on crude oil hedge contracts, and
abandonment expenditures, partially offset by accrued income taxes and royalties payable, an increase in accrued liabilities, and a
decrease in crude oil inventory resulting from our VLCC transactions. Changes in operating assets and liabilities in 2020 reduced net
cash provided by operating activities by $470 million, primarily from a decrease in accounts payable and accrued liabilities, an
increase in crude oil inventory resulting from our VLCC transactions, and abandonment expenditures, partially offset by lower
receivables. At December 31, 2021, we have accrued income taxes and royalties payable of approximately $470 million in Libya

related to operations for the period December 2020 through November 2021, which we paid in January 2022.

Investing Activities: Total Additions to Property, Plant and Equipment were $1,747 million in 2021 (2020: $2,197 million). The

decrease primarily reflects lower drilling activity.  Proceeds from asset sales were $427 million in 2021 (2020: $493 million).

92416 10K 03.26.2022 CO9

41

Financing Activities: In 2021, we repaid $500 million of our $1 billion term loan maturing in March 2023. Borrowings in 2021
related to the $750 million of 4.250% fixed-rate senior unsecured notes due 2030 issued by our Midstream operating segment, while
borrowings in 2020 related to our $1 billion term loan. Common stock dividends paid were $311 million in 2021 (2020:
Financing Activities: In 2021, we repaid $500 million of our $1 billion term loan maturing in March 2023. Borrowings in 2021
$309 million), and payments to noncontrolling interests were $664 million in 2021 (2020: $261 million), which included $375 million
In 2021, we received net
paid to GIP for the repurchase by HESM Opco of approximately 15.6 million GIP-owned Class B units.
related to the $750 million of 4.250% fixed-rate senior unsecured notes due 2030 issued by our Midstream operating segment, while
proceeds of $178 million from two public offerings totaling approximately 7.8 million Hess-owned Class A shares in Hess Midstream
borrowings in 2020 related to our $1 billion term loan. Common stock dividends paid were $311 million in 2021 (2020:
LP.
$309 million), and payments to noncontrolling interests were $664 million in 2021 (2020: $261 million), which included $375 million
paid to GIP for the repurchase by HESM Opco of approximately 15.6 million GIP-owned Class B units.
In 2021, we received net
Future Capital Requirements and Resources
proceeds of $178 million from two public offerings totaling approximately 7.8 million Hess-owned Class A shares in Hess Midstream
LP.

At December 31, 2021, we had $2.71 billion in cash and cash equivalents, excluding Midstream, and total liquidity, including
available committed credit facilities, of approximately $6.3 billion. Our fully undrawn $3.5 billion committed revolving credit facility
Future Capital Requirements and Resources
matures in May 2024. In January 2022, we paid accrued Libyan income tax and royalties of approximately $470 million related to
In February 2022, we repaid the remaining $500 million
operations for the period December 2020 through November 2021.
At December 31, 2021, we had $2.71 billion in cash and cash equivalents, excluding Midstream, and total liquidity, including
outstanding under our $1 billion term loan.
available committed credit facilities, of approximately $6.3 billion. Our fully undrawn $3.5 billion committed revolving credit facility
matures in May 2024. In January 2022, we paid accrued Libyan income tax and royalties of approximately $470 million related to
Net production in 2022 is forecast to be in the range of 325,000 boepd to 330,000 boepd, excluding Libya, and we expect our
operations for the period December 2020 through November 2021.
In February 2022, we repaid the remaining $500 million
2022 E&P capital and exploratory expenditures will be approximately $2.6 billion. For calendar year 2022, we have WTI collars with
outstanding under our $1 billion term loan.
an average monthly floor price of $60 per barrel and an average monthly ceiling price of $100 per barrel for 90,000 bopd, and Brent
collars with an average monthly floor price of $65 per barrel and an average monthly ceiling price of $105 per barrel for 60,000 bopd.
Net production in 2022 is forecast to be in the range of 325,000 boepd to 330,000 boepd, excluding Libya, and we expect our
2022 E&P capital and exploratory expenditures will be approximately $2.6 billion. For calendar year 2022, we have WTI collars with
In 2022, based on current forward strip crude oil prices, we expect cash flow from operating activities and cash and cash
an average monthly floor price of $60 per barrel and an average monthly ceiling price of $100 per barrel for 90,000 bopd, and Brent
equivalents at December 31, 2021 will be sufficient to fund our capital investment program, dividends, and the recent repayment of
collars with an average monthly floor price of $65 per barrel and an average monthly ceiling price of $105 per barrel for 60,000 bopd.
the remaining $500 million outstanding under our $1 billion term loan. Depending on market conditions, we may take any of the
following steps, or a combination thereof, to improve our liquidity and financial position: reduce the planned capital program and
In 2022, based on current forward strip crude oil prices, we expect cash flow from operating activities and cash and cash
other cash outlays, including dividends, pursue asset sales, borrow against our committed revolving credit facility, or issue debt or
equivalents at December 31, 2021 will be sufficient to fund our capital investment program, dividends, and the recent repayment of
equity securities.
the remaining $500 million outstanding under our $1 billion term loan. Depending on market conditions, we may take any of the
following steps, or a combination thereof, to improve our liquidity and financial position: reduce the planned capital program and
The table below summarizes the capacity, usage, and available capacity of our borrowing and letter of credit facilities at
other cash outlays, including dividends, pursue asset sales, borrow against our committed revolving credit facility, or issue debt or
December 31, 2021:
equity securities.

The table below summarizes the capacity, usage, and available capacity of our borrowing and letter of credit facilities at

Capacity

Borrowings

Total
Used

Available
Capacity

December 31, 2021:

Hess Corporation

Expiration
Date

Expiration
Date

Hess Corporation

Revolving credit facility.................................................. May 2024
Committed lines .............................................................. Various (a)
Uncommitted lines .......................................................... Various (a)
Total - Hess Corporation ............................................
Revolving credit facility.................................................. May 2024
...............................................
............
............
Committed lines .............................................................. Various (a)
Revolving credit facility (b) ............................................ December 2024
Uncommitted lines .......................................................... Various (a)
Total - Hess Corporation ............................................
Total - Midstream.......................................................
..................................
...............................................
............
............

Midstream

Capacity
3,500
100
230
3,830
3,500
100
230
1,000
3,830
1,000

$

$
$

$
$
$

Midstream
(a) Committed and uncommitted lines have expiration dates through 2022.
1,000
(b) This credit facility may only be utilized by HESM Opco and is non-recourse to Hess Corporation.
1,000

Revolving credit facility (b) ............................................ December 2024

..................................

Total - Midstream.......................................................
Hess Corporation:

(a) Committed and uncommitted lines have expiration dates through 2022.
(b) This credit facility may only be utilized by HESM Opco and is non-recourse to Hess Corporation.

$
$

$
$

$
$
$

$
$

Letters of
Credit
Issued

(In millions)
Letters of
Credit
Issued

Borrowings
$

— $
—
—
— $
— $
—
—
$
104
— $
$
104

— $
29
(In millions)
230
$
259
— $
29
230
— $
$
259
— $

Total
Used

— $
29
230
$
259
— $
29
230
104
259
104

$
$
$

Available
Capacity
3,500
71
—
3,571
3,500
71
—
896
3,571
896

104
104

$
$

— $
— $

104
104

$
$

896
896

Hess Corporation:

In April 2021, we amended the Corporation's fully undrawn $3.5 billion revolving credit facility that had an expiration date in
May 2023, by extending the facility for one year to May 2024 and incorporating customary provisions for the eventual replacement of
LIBOR, among other changes as set forth in the amended credit agreement. This facility can be used for borrowings and letters of
credit. Borrowings on the facility will generally bear interest at 1.40% above LIBOR, though the interest rate is subject to adjustment
In April 2021, we amended the Corporation's fully undrawn $3.5 billion revolving credit facility that had an expiration date in
if the Corporation’s credit rating changes. At December 31, 2021, Hess Corporation had no outstanding borrowings or letters of credit
May 2023, by extending the facility for one year to May 2024 and incorporating customary provisions for the eventual replacement of
under its revolving credit facility.
LIBOR, among other changes as set forth in the amended credit agreement. This facility can be used for borrowings and letters of
credit. Borrowings on the facility will generally bear interest at 1.40% above LIBOR, though the interest rate is subject to adjustment
In 2020, we entered into a $1 billion three year term loan agreement with a maturity date of March 16, 2023. Borrowings under
if the Corporation’s credit rating changes. At December 31, 2021, Hess Corporation had no outstanding borrowings or letters of credit
the term loan generally bear interest at LIBOR plus an initial applicable margin of 2.25%. In July 2021, we repaid $500 million of the
under its revolving credit facility.
term loan, and in February 2022, we repaid the remaining $500 million.

In 2020, we entered into a $1 billion three year term loan agreement with a maturity date of March 16, 2023. Borrowings under
The revolving credit facility and term loan are subject to customary representations, warranties, customary events of default and
the term loan generally bear interest at LIBOR plus an initial applicable margin of 2.25%. In July 2021, we repaid $500 million of the
covenants, including a financial covenant limiting the ratio of Total Consolidated Debt to Total Capitalization of the Corporation and
term loan, and in February 2022, we repaid the remaining $500 million.
its consolidated subsidiaries to 65%, and a financial covenant limiting the ratio of secured debt to Consolidated Net Tangible Assets of
the Corporation and its consolidated subsidiaries to 15% (as these capitalized terms are defined in the credit agreement for the
The revolving credit facility and term loan are subject to customary representations, warranties, customary events of default and
revolving credit facility and the term loan agreement). The indentures for the Corporation's fixed-rate public notes limit the ratio of
covenants, including a financial covenant limiting the ratio of Total Consolidated Debt to Total Capitalization of the Corporation and
its consolidated subsidiaries to 65%, and a financial covenant limiting the ratio of secured debt to Consolidated Net Tangible Assets of
the Corporation and its consolidated subsidiaries to 15% (as these capitalized terms are defined in the credit agreement for the
41
revolving credit facility and the term loan agreement). The indentures for the Corporation's fixed-rate public notes limit the ratio of

9
O
C
2
2
0
2
.
6
2
.
3
0
K
0
1

6
1
4
2
9

1
4

40

41

41

92416 10K 03.26.2022 CO9

92416_10K_03.26.2022_CO9.indd 41

3/26/22 9:05 AM

K

8.500 in x 11.000 in

Hess Corp

03.26.2022 09:08AM

92416

awallerstein (sa1) (sa1)

92416 10K 03.26.2022 CO9

tbujak

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
 
 
92416 10K 03.8.2022

42

4
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

secured debt to Consolidated Net Tangible Assets (as that term is defined in the indentures) to 15%. As of December 31, 2021, Hess
Corporation was in compliance with these financial covenants. The most restrictive of the financial covenants related to our fixed-rate
public notes and our term loan and revolving credit facility would allow us to borrow up to an additional $1,843 million of secured
debt at December 31, 2021. For additional information regarding the alteration or discontinuation of LIBOR on our borrowing costs,
see Financial Risks in Item 1A. Risk Factors.

We had $259 million in letters of credit outstanding at December 31, 2021 (2020: $269 million), which relate to our global
business operations. We have a shelf registration under which we may issue additional debt securities, warrants, common stock or
preferred stock.

Midstream:

At December 31, 2021, HESM Opco, a consolidated subsidiary of Hess Midstream LP, had $1.4 billion of senior secured
syndicated credit facilities maturing December 16, 2024, consisting of a $1 billion five year revolving credit facility and a fully drawn
$400 million five year term loan A facility. The revolving credit facility can be used for borrowings and letters of credit to fund
HESM Opco’s operating activities, capital expenditures, distributions and for other general corporate purposes. Borrowings under the
five year term loan A facility will generally bear interest at LIBOR plus an applicable margin ranging from 1.55% to 2.50%, while the
applicable margin for the five year syndicated revolving credit facility ranges from 1.275% to 2.000%. Pricing levels for the facility
fee and interest-rate margins are based on HESM Opco’s ratio of total debt to EBITDA (as defined in the credit facilities). If HESM
Opco obtains an investment grade credit rating, the pricing levels will be based on HESM Opco’s credit ratings in effect from time to
time. The credit facilities contain covenants that require HESM Opco to maintain a ratio of total debt to EBITDA (as defined in the
credit facilities) for the prior four fiscal quarters of not greater than 5.00 to 1.00 as of the last day of each fiscal quarter (5.50 to 1.00
during the specified period following certain acquisitions) and, prior to HESM Opco obtaining an investment grade credit rating, a
ratio of secured debt to EBITDA for the prior four fiscal quarters of not greater than 4.00 to 1.00 as of the last day of each fiscal
quarter. HESM Opco was in compliance with these financial covenants at December 31, 2021. The credit facilities are secured by
first-priority perfected liens on substantially all of the assets of HESM Opco and its direct and indirect wholly owned material
domestic subsidiaries, including equity interests directly owned by such entities, subject to certain customary exclusions. At
December 31, 2021, borrowings of $104 million were drawn under HESM Opco’s revolving credit facility, and borrowings of $390
million, excluding deferred issuance costs, were drawn under HESM Opco’s term loan A facility. Borrowings under these credit
facilities are non-recourse to Hess Corporation.

Credit Ratings

Two of the three major credit rating agencies that rate our debt have assigned an investment grade rating.

In March 2021,
Standard and Poor’s Ratings Services affirmed our credit rating at BBB- and revised the outlook to stable (from negative). Fitch
Ratings affirmed our BBB- credit rating and revised the outlook from stable to positive in August 2021 and Moody’s Investors Service
affirmed our credit rating at Ba1, which is below investment grade, and revised the outlook from stable to positive in November 2021.

At December 31, 2021, HESM Opco’s senior unsecured debt is rated BB+ by Standard and Poor’s Ratings Services and Fitch

Ratings, and Ba3 by Moody’s Investors Service.

Cash Requirements:

Our cash obligations and commitments over the next twelve months include accounts payable, accrued liabilities, the current
portion of long-term debt, interest, lease payments, and purchase obligations which cover a portion of our planned capital expenditure
program in 2022 and include commitments for oil and gas production expenses, transportation and related contracts, seismic purchases
and other normal business expenses.

Our long-term cash obligations and commitments include:

•

•

•

Debt and interest: See Note 7, Debt in the Notes to Consolidated Financial Statements.

Operating and finance leases: The Corporation and certain of its subsidiaries lease drilling rigs, equipment, logistical assets
(offshore vessels, aircraft, and shorebases), and office space for varying periods. See Note 6, Leases in the Notes to
Consolidated Financial Statements.

Purchase obligations: We were contractually committed at December 31, 2021 for certain long-term capital expenditures
and operating expenses. Long-term obligations for operating expenses include commitments for oil and gas production
expenses, transportation and related contracts, seismic purchases and other normal business expenses. See Note 18,
Guarantees, Contingencies and Commitments in the Notes to Consolidated Financial Statements.

•

Asset retirement obligations: See Note 8, Asset Retirement Obligations in the Notes to Consolidated Financial Statements.

42

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 42

3/23/22 1:35 PM

42

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
4

 
 
 
 
4
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

43

•

•

Post-retirement plan liabilities: We have certain unfunded post-retirement plans, including our post-retirement medical plan.
See Note 9, Retirement Plans in the Notes to Consolidated Financial Statements.

Uncertain income tax positions: See Note 15, Income Taxes in the Notes to Consolidated Financial Statements.

Off-Balance Sheet Arrangements

At December 31, 2021, we had $259 million in letters of credit. See also Note 18, Guarantees, Contingencies and Commitments

in the Notes to Consolidated Financial Statements.

Foreign Operations

We conduct E&P activities outside the U.S., principally in Guyana, the Joint Development Area of Malaysia/Thailand, Malaysia,
Libya, Suriname, and Canada. Therefore, we are subject to the risks associated with foreign operations, including political risk, tax
law changes, currency risk, corruption and acts of terrorism. See Item 1A. Risk Factors for further details.

Critical Accounting Policies and Estimates

Accounting policies and estimates affect the recognition of assets and liabilities in the Consolidated Balance Sheet and revenues
and expenses in the Statement of Consolidated Income. The accounting methods used can affect net income, equity and various
financial statement ratios. However, our accounting policies generally do not change cash flows or liquidity.

Accounting for Exploration and Development Costs:

E&P activities are accounted for using the successful efforts
method. Costs of acquiring unproved and proved oil and gas leasehold acreage, including lease bonuses, brokers’ fees and other
related costs are capitalized. Annual
lease rentals, exploration expenses and exploratory dry hole costs are expensed as
incurred. Costs of drilling and equipping productive wells, including development dry holes, and related production facilities are
capitalized.

The costs of exploratory wells that find oil and gas reserves are capitalized pending determination of whether proved reserves
have been found. Exploratory drilling costs remain capitalized after drilling is completed if (1) the well has found a sufficient quantity
of reserves to justify completion as a producing well and (2) sufficient progress is being made in assessing the reserves and the
economic and operational viability of the project.
If either of those criteria is not met, or if there is substantial doubt about the
economic or operational viability of the project, the capitalized well costs are charged to expense. Indicators of sufficient progress in
assessing reserves, and the economic and operating viability of a project include: commitment of project personnel, active negotiations
for sales contracts with customers, negotiations with governments, operators and contractors and firm plans for additional drilling and
other factors.

Crude Oil and Natural Gas Reserves: The determination of estimated proved reserves is a significant element in arriving at the
results of operations of E&P activities. The estimates of proved reserves affect well capitalizations, the unit of production
depreciation rates of proved properties and wells and equipment, as well as impairment testing of oil and gas assets.

For reserves to be booked as proved they must be determined with reasonable certainty to be economically producible from
known reservoirs under existing economic conditions, operating methods and government regulations. In addition, government and
project operator approvals must be obtained and, depending on the amount of the project cost, senior management or the Board of
Directors must commit to fund the project. We maintain our own internal reserve estimates that are calculated by technical staff that
work directly with the oil and gas properties. Our technical staff update reserve estimates throughout the year based on evaluations of
new wells, performance reviews, new technical data and other studies. To provide consistency throughout the Corporation, standard
reserve estimation guidelines, definitions, reporting reviews and approval practices are used. The internal reserve estimates are subject
to internal technical audits and senior management review. We also engage an independent third-party consulting firm to audit
approximately 80% of our total proved reserves each year.

Proved reserves are calculated using the average price during the twelve-month period ending December 31 determined as an
unweighted arithmetic average of the price on the first day of each month within the year, unless prices are defined by contractual
agreements, excluding escalations based on future conditions. As discussed in Item 1A. Risk Factors, crude oil prices are volatile
which can have an impact on our proved reserves. Crude oil prices used in the determination of proved reserves at December 31, 2021
were $66.34 per barrel for WTI (2020: $39.77) and $68.92 per barrel for Brent (2020: $43.43). At December 31, 2021, spot prices
closed at $75.21 per barrel for WTI and $77.02 per barrel for Brent.
If crude oil prices in 2022 are at levels below that used in
determining 2021 proved reserves, we may recognize negative revisions to our December 31, 2022 proved undeveloped reserves. In
addition, we may recognize negative revisions to proved developed reserves, which can vary significantly by asset due to differing
operating cost structures. Conversely, price increases in 2022 above those used in determining 2021 proved reserves could result in
It is difficult to estimate the
positive revisions to proved developed and proved undeveloped reserves at December 31, 2022.
magnitude of any potential net negative or positive change in proved reserves at December 31, 2022, due to numerous currently
unknown factors, including 2022 crude oil prices, the amount of any additions to proved reserves, positive or negative revisions in

43

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
4

43

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 43

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
4
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

44

proved reserves related to 2022 reservoir performance, the levels to which industry costs will change in response to 2022 crude oil
prices, and management’s plans as of December 31, 2022 for developing proved undeveloped reserves. A 10% change in proved
developed and proved undeveloped reserves at December 31, 2021 would result in an approximate $165 million pre-tax change in
depreciation, depletion, and amortization expense for 2022 based on projected production volumes. See the Supplementary Oil and
Gas Data on pages 89 through 98 in the accompanying financial statements for additional information on our oil and gas reserves.

Impairment of Long-lived Assets: We review long‑lived assets, including oil and gas fields, for impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be recovered. Long‑lived assets are tested based on identifiable
cash flows that are largely independent of the cash flows of other assets and liabilities. If the carrying amounts of the long-lived assets
are not expected to be recovered by estimated undiscounted future net cash flows, the assets are impaired and an impairment loss is
recorded. The amount of impairment is measured based on the estimated fair value of the assets generally determined by discounting
anticipated future net cash flows, an income valuation approach, or by a market‑based valuation approach, which are Level 3 fair
value measurements.

In the case of oil and gas fields, the present value of future net cash flows is based on management’s best estimate of future prices,
which is determined with reference to recent historical prices and published forward prices, applied to projected production volumes
and discounted at a risk-adjusted rate. The projected production volumes represent reserves, including probable reserves, expected to
be produced based on a stipulated amount of capital expenditures. The production volumes, prices and timing of production are
consistent with internal projections and other externally reported information. Oil and gas prices used for determining asset
impairment will generally differ from those used in the standardized measure of discounted future net cash flows, since the
standardized measure requires the use of historical twelve-month average prices.

Our impairment tests of long-lived E&P producing assets are based on our best estimates of future production volumes (including
recovery factors), selling prices, operating and capital costs, the timing of future production and other factors, which are updated each
time an impairment test is performed. We could experience an impairment in the future if one or a combination of the following
occur: the projected production volumes from oil and gas fields decrease, crude oil and natural gas selling prices decline significantly
for an extended period or future estimated capital and operating costs increase significantly.

As a result of the significant decline in crude oil prices due to the economic slowdown from COVID-19, we reviewed our oil and
gas fields and midstream operating segment asset groups for impairment at March 31, 2020. We impaired various oil and gas fields
located in Malaysia, Denmark, and the Gulf of Mexico in the first quarter of 2020 primarily as a result of a lower long-term crude oil
price outlook. See Note 12, Impairment and Other in the Notes to Consolidated Financial Statements for further details.

Hess Midstream LP: We consolidate the activities of our interest in Hess Midstream LP, which qualifies as a variable interest
entity (VIE) under U.S. generally accepted accounting principles. We have concluded that we are the primary beneficiary of the VIE,
as defined in the accounting standards, since we have the power through Hess Corporation’s approximate 43.5% consolidated
ownership interest in Hess Midstream LP to direct those activities that most significantly impact the economic performance of Hess
Midstream LP, and are obligated to absorb losses or have the right to receive benefits that could potentially be significant to Hess
Midstream LP. This conclusion was based on a qualitative analysis that considered Hess Midstream LP’s governance structure, the
commercial agreements between Hess Midstream LP and us, and the voting rights established between the members, which provide us
the ability to control the operations of Hess Midstream LP.

Income Taxes: Judgments are required in the determination and recognition of income tax assets and liabilities in the financial
statements. These judgments include the requirement to recognize the financial statement effect of a tax position only when
management believes it is more likely than not, based on the technical merits, that the position will be sustained upon examination.

We have net operating loss carryforwards or credit carryforwards in multiple jurisdictions and have recorded deferred tax assets
for those losses and credits. Additionally, we have deferred tax assets due to temporary differences between the book basis and tax
basis of certain assets and liabilities. Regular assessments are made as to the likelihood of those deferred tax assets being realized. If,
when tested under the relevant accounting standards, it is more likely than not that some or all of the deferred tax assets will not be
realized, a valuation allowance is recorded to reduce the deferred tax assets to the amount that is expected to be realized.

The accounting standards require the evaluation of all available positive and negative evidence giving weight based on the
evidence’s relative objectivity.
In evaluating potential sources of positive evidence, we consider the reversal of taxable temporary
differences, taxable income in carryback and carryforward periods, the availability of tax planning strategies, the existence of
appreciated assets, estimates of future taxable income, and other factors. Estimates of future taxable income are based on assumptions
of oil and gas reserves, selling prices, and other subjective operating assumptions that are consistent with internal business
forecasts. In evaluating potential sources of negative evidence, we consider a cumulative loss in recent years, any history of operating
losses or tax credit carryforwards expiring unused, losses expected in early future years, unsettled circumstances that, if unfavorably
resolved, would adversely affect future operations and profit levels on a continuing basis in future years, and any carryback or
carryforward period so brief that a significant deductible temporary difference expected to reverse in a single year would limit
realization of tax benefits. Due to a sustained low commodity price environment, we remained in a three-year cumulative loss

44

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
4

44

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 44

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
4
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

45

position, both on a consolidated basis and for certain jurisdictions, at December 31, 2021. A three-year cumulative loss constitutes
objective negative evidence to which the accounting standards require we assign significant weight relative to subjective evidence
such as our estimates of future taxable income. We are generally not recognizing deferred tax benefit or expense in certain countries,
primarily the U.S. (non-Midstream), Denmark (sold in August 2021), and Malaysia, while we maintain valuation allowances against
net deferred tax assets in these jurisdictions.

At December 31, 2021, the Consolidated Balance Sheet reflects a $3,838 million valuation allowance against the net deferred tax
assets for multiple jurisdictions based on the evaluation of the accounting standards described above. The amount of the deferred tax
asset considered realizable, however, could be adjusted if estimates of future taxable income change or if objective negative evidence
in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as expected future
growth.

Asset Retirement Obligations: We have material legal obligations to remove and dismantle long‑lived assets and to restore land
or seabed at certain E&P locations. In accordance with generally accepted accounting principles, we recognize a liability for the fair
value of required asset retirement obligations. In addition, the fair value of any legally required conditional asset retirement obligation
is recorded if the liability can be reasonably estimated. We capitalize such costs as a component of the carrying amount of the
underlying assets in the period in which the liability is incurred.
In subsequent periods, the liability is accreted, and the asset is
depreciated over the useful life of the related asset. We estimate the fair value of these obligations by discounting projected future
payments that will be required to satisfy the obligations. In determining these estimates, we are required to make several assumptions
and judgments related to the scope of dismantlement, timing of settlement, interpretation of legal requirements, inflationary factors
and discount rate. In addition, there are other external factors, which could significantly affect the ultimate settlement costs or timing
for these obligations including changes in environmental regulations and other statutory requirements, fluctuations in industry costs
and foreign currency exchange rates and advances in technology. As a result, our estimates of asset retirement obligations are subject
to revision due to the factors described above. Changes in estimates prior to settlement result in adjustments to both the liability and
related asset values, unless the field has ceased production, in which case changes are recognized in our Consolidated Statement of
Income. See Note 8, Asset Retirement Obligations.

Retirement Plans: We have funded non-contributory defined benefit pension plans, an unfunded supplemental pension plan and
an unfunded postretirement medical plan. We recognize the net change in the funded status of the projected benefit obligation for
these plans in the Consolidated Balance Sheet. The determination of the obligations and expenses related to these plans are based on
several actuarial assumptions. These assumptions represent estimates made by us, some of which can be affected by external
factors. The most significant assumptions relate to:

Discount rates used for measuring the present value of future plan obligations and net periodic benefit cost: The discount rates
used to estimate our projected benefit obligations and net periodic benefit cost is based on a portfolio of high‑quality, fixed income
debt instruments with maturities that approximate the expected payment of plan obligations. At December 31, 2021, a 0.25% decrease
in the discount rate assumptions would increase projected benefit obligations by approximately $130 million and would increase
forecasted 2022 annual net periodic benefit expense by approximately $10 million. The increase in the projected benefit obligations
would decrease the funded status of our pension plans, but any decrease in the funded status would be partially mitigated by increases
in the fair value of fixed income investments in the asset portfolios.

Expected long-term rates of returns on plan assets: The expected return on plan assets is developed from the expected future
returns for each asset category, weighted by the target allocation of plan assets to that asset category. The future expected return
assumptions for individual asset categories are largely based on inputs from various investment experts regarding their future return
expectations for particular asset categories. At December 31, 2021, a 0.25% decrease in the expected long-term rates of return on plan
assets assumption would increase forecasted 2022 annual net periodic benefit expense by approximately $10 million.

Other assumptions include the rate of future increases in compensation levels and expected participant mortality.

Derivatives: We utilize derivative instruments, including futures, forwards, options and swaps, individually or in combination to
mitigate our exposure to fluctuations in the prices of crude oil and natural gas, as well as changes in interest and foreign currency
exchange rates. All derivative instruments are recorded at fair value in our Consolidated Balance Sheet. Our policy for recognizing
the changes in fair value of derivatives varies based on the designation of the derivative. The changes in fair value of derivatives that
are not designated as hedges are recognized currently in earnings. Derivatives may be designated as hedges of expected future cash
flows or forecasted transactions (cash flow hedges), or hedges of changes in fair value of recognized assets and liabilities or of
unrecognized firm commitments (fair value hedges). Changes in fair value of derivatives that are designated as cash flow hedges are
recorded as a component of other comprehensive income (loss). Amounts included in Accumulated other comprehensive income
(loss) for cash flow hedges are reclassified into earnings in the same period that the hedged item is recognized in earnings. Changes in
fair value of derivatives designated as fair value hedges are recognized currently in earnings. The change in fair value of the related
hedged item is recorded as an adjustment to its carrying amount and recognized currently in earnings.

45

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 45

3/23/22 1:35 PM

45

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
4

 
 
 
 
4
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

46

Fair Value Measurements: We use various valuation approaches in determining fair value for financial instruments, including
the market and income approaches. Our fair value measurements also include non-performance risk and time value of money
considerations. Counterparty credit is considered for financial assets, and our credit is considered for financial liabilities.

We also record certain nonfinancial assets and liabilities at fair value when required by generally accepted accounting
principles. These fair value measurements are recorded in connection with business combinations, qualifying non-monetary
exchanges, the initial recognition of asset retirement obligations and any impairment of long-lived assets, equity method investments
or goodwill.

We determine fair value in accordance with the fair value measurements accounting standard which established a hierarchy for
the inputs used to measure fair value based on the source of the inputs, which generally range from quoted prices for identical
instruments in a principal trading market (Level 1) to estimates determined using related market data (Level 3), including discounted
cash flows and other unobservable data. Measurements derived indirectly from observable inputs or from quoted prices from markets
that are less liquid are considered Level 2. When Level 1 inputs are available within a particular market, those inputs are selected for
determination of fair value over Level 2 or 3 inputs in the same market. Multiple inputs may be used to measure fair value; however,
the level assigned to a fair value measurement is based on the lowest significant input level within this fair value hierarchy.

Environment, Health and Safety

Our long-term vision and values provide a foundation for how we do business and define our commitment to meeting high
standards of corporate citizenship and creating a long lasting positive impact on the communities where we do business. Our strategy
is reflected in our EHS & SR policies and by a management system framework that helps protect our workforce, customers and local
communities. Our management systems are intended to promote internal consistency, adherence to policy objectives and continual
improvement in EHS & SR performance. Improved performance may, in the short‑term, increase our operating costs and could also
require increased capital expenditures to reduce potential risks to our assets, reputation and license to operate. In addition to enhanced
EHS & SR performance, improved productivity and operational efficiencies may be realized from investments in EHS & SR. We
have programs in place to evaluate regulatory compliance, audit facilities, train employees, prevent and manage risks and emergencies
and to generally meet corporate EHS & SR goals and objectives.

Environmental Matters

We recognize that climate change is a global environmental concern. We assess, monitor and take measures to reduce our carbon
footprint at existing and planned operations. The EPA has adopted a series of GHG monitoring, reporting, and emissions control rules
for the oil and natural gas industry, and the U.S. Congress has, from time to time, considered adopting further legislation to reduce
GHG emissions. For example, in November 2021, the EPA proposed new regulations to establish comprehensive standards of
performance and emission guidelines for methane and volatile organic compound emissions from existing operations in the oil and gas
sector, including the exploration and production, transmission, processing, and storage segments. The EPA is currently seeking public
In addition, states have taken measures to reduce
comments on its proposal, which the EPA hopes to finalize by the end of 2022.
emissions of GHGs, primarily through the development of GHG emission inventories and/or regional GHG cap-and-trade programs.
At the international level, the Paris Agreement on climate change aimed to enhance global response to global temperature changes and
to reduce GHG emissions, among other things. We are committed to complying with all GHG emissions regulations that apply to our
operations, including those related to venting or flaring of natural gas, and the responsible management of GHG emissions at our
facilities. While we monitor climate-related regulatory initiatives and international public policy issues, the current state of ongoing
international climate initiatives and any related domestic actions make it difficult to assess the timing or effect on our operations or to
predict with certainty the future costs that we may incur in order to comply with future international treaties, legislation or new
regulations. However, future restrictions on emissions of GHGs, or related measures to encourage use of low carbon energy could
result in higher capital expenditures and operating expenses for us and the oil and gas industry in general and may reduce demand for
our products, as described under Regulatory, Legal and Environmental Risks in Item 1A. Risk Factors.

We will have continuing expenditures for environmental assessment and remediation. Sites where corrective action may be
necessary include E&P facilities, sites from discontinued operations where we retained liability and, although not currently significant,
EPA “Superfund” sites where we have been named a potentially responsible party. We accrue for environmental assessment and
remediation expenses when the future costs are probable and reasonably estimable. For additional information, see Item 3. Legal
Proceedings. At December 31, 2021, our reserve for estimated remediation liabilities was approximately $60 million. We expect that
existing reserves for environmental liabilities will adequately cover costs to assess and remediate known sites. Our remediation
spending was approximately $16 million in 2021 (2020: $15 million; 2019: $20 million). The amount of other expenditures incurred
to comply with federal, state, local and foreign country environmental regulations is difficult to quantify as such costs are captured as
mostly indistinguishable components of our capital expenditures and operating expenses.

As an element of our EHS and SR strategy, we purchase carbon credits annually to offset 100 percent of our estimated Scope 3
business travel emissions and 100 percent of our estimated Scope 1 and Scope 3 emissions associated with operating the Corporation’s
truck fleet, aviation activities (aircraft and helicopters) and personal and rental vehicle miles driven on company business. We also

46

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
4

46

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 46

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:42PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

47

4
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

offset purchased electricity used in our operations from nonrenewable sources by purchasing renewable energy credits. The cost of
purchased carbon and renewable energy credits was not material to our financial results in 2021 and was included in Operating costs
and expenses in the Statement of Consolidated Income.

Health and Safety Matters

The crude oil and natural gas industry is regulated at federal, state, local and foreign government levels regarding the health and
safety of E&P operations. Such laws and regulations relate to, among other matters, occupational safety, the use of hydraulic
fracturing to stimulate crude oil and natural gas production, well control and integrity, process safety and equipment integrity, and may
include permitting and disclosure requirements, operating restrictions and other conditions on the development of crude oil and natural
gas. The level of our expenditures to comply with federal, state, local and foreign country health and safety regulations is difficult to
quantify as such costs are captured as mostly indistinguishable components of our capital expenditures and operating expenses. While
compliance with laws and regulations relating to health and safety matters increases the overall cost of business for us and the oil and
gas industry in general, it has not had, to date, a material adverse effect on our operations, financial condition or results of operations.

Occupational Safety: We are subject to the requirements set forth under federal workplace standards by the OSHA and
comparable state statutes that regulate the protection of the health and safety of workers. Under OSHA and other federal and state
occupational safety and health laws and laws of foreign countries in which we operate, we must develop, maintain and disclose certain
information about hazardous materials used, released, or produced in our operations.

Production and Well Integrity: Our U.S. onshore production facilities are subject to U.S. federal government, state and local
regulations regarding the use of hydraulic fracturing and well control and integrity. Our offshore production facilities in the Gulf of
Mexico are subject to the U.S. federal government’s Safety and Environmental Management System regulations, which provide a
systematic approach for identifying, managing and mitigating hazards. Adapting to new technical standards and procedures in
production and in our well integrity management system is fundamental to our aim of protecting the environment as well as the health
and safety of our workforce and the communities in which we operate, and to safeguarding our product.

Process Safety and Equipment Integrity: We are also regulated at federal, state, local and foreign government levels regarding
process safety and the integrity of our equipment, including OSHA’s Process Safety Management of Highly Hazardous Chemicals
standard. ICE are barriers and safeguards that prevent or mitigate process safety incidents through detection, isolation, containment,
control or emergency preparedness and response within our facilities. We have established ICE performance standards, which set
specific requirements and criteria for inspections and tests that help to ensure ICE barriers are effective. We conduct assessments
collaboratively with our operated assets, subject matter experts and technical authorities to evaluate compliance with corporate and
asset environment, health and safety standards and procedures, as well as with applicable regulations. For additional information on
our emergency response and incident mitigation activities, see Emergency Preparedness and Response Plans and Procedures in Items
1 and 2. Business and Properties.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
4

47

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 47

3/23/22 1:35 PM

47

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

48

4
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of our business, we are exposed to commodity risks related to changes in the prices of crude oil, NGL, and
natural gas as well as changes in interest rates and foreign currency values. In the disclosures that follow, financial risk management
activities refer to the mitigation of these risks through hedging activities.

Controls: We maintain a control environment under the direction of our Chief Risk Officer. Controls over instruments used in
financial risk management activities include volumetric and term limits. Our Treasury department is responsible for administering and
monitoring foreign exchange rate and interest rate hedging programs using similar controls and processes, where applicable. Hedging
strategies are reviewed annually by the Audit Committee of the Board of Directors.

Instruments: We primarily use forward commodity contracts, foreign exchange forward contracts, futures, swaps, and options in
our risk management activities. These contracts are generally widely traded instruments with standardized terms. The following
describes these instruments and how we use them:

• Swaps: We use financially settled swap contracts with third parties as part of our financial risk management activities. Cash
flows from swap contracts are determined based on underlying commodity prices or interest rates and are typically settled
over the life of the contract.

• Forward Foreign Exchange Contracts: We enter into forward contracts, primarily for the British Pound, Canadian Dollar
and Malaysian Ringgit, which commit us to buy or sell a fixed amount of those currencies at a predetermined exchange rate
on a future date.

• Exchange-traded Contracts: We may use exchange-traded contracts, including futures, on a number of different underlying
energy commodities. These contracts are settled daily with the relevant exchange and may be subject to exchange position
limits.

• Options: Options on various underlying energy commodities include exchange-traded and third-party contracts and have
various exercise periods. As a purchaser of options, we pay a premium at the outset and are exposed to the favorable
consequence of collecting payment upon exercise depending upon the underlying commodity price movement. As a seller of
options, we receive a premium at the outset and are exposed to the unfavorable consequence of having to make payment upon
exercise depending upon the underlying commodity price movement.

Financial Risk Management Activities

We have outstanding foreign exchange contracts with notional amounts totaling $145 million at December 31, 2021 that are used
to reduce our exposure to fluctuating foreign exchange rates for various currencies. The change in fair value of foreign exchange
contracts from a 10% strengthening or weakening in the U.S. Dollar exchange rate is estimated to be a gain or loss of approximately
$5 million, respectively, at December 31, 2021.

At December 31, 2021, our total long-term debt, which was substantially comprised of fixed-rate instruments, had a carrying
value of $8,458 million and a fair value of $9,897 million. A 15% increase or decrease in interest rates would decrease or increase the
fair value of debt by approximately $390 million or $405 million, respectively. Any changes in interest rates do not impact our cash
outflows associated with fixed-rate interest payments or settlement of debt principal, unless a debt instrument is repurchased prior to
maturity.

For calendar year 2022, we have WTI collars with an average monthly floor price of $60 per barrel and an average monthly
ceiling price of $100 per barrel for 90,000 bopd, and Brent collars with an average monthly floor price of $65 per barrel and an
average monthly ceiling price of $105 per barrel for 60,000 bopd. As of December 31, 2021, an assumed 10% increase in the forward
WTI and Brent crude oil prices used in determining the fair value of our collars would reduce the fair value of these derivative
instruments by approximately $100 million, while an assumed 10% decrease in the same crude oil prices would increase the fair value
of these derivative instruments by approximately $100 million.

See Note 20, Financial Risk Management Activities in the Notes to Consolidated Financial Statements for further details.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
4

48

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 48

3/23/22 1:35 PM

48

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
4
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

49

Item 8. Financial Statements and Supplementary Data

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

Management’s Report on Internal Control over Financial Reporting .......................................................................
Reports of Independent Registered Public Accounting Firm (PCAOB ID 42) .........................................................
Consolidated Balance Sheet at December 31, 2021, and 2020..................................................................................
Statement of Consolidated Income for each of the Three Years in the Period Ended December 31, 2021 ..............
Statement of Consolidated Comprehensive Income for each of the Three Years in the Period Ended
December 31, 2021 ....................................................................................................................................................
Statement of Consolidated Cash Flows for each of the Three Years in the Period Ended December 31, 2021 .......
Statement of Consolidated Equity for each of the Three Years in the Period Ended December 31, 2021................
Notes to Consolidated Financial Statements..............................................................................................................
Note 1 - Nature of Operations, Basis of Presentation and Summary of Accounting Policies............................
Note 2 - Inventories ............................................................................................................................................
Note 3 - Property, Plant and Equipment.............................................................................................................
Note 4 - Hess Midstream LP ..............................................................................................................................
Note 5 - Accrued Liabilities ...............................................................................................................................
Note 6 - Leases ...................................................................................................................................................
Note 7 - Debt ......................................................................................................................................................
Note 8 - Asset Retirement Obligations...............................................................................................................
Note 9 - Retirement Plans...................................................................................................................................
Note 10 - Revenue ..............................................................................................................................................
Note 11 - Dispositions ........................................................................................................................................
Note 12 - Impairment and Other ........................................................................................................................
Note 13 - Severance Costs..................................................................................................................................
Note 14 - Share-based Compensation.................................................................................................................
Note 15 - Income Taxes......................................................................................................................................
Note 16 - Outstanding and Weighted Average Common Shares .......................................................................
Note 17 - Supplementary Cash Flow Information..............................................................................................
Note 18 - Guarantees, Contingencies and Commitments ...................................................................................
Note 19 - Segment Information ..........................................................................................................................
Note 20 - Financial Risk Management Activities...............................................................................................
Note 21 - Subsequent Events..............................................................................................................................

Supplementary Oil and Gas Data...............................................................................................................................

Page
Number
50
51
54
55

56
57
58

59
64
64
65
67
67
69
71
72
76
76
77
77
77
79
82
83
83
85
86
88

89

Schedules have been omitted because of the absence of the conditions under which they are required or because the required information is presented in the financial

statements or the notes thereto.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
4

49

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 49

3/23/22 1:35 PM

49

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

50

5
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rules 13a‑15(f). Under the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting, as required by Section 404 of the Sarbanes‑Oxley Act, based on the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our
evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

The Corporation’s independent registered public accounting firm, Ernst & Young LLP, has audited the effectiveness of the

Corporation’s internal control over financial reporting as of December 31, 2021, as stated in their report, which is included herein.

By

By

John P. Rielly
Executive Vice President and
Chief Financial Officer

John B. Hess
Chief Executive Officer

March 1, 2022

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
5

50

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 50

3/23/22 1:35 PM

50

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:43PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rules 13a‑15(f). Under the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting, as required by Section 404 of the Sarbanes‑Oxley Act, based on the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our

evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

The Corporation’s independent registered public accounting firm, Ernst & Young LLP, has audited the effectiveness of the

Corporation’s internal control over financial reporting as of December 31, 2021, as stated in their report, which is included herein.

5
1

9
2
4
1
6

1
0
K
0
3
.
2
6
.
2
0
2
2
C
O
9

March 1, 2022

92416 10K 03.26.2022 CO9

51

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Hess Corporation

Opinion on Internal Control over Financial Reporting

We have audited Hess Corporation and consolidated subsidiaries’ (the “Corporation”) internal control over financial reporting as
of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hess Corporation and
consolidated subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31,
2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Corporation as of December 31, 2021 and 2020, the related statements of
consolidated income, comprehensive income, cash flows and equity for each of the three years in the period ended December 31,
2021, and the related notes and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

New York, New York
March 1, 2022

9
O
C
2
2
0
2
.
6
2
.
3
0
K
0
1

6
1
4
2
9

1
5

50

51

51

92416 10K 03.26.2022 CO9

92416_10K_03.26.2022_CO9.indd 51

3/26/22 9:05 AM

K

8.500 in x 11.000 in

Hess Corp

03.26.2022 09:08AM

92416

awallerstein (sa1) (sa1)

92416 10K 03.26.2022 CO9

tbujak

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
 
 
92416 10K 03.8.2022

52

5
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Hess Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Hess Corporation and consolidated subsidiaries (the
“Corporation”) as of December 31, 2021 and 2020, the related statements of consolidated income, comprehensive income, cash flows
and equity for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Corporation at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework), and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on
the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,
by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.

Description of the
Matter

Depreciation, depletion and amortization of proved oil and natural gas properties
The net book value of the Corporation’s exploration and production assets was $11,047
million at December 31, 2021, and depreciation, depletion and amortization (DD&A)
expense was $1,361 million for the year then ended. As described in Note 1 to the
financial statements, the Corporation follows the successful efforts method of accounting
for its oil and gas exploration and production activities. Under the successful efforts
method of accounting, DD&A expense is recorded using the units-of-production method,
based on proved oil and gas reserves, as estimated by petroleum engineering specialists,
for property acquisition costs and proved developed oil and gas reserves, also estimated
by petroleum engineering specialists, for oil and gas production facilities and wells.
Proved oil and gas reserves are based on geological and engineering evaluations of
estimated in-place hydrocarbon volumes using financial and non-financial
inputs.
Significant
is required by the Corporations’ internal engineering staff in
evaluating the geological and engineering data used to estimate reserves. Estimating
proved reserves also requires the selection of inputs, including oil and natural gas price
assumptions, future operating and capital costs assumptions and tax rates by jurisdiction,
among others. Management used independent petroleum engineering specialists to audit

judgment

52

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
5

52

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 52

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

53

5
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

approximately 88% of the Corporation’s proved reserves at December 31, 2021 as
prepared by the Corporation’s internal engineering staff.

Auditing the Corporation’s DD&A expense calculation is complex because of our need to
assess the reasonableness of management’s determination of the inputs described above
used in estimating proved oil and gas reserves and to use the work of the internal
engineering staff and independent petroleum engineering specialists.

How We Addressed the
Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness
of internal controls that address the risks of material misstatement relating to the DD&A
expense calculation. This included controls over the completeness and accuracy of the
financial data used in estimating proved oil and gas reserves.

Our testing of the Corporation’s DD&A expense calculation included, among other
procedures, evaluating the professional qualifications and objectivity of the Corporation’s
internal petroleum engineering specialist responsible for overseeing the preparation of the
Corporation’s reserve estimates and of the independent petroleum engineering specialist
used to audit the estimates.
In addition, we tested the completeness and accuracy of the
financial data used in the estimation of proved oil and gas reserves by agreeing significant
inputs to source documentation, where available, on a sample basis and assessing the
inputs for reasonableness based on review of corroborative evidence and consideration of
any contrary evidence. Additionally, we performed analytic and lookback procedures on
inputs into the oil and gas reserve estimate as well as on the outputs. Finally, we tested
the mathematical accuracy of the DD&A expense calculations, including comparing the
proved oil and gas reserves to the Corporation’s reserve report.

We have served as the Corporation’s auditor since 1971
New York, New York
March 1, 2022

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
5

53

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 53

3/23/22 1:35 PM

53

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
5
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

92416 10K 03.8.2022

54

December 31,

2021

2020

(In millions,
except share amounts)

Assets

Current Assets:
Cash and cash equivalents.......................................................................................................................................... $
Accounts receivable:

2,713

$

1,739

From contracts with customers ............................................................................................................................
Joint venture and other .........................................................................................................................................
Inventories..................................................................................................................................................................
Other current assets ....................................................................................................................................................
Total current assets..........................................................................................................................................

Property, plant and equipment:
Total — at cost ...........................................................................................................................................................
Less: Reserves for depreciation, depletion, amortization and lease impairment .......................................................
Property, plant and equipment — net..............................................................................................................
Operating lease right-of-use assets — net....................................................................................................................
Finance lease right-of-use assets — net .......................................................................................................................
Post-retirement benefit assets.......................................................................................................................................
Goodwill.......................................................................................................................................................................
Deferred income taxes..................................................................................................................................................
Other assets ..................................................................................................................................................................

Total Assets ............................................................................................................................................ $

Liabilities

Current Liabilities:
Accounts payable ....................................................................................................................................................... $
Accrued liabilities ......................................................................................................................................................
Taxes payable.............................................................................................................................................................
Current portion of long-term debt ..............................................................................................................................
Current portion of operating and finance lease obligations .......................................................................................
Total current liabilities ....................................................................................................................................
Long-term debt.............................................................................................................................................................
Long-term operating lease obligations.........................................................................................................................
Long-term finance lease obligations ............................................................................................................................
Deferred income taxes..................................................................................................................................................
Asset retirement obligations.........................................................................................................................................
Other liabilities and deferred credits ............................................................................................................................
Total Liabilities ..................................................................................................................................................

Equity

Hess Corporation stockholders’ equity:

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

1,062
149
223
199
4,346

31,178
16,996
14,182
352
144
409
360
71
651
20,515

220
1,710
528
517
89
3,064
7,941
394
200
383
1,005
502
13,489

$

$

710
150
378
104
3,081

30,519
16,404
14,115
426
168
45
360
59
567
18,821

200
1,251
81
10
81
1,623
8,286
478
220
342
894
643
12,486

Issued — 309,744,953 shares (2020: 306,980,092)...........................................................................................
Capital in excess of par value..................................................................................................................................
Retained earnings ....................................................................................................................................................
Accumulated other comprehensive income (loss) ..................................................................................................
Total Hess Corporation stockholders’ equity.....................................................................................................
Noncontrolling interests ...............................................................................................................................................
Total equity ........................................................................................................................................................

Total Liabilities and Equity.................................................................................................................. $

310
6,017
379
(406)
6,300
726
7,026
20,515

$

307
5,684
130
(755)
5,366
969
6,335
18,821

The consolidated financial statements reflect the successful efforts method of accounting for oil and gas exploration and production
activities.

See accompanying Notes to Consolidated Financial Statements.

54

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 54

3/23/22 1:35 PM

54

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
5

 
 
 
 
92416 10K 03.8.2022

55

5
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME

Revenues and Non-Operating Income

Sales and other operating revenues ................................................................................................. $
Gains on asset sales, net ..................................................................................................................
Other, net.........................................................................................................................................
Total revenues and non-operating income ................................................................................

Costs and Expenses

Marketing, including purchased oil and gas....................................................................................
Operating costs and expenses..........................................................................................................
Production and severance taxes.......................................................................................................
Exploration expenses, including dry holes and lease impairment ..................................................
General and administrative expenses ..............................................................................................
Interest expense ...............................................................................................................................
Depreciation, depletion and amortization .......................................................................................
Impairment and other ......................................................................................................................
Total costs and expenses ...........................................................................................................
Income (Loss) Before Income Taxes.................................................................................................
Provision (benefit) for income taxes ...............................................................................................
Net Income (Loss)...............................................................................................................................
Less: Net income (loss) attributable to noncontrolling interests.....................................................
Net Income (Loss) Attributable to Hess Corporation.....................................................................
Less: Preferred stock dividends.......................................................................................................
Net Income (Loss) Attributable to Hess Corporation Common Stockholders............................. $

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

Basic.................................................................................................................................................. $
Diluted .............................................................................................................................................. $

Weighted Average Number of Common Shares Outstanding:

Basic..................................................................................................................................................
Diluted ..............................................................................................................................................
Common Stock Dividends Per Share ............................................................................................... $

Year Ended December 31,

2021

2020

2019

(In millions, except per share amounts)

7,473
29
81
7,583

2,034
1,229
172
162
340
481
1,528
147
6,093
1,490
600
890
331
559
—
559

1.82
1.81

307.4
309.3
1.00

$

$

$
$

$

$

4,667
87
50
4,804

936
1,218
124
351
357
468
2,074
2,126
7,654
(2,850)
(11)
(2,839)
254
(3,093)
—
(3,093) $

(10.15) $
(10.15) $

304.8
304.8
1.00

$

6,495
22
(7)
6,510

1,736
1,237
184
233
397
380
2,122
—
6,289
221
461
(240)
168
(408)
4
(412)

(1.37)
(1.37)

301.2
301.2
1.00

See accompanying Notes to Consolidated Financial Statements.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
5

55

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 55

3/23/22 1:35 PM

55

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

56

5
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

Net Income (Loss)............................................................................................................................... $
Other Comprehensive Income (Loss):
Derivatives designated as cash flow hedges

Effect of hedge (gains) losses reclassified to income .......................................................................
Income taxes on effect of hedge (gains) losses reclassified to income.............................................
Net effect of hedge (gains) losses reclassified to income ...............................................................
Change in fair value of cash flow hedges .........................................................................................
Income taxes on change in fair value of cash flow hedges ...............................................................
Net change in fair value of cash flow hedges..................................................................................
Change in derivatives designated as cash flow hedges, after taxes................................................
Pension and other postretirement plans

(Increase) reduction in unrecognized actuarial losses.......................................................................
Income taxes on actuarial changes in plan liabilities ........................................................................
(Increase) reduction in unrecognized actuarial losses, net..............................................................
Amortization of net actuarial losses ..................................................................................................
Income taxes on amortization of net actuarial losses........................................................................
Net effect of amortization of net actuarial losses............................................................................
Change in pension and other postretirement plans, after taxes ....................................................
Other Comprehensive Income (Loss)...............................................................................................
Comprehensive Income (Loss) ..........................................................................................................
Less: Comprehensive income (loss) attributable to noncontrolling interests ...................................
Comprehensive Income (Loss) Attributable to Hess Corporation ................................................ $

Year Ended December 31,
2020

2019

2021

(In millions)

890

$

(2,839) $

(240)

243
—
243
(315)
—
(315)
(72)

355
—
355
66
—
66
421
349
1,239
331
908

$

(547)
—
(547)
649
—
649
102

(205)
—
(205)
47
—
47
(158)
(56)
(2,895)
254
(3,149) $

(1)
—
(1)
(462)
86
(376)
(377)

(160)
—
(160)
144
—
144
(16)
(393)
(633)
168
(801)

See accompanying Notes to Consolidated Financial Statements.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
5

56

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 56

3/23/22 1:35 PM

56

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
5
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

57

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

Cash Flows From Operating Activities

Net income (loss) .............................................................................................................................. $
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gains) on asset sales, net ............................................................................................................
Depreciation, depletion and amortization ....................................................................................
Impairment and other ...................................................................................................................
Exploratory dry hole costs............................................................................................................
Exploration lease and other impairment.......................................................................................
Pension settlement loss.................................................................................................................
Stock compensation expense........................................................................................................
Noncash (gains) losses on commodity derivatives, net................................................................
Provision (benefit) for deferred income taxes and other tax accruals..........................................
Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable..............................................................................
(Increase) decrease in inventories ...........................................................................................
Increase (decrease) in accounts payable and accrued liabilities..............................................
Increase (decrease) in taxes payable .......................................................................................
Changes in other operating assets and liabilities.....................................................................
Net cash provided by (used in) operating activities .....................................................

Cash Flows From Investing Activities

Additions to property, plant and equipment - E&P...........................................................................
Additions to property, plant and equipment - Midstream .................................................................
Payments for Midstream equity investments ....................................................................................
Proceeds from asset sales, net of cash sold .......................................................................................
Other, net...........................................................................................................................................
Net cash provided by (used in) investing activities......................................................

Cash Flows From Financing Activities

Net borrowings (repayments) of debt with maturities of 90 days or less .........................................
Debt with maturities of greater than 90 days:

Borrowings...................................................................................................................................
Repayments ..................................................................................................................................
Proceeds from sale of Class A shares of Hess Midstream LP ..........................................................
Employee stock options exercised ....................................................................................................
Cash dividends paid ..........................................................................................................................
Payments on finance lease obligations..............................................................................................
Common stock acquired and retired..................................................................................................
Noncontrolling interests, net .............................................................................................................
Other, net...........................................................................................................................................
Net cash provided by (used in) financing activities .....................................................

Year Ended December 31,
2020

2019

2021

(In millions)

890

$

(2,839) $

(240)

(29)
1,528
147
11
20
9
77
216
122

(748)
135
241
447
(176)
2,890

(1,584)
(163)
—
427
(5)
(1,325)

(80)

750
(510)
178
77
(311)
(10)
—
(664)
(21)
(591)

(87)
2,074
2,126
192
51
—
79
260
(53)

267
(117)
(533)
(16)
(71)
1,333

(1,896)
(301)
—
493
(3)
(1,707)

152

1,000
—
—
15
(309)
(7)
—
(261)
(22)
568

(22)
2,122
—
49
17
93
85
116
17

(383)
(16)
4
16
(216)
1,642

(2,433)
(396)
(33)
22
(3)
(2,843)

32

760
(8)
—
40
(316)
(49)
(25)
(353)
(29)
52

Net Increase (Decrease) in Cash and Cash Equivalents .................................................................
Cash and Cash Equivalents at Beginning of Year ..........................................................................
Cash and Cash Equivalents at End of Year..................................................................................... $

974
1,739
2,713

$

194
1,545
1,739

$

(1,149)
2,694
1,545

See accompanying Notes to Consolidated Financial Statements.

57

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 57

3/23/22 1:35 PM

57

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
5

 
 
 
 
5
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

58

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED EQUITY

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

$

291

$

5,386

$

4,257

(In millions)
$

(306) $

9,629

$

1,259

$ 10,888

Balance at December 31, 2018 .............. $
Net income (loss)...................................

Other comprehensive income (loss) ......
Preferred stock conversion ....................
Share-based compensation.....................
Dividends on preferred stock.................
Dividends on common stock .................
Conversion of Midstream structure .......

Sale of water business to Hess
Infrastructure Partners ...........................
Noncontrolling interests, net..................
Balance at December 31, 2019 .............. $
Net income (loss)...................................
Other comprehensive income (loss) ......
Share-based compensation.....................
Dividends on common stock .................
Noncontrolling interests, net..................
Balance at December 31, 2020 .............. $
Net income (loss)...................................
Other comprehensive income (loss) ......
Share-based compensation.....................
Dividends on common stock .................

Sale of Class A shares of Hess
Midstream LP ........................................

Repurchase of Class B units of Hess
Midstream Operations LP......................
Noncontrolling interests, net..................
Balance at December 31, 2021 .............. $

1

—

—

(1)

—

—

—

—

—
—

—

—

12

2

—

—

—

—
—

—

—

(11)

123

—

—

15

78
—

(408)

—

—

—

(4)

(310)

—

—
—

—

(393)

—

—

—

—

—

—
—

(408)

(393)

—

125

(4)

(310)

15

78

—

— $

305

$

5,591

$

3,535

$

(699) $

8,732

$

—

—

—

—

—

—

—

2

—

—

—

—

93

—

—

— $

307

$

5,684

$

—

—

—

—

—

—

—

—

—

3

—

—

—

—

—

—

153

—

152

28

—

(3,093)

—

(5)

(307)

—

130

559

—

—

(310)

—

—

—

—

(56)

—

—

—

(3,093)

(56)

90

(307)

—

$

(755) $

5,366

$

—

349

—

—

—

—

—

559

349

156

(310)

152

28

—

168

—

—

—

—

—

(22)

(78)

(353)

974

254

—

—

—

(259)

969

331

—

—

—

(240)

(393)

—

125

(4)

(310)

(7)

—

(353)

$

9,706

(2,839)

(56)

90

(307)

(259)

$

6,335

890

349

156

(310)

103

255

(390)

(287)

(362)

(287)

— $

310

$

6,017

$

379

$

(406) $

6,300

$

726

$

7,026

See accompanying Notes to Consolidated Financial Statements.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
5

58

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 58

3/23/22 1:35 PM

58

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
5
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

59

1. Nature of Operations, Basis of Presentation and Summary of Accounting Policies

Unless the context indicates otherwise, references to “Hess”, “the Corporation”, “Registrant”, “we”, “us” and “our” refer to

the consolidated business operations of Hess Corporation and its affiliates.

Nature of Business: Hess Corporation, incorporated in the State of Delaware in 1920, is a global E&P company engaged in
exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids, and natural gas with
production operations located primarily in the United States (U.S.), Guyana, the Malaysia/Thailand Joint Development Area (JDA),
and Malaysia. We conduct exploration activities primarily offshore Guyana, the U.S. Gulf of Mexico, and offshore Suriname and
Canada.

Our Midstream operating segment, which is comprised of Hess Corporation’s approximate 43.5% consolidated ownership interest
in Hess Midstream LP at December 31, 2021 (see Note 4, Hess Midstream LP) provides fee-based services, including gathering,
compressing and processing natural gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL;
storing and terminaling propane, and water handling services primarily in the Bakken shale play in the Williston Basin area of North
Dakota.

Basis of Presentation and Principles of Consolidation: The consolidated financial statements include the accounts of Hess
Corporation and entities in which we own more than a 50% voting interest. Commencing December 16, 2019, we consolidate Hess
Midstream LP, a variable interest entity that acquired Hess Infrastructure Partners LP (HIP), based on our conclusion that we have the
power through Hess Corporation’s approximate 43.5% consolidated ownership interest in Hess Midstream LP to direct those activities
that most significantly impact the economic performance of Hess Midstream LP, and are obligated to absorb losses or have the right to
receive benefits that could potentially be significant to Hess Midstream LP. Prior to December 16, 2019, we consolidated HIP, also a
variable interest entity based on the conclusion that we had the power to direct the activities that most significantly impacted the
economic performance of HIP, and were obligated to absorb losses or had the right to receive benefits that could potentially be
significant to HIP. This conclusion was based on a qualitative analysis that considered Hess Midstream LP’s governance structure, the
commercial agreements between Hess Midstream LP and us, and the voting rights established between the members, which provide us
the ability to control the operations of Hess Midstream LP.

Our undivided interests in unincorporated oil and gas E&P ventures are proportionately consolidated.

Investments in affiliated
companies, 20% to 50% owned and where we have the ability to influence the operating or financial decisions of the affiliate, are
accounted for using the equity method.

Estimates and Assumptions:

In preparing financial statements in conformity with GAAP, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities in the Consolidated Balance Sheet and revenues and expenses in
the Statement of Consolidated Income. Actual results could differ from those estimates. Estimates made by management include oil
and gas reserves, asset and other valuations, depreciable lives, pension liabilities, legal and environmental obligations, asset retirement
obligations and income taxes.

Revenue Recognition:

Exploration and Production

The E&P segment recognizes revenue from the sale of crude oil, NGL, and natural gas as performance obligations under contracts
with customers are satisfied. Our responsibilities to deliver each unit of quantity of crude oil, NGL, and natural gas under these
contracts represent separate, distinct performance obligations. These performance obligations are satisfied at the point in time control
of each unit of quantity transfers to the customer. Generally, the control of each unit of quantity transfers to the customer upon the
transfer of legal title at the point of physical delivery. Pricing is variable and is determined with reference to a particular market or
pricing index, plus or minus adjustments reflecting quality or location differentials.

For long-term international natural gas contracts with ship-or-pay provisions, our obligation to stand-ready to provide a minimum
volume over each commitment period represents separate, distinct performance obligations. Penalties owed against future deliveries
of natural gas due to delivery of volumes below minimum delivery commitments are recognized as reductions to revenue in the
commitment period when the shortfall occurs. Long-term international natural gas contracts may also contain take-or-pay provisions
whereby the customer is required to pay for volumes not taken that are below minimum volume commitments but the customer has
certain make-up rights to receive shortfall volumes in subsequent periods. Shortfall payments received from customers when volumes
purchased are below the minimum volume commitment are deferred upon receipt as a contract liability. Revenue is recognized at the
earlier of when we deliver the make-up volumes in subsequent periods or when it becomes remote that the customer will exercise their
make-up rights.

59

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 59

3/23/22 1:35 PM

59

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
5

 
 
 
 
6
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

60

Certain crude oil, NGL, and natural gas volumes are purchased by Hess from third parties, including working interest partners and
royalty owners in certain Hess-operated properties, before they are sold to customers. Where control over the crude oil, NGL, or
natural gas transfers to Hess before the volumes are transferred to the customer, revenue and the associated cost of purchased volumes
are presented on a gross basis in the Statement of Consolidated Income within Sales and other operating revenues and Marketing,
including purchased oil and gas, respectively. Where control of crude oil, NGL, or natural gas is not transferred to Hess, revenue is
presented net of the associated cost of purchased volumes within Sales and other operating revenues in the Statement of Consolidated
Income.

Contract Duration and Pricing:

Contracts with customers for the sale of U.S. crude oil, NGL, and natural gas primarily include those contracts that
involve the short-term sale of volumes during a specified period, and those contracts that automatically renew on a periodic
basis until either party cancels. We have certain long-term contracts with customers for the sale of U.S. natural gas and NGL
that have remaining durations ranging from one to eleven years.

Contracts with customers for the sale of international crude oil involve the short-term sale of volumes during a specified
period. Pricing is determined with reference to a particular market or pricing index, plus or minus adjustments reflecting
quality or location differentials, shortly after control of the volumes transfers to the customer.
International contracts with
customers for the sale of natural gas are in the form of natural gas sales agreements with government entities that have
durations that are aligned with the durations of production sharing contracts or other contractual arrangements with host
governments. Pricing is determined using contractual formulas that are based on the price of alternative fuels as obtained
from price indices and other factors.

Contract Balances:

Our right to receive or collect payment from the customer is aligned with the timing of revenue recognition except in

situations when we receive shortfall payments under contracts with take-or-pay provisions with customer make-up rights.

Generally, we receive payments from customers on a monthly basis, shortly after the physical delivery of the crude oil,

NGL, or natural gas.

Transaction Price Allocated to Remaining Performance Obligations:

The transaction price allocated to our wholly unsatisfied performance obligations on uncompleted contracts is
variable. Further, many of our contracts with customers have durations of less than twelve months. Accordingly, we have
elected under the provisions of Accounting Standards Codification (ASC) 606, Revenues from Contracts with Customers, the
exemption from disclosure of revenue recognizable in future periods as these performance obligations are satisfied.

Sales-based Taxes:

We exclude sales-based taxes that are collected from customers from the transaction price in our contracts with
customers. Accordingly, revenue from contracts with customers is net of sales-based taxes that are collected from customers
and remitted to taxing authorities.

Midstream

Our Midstream segment provides gathering, compression, processing,

fractionation, storage,

terminaling,

loading and

transportation, and water handling services.

The Midstream segment has multiple long-term, fee-based commercial agreements with certain subsidiaries of Hess, each
generally with an initial ten-year term that can be extended for an additional ten-year term at the unilateral right of Hess
Midstream. These contracts have minimum volumes the customer is obligated to provide each calendar quarter. The minimum
volume commitments are subject to fluctuation based on nominations covering substantially all of our E&P segment’s production and
projected third-party volumes that will be purchased in the Bakken. As the minimum volume commitments are subject to fluctuation,
and as these contracts contain fee inflation escalators and fee recalculation mechanisms, substantially all of the transaction price at
contract inception is variable. The midstream segment also has long-term, fee based commercial agreements for water handling
services with a subsidiary of Hess with an initial 14 year term that can be extended for an additional ten-year term at the unilateral
right of Hess Midstream. Water handling services are provided for an agreed-upon fee per barrel or the reimbursement of third-party
fees.

The Midstream segment’s responsibilities to provide each of the above services for each year under each of the commercial
agreements are considered separate, distinct performance obligations. Revenue is recognized for each performance obligation under
these commercial agreements over-time as services are rendered using the output method, measured using the amount of volumes
serviced during the period. The Midstream segment has elected the practical expedient under the provisions of ASC 606, Revenue

60

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
6

60

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 60

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

61

6
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

from Contracts with Customers to recognize revenue in the amount it is entitled to invoice. If the commercial agreements have ship-
or-pay provisions,
the Midstream segment’s responsibility to stand-ready to service a minimum volume over each quarterly
commitment period represent separate, distinct performance obligations. Shortfall payments received under ship-or-pay provisions are
recognized as revenue in the calendar quarter the shortfall occurs as the customer does not have make-up rights beyond the calendar
quarter end of the quarterly commitment period. All revenues, receivables, and contract balances arising from the commercial
agreements between the Midstream segment and the Hess subsidiaries that are the counterparty to the commercial agreements are
eliminated upon consolidation.

On December 30, 2020, Hess Midstream exercised its renewal options to extend the terms of certain gas gathering, crude oil
gathering, gas processing and fractionation, storage, and terminal and export commercial agreements for the secondary term through
December 31, 2033. There were no changes to any provisions of the existing commercial agreements as a result of the exercise of the
renewal options.

Exploration and Development Costs: E&P activities are accounted for using the successful efforts method. Costs of acquiring
unproved and proved oil and gas leasehold acreage,
related costs are
capitalized. Annual lease rentals, exploration expenses and exploratory dry hole costs are expensed as incurred. Costs of drilling and
equipping productive wells, including development dry holes, and related production facilities are capitalized.

including lease bonuses, brokers’

fees and other

The costs of exploratory wells that find oil and gas reserves are capitalized pending determination of whether proved reserves
have been found. Exploratory drilling costs remain capitalized after drilling is completed if (1) the well has found a sufficient quantity
of reserves to justify completion as a producing well and (2) sufficient progress is being made in assessing the reserves and the
economic and operational viability of the project.
If either of those criteria is not met, or if there is substantial doubt about the
economic or operational viability of a project, the capitalized well costs are charged to expense. Indicators of sufficient progress in
assessing reserves and the economic and operating viability of a project include commitment of project personnel, active negotiations
for sales contracts with customers, negotiations with governments, operators and contractors, firm plans for additional drilling and
other factors.

Depreciation, Depletion and Amortization: We record depletion expense for acquisition costs of proved properties using the
units of production method over proved oil and gas reserves. Depreciation and depletion expense for oil and gas production facilities
and wells is calculated using the units of production method over proved developed oil and gas reserves. Provisions for impairment of
undeveloped oil and gas leases are based on periodic evaluations and other factors. Depreciation of all other plant and equipment is
determined on the straight-line method based on estimated useful lives.

Capitalized Interest:

Interest from external borrowings is capitalized on material projects using the weighted average cost of
outstanding borrowings until the project is substantially complete and ready for its intended use, which for oil and gas assets is at first
production from the field. Capitalized interest is depreciated in the same manner as the depreciation of the underlying assets.

Impairment of Long‑lived Assets: We review long‑lived assets, including oil and gas fields, for impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be recovered. If the carrying amounts of the long-lived assets are
not expected to be recovered by estimated undiscounted future net cash flows, the assets are impaired and an impairment loss is
recorded. The amount of impairment is measured based on the estimated fair value of the assets generally determined by discounting
anticipated future net cash flows, an income valuation approach, or by a market‑based valuation approach, which are Level 3 fair
value measurements.

In the case of oil and gas fields, the present value of future net cash flows is based on management’s best estimate of future prices,
which is determined with reference to recent historical prices and published forward prices, applied to projected production volumes
and discounted at a risk-adjusted rate. The projected production volumes represent reserves, including probable reserves, expected to
be produced based on a projected amount of capital expenditures. The production volumes, prices and timing of production are
consistent with internal projections and other externally reported information. Oil and gas prices used for determining asset
impairment will generally differ from those used in the standardized measure of discounted future net cash flows reported in
Supplementary Oil and Gas Data, since the standardized measure requires the use of historical twelve-month average prices.

Impairment of Goodwill: Goodwill is tested for impairment annually on October 1st or when events or circumstances indicate
that the carrying amount of the goodwill may not be recoverable. To determine whether goodwill is impaired, the fair value of a
reporting unit is compared with its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying value,
goodwill is not impaired. If the carrying value of the reporting unit exceeds its fair value, an impairment charge would be recorded for
the excess of the carrying value over fair value, limited by the amount of goodwill allocated to the reporting unit. At December 31,
2021, goodwill of $360 million relates to the Midstream operating segment.

Cash and Cash Equivalents: Cash and cash equivalents primarily comprises cash on hand and on deposit, as well as highly

liquid investments that are readily convertible into cash and have maturities of three months or less when acquired.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
6

61

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 61

3/23/22 1:35 PM

61

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
6
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

62

Inventories: Produced and unsold crude oil and NGL are valued at the lower of cost or net realizable value. Cost is determined
using the average cost of production plus any transport cost incurred in bringing the volumes to their present location. Materials and
supplies are valued at cost. Obsolete or surplus materials identified during periodic reviews are valued at the lower of cost or
estimated net realizable value.

Leases: We determine if an arrangement is a lease at inception by evaluating whether the contract conveys the right to control an
identified asset during the period of use. Right-of-use (ROU) assets represent our right to use an identified asset for the lease term and
lease obligations represent our obligation to make payments as set forth in the lease arrangement. ROU assets and lease liabilities are
recognized in the Consolidated Balance Sheet as operating leases or finance leases at the commencement date based on the present
value of the minimum lease payments over the lease term. Where the implicit discount rate in a lease is not readily determinable, we
use our incremental borrowing rate based on information available at the commencement date for determining the present value of the
minimum lease payments. The lease term used in measurement of our lease obligations includes options to extend or terminate the
lease when, in our judgment, it is reasonably certain that we will exercise that option. Variable lease payments that depend on an
index or a rate are included in the measurement of lease obligations using the index or rate at the commencement date. Variable lease
payments that vary because of changes in facts or circumstances after the commencement date of the lease are not included in the
minimum lease payments used to measure lease obligations. We have agreements that include financial obligations for lease and
nonlease components. For purposes of measuring lease obligations, we have elected not to separate nonlease components from lease
components for the following classes of assets: drilling rigs, office space, offshore vessels, and aircraft. We apply a portfolio
approach to account for operating lease ROU assets and liabilities for certain vehicles, railcars, field equipment and office equipment
leases.

Finance lease cost is recognized as amortization of the ROU asset and interest expense on the lease liability. Operating lease cost
is generally recognized on a straight-line basis. Operating lease costs for drilling rigs used to drill development wells and successful
exploration wells are capitalized. Operating lease cost for other ROU assets used in oil and gas producing activities are either
capitalized or expensed on a straight-line basis based on the nature of operation for which the ROU asset is utilized.

Leases with an initial term of 12 months or less are not recorded on the balance sheet as permitted under ASC 842, Leases. We
recognize lease cost for short-term leases on a straight-line basis over the term of the lease. Some of our leases include one or more
options to renew. The renewal option is at our sole discretion and is not included in the lease term for measurement of the lease
obligation unless we are reasonably certain at the commencement date of the lease, to renew the lease.

Income Taxes: Deferred income taxes are determined using the liability method. We have net operating loss carryforwards or
credit carryforwards in multiple jurisdictions and have recorded deferred tax assets for those losses and credits. Additionally, we have
deferred tax assets due to temporary differences between the book basis and tax basis of certain assets and liabilities. Regular
assessments are made as to the likelihood of those deferred tax assets being realized. If, when tested under the relevant accounting
standards, it is more likely than not that some or all of the deferred tax assets will not be realized, a valuation allowance is recorded to
reduce the deferred tax assets to the amount that is expected to be realized. The accounting standards require the evaluation of all
available positive and negative evidence giving weight based on the evidence’s relative objectivity. In evaluating potential sources of
positive evidence, we consider the reversal of taxable temporary differences, taxable income in carryback and carryforward periods,
the availability of tax planning strategies, the existence of appreciated assets, estimates of future taxable income, and other factors. In
evaluating potential sources of negative evidence, we consider a cumulative loss in recent years, any history of operating losses or tax
credit carryforwards expiring unused, losses expected in early future years, unsettled circumstances that, if unfavorably resolved,
would adversely affect future operations and profit levels on a continuing basis in future years, and any carryback or carryforward
period so brief that a significant deductible temporary difference expected to reverse in a single year would limit realization of tax
benefits. We assign cumulative historical losses significant weight in the evaluation of realizability relative to more subjective
In addition, we recognize the financial statement effect of a tax position only when
evidence such as forecasts of future income.
management believes that it is more likely than not, that based on the technical merits, the position will be sustained upon
examination. We are no longer indefinitely reinvested with respect to the book in excess of tax basis in the investment in our foreign
subsidiaries. Because of U.S. tax reform we expect that the future reversal of such temporary differences will occur free of material
taxation. We classify interest and penalties associated with uncertain tax positions as income tax expense. We account for the U.S.
tax effect of global intangible low-taxed income earned by foreign subsidiaries in the period that such income is earned. We utilize
the aggregate approach for releasing disproportionate income tax effects from Accumulated other comprehensive income (loss).

Asset Retirement Obligations: We have material legal obligations to remove and dismantle long‑lived assets and to restore land
or the seabed at certain E&P locations. We initially recognize a liability for the fair value of legally required asset retirement
obligations in the period in which the retirement obligations are incurred and capitalize the associated asset retirement costs as part of
the carrying amount of the long‑lived assets.
In subsequent periods, the liability is accreted, and the asset is depreciated over the
useful life of the related asset. Fair value is determined by applying a credit adjusted risk-free rate to the undiscounted expected future
abandonment expenditures. Changes in estimates prior to settlement result in adjustments to both the liability and related asset values,
unless the field has ceased production, in which case changes are recognized in the Statement of Consolidated Income.

62

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 62

3/23/22 1:35 PM

62

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:44PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
6

 
 
 
 
6
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

63

We measure asset retirement obligations based on the requirements of existing laws and regulations in accordance with ASC
410-20, Asset Retirement Obligations. Laws and regulations associated with the scope and timing for the abandonment of oil and gas
wells, facilities and equipment could change which could increase the cost of our abandonment obligations. In addition, we may be
required to assume abandonment obligations for certain divested assets in the event the current or future owners of facilities previously
owned by us are unable to perform, whether due to bankruptcy or otherwise.

Retirement Plans: We recognize the funded status of defined benefit postretirement plans in the Consolidated Balance
Sheet. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation. We
recognize the net changes in the funded status of these plans as a component of Other Comprehensive Income (Loss) in the year in
which such changes occur. Actuarial gains and losses in excess of 10% of the greater of the benefit obligation or the market value of
assets are amortized over the average remaining service period of active employees or the remaining average expected life if a plan’s
participants are predominantly inactive.

Derivatives: We utilize derivative instruments for financial risk management activities. In these activities, we may use futures,
forwards, options and swaps, individually or in combination, to mitigate our exposure to fluctuations in prices of crude oil and natural
gas, as well as changes in interest and foreign currency exchange rates.

All derivative instruments are recorded at fair value in the Consolidated Balance Sheet. Our policy for recognizing the changes in
fair value of derivatives varies based on the designation of the derivative. The changes in fair value of derivatives that are not
designated as hedges are recognized currently in earnings. Derivatives may be designated as hedges of expected future cash flows or
forecasted transactions (cash flow hedges), or hedges of changes in fair value of recognized assets and liabilities or of unrecognized
firm commitments (fair value hedges). Changes in fair value of derivatives that are designated as cash flow hedges are recorded as a
component of other comprehensive income (loss). Amounts included in Accumulated other comprehensive income (loss) for cash
flow hedges are reclassified into earnings in the same period that the hedged item is recognized in earnings. Changes in fair value of
derivatives designated as fair value hedges are recognized currently in earnings. The change in fair value of the related hedged item is
recorded as an adjustment to its carrying amount and recognized currently in earnings.

Fair Value Measurements: We use various valuation approaches in determining fair value for financial instruments, including
the market and income approaches. Our fair value measurements also include non-performance risk and time value of money
considerations. Counterparty credit is considered for financial assets, and our credit is considered for financial liabilities. We also
record certain nonfinancial assets and liabilities at fair value when required by GAAP. These fair value measurements are recorded in
connection with business combinations, qualifying nonmonetary exchanges, the initial recognition of asset retirement obligations and
any impairment of long‑lived assets, equity method investments or goodwill. We determine fair value in accordance with the fair
value measurements accounting standard which established a hierarchy for the inputs used to measure fair value based on the source of
the inputs, which generally range from quoted prices for identical instruments in a principal trading market (Level 1) to estimates
determined using related market data (Level 3), including discounted cash flows and other unobservable data. Measurements derived
indirectly from observable inputs or from quoted prices from markets that are less liquid are considered Level 2. When Level 1 inputs
are available within a particular market, those inputs are selected for determination of fair value over Level 2 or 3 inputs in the same
market. Multiple inputs may be used to measure fair value; however, the level assigned to a fair value measurement is based on the
lowest significant input level within this fair value hierarchy.

Details on the methods and assumptions used to determine the fair values are as follows:

Fair value measurements based on Level 1 inputs: Measurements that are most observable are based on quoted prices of identical
instruments obtained from the principal markets in which they are traded. Closing prices are both readily available and representative
of fair value. Market transactions occur with sufficient frequency and volume to assure liquidity.

Fair value measurements based on Level 2 inputs: Measurements derived indirectly from observable inputs or from quoted prices
from markets that are less liquid are considered Level 2. Measurements based on Level 2 inputs include over-the-counter derivative
instruments that are priced on an exchange-traded curve but have contractual terms that are not identical to exchange-traded contracts.

Fair value measurements based on Level 3 inputs: Measurements that are least observable are estimated from related market
data, determined from sources with little or no market activity for comparable contracts or are positions with longer durations. Fair
values determined using discounted cash flows and other unobservable data are also classified as Level 3.

Netting of Financial Instruments: We generally enter into master netting arrangements to mitigate legal and counterparty credit
risk. Master netting arrangements are generally accepted overarching master contracts that govern all individual transactions with the
same counterparty entity as a single legally enforceable agreement. The U.S. Bankruptcy Code provides for the enforcement of
certain termination and netting rights under certain types of contracts upon the bankruptcy filing of a counterparty, commonly known
If a master netting arrangement provides for termination and netting upon the counterparty’s
as the “safe harbor” provisions.
bankruptcy, these rights are generally enforceable with respect to “safe harbor” transactions. If these arrangements provide the right
of offset and our intent and practice is to offset amounts in the case of such a termination, our policy is to record the fair value of
In the normal course of business, we rely on legal and credit risk mitigation clauses
derivative assets and liabilities on a net basis.

63

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
6

63

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 63

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

64

6
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

providing for adequate credit assurance as well as close‑out netting, including two‑party netting and single counterparty multilateral
netting. As applied to us, “two‑party netting” is the right to net amounts owing under safe harbor transactions between a single
defaulting counterparty entity and a single Hess entity, and “single counterparty multilateral netting” is the right to net amounts owing
under safe harbor transactions among a single defaulting counterparty entity and multiple Hess entities. We are reasonably assured
that these netting rights would be upheld in a bankruptcy proceeding in the U.S. in which the defaulting counterparty is a debtor under
the U.S. Bankruptcy Code.

Share-based Compensation: We account for share-based compensation based on the fair value of the award on the date of
grant. The fair value of all share‑based compensation is recognized over the requisite service period for the entire award, whether the
award was granted with ratable or cliff vesting terms, net of actual forfeitures. We estimate fair value at the date of grant using a
Black‑Scholes valuation model for employee stock options and a Monte Carlo simulation model for performance share units
(PSUs). Fair value of restricted stock is based on the market value of the underlying shares at the date of grant.

Foreign Currency Translation: The U.S. Dollar is the functional currency (primary currency in which business is conducted) for
our foreign operations. Adjustments resulting from remeasuring monetary assets and liabilities that are denominated in a currency
other than the functional currency are recorded in Other, net in the Statement of Consolidated Income.

Maintenance and Repairs: Maintenance and repairs are expensed as incurred. Capital improvements are recorded as additions

in Property, plant and equipment.

Environmental Expenditures: We accrue and expense the undiscounted environmental costs necessary to remediate existing
conditions related to past operations when the future costs are probable and reasonably estimable. At year‑end 2021, our reserve for
estimated remediation liabilities was approximately $60 million. Environmental expenditures that increase the life or efficiency of
property or reduce or prevent future adverse impacts to the environment are capitalized.

2. Inventories

Inventories at December 31 were as follows:

Crude oil and natural gas liquids..................................................................................................................................... $
Materials and supplies.....................................................................................................................................................

Total Inventories ........................................................................................................................................................ $

2021

2020

(In millions)

52
171
223

$

$

226
152
378

At December 31, 2020, crude oil inventories included $164 million associated with the cost of 4.2 million barrels of crude oil
transported and stored on two chartered VLCCs for sale in Asian markets. The two VLCC cargos were sold in the first quarter of
2021.

3.  Property, Plant and Equipment

Property, plant and equipment at December 31 were as follows:

Exploration and Production

Unproved properties................................................................................................................................................ $
Proved properties.....................................................................................................................................................
Wells, equipment and related facilities ...................................................................................................................

Midstream ......................................................................................................................................................................
Corporate and Other ....................................................................................................................................................
Total — at cost ........................................................................................................................................................
Less: Reserves for depreciation, depletion, amortization and lease impairment ....................................................
Property, Plant and Equipment — Net.................................................................................................................. $

2021

2020

(In millions)

184
2,877
23,745
26,806
4,342
30
31,178
16,996
14,182

$

$

164
2,930
23,224
26,318
4,163
38
30,519
16,404
14,115

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
6

64

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 64

3/23/22 1:35 PM

64

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
6
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

65

Capitalized Exploratory Well Costs: The following table discloses the amount of capitalized exploratory well costs pending

determination of proved reserves at December 31 and the changes therein during the respective years:

Balance at January 1.......................................................................................................................... $
Additions to capitalized exploratory well costs pending the determination of proved reserves.....
Reclassifications to wells, facilities and equipment based on the determination of proved
reserves............................................................................................................................................
Capitalized exploratory well costs charged to expense...................................................................
Balance at December 31..................................................................................................................... $
Number of Wells at December 31 .....................................................................................................

2021

2020

2019

$

(In millions)
584
111

(111)
(125)
459
22

$

$

$

459
222

—
—
681
35

418
224

(58)
—
584
31

During the three years ended December 31, 2021, additions to capitalized exploratory well costs primarily related to drilling at the

Stabroek Block, offshore Guyana.  In 2019, other drilling activity included the Esox prospect in the Gulf of Mexico.

Reclassifications to wells, facilities and equipment based on the determination of proved reserves in 2020 resulted from sanctions
of the Payara Field development, the third sanctioned project on the Stabroek Block, offshore Guyana, and an additional phase of
development at the North Malay Basin, offshore Peninsular Malaysia.
In 2019, reclassifications to wells, facilities and equipment
resulted from sanction of the Liza Phase 2 development on the Stabroek Block and the Esox tieback well to the Tubular Bells Field in
the Gulf of Mexico.

Capitalized exploratory well costs charged to expense in 2020 of $125 million primarily related to the northern portion of the
Shenzi Field (Hess 28%) in the Gulf of Mexico due to reprioritization of our forward capital program in response to the significant
decline in crude oil prices. The preceding table excludes well costs incurred and expensed during 2021 of $11 million (2020: $67
million; 2019: $49 million).

Exploratory well costs capitalized for greater than one year following completion of drilling were $459 million at December 31,

2021, separated by year of completion as follows (in millions):

2020 ...................................................................................................................................................................................................... $
2019 ......................................................................................................................................................................................................
2018 ......................................................................................................................................................................................................
2017 ......................................................................................................................................................................................................
2016 and prior .......................................................................................................................................................................................

$

117
173
105
27
37
459

Guyana: Approximately 90% of the capitalized well costs in excess of one year relate to successful exploration wells where
hydrocarbons were encountered on the Stabroek Block (Hess 30%).
In the fourth quarter of 2021, the operator submitted a fourth
development plan for the Yellowtail Field to the Government of Guyana for approval. The operator also plans further appraisal
drilling and is conducting pre-development planning for additional phases of development.

JDA: Approximately 8% 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 2% of the capitalized well costs in excess of one year relates to North Malay Basin (Hess 50%),
offshore Peninsular Malaysia, where hydrocarbons were encountered in one successful exploration well. Subsurface evaluation and
pre-development studies are ongoing.

4.  Hess Midstream LP

HIP was initially formed on May 21, 2015, with Hess selling 50% of HIP to GIP for approximately $2.6 billion on July 1, 2015.
On April 10, 2017, HIP completed an initial public offering (IPO) of 16,997,000 common units, representing 30.5% limited
partnership interests in its subsidiary Hess Midstream Partners LP (Hess Midstream Partners), for net proceeds of approximately
$365.5 million.
In connection with the IPO, HIP contributed a 20% controlling economic interest in each of Hess North Dakota
Pipeline Operations LP, Hess TGP Operations LP, and Hess North Dakota Export Logistics Operations LP, and a 100% economic
In exchange for the contributed
interest in Hess Mentor Storage Holdings LLC (collectively the “Contributed Businesses”).
businesses, Hess and GIP each received common and subordinated units representing a direct 33.75% limited partner interest in Hess

65

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 65

3/23/22 1:35 PM

65

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
6

 
 
 
 
6
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

66

Midstream Partners and a 50% indirect ownership interest through HIP in Hess Midstream Partners’ general partner, which had a 2%
economic interest in Hess Midstream Partners plus incentive distribution rights.

On December 16, 2019, Hess Midstream Partners acquired HIP, including HIP’s 80% interest in Hess Midstream Partners’ oil
and gas midstream assets, HIP’s water services business and the outstanding economic general partner interest and incentive
distribution rights in Hess Midstream Partners LP. In addition, Hess Midstream Partners’ organizational structure converted from a
master limited partnership into an “Up-C” structure in which Hess Midstream Partners’ public unitholders received newly issued Class
A shares in a new public entity named Hess Midstream LP (Hess Midstream), which is taxed as a corporation for U.S. federal and
state income tax purposes. Hess Midstream Partners changed its name to “Hess Midstream Operations LP” (HESM Opco) and
became a consolidated subsidiary of Hess Midstream, the new publicly listed entity. As consideration for the acquisition, Hess
received a cash payment of $301 million and approximately 115 million newly issued HESM Opco Class B units. After giving effect
to the acquisition and related transactions, public shareholders of Class A shares in Hess Midstream owned 6% of the consolidated
entity on an as-exchanged basis and Hess and GIP each owned 47% of the consolidated entity on an as-exchanged basis, primarily
through the sponsors’ ownership of Class B units in HESM Opco that are exchangeable into Class A shares of Hess Midstream on a
one-for-one basis.

In March 2021, Hess Midstream completed an underwritten public equity offering of 6.9 million Class A shares held by Hess and
GIP. These Class A shares of Hess Midstream were obtained by Hess and GIP through the exchange of 6.9 million of their Class B
units of HESM Opco. As a result of this transaction, Hess received net proceeds of $70 million and recorded an increase in additional
paid-in capital and noncontrolling interests of $56 million and $41 million, respectively. The increase of $41 million in noncontrolling
interests is comprised of $14 million resulting from the change in ownership and $27 million due to the recognition of a deferred tax
asset as a result of an increase in the tax basis of Hess Midstream LP's investment in HESM Opco.

In August 2021, HESM Opco repurchased 31.25 million Class B units held by Hess and GIP for $750 million. Hess received net
proceeds of $375 million. HESM Opco issued $750 million in aggregate principal amount of 4.250% fixed-rate senior unsecured
notes due 2030 in a private offering to finance the repurchase. The transaction resulted in an increase in additional paid-in capital and
a decrease in noncontrolling interests of $28 million, and an increase in deferred tax assets and noncontrolling interests of $15 million
due to a decrease in the book basis of Hess Midstream LP's investment in HESM Opco. The $375 million paid to GIP was recorded as
a reduction to noncontrolling interests.

In October 2021, Hess Midstream completed an underwritten public equity offering of approximately 8.6 million Class A Shares
held by Hess and GIP. These Class A shares of Hess Midstream were obtained by Hess and GIP through the exchange of
approximately 8.6 million of their Class B units of HESM Opco. As a result of this transaction, Hess received net proceeds of
$108 million and recorded an increase in additional paid-in capital and noncontrolling interests of $96 million and $62 million,
respectively. The increase of $62 million in noncontrolling interests is comprised of $12 million resulting from the change in
ownership and $50 million due to the recognition of a deferred tax asset as a result of an increase in the tax basis of Hess Midstream
LP's investment in HESM Opco.

After giving effect to the above transactions in 2021, public shareholders of Class A shares of Hess Midstream own approximately

13%, and Hess and GIP each own approximately 43.5%, of the consolidated entity on an as-exchanged basis at December 31, 2021.

Little Missouri 4 (LM4) is a 200 million standard cubic feet per day gas processing plant located south of the Missouri River in
McKenzie County, North Dakota, that was constructed as part of a 50/50 joint venture between Hess Midstream and Targa Resources
Corp. Hess Midstream has a natural gas processing agreement with LM4 under which it pays a processing fee and reimburses LM4
for its proportionate share of electricity costs. In 2021, these processing fees were $28 million (2020: $26 million; 2019: $6 million)
and are included in Operating costs and expenses in the Statement of Consolidated Income.

At December 31, 2021, Hess Midstream liabilities totaling $2,694 million (2020: $2,026 million) are on a nonrecourse basis to
Hess Corporation, while Hess Midstream assets available to settle the obligations of Hess Midstream included cash and cash
equivalents totaling $2 million (2020: $3 million), property, plant and equipment, net totaling $3,125 million (2020: $3,111 million)
and an equity-method investment in LM4 of $102 million (2020: $108 million).

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
6

66

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 66

3/23/22 1:35 PM

66

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
6
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

5. Accrued Liabilities

The following table provides detail of our accrued liabilities at December 31:

Accrued capital expenditures..................................................................................................................................... $
Accrued operating and marketing expenditures ........................................................................................................
Accrued payments to royalty and working interest owners ......................................................................................
Current portion of asset retirement obligations .........................................................................................................
Accrued interest on debt ............................................................................................................................................
Accrued compensation and benefits ..........................................................................................................................
Other accruals ............................................................................................................................................................
Total Accrued Liabilities .......................................................................................................................................... $

92416 10K 03.8.2022

67

2021

2020

$

(In millions)
479
462
253
185
138
124
69
1,710

$

345
325
170
105
126
117
63
1,251

6.  Leases

Operating and finance lease obligations at December 31 included in the Consolidated Balance Sheet were as follows:

Operating Leases

Finance Leases

2021

2020

2021

2020

Right-of-use assets — net (a) ................................................................................... $
Lease obligations:.....................................................................................................

Current ................................................................................................................... $
Long-term ..............................................................................................................
Total lease obligations............................................................................................ $

352

70
394
464

$

$

$

(In millions)
426

$

63
478
541

$

$

144

19
200
219

$

$

$

168

18
220
238

(a) At December 31, 2021, finance lease ROU assets had a cost of $212 million (2020: $212 million) and accumulated amortization of $68 million (2020: $44

million).

Lease obligations represent 100% of the present value of future minimum lease payments in the lease arrangement. Where we
have contracted directly with a lessor in our role as operator of an unincorporated oil and gas venture, we bill our partners their
proportionate share for reimbursements as payments under lease agreements become due pursuant to the terms of our joint operating
and other agreements.

The nature of our leasing arrangements at December 31, 2021 was as follows:

Operating leases:

In the normal course of business, we primarily lease drilling rigs, equipment, logistical assets (offshore

vessels, aircraft, and shorebases), and office space.

Finance leases:

In 2018, we entered into a sale and lease-back arrangement for a floating storage and offloading vessel
(FSO) to handle produced condensate at North Malay Basin, offshore Peninsular Malaysia. At December 31, 2021, the remaining
lease term for the FSO was 11.8 years.

Maturities of lease obligations at December 31, 2021 were as follows:

Operating
Leases

Finance
Leases

(In millions)

2022 ........................................................................................................................................................................... $
2023 ...........................................................................................................................................................................
2024 ...........................................................................................................................................................................
2025 ...........................................................................................................................................................................
2026 ...........................................................................................................................................................................
Remaining years.........................................................................................................................................................
Total lease payments...............................................................................................................................................
Less: Imputed interest ..........................................................................................................................................
Total lease obligations.............................................................................................................................................. $

87
75
69
64
49
219
563
(99)
464

$

$

36
36
36
36
31
145
320
(101)
219

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
6

67

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 67

3/23/22 1:35 PM

67

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
The following information relates to the operating and finance leases at December 31:

Operating Leases

Finance Leases

92416 10K 03.8.2022

68

Weighted average remaining lease term .........................................
Range of remaining lease terms ...................................................... 0.1 - 14.5 years
Weighted average discount rate ......................................................

4.1%

2021
9.9 years

2020
10.3 years

0.1 - 15.5 years
4.0%

2021
11.8 years

11.8 years
7.9%

2020
12.8 years

12.8 years
7.9%

6
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

The components of lease costs for the years ended December 31, 2021 and 2020 were as follows:

Operating lease cost ................................................................................................................................................... $
Finance lease cost:

Amortization of leased assets...............................................................................................................................
Interest on lease obligations .................................................................................................................................
Short-term lease cost (a) ............................................................................................................................................
Variable lease cost (b)................................................................................................................................................
Sublease income (c) ...................................................................................................................................................
Total lease cost............................................................................................................................................................ $

2021

2020

(In millions)

88

$

200

24
18
137
21
(17)
271

$

31
20
199
38
(15)
473

(a) Short-term lease cost is primarily attributable to equipment used in global exploration, development, production, and crude oil marketing activities. Future short-

term lease costs will vary based on activity levels of our operated assets.

(b) Variable lease costs for drilling rigs result from differences in the minimum rate and the actual usage of the ROU asset during the lease period. Variable lease
costs for logistical assets result from differences in stated monthly rates and total charges reflecting the actual usage of the ROU asset during the lease
period.  Variable lease costs for our office leases represent common area maintenance charges which have not been separated from lease components.

(c) We sublease certain of our office space to third parties under our head lease.

The above lease costs represent 100% of the lease payments due for the period, including where we as operator have contracted
directly with suppliers. As the payments under lease agreements where we are operator become due, we bill our partners their
proportionate share for reimbursement pursuant to the terms of our joint operating agreements. Reimbursements are not reflected in
the table above.  Certain lease costs above associated with exploration and development activities are included in capital expenditures.

Supplemental cash flow information related to leases for the years ended December 31, 2021 and 2020 were as follows:

Operating Leases

Finance Leases

2021

2020

2021

2020

Cash paid for amounts included in the measurement of lease obligations:

Operating cash flows (a)....................................................................................... $
Financing cash flows (a).......................................................................................

Noncash transactions:

Leased assets recognized for new lease obligations incurred ..............................
Changes in leased assets and lease obligations due to lease modifications (b)....

$

87
—

12
29

(a) Amounts represent gross lease payments before any recovery from partners.
(b) In 2020, primarily related to negotiated extensions of an office lease and offshore drilling rig leases.

(In millions)

$

218
—

51
123

$

18
18

—
—

20
17

—
—

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
6

68

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 68

3/23/22 1:35 PM

68

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
6
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

7. Debt

Total debt at December 31 consisted of the following:

92416 10K 03.8.2022

69

2021

2020

(In millions)

Debt - Hess Corporation:

Senior unsecured fixed-rate public notes:

3.500% due 2024..................................................................................................................................................... $
4.300% due 2027.....................................................................................................................................................
7.875% due 2029.....................................................................................................................................................
7.300% due 2031.....................................................................................................................................................
7.125% due 2033.....................................................................................................................................................
6.000% due 2040.....................................................................................................................................................
5.600% due 2041.....................................................................................................................................................
5.800% due 2047.....................................................................................................................................................
Total senior unsecured fixed-rate public notes ............................................................................................................
Term loan facility .........................................................................................................................................................
Fair value adjustments - interest rate hedging..............................................................................................................

Total Debt - Hess Corporation............................................................................................................................. $

Debt - Midstream (Hess Midstream Operations LP):

Senior unsecured fixed-rate public notes:

5.625% due 2026 ................................................................................................................................................... $
5.125% due 2028 ...................................................................................................................................................
4.250% due 2030 ...................................................................................................................................................
Total senior unsecured fixed-rate public notes ............................................................................................................
Term loan A facility ....................................................................................................................................................
Revolving credit facility ..............................................................................................................................................

Total Debt - Midstream ........................................................................................................................................ $

Total Debt:

Current portion of long-term debt ................................................................................................................................ $
Long-term debt.............................................................................................................................................................

Total Debt............................................................................................................................................................... $

At December 31, 2021, the maturity profile of total debt was as follows:

299
995
464
628
537
742
1,236
494
5,395
497
2
5,894

791
543
739
2,073
387
104
2,564

517
7,941
8,458

2022 ................................................................................................................................................... $
2023 ...................................................................................................................................................
2024 ...................................................................................................................................................
2025 ...................................................................................................................................................
2026 ...................................................................................................................................................
Thereafter...........................................................................................................................................
Total Borrowings...............................................................................................................................
Less: Deferred financing costs and discounts....................................................................................

Total Debt (excluding interest).................................................................................................... $

No interest was capitalized in 2021 or 2020 (2019: $38 million).

Debt – Hess Corporation:

Senior unsecured fixed-rate public notes:

Total

520
30
744
—
800
6,438
8,532
(74)
8,458

Hess
Corporation

(In millions)
500
—
300
—
—
5,138
5,938
(44)
5,894

$

$

$

$

$

$

$

$

$

$

299
994
464
628
537
741
1,236
494
5,393
988
5
6,386

789
542
—
1,331
395
184
1,910

10
8,286
8,296

Midstream

20
30
444
—
800
1,300
2,594
(30)
2,564

At December 31, 2021, Hess Corporation’s fixed-rate public notes had a gross principal amount of $5,438 million (2020:
$5,438 million) and a weighted average interest rate of 5.9% (2020: 5.9%). The indentures for our fixed-rate public notes limit the
ratio of secured debt to Consolidated Net Tangible Assets (as that term is defined in the indentures) to 15%. As of December 31,
2021, Hess Corporation was in compliance with this financial covenant.

69

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 69

3/23/22 1:35 PM

69

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
6

 
 
 
 
92416 10K 03.8.2022

70

7
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Term loan and credit facility:

In March 2020, we entered into a $1 billion three year term loan agreement with a maturity date of March 16, 2023. In July 2021,
we repaid $500 million of the $1 billion outstanding under the term loan, and in February 2022, we repaid the remaining $500 million.
The remaining $500 million has been classified as Current portion of long-term debt in our Consolidated Balance Sheet at December
31, 2021 as it was our intent to repay the remaining $500 million in the first quarter of 2022.

In 2019, we entered into a $3.5 billion revolving credit facility with a maturity date of May 15, 2023. In April 2021, we amended
this credit facility by extending this facility's expiration date for one year to May 2024 and incorporating customary provisions for the
eventual replacement of LIBOR among other changes as set forth in the amended credit agreement. Borrowings on the facility will
generally bear interest at 1.40% above LIBOR, though the interest rate is subject to adjustment if our credit rating changes. At
December 31, 2021, Hess Corporation had no outstanding borrowings or letters of credit under this facility.

The revolving credit facility and term loan are subject to customary representations, warranties, customary events of default and
covenants, including a financial covenant limiting the ratio of Total Consolidated Debt to Total Capitalization of the Corporation and
its consolidated subsidiaries to 65%, and a financial covenant limiting the ratio of secured debt to Consolidated Net Tangible Assets of
the Corporation and its consolidated subsidiaries to 15% (as these capitalized terms are defined in the credit agreement for the
revolving credit facility and the term loan agreement). As of December 31, 2021, Hess Corporation was in compliance with these
financial covenants.

The most restrictive of the financial covenants related to our fixed-rate public notes and our term loan and revolving credit facility

would allow us to borrow up to an additional $1,843 million of secured debt at December 31, 2021.

Other outstanding letters of credit at December 31 were as follows:

Committed lines (a).................................................................................................................................................... $
Uncommitted lines (a)................................................................................................................................................

Total..................................................................................................................................................................... $

(a) At December 31, 2021, committed and uncommitted lines have expiration dates through 2022.

Debt - Midstream:

Senior unsecured fixed-rate public notes:

2021

2020

(In millions)

29
230
259

$

$

54
215
269

In November 2017, HIP issued $800 million in aggregate principal amount of 5.625% fixed-rate senior unsecured notes due in
2026. In December 2019, in connection with the acquisition of HIP and corporate restructuring described in Note 4, Hess Midstream
LP, HESM Opco assumed $800 million of outstanding HIP senior unsecured notes in a par-for-par exchange.
In addition, in
December 2019, HESM Opco issued $550 million in aggregate principal amount of 5.125% fixed-rate senior unsecured notes due in
2028 to finance the acquisition of HIP and repay outstanding borrowings under HIP’s credit facilities. In August 2021, HESM Opco
issued $750 million in aggregate principal amount of 4.250% fixed-rate senior unsecured notes due in 2030 in a private offering to
finance the repurchase of 31.25 million HESM Opco Class B units held by Hess and GIP. These senior unsecured notes are
guaranteed by certain of HESM Opco’s direct and indirect wholly owned material domestic subsidiaries. These senior unsecured
notes are non-recourse to Hess Corporation.

Credit facilities:

At December 31, 2021, HESM Opco had $1.4 billion of senior secured syndicated credit facilities maturing December 2024,
consisting of a $1 billion 5-year revolving credit facility and a fully drawn $400 million 5-year term loan A facility. The revolving
credit facility can be used for borrowings and letters of credit to fund HESM Opco’s operating activities, capital expenditures,
distributions and for other general corporate purposes. Borrowings under the 5-year term loan A facility will generally bear interest at
LIBOR plus an applicable margin ranging from 1.55% to 2.50%, while the applicable margin for the 5-year syndicated revolving
credit facility ranges from 1.275% to 2.000%. Pricing levels for the facility fee and interest-rate margins are based on HESM Opco’s
ratio of total debt to EBITDA (as defined in the credit facilities). If HESM Opco obtains an investment grade credit rating, the pricing
levels will be based on HESM Opco’s credit ratings in effect from time to time. The credit facilities contain covenants that require
HESM Opco to maintain a ratio of total debt to EBITDA (as defined in the credit facilities) for the prior four fiscal quarters of not
greater than 5.00 to 1.00 as of the last day of each fiscal quarter (5.50 to 1.00 during the specified period following certain
acquisitions) and, prior to HESM Opco obtaining an investment grade credit rating, a ratio of secured debt to EBITDA for the prior
four fiscal quarters of not greater than 4.00 to 1.00 as of the last day of each fiscal quarter. HESM Opco was in compliance with these
financial covenants at December 31, 2021. The credit facilities are secured by first-priority perfected liens on substantially all of the
assets of HESM Opco and its direct and indirect wholly owned material domestic subsidiaries, including equity interests directly
owned by such entities, subject to certain customary exclusions. At December 31, 2021, borrowings of $104 million were drawn

70

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
7

70

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 70

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

71

7
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

under HESM Opco’s revolving credit facility, and borrowings of $390 million, excluding deferred issuance costs, were drawn under
HESM Opco’s term loan A facility. Borrowings under these credit facilities are non-recourse to Hess Corporation.

8. Asset Retirement Obligations

The following table describes the changes in our asset retirement obligations for the years ended December 31:

2021

2020

Balance at January 1..................................................................................................................................................... $
Liabilities incurred .......................................................................................................................................................
Liabilities settled or disposed of...................................................................................................................................
Accretion expense ........................................................................................................................................................
Revisions of estimated liabilities..................................................................................................................................
Foreign currency remeasurement .................................................................................................................................
Balance at December 31................................................................................................................................................ $

$

(In millions)
999
229
(207)
44
126
(1)
1,190

$

Total Asset Retirement Obligations at December 31:

Current portion of asset retirement obligations............................................................................................................ $
Long-term asset retirement obligations........................................................................................................................
Total at December 31 ............................................................................................................................................... $

185
1,005
1,190

$

$

1,024
36
(161)
46
52
2
999

105
894
999

The liabilities incurred in 2021 on Hess owned properties primarily relate to operations in the U.S. and Guyana while liabilities
incurred in 2020 primarily relate to operations in Guyana, the U.S. and Malaysia. In August 2020, Fieldwood and related entities filed
for bankruptcy relief under Chapter 11 of the U.S. Bankruptcy Code. Fieldwood’s Bankruptcy Plan, which was approved by the U.S.
Bankruptcy Court in June 2021, includes the abandonment of certain assets, including seven offshore Gulf of Mexico leases and
related facilities in the West Delta Field that were formerly owned by us and sold to a Fieldwood predecessor in 2004, and the
discharge of Fieldwood’s obligation to decommission these facilities. As a result, in October 2021 and February 2022, we received
decommissioning orders from the BSEE requiring us to decommission certain wells and related facilities located on six of the seven
West Delta leases. We expect to receive additional orders covering the remainder of the West Delta decommissioning obligations in
the near future and are actively engaged with the BSEE to agree on the scope and timing of decommissioning activities. Our
decommissioning obligation derives from our former ownership of the facilities. We are seeking contribution from other parties that
owned an interest in the facilities. Liabilities incurred in 2021 include $147 million representing total estimated abandonment
obligations in the West Delta Field. Potential recoveries from other parties that previously owned an interest in the West Delta Field
have not been recognized as of December 31, 2021.

The liabilities settled or disposed of in 2021 primarily result from the sale of our interests in Denmark and abandonment activity
completed in the Gulf of Mexico and the Bakken. Liabilities settled or disposed of in 2020 primarily result from an asset sale in the
Gulf of Mexico and abandonment activity completed in the Gulf of Mexico, the Bakken and the U.K. North Sea. Revisions of
estimated liabilities in 2021 and 2020 primarily reflect an acceleration of planned abandonment activity in the Gulf of Mexico and
changes in service and equipment rates.

Sinking fund deposits that are legally restricted for purposes of settling asset retirement obligations, which are reported in non-

current Other assets in the Consolidated Balance Sheet, were $233 million at December 31, 2021 (2020: $207 million).

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
7

71

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 71

3/23/22 1:35 PM

71

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

72

7
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

9. Retirement Plans

We have funded noncontributory defined benefit pension plans for a significant portion of our employees. In addition, we have
an unfunded supplemental pension plan covering certain employees, which provides incremental payments that would have been
payable from our principal pension plans, were it not for limitations imposed by income tax regulations. The plans provide defined
benefits based on years of service and final average salary to our U.S. employees hired prior to January 1, 2017 and to our employees
in the United Kingdom (U.K.). The U.S. employees hired on or after January 1, 2017 participate under a cash accumulation formula
and receive credits to a notional account based on a percentage of pensionable wages. Interest accrues on the balance in the notional
account at a rate determined in accordance with plan provisions. Additionally, we maintain an unfunded postretirement medical plan
that provides health benefits to certain U.S. qualified retirees from ages 55 through 65. The measurement date for all retirement plans
is December 31.

The following table summarizes the benefit obligations, the fair value of plan assets, and the funded status of our pension and

postretirement medical plans:

Funded
Pension Plans

Unfunded
Pension Plan

Postretirement
Medical Plan

2021

2020

2021

2020

2021

2020

Change in Benefit Obligation

Balance at January 1, ..................................................................................... $ 3,085
41
Service cost ..................................................................................................
52
Interest cost ..................................................................................................
Actuarial (gains) loss (a) ..............................................................................
(126)
(100)
Benefit payments (b) ...................................................................................
Plan amendments..........................................................................................
2
Foreign currency exchange rate changes .....................................................
(6)
2,948
Balance at December 31, (c)...........................................................................

$ 2,667
37
68
385
(93)
—
21
3,085

Change in Fair Value of Plan Assets

Balance at January 1, ...................................................................................... $ 3,043
417
Actual return on plan assets .........................................................................
Employer contributions ...............................................................................
6
(100)
Benefit payments (b) ...................................................................................
Foreign currency exchange rate changes .....................................................
(9)
Balance at December 31, ................................................................................
3,357

$ 2,732
378
4
(93)
22
3,043

$

$

(In millions)

$

269
10
3
(8)
(26)
—
—
248

— $
—
26
(26)
—
—

$

242
13
5
26
(17)
—
—
269

— $
—
17
(17)
—
—

$

65
3
1
(3)
(7)
—
—
59

— $
—
7
(7)
—
—

75
3
1
(8)
(6)
—
—
65

—
—
6
(6)
—
—

Funded Status (Plan assets greater (less) than benefit obligations) at
December 31,.................................................................................................... $

409

Unrecognized Net Actuarial (Gains) Losses.................................................. $

501

$

$

(42) $

(248) $

(269) $

(59) $

(65)

900

$

66

$

86

$

(21) $

(19)

(a) Changes in discount rates resulted in actuarial gains of $178 million in 2021 (2020: $387 million of actuarial losses). Changes in the inflation assumptions for
our U.K. pension plan resulted in actuarial losses of $36 million in 2021 (2020: $24 million of actuarial losses). Changes in mortality assumptions resulted in
actuarial losses of $7 million in 2021 (2020: $18 million of actuarial gains). Changes in all other assumptions, including demographic assumptions, resulted in
actuarial gains of $2 million in 2021 (2020: $10 million of actuarial losses).

(b) Benefit payments include lump-sum settlement payments of $34 million in 2021 (2020: $23 million).
(c) At December 31, 2021, the accumulated benefit obligation for the funded and unfunded defined benefit pension plans was $2,856 million and $208 million,

respectively (2020: $2,993 million and $228 million, respectively).

Amounts recognized in the Consolidated Balance Sheet at December 31 consisted of the following:

Funded
Pension Plans

Unfunded
Pension Plan

Postretirement
Medical Plan

2021

2020

2021

2020

2021

2020

Noncurrent assets........................................................................................ $
Current liabilities ........................................................................................
Noncurrent liabilities ..................................................................................

Pension assets / (accrued benefit liability)......................................... $

409
—
—
409

Accumulated other comprehensive (income) loss, pre-tax (a)...................... $

501

$

45
—
(87)
(42) $

(In millions)
— $
(34)
(214)
(248) $

— $
(49)
(220)
(269) $

— $
(6)
(53)
(59) $

—
(7)
(58)
(65)

900

$

66

$

86

$

(21) $

(19)

$

$

$

(a) The after‑tax deficit reflected in Accumulated other comprehensive income (loss) was $338 million at December 31, 2021 (2020: $759 million deficit).

72

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
7

72

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 72

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:45PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
7
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

73

The net periodic benefit cost for funded and unfunded pension plans, and the postretirement medical plan, is as follows:

Pension Plans

Postretirement Medical Plan

2021

2020

2019

2021

2020

2019

(In millions)

Service cost .................................................................................................... $
Interest cost ....................................................................................................
Expected return on plan assets .......................................................................
Amortization of unrecognized net actuarial losses (gains).............................
Settlement loss ...............................................................................................
Curtailment gain .............................................................................................

Net Periodic Benefit Cost / (Income) (a)................................................ $

$

51
55
(197)
58
9
—
(24) $

$

50
73
(180)
48
—
—
(9) $

44
89
(180)
52
93
—
98

$

$

3
1
—
(1)
—
—
3

$

$

3
1
—
(1)
—
—
3

$

$

2
2
—
(1)
—
—
3

(a) Net non-service cost, which is included in Other, net in the Statement of Consolidated Income, was income of $75 million in 2021 (2020: $59 million of income;

2019: $55 million of expense).

In 2019, the trust for the Hess Corporation Employees’ Pension Plan (the “Plan”) purchased a single premium annuity contract at
a cost of $249 million using assets of the Plan to settle and transfer certain of its obligations to a third party. The settlement
transaction resulted in a noncash charge of $88 million to recognize unamortized pension actuarial losses that is included in Other, net
in the Statement of Consolidated Income.

In 2022, we forecast service cost for our pension and postretirement medical plans to be approximately $50 million and net non-
service cost of approximately $135 million of income, which is comprised of interest cost of approximately $65 million, amortization
of unrecognized net actuarial losses of approximately $15 million, and estimated expected return on plan assets of approximately $215
million.

Assumptions: The weighted average actuarial assumptions used to determine benefit obligations at December 31 and net periodic

benefit cost for the three years ended December 31 for our funded and unfunded pension plans were as follows:

Benefit Obligations:

Discount rate .................................................................................................................................
Rate of compensation increase .....................................................................................................

Net Periodic Benefit Cost:

Discount rate

Service cost..............................................................................................................................
Interest cost..............................................................................................................................
Expected return on plan assets ......................................................................................................
Rate of compensation increase .....................................................................................................

2021

2.5%
3.8%

2.6%
1.7%
6.6%
3.8%

2020

2.2%
3.8%

3.2%
2.6%
6.7%
3.8%

2019

2.9%
3.8%

3.9%
3.4%
7.1%
3.8%

The actuarial assumptions used to determine benefit obligations at December 31 for the postretirement medical plan were as

follows:

Discount rate .................................................................................................................................
Initial health care trend rate ..........................................................................................................
Ultimate trend rate ........................................................................................................................
Year in which ultimate trend rate is reached ................................................................................

2021
2.4%
5.5%
4.0%
2046

2020
1.9%
6.0%
4.5%
2038

2019
2.8%
6.5%
4.5%
2038

The assumptions used to determine net periodic benefit cost for each year were established at the end of each previous year while
the assumptions used to determine benefit obligations were established at each year‑end. The net periodic benefit cost and the
actuarial present value of benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The discount
rate is developed based on a portfolio of high‑quality, fixed income debt instruments with maturities that approximate the expected
payment of plan obligations.

The overall expected return on plan assets is developed from the expected future returns for each asset category, weighted by the
target allocation of pension assets to that asset category. The future expected return assumptions for individual asset categories are
largely based on inputs from various investment experts regarding their future return expectations for particular asset categories.

Our investment strategy is to maximize long‑term returns at an acceptable level of risk through broad diversification of plan assets
in a variety of asset classes. Asset classes and target allocations are determined by our investment committee and include domestic
and foreign equities, fixed income, and other investments, including hedge funds, real estate and private equity. Investment managers
are prohibited from investing in securities issued by us unless indirectly held as part of an index strategy. The majority of plan assets

73

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
7

73

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 73

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

74

7
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

are highly liquid, providing ample liquidity for benefit payment requirements. The current target allocations for plan assets are 45%
equity securities, 35% fixed income securities (including cash and short‑term investment funds) and 20% to all other types of
investments. Asset allocations are rebalanced on a periodic basis throughout the year to bring assets to within an acceptable range of
target levels.

Fair value: The following tables provide the fair value of the financial assets of the funded pension plans at December 31, 2021
and 2020 in accordance with the fair value measurement hierarchy described in Note 1, Nature of Operations, Basis of Presentation
and Summary of Accounting Policies.

Level 1

Level 2

Level 3

Net Asset
Value (c)

Total

(In millions)

December 31, 2021

Cash and Short-Term Investment Funds ........................................... $
Equities:
U.S. equities (domestic) .......................................................................
International equities (non-U.S.) ..........................................................
Global equities (domestic and non-U.S.) .............................................

Fixed Income:
Treasury and government related (a) ...................................................
Mortgage-backed securities (b) ............................................................
Corporate ..............................................................................................

Other:

Hedge funds .........................................................................................
Private equity funds .............................................................................
Real estate funds ..................................................................................
Total investments................................................................................... $

December 31, 2020

Cash and Short-Term Investment Funds ........................................... $
Equities:
U.S. equities (domestic) .......................................................................
International equities (non-U.S.) ..........................................................
Global equities (domestic and non-U.S.) .............................................

Fixed Income:
Treasury and government related (a) ...................................................
Mortgage-backed securities (b) ............................................................
Corporate ..............................................................................................

Other:
Hedge funds ..........................................................................................
Private equity funds ..............................................................................
Real estate funds ...................................................................................
Total investments................................................................................... $

19

$

— $

— $

— $

19

688
504
231

402
191
635

44

749
489
225

399
186
443

—
56
7

361
128
452

—
—
—

—
—
—

87
375
224

41
63
55

—
—
—
1,004

$

—
—
—
— $

81
382
195
1,503

$

81
382
224
3,357

— $

— $

— $

—
43
8

350
116
381

—
—
—
898

—
—
—

—
—
—

164
352
217

49
70
62

—
—
—
— $

73
251
161
1,399

$

73
251
184
3,043

$

601
73
—

—
—
128

—
—
29
850

44

585
94
—

—
—
—

—
—
23
746

$

$

$

(a) Includes securities issued and guaranteed by U.S. and non‑U.S. governments, and securities issued by governmental agencies and municipalities.
(b) Comprised of U.S. residential and commercial mortgage-backed securities.
(c) Includes certain investments that have been valued using the net asset value (NAV) practical expedient, and therefore have not been categorized in the fair value
hierarchy. The inclusion of such amounts in the above table is intended to aid reconciliation of investments categorized in the fair value hierarchy to total
pension plan assets.

The following describes the financial assets of the funded pension plans:

Cash and short‑term investment funds - Consists of cash on hand and short-term investment funds that provide for daily

investments and redemptions which are classified as Level 1.

Equities - Consists of individually held U.S. and international equity securities. This investment category also includes funds
that consist primarily of U.S. and international equity securities. Equity securities, which are individually held and are traded actively
on exchanges, are classified as Level 1. Certain funds, consisting primarily of equity securities, are classified as Level 2 if the NAV is
determined and published daily, and is the basis for current transactions. Commingled funds, consisting primarily of equity securities,
are valued using the NAV per fund share.

Fixed income investments - Consists of individually held securities issued by the U.S. government, non-U.S. governments,
governmental agencies, municipalities and corporations, and agency and non-agency mortgage-backed securities. This investment
category also includes funds that consist of fixed income securities. Individual fixed income securities are generally priced based on

74

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
7

74

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 74

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

75

7
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

evaluated prices from independent pricing services, which are monitored and provided by the third-party custodial firm responsible for
safekeeping assets of the particular plan and are classified as Level 2. Exchange-traded funds consisting of fixed income securities are
classified as Level 1. Certain funds, consisting primarily of fixed income securities, are classified as Level 2 if the NAV is determined
and published daily, and is the basis for current transactions. Commingled funds, consisting primarily of fixed income securities, are
valued using the NAV per fund share.

Other investments - Consists of exchange‑traded real estate investment

trust securities, which are classified as
Level 1. Commingled funds and limited partnership investments in hedge funds, private equity and real estate funds are valued at the
NAV per fund share.

Contributions and estimated future benefit payments: In 2022, we expect to contribute approximately $45 million to our funded

pension plans.

Estimated future benefit payments by the funded and unfunded pension plans, and the postretirement medical plan, which reflect

expected future service, are as follows (in millions):

2022.....................................................................................................................................................................................................
2023.....................................................................................................................................................................................................
2024.....................................................................................................................................................................................................
2025.....................................................................................................................................................................................................
2026.....................................................................................................................................................................................................
Years 2027 to 2031 .............................................................................................................................................................................

$

131
132
137
125
131
662

We also have defined contribution plans for certain eligible employees. Employees may contribute a portion of their
compensation to these plans and we match a portion of the employee contributions. We recorded expense of $18 million in 2021 for
contributions to these plans (2020: $22 million; 2019: $20 million).

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
7

75

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 75

3/23/22 1:35 PM

75

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
7
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

76

10. Revenue

Revenue from contracts with customers on a disaggregated basis was as follows (in millions):

Exploration and Production

Midstream Eliminations

Total

United
States

Guyana

Malaysia
and JDA Other (a)

E&P
Total

2021

Sales of our net production volumes:

Crude oil revenue.................................................... $ 2,958
Natural gas liquids revenue.....................................
594
Natural gas revenue.................................................
350
1,638
Sales of purchased oil and gas .....................................
Intercompany revenue..................................................
—
Total revenues from contracts with customers ............
5,540
Other operating revenues (b) .......................................
(162)
Total sales and other operating revenues ............. $ 5,378

2020

Sales of our net production volumes:

Crude oil revenue.................................................... $ 1,898
253
Natural gas liquids revenue.....................................
Natural gas revenue.................................................
144
831
Sales of purchased oil and gas .....................................
—
Intercompany revenue..................................................
3,126
Total revenues from contracts with customers ............
Other operating revenues (b) .......................................
478
Total sales and other operating revenues ............. $ 3,604

$

$

$

$

765
—
—
16
—
781
(27)
754

278
—
—
5
—
283
67
350

$

$

$

$

2019

Sales of our net production volumes:

Crude oil revenue.................................................... $ 2,981
Natural gas liquids revenue.....................................
229
Natural gas revenue.................................................
150
1,644
Sales of purchased oil and gas .....................................
Intercompany revenue..................................................
—
5,004
Total revenues from contracts with customers ............
Other operating revenues (b) .......................................
39
Total sales and other operating revenues ............. $ 5,043

$ — $
—
—
—
—
—
—
$ — $

83
—
655
—
—
738
—
738

34
—
477
—
—
511
—
511

113
—
646
3
—
762
—
762

$

$

$

$

$

$

519
—
10
95
—
624
(21)
603

$ 4,325
594
1,015
1,749
—
7,683
(210)
$ 7,473

153
—
10
11
—
174
28
202

566
—
33
91
—
690
—
690

$ 2,363
253
631
847
—
4,094
573
$ 4,667

$ 3,660
229
829
1,738
—
6,456
39
$ 6,495

$

$

$

$

$

$

— $
—
—
—
1,204
1,204
—
1,204

$

— $
—
—
—
1,092
1,092
—
1,092

$

— $
—
—
—
848
848
—
848

$

— $ 4,325
—
594
1,015
—
1,749
—
(1,204)
—
7,683
(1,204)
(210)
—
(1,204) $ 7,473

— $ 2,363
253
—
631
—
847
—
—
(1,092)
4,094
(1,092)
573
—
(1,092) $ 4,667

— $ 3,660
229
—
829
—
1,738
—
(848)
—
6,456
(848)
39
—
(848) $ 6,495

(a) Other includes our interests in Denmark, which were sold in August 2021, and Libya.
(b) Includes gains (losses) on commodity derivatives of $(243) million in 2021, $547 million in 2020, and $1 million in 2019.

At December 31, 2021, contract liabilities of $24 million (2020: nil) resulted from a take-or-pay deficiency payment received in

2021 that is subject to a make-up period expiring in December 2023.  At December 31, 2021 and 2020, there were no contract assets.

11.  Dispositions

2021: We completed the sale of our interests in Denmark for net cash consideration of approximately $130 million, after normal
closing adjustments, and recognized a pre-tax gain of $29 million ($29 million after income taxes). In addition, we completed the sale
of our Little Knife and Murphy Creek nonstrategic acreage interests in the Bakken for net cash consideration of $297 million, after
normal closing adjustments. The sale included approximately 78,700 net acres, which are located in the southernmost portion of the
Corporation's Bakken position. The acreage constituted part of a larger amortization base and the sale was treated as a normal
retirement.  Accordingly, no gain or loss was recognized upon sale.

2020: We completed the sale of our 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico for proceeds of

$482 million, after normal closing adjustments, and recognized a pre-tax gain of $79 million ($79 million after income taxes).

2019: We completed the sale of our remaining acreage in the Utica shale play in eastern Ohio for proceeds of $22 million, after

normal closing adjustments, and recognized a pre-tax gain of $22 million ($22 million after income taxes).

76

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 76

3/23/22 1:35 PM

 76

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
7

 
 
 
 
7
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

77

12. Impairment and Other

Oil and Gas Properties:

In June 2021, the U.S. Bankruptcy Court approved the bankruptcy plan for Fieldwood which includes transferring abandonment
obligations of Fieldwood to predecessors in title of certain of its assets, including Hess, who are jointly and severally liable for the
obligations. As a result, we recognized a charge of $147 million ($147 million after income taxes) in connection with total estimated
abandonment obligations for seven leases in the West Delta Field in the Gulf of Mexico, which we sold to a Fieldwood predecessor in
2004. See Note 8, Asset Retirement Obligations.

As a result of the significant decline in crude oil prices due to the global economic slowdown from COVID-19, 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 in the first quarter of 2020 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 at March 31, 2020
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.

13. Severance Costs

We incurred employee termination costs of $27 million in 2020 related to cost reduction initiatives. All charges were based on
amounts incurred under ongoing severance arrangements or other statutory requirements, plus amounts earned under enhanced benefit
arrangements. Payments for termination costs were $7 million in 2021 (2020: $20 million; 2019: $4 million).

14. Share-based Compensation

We have established and maintain long term incentive plans (LTIP) for the granting of restricted common shares, performance
share units (PSUs) and stock options to our employees. At December 31, 2021, the total number of authorized common stock under
the LTIP was 63.5 million shares, of which we have 23.6 million shares available for issuance. Share‑based compensation expense
consisted of the following:

Restricted stock............................................................................................................................... $
Performance share units..................................................................................................................
Stock options...................................................................................................................................

Share-based compensation expense before income taxes....................................................... $
Income tax benefit on share-based compensation expense .................................................... $

2021

2020

2019

$

(In millions)
51
18
10
79
$
— $

$

49
18
10
77
$
— $

53
22
10
85
—

Based on share‑based compensation awards outstanding at December 31, 2021, unearned compensation expense, before income

taxes, of $79 million is expected to be recognized over a weighted average period of 1.8 years.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
7

77

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 77

3/23/22 1:35 PM

 77

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
7
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

78

Our share-based compensation plans can be summarized as follows:

Restricted stock:

Restricted stock generally vests equally on an annual basis over a three-year term and is valued based on the prevailing market

price of our common stock on the date of grant. The following is a summary of restricted stock award activity in 2021:

Outstanding at January 1, 2021 ..............................................................................................................................
Granted ....................................................................................................................................................................
Vested (a).................................................................................................................................................................
Forfeited...................................................................................................................................................................
Outstanding at December 31, 2021 .........................................................................................................................

(a) In 2021, restricted stock with a vesting date fair value of $72 million were vested (2020: $51 million; 2019: $102 million).

Performance share units:

Shares of
Restricted
Common
Stock

Weighted -
Average Price
on Date of
Grant

(In thousands, except per share
amounts)

1,917
781
(980)
(102)
1,616

$

$

51.94
75.11
52.72
57.16
62.33

PSUs generally vest three years from the date of grant and are valued using a Monte Carlo simulation on the date of grant. The
number of shares of common stock to be issued under a PSU agreement is based on a comparison of the Corporation’s total
shareholder return (TSR) to the TSR of a predetermined group of peer companies over a three-year performance period ending
December 31 of the year prior to settlement of the grant. Beginning with the PSUs granted in 2020, the Corporation's TSR is
compared to the TSR of a predetermined group of peer companies and the S&P 500 index over the three-year performance period.
Payouts of the performance share awards will range from 0% to 200% of the target awards based on the Corporation’s TSR ranking
within the peer group. Dividend equivalents for the performance period will accrue on performance shares but will only be paid out
on earned shares after the performance period. The following is a summary of PSU activity in 2021:

Performance
Share Units

Weighted -
Average Fair
Value on Date
of Grant

Outstanding at January 1, 2021 ..............................................................................................................................
Granted ....................................................................................................................................................................
Vested (a).................................................................................................................................................................
Forfeited...................................................................................................................................................................
Outstanding at December 31, 2021 .........................................................................................................................

(a) In 2021, PSU’s with a vesting date fair value of $30 million were vested (2020: $48 million; 2019: $16 million).

The following weighted average assumptions were utilized to estimate the fair value of PSU awards:

$

(In thousands, except per share
amounts)
806
205
(274)
(4)
733

62.36
86.70
59.65
62.66
70.17

$

Risk free interest rate.......................................................................................................................
Stock price volatility .......................................................................................................................
Contractual term in years ................................................................................................................
Grant date price of Hess common stock.......................................................................................... $

2021

2020

2019

0.29 %
0.579
3.0

0.52 %
0.374
3.0

2.48 %
0.369
3.0

75.04

$

49.72

$

56.74

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
7

78

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 78

3/23/22 1:35 PM

 78

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
7
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

79

Stock options:

Stock options vest over three years from the date of grant, have a 10‑year term, and the exercise price equals the market price of

our common stock on the date of grant. The following is a summary of stock options activity in 2021:

Outstanding at January 1, 2021...................................................................................................
Granted .........................................................................................................................................
Exercised ......................................................................................................................................
Cancelled......................................................................................................................................
Forfeited .......................................................................................................................................
Outstanding at December 31, 2021..............................................................................................

Number of
options
(In thousands)
4,382
319
(1,538)
(1,049)
(27)
2,087

Weighted
Average
Exercise Price
per Share

$

$

61.57
75.04
49.87
83.88
52.07
61.15

Weighted
Average
Remaining
Contractual
Term
5.1 years

6.5 years

At December 31, 2021, there were 2.1 million outstanding stock options (1.17 million exercisable) with a weighted average
exercise price of $61.15 per share ($62.27 per share for exercisable options), a weighted average remaining contractual life of 6.5
years (5.0 years for exercisable options) and an aggregate intrinsic value of $28 million ($15 million for exercisable options). The
intrinsic value of stock options exercised in 2021 was $45 million (2020: $3 million, 2019: $10 million).

The following weighted average assumptions were utilized to estimate the fair value of stock options:

Risk free interest rate....................................................................................................................
Stock price volatility.....................................................................................................................
Dividend yield ..............................................................................................................................
Expected life in years ...................................................................................................................
Weighted average fair value per option granted........................................................................... $

2021

2020

2019

0.95 %
0.470
1.33 %
6.0

0.64 %
0.372
2.01 %
6.0

2.55 %
0.359
1.76 %
6.0

29.66

$

14.30

$

18.08

In estimating the fair value of PSUs and stock options, the risk-free interest rate is based on the vesting period of the award and is
obtained from published sources. The stock price volatility is determined from the historical stock prices of the Corporation using the
expected term.

15.  Income Taxes

The provision (benefit) for income taxes consisted of:

United States

Federal
Current............................................................................................................................................. $
Deferred taxes and other accruals ...................................................................................................
State...................................................................................................................................................

Foreign

Current (a) .......................................................................................................................................
Deferred taxes and other accruals ...................................................................................................

Provision (Benefit) For Income Taxes......................................................................................... $

(a) Primarily comprised of Libya in 2021, 2020 and 2019.

Income (loss) before income taxes consisted of the following:

United States (a) ................................................................................................................................... $
Foreign .................................................................................................................................................

Income (Loss) Before Income Taxes............................................................................................ $

2021

2020

2019

(In millions)

— $
12
3
15

478
107
585
600

$

(4) $
6
(1)
1

48
(60)
(12)
(11) $

(1)
72
16
87

447
(73)
374
461

2021

2020

2019

(In millions)

143
1,347
1,490

$

$

(1,509) $
(1,341)
(2,850) $

(338)
559
221

(a) Includes substantially all of our interest expense, corporate expense and the results of commodity hedging activities.

 79

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
7

79

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 79

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

80

8
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

The difference between our effective income tax rate and the U.S. statutory rate is reconciled below:

2021

2020

2019

U.S. statutory rate ...........................................................................................................................
Effect of foreign operations (a).......................................................................................................
State income taxes, net of federal income tax.................................................................................
Valuation allowance on current year operations.............................................................................
Release valuation allowance against previously unbenefited deferred tax assets ..........................
Noncontrolling interests in Midstream ...........................................................................................
Intraperiod allocation ......................................................................................................................
Credits.............................................................................................................................................
Equity and executive compensation................................................................................................
Other ...............................................................................................................................................
Total .............................................................................................................................................

21.0 %
28.0
0.2
(5.3)
—
(4.0)
—
—
0.4
—
40.3 %

21.0 %
12.1
0.1
(36.5)
—
1.7
—
2.0
(0.1)
0.1
0.4 %

21.0 %
142.9
5.8
41.8
(24.5)
(16.0)
33.7
—
2.2
1.2
208.1 %

(a) The variance in effective income tax rates attributable to the effect of foreign operations primarily resulted from the mix of income among high, primarily Libya,

and low tax rate jurisdictions.

The components of deferred tax liabilities and deferred tax assets at December 31, were as follows:

Deferred Tax Liabilities

Property, plant and equipment and investments........................................................................................................... $
Other.............................................................................................................................................................................
Total Deferred Tax Liabilities.................................................................................................................................

Deferred Tax Assets

Net operating loss carryforwards .................................................................................................................................
Tax credit carryforwards ..............................................................................................................................................
Property, plant and equipment and investments...........................................................................................................
Accrued compensation, deferred credits and other liabilities ......................................................................................
Asset retirement obligations.........................................................................................................................................
Other.............................................................................................................................................................................
Total Deferred Tax Assets .......................................................................................................................................
Valuation allowances (a)..............................................................................................................................................
Total deferred tax assets, net of valuation allowances..........................................................................................

Net Deferred Tax Assets (Liabilities) .................................................................................................................. $

(a) In 2021, the valuation allowance decreased by $1,553 million (2020: increase of $657 million; 2019: decrease of $143 million).

2021

2020

(In millions)

(1,712) $
(38)
(1,750)

4,323
89
258
71
258
277
5,276
(3,838)
1,438
(312) $

(847)
(45)
(892)

5,037
135
55
196
252
325
6,000
(5,391)
609
(283)

In the Consolidated Balance Sheet, deferred tax assets and liabilities are netted by taxing jurisdiction and are recorded at

December 31, as follows:

Deferred income taxes (long-term asset)...................................................................................................................... $
Deferred income taxes (long-term liability) .................................................................................................................

Net Deferred Tax Assets (Liabilities)................................................................................................................... $

2021

2020

(In millions)

$

71
(383)
(312) $

59
(342)
(283)

At December 31, 2021, we have recognized a gross deferred tax asset related to net operating loss carryforwards of $4,323 million
before application of valuation allowances. The deferred tax asset is comprised of $300 million attributable to foreign net operating
losses which will begin to expire in 2025, $3,507 million attributable to U.S. federal operating losses which will begin to expire in
2034, and $516 million attributable to losses in various U.S. states which will begin to expire in 2022. The deferred tax asset
attributable to foreign net operating losses, net of valuation allowances, is $166 million. A full valuation allowance is established
against the deferred tax asset attributable to U.S. federal and state net operating losses, except for $12 million of U.S. federal and $3
million of U.S. state deferred tax assets attributable to Midstream activities for which separate U.S. federal and state tax returns are
filed. At December 31, 2021, we have U.S. state tax credit carryforwards of $18 million, which will begin to expire in 2034, $71
million of other business credit carryforwards, which will begin to expire in 2036, and foreign tax credit carryforwards of $1 million,
which will begin to expire in 2024.  A full valuation allowance is established against the deferred tax asset attributable to these credits.

At December 31, 2021, the Consolidated Balance Sheet reflects a $3,838 million (2020: $5,391 million) valuation allowance
against the net deferred tax assets for multiple jurisdictions based on application of the relevant accounting standards. Hess continues

 80

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
8

80

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 80

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

81

8
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

to maintain a full valuation allowance against its deferred tax assets in the U.S. (non-Midstream) and Malaysia, and other certain
jurisdictions, and did so against its deferred tax assets in Denmark prior to its sale in 2021 (see Note 11, Dispositions). The reduction
in valuation allowance year over year is primarily due to the sale of the Denmark asset with its deferred tax asset and related valuation
allowance being derecognized as part of net basis of property sold and partially due to a reduction in deferred tax asset balances in
jurisdictions where we continue to maintain a full valuation allowance. Management assesses the available positive and negative
evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. The
the three-year period ending December 31, 2021 constitutes significant objective negative
cumulative loss incurred over
evidence. Such objective negative evidence limits our ability to consider subjective positive evidence, such as our projections of
future taxable income, resulting in the recognition of a valuation allowance against
the net deferred tax assets for these
jurisdictions. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable
income change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight can be
given to subjective evidence.

Below is a reconciliation of the gross beginning and ending amounts of unrecognized tax benefits:

Balance at January 1.......................................................................................................................... $
Additions based on tax positions taken in the current year...............................................................
Additions based on tax positions of prior years ................................................................................
Reductions based on tax positions of prior years..............................................................................
Reductions due to settlements with taxing authorities ......................................................................
Reductions due to lapses in statutes of limitation .............................................................................
Balance at December 31..................................................................................................................... $

2021

2020

2019

(In millions)
168
2
1
(2)
(1)
(2)
166

$

$

$

$

166
12
3
(48)
—
—
133

168
2
1
(1)
—
(2)
168

The December 31, 2021 balance of unrecognized tax benefits includes $15 million that, if recognized, would impact our effective
income tax rate. Over the next 12 months, it is reasonably possible that the total amount of unrecognized tax benefits could decrease
between zero and $15 million due to settlements with taxing authorities or other resolutions, as well as lapses in statutes of
limitation. At December 31, 2021, our accrued interest and penalties related to unrecognized tax benefits is $6 million (2020: $6
million).

We file income tax returns in the U.S. and various foreign jurisdictions. We are no longer subject to examinations by income tax

authorities in most jurisdictions for years prior to 2009.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
8

81

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 81

3/23/22 1:35 PM

 81

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:46PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
8
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

82

16. Outstanding and Weighted Average Common Shares

The Net income (loss) and weighted average number of common shares used in basic and diluted earnings per share computation

were as follows:

2021

2020

2019

(In millions except per share amounts)

Net Income (Loss) Attributable to Hess Corporation Common Stockholders:

Net income (loss) .............................................................................................................................. $
Less: Net income (loss) attributable to noncontrolling interests.....................................................
Less: Preferred stock dividends.......................................................................................................
Net income (loss) attributable to Hess Corporation Common Stockholders .................................... $

890
331
—
559

$

$

(2,839) $
254
—
(3,093) $

Weighted Average Number of Common Shares Outstanding:

Basic ..................................................................................................................................................
Effect of dilutive securities
Restricted common stock ................................................................................................................
Stock options...................................................................................................................................
Performance share units ..................................................................................................................
Diluted...............................................................................................................................................

307.4

0.7
0.4
0.8
309.3

304.8

—
—
—
304.8

(240)
168
4
(412)

301.2

—
—
—
301.2

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

Basic .................................................................................................................................................. $
Diluted............................................................................................................................................... $

1.82
1.81

$
$

(10.15) $
(10.15) $

(1.37)
(1.37)

Antidilutive shares excluded from the computation of diluted shares:

Restricted common stock ..................................................................................................................
Stock options.....................................................................................................................................
Performance share units ....................................................................................................................

—
0.7
—

2.1
4.3
1.1

2.2
4.7
1.7

The following table provides the changes in our outstanding common shares:

Balance at January 1.............................................................................................................................
Conversion of preferred stock ...........................................................................................................
Activity related to restricted stock awards, net .................................................................................
Stock options exercised.....................................................................................................................
PSUs vested.......................................................................................................................................
Balance at December 31.......................................................................................................................

Preferred Stock:

2021

2020

2019

307.0
—
0.7
1.5
0.5
309.7

(In millions)
304.9
—
1.0
0.3
0.8
307.0

291.4
11.6
0.9
0.7
0.3
304.9

In February 2016, we issued depository shares representing 575,000 shares of 8% Series A Mandatory Convertible Preferred
Stock (Preferred Stock), par value $1 per share, with a liquidation preference of $1,000 per share. On January 31, 2019, the Preferred
Stock automatically converted into shares of common stock and the net number of common shares issued by the Corporation was
approximately 11.6 million shares.

Common Stock Repurchase Plan:

At December 31, 2021, we are authorized, but not required, to purchase additional common stock up to a value of $650 million.

Common Stock Dividends:

Cash dividends declared on common stock totaled $1.00 per share in 2021, 2020 and 2019.  See Note 21, Subsequent Events.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
8

82

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 82

3/23/22 1:35 PM

 82

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

83

8
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

17. Supplementary Cash Flow Information

The following information supplements the Statement of Consolidated Cash Flows:

2021

2020

2019

(In millions)

Cash Flows From Operating Activities

Interest paid ..................................................................................................................................... $
Net income taxes (paid) refunded ...................................................................................................

(459) $
(16)

(460) $
(64)

(380)
(417)

Cash Flows From Investing Activities
Additions to property, plant and equipment - E&P:

Capital expenditures incurred - E&P ................................................................................................ $
Increase (decrease) in related liabilities ............................................................................................
Additions to property, plant and equipment - E&P .................................................................. $

(1,698) $
114
(1,584) $

(1,678) $
(218)
(1,896) $

(2,576)
143
(2,433)

Additions to property, plant and equipment - Midstream:

Capital expenditures incurred - Midstream....................................................................................... $
Increase (decrease) in related liabilities ............................................................................................
Additions to property, plant and equipment - Midstream........................................................ $

(183) $
20
(163) $

(253) $
(48)
(301) $

(416)
20
(396)

In December 2019, as part of HESM Opco’s acquisition of HIP (see Note 4, Hess Midstream LP), HESM Opco assumed

$800 million of outstanding HIP notes (see Note 7, Debt).

18.  Guarantees, Contingencies and Commitments

Guarantees and Contingencies

We are subject to loss contingencies with respect to various claims, lawsuits and other proceedings. A liability is recognized in
our consolidated financial statements when it is probable that a loss has been incurred and the amount can be reasonably estimated. If
the risk of loss is probable, but the amount cannot be reasonably estimated or the risk of loss is only reasonably possible, a liability is
not accrued; however, we disclose the nature of those contingencies. We cannot predict with certainty if, how or when existing
claims, lawsuits and proceedings will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in
their early stages of development or where plaintiffs seek indeterminate damages.

We, along with many companies that have been or continue to be engaged in refining and marketing of gasoline, have been a party
to lawsuits and claims related to the use of MTBE in gasoline. A series of similar lawsuits, many involving water utilities or
governmental entities, were filed in jurisdictions across the U.S. against producers of MTBE and petroleum refiners who produced
gasoline containing MTBE, including us. The principal allegation in all cases was that gasoline containing MTBE was a defective
product and that these producers and refiners are strictly liable in proportion to their share of the gasoline market for damage to
groundwater resources and are required to take remedial action to ameliorate the alleged effects on the environment of releases of
MTBE. The majority of the cases asserted against us have been settled. There are two remaining active cases, filed by Pennsylvania
and Maryland. In June 2014, the Commonwealth of Pennsylvania filed a lawsuit alleging that we and all major oil companies with
operations in Pennsylvania, have damaged the groundwater by introducing thereto gasoline with MTBE. The Pennsylvania suit has
been forwarded to the existing MTBE multidistrict litigation pending in the Southern District of New York. In December 2017, the
State of Maryland filed a lawsuit alleging that we and other major oil companies damaged the groundwater in Maryland by
introducing thereto gasoline with MTBE. The suit, filed in Maryland state court, was served on us in January 2018 and has been
removed to federal court by the defendants.

In September 2003, we received a directive from the NJDEP to remediate contamination in the sediments of the Lower Passaic
River. The NJDEP is also seeking natural resource damages. The directive, insofar as it affects us, relates to alleged releases from a
petroleum bulk storage terminal in Newark, New Jersey we previously owned. We and over 70 companies entered into an
Administrative Order on Consent with the EPA to study the same contamination; this work remains ongoing. We and other parties
settled a cost recovery claim by the State of New Jersey and agreed with the EPA to fund remediation of a portion of the site. On
March 4, 2016, the EPA issued a ROD in respect of the lower eight miles of the Lower Passaic River, selecting a remedy that includes
bank-to-bank dredging at an estimated cost of $1.38 billion. The ROD does not address the upper nine miles of the Lower Passaic
River or the Newark Bay, which may require additional remedial action. In addition, the federal trustees for natural resources have
begun a separate assessment of damages to natural resources in the Passaic River. Given that the EPA has not selected a final remedy
for the entirety of the Lower Passaic River or the Newark Bay, total remedial costs cannot be reliably estimated at this time. Based on
currently known facts and circumstances, we do not believe that this matter will result in a significant liability to us because our
former terminal did not store or use contaminants which are of concern in the river sediments and could not have contributed

 83

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
8

83

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 83

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
8
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

84

contamination along the river’s length. Further, there are numerous other parties who we expect will bear the cost of remediation and
damages.

In March 2014, we received an Administrative Order from the EPA requiring us and 26 other parties to undertake the Remedial
Design for the remedy selected by the EPA for the Gowanus Canal Superfund Site in Brooklyn, New York. Our alleged liability
derives from our former ownership and operation of a fuel oil terminal and connected shipbuilding and repair facility adjacent to the
Canal. The remedy selected by the EPA includes dredging of surface sediments and the placement of a cap over the deeper sediments
throughout the Canal and in-situ stabilization of certain contaminated sediments that will remain in place below the cap. The EPA’s
original estimate was that this remedy would cost $506 million; however, the ultimate costs that will be incurred in connection with
the design and implementation of the remedy remain uncertain. We have complied with the EPA’s March 2014 Administrative Order
and contributed funding for the Remedial Design based on an allocation of costs among the parties determined by a third-party expert.
In January 2020, we received an additional Administrative Order from the EPA requiring us and several other parties to begin
Remedial Action along the uppermost portion of the Canal. We intend to comply with this Administrative Order. The remediation
work began in the fourth quarter of 2020. Based on currently known facts and circumstances, we do not believe that this matter will
result in a significant liability to us, and the costs will continue to be allocated amongst the parties, as they were for the Remedial
Design.

From time to time, we are involved in other judicial and administrative proceedings relating to environmental matters. We
periodically receive notices from the EPA that we are a “potential responsible party” under the Superfund legislation with respect to
various waste disposal sites. Under this legislation, all potentially responsible parties may be jointly and severally liable. For any site
for which we have received such a notice, the EPA’s claims or assertions of liability against us relating to these sites have not been
fully developed, or the EPA’s claims have been settled or a settlement is under consideration, in all cases for amounts that are not
material. Beginning in 2017, certain states, municipalities and private associations in California, Delaware, Maryland, Rhode Island
and South Carolina separately filed lawsuits against oil, gas and coal producers, including us, for alleged damages purportedly caused
by climate change. These proceedings include claims for monetary damages and injunctive relief. Beginning in 2013, various
parishes in Louisiana filed suit against approximately 100 oil and gas companies, including us, alleging that the companies’ operations
and activities in certain fields violated the State and Local Coastal Resource Management Act of 1978, as amended, and caused
contamination, subsidence and other environmental damages to land and water bodies located in the coastal zone of Louisiana. The
plaintiffs seek, among other things, the payment of the costs necessary to clear, re-vegetate and otherwise restore the allegedly
impacted areas. The ultimate impact of such climate and other aforementioned environmental proceedings, and of any related
proceedings by private parties, on our business or accounts cannot be predicted at this time due to the large number of other potentially
responsible parties and the speculative nature of clean-up cost estimates.

We are also involved in other judicial and administrative proceedings from time to time in addition to the matters described above,
including claims related to post-production deductions from royalty payments. We may also be exposed to future decommissioning
liabilities for divested assets in the event the current or future owners of facilities previously owned by us are determined to be unable
to perform such actions, whether due to bankruptcy or otherwise. We cannot predict with certainty if, how or when such proceedings
will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in their early stages of development or
where plaintiffs seek indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy
discovery and determination of important factual matters before a loss or range of loss can be reasonably estimated for any
proceeding.

Subject to the foregoing, in management’s opinion, based upon currently known facts and circumstances, the outcome of lawsuits,
claims and proceedings, including the matters disclosed above, is not expected to have a material adverse effect on our financial
condition, results of operations or cash flows. However, we could incur judgments, enter into settlements, or revise our opinion
regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations in
the period in which the amounts are accrued and our cash flows in the period in which the amounts are paid.

Unconditional Purchase Obligations and Commitments

The following table shows aggregate information for certain unconditional purchase obligations and commitments at

December 31, 2021, which are not included elsewhere within these Consolidated Financial Statements:

Capital expenditures ........................................................................................ $
Operating expenses..........................................................................................
Transportation and related contracts................................................................

$

3,263
180
2,574

1,028
132
390

Total

2022

Payments Due by Period
2025 and
2023 and
2026
2024

Thereafter

(In millions)
1,458
$
42
639

$

$

777
6
453

—
—
1,092

84

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 84

3/23/22 1:35 PM

 84

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
8

 
 
 
 
92416 10K 03.8.2022

85

8
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

19. Segment Information

We currently have two operating segments, E&P and Midstream. The E&P operating segment explores for, develops, produces,
purchases and sells crude oil, NGL and natural gas. Production operations over the three years ended December 31, 2021 were in the
U.S., Malaysia and the JDA, Denmark (sold in August 2021), Libya, and Guyana commencing December 2019. The Midstream
operating segment provides fee-based services including crude oil and natural gas gathering, processing of natural gas and the
fractionation of NGL, transportation of crude oil by rail car, terminaling and loading crude oil and NGL, storing and terminaling
propane, and water handling services primarily in the Bakken shale play of North Dakota. All unallocated costs are reflected under
Corporate, Interest and Other.

The following table presents operating segment financial data (in millions):

Exploration
and
Production

Midstream

Corporate,
Interest and
Other

Eliminations

Total

2021

Sales and Other Operating Revenues - Third parties ....................... $
Intersegment Revenues ....................................................................
Sales and Other Operating Revenues ............................................... $
Net Income (Loss) Attributable to Hess Corporation ...................... $
Interest Expense ...............................................................................
Depreciation, Depletion and Amortization ......................................
Impairment and Other ......................................................................
Provision (Benefit) for Income Taxes..............................................
Investment in Affiliates....................................................................
Identifiable Assets ............................................................................
Capital Expenditures ........................................................................

2020

Sales and Other Operating Revenues - Third parties ....................... $
Intersegment Revenues ....................................................................
Sales and Other Operating Revenues ............................................... $
Net Income (Loss) Attributable to Hess Corporation ...................... $
Interest Expense ...............................................................................
Depreciation, Depletion and Amortization ......................................
Impairment and Other ......................................................................
Provision (Benefit) for Income Taxes..............................................
Investment in Affiliates....................................................................
Identifiable Assets ............................................................................
Capital Expenditures ........................................................................

2019

Sales and Other Operating Revenues - Third parties ....................... $
Intersegment Revenues ....................................................................
Sales and Other Operating Revenues ............................................... $
Net Income (Loss) Attributable to Hess Corporation ...................... $
Interest Expense ...............................................................................
Depreciation, Depletion and Amortization ......................................
Provision (Benefit) for Income Taxes..............................................
Capital Expenditures ........................................................................

$

$
$

7,473
—
7,473
770
—
1,361
147
585
94
14,173
1,698

$

4,667
—
4,667
$
(2,841) $
—
1,915
2,126
(12)
104
13,688
1,678

$

$
$

6,495
—
6,495
53
—
1,977
375
2,576

— $

$
$

1,204
1,204
286
105
166
—
15
102
3,671
183

— $

$
$

1,092
1,092
230
95
157
—
7
108
3,599
253

$
$

— $
848
848
144
63
142
—
416

— $
—
— $
(497) $
376
1
—
—
1
2,671
—

— $
—
— $
(482) $
373
2
—
(6)
—
1,534
—

— $
—
— $
(605) $
317
3
86
—

— $

(1,204)
(1,204) $
— $
—
—
—
—
—
—
—

— $

(1,092)
(1,092) $
— $
—
—
—
—
—
—
—

— $

(848)
(848) $
— $
—
—
—
—

7,473
—
7,473
559
481
1,528
147
600
197
20,515
1,881

4,667
—
4,667
(3,093)
468
2,074
2,126
(11)
212
18,821
1,931

6,495
—
6,495
(408)
380
2,122
461
2,992

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
8

85

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 85

3/23/22 1:35 PM

 85

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
8
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

86

The following table presents financial information by major geographic area:

United States

Guyana

Malaysia
and JDA

Other (a)

(In millions)

Corporate,
Interest and
other

Total

2021

Sales and Other Operating Revenues ........................................ $

5,378

$

754

$

738

$

Property, Plant and Equipment (Net) (b)...................................

9,721

3,064

1,035

2020

Sales and Other Operating Revenues ........................................ $

3,604

$

350

$

511

$

Property, Plant and Equipment (Net) (b)...................................

10,384

2,114

1,067

$

$

603

352

202

539

— $

10

— $
11

7,473

14,182

4,667

14,115

2019

Sales and Other Operating Revenues ........................................ $

5,043

$

— $

762

$

690

$

— $

6,495

(a) Other includes our interests in Denmark (sold in August 2021), Libya, Suriname and Canada.
(b) Property, plant and equipment in the United States in 2021 includes $6,596 million (2020: $7,273 million) attributable to the E&P segment and $3,125 million

(2020: $3,111 million) attributable to the Midstream segment.

20.  Financial Risk Management Activities

In the normal course of our business, we are exposed to commodity risks related to changes in the prices of crude oil and natural
gas, as well as changes in interest rates and foreign currency values.
In the disclosures that follow, corporate financial risk
management activities refer to the mitigation of these risks through hedging activities. We maintain a control environment for all of
our financial risk management activities under the direction of our Chief Risk Officer. Our Treasury department is responsible for
administering foreign exchange rate and interest
rate hedging programs using similar controls and processes, where
applicable.  Hedging strategies are reviewed annually by the Audit Committee of the Board of Directors.

Corporate Financial Risk Management Activities: Financial risk management activities include transactions designed to reduce
risk in the selling prices of crude oil or natural gas we produce or by reducing our exposure to foreign currency or interest rate
movements. Generally, futures, swaps or option strategies may be used to fix the forward selling price, or establish a floor price or a
range banded with a floor and ceiling price, for a portion of our crude oil or natural gas production. Forward contracts may also be
used to purchase certain currencies in which we conduct business with the intent of reducing exposure to foreign currency
fluctuations. At December 31, 2021,
these forward contracts relate to the British Pound, Canadian Dollar and Malaysian
Ringgit.  Interest rate swaps may be used to convert interest payments on certain long-term debt from fixed to floating rates.

The notional amounts of outstanding financial risk management derivative contracts were as follows:

Commodity - crude oil hedge contracts (millions of barrels) .........................................................................................
Foreign exchange forwards ............................................................................................................................................. $
Interest rate swaps ........................................................................................................................................................... $

(In millions)
54.8
145
100

$
$

27.4
163
100

For calendar year 2022, we have hedged 90,000 bopd with WTI collars with an average monthly floor price of $60 per barrel and
an average monthly ceiling price of $100 per barrel, and 60,000 bopd with Brent collars with an average monthly floor price of $65
per barrel and an average monthly ceiling price of $105 per barrel.

December 31,
2021

December 31,
2020

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
8

86

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 86

3/23/22 1:35 PM

 86

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
8
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

The table below reflects the gross and net fair values of risk management derivative instruments:

December 31, 2021

Derivative Contracts Designated as Hedging Instruments:
Crude oil collars ......................................................................................................................................................... $
Interest rate swaps ......................................................................................................................................................
Total derivative contracts designated as hedging instruments ...................................................................................

Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards ........................................................................................................................................
Total derivative contracts not designated as hedging instruments.............................................................................
Gross fair value of derivative contracts......................................................................................................................
Gross amount offset in the Consolidated Balance Sheet............................................................................................

Net Amounts Presented in the Consolidated Balance Sheet ................................................................................... $

December 31, 2020

Derivative Contracts Designated as Hedging Instruments:
Crude oil put options.................................................................................................................................................. $
Crude oil swaps ..........................................................................................................................................................
Interest rate swaps ......................................................................................................................................................
Total derivative contracts designated as hedging instruments ...................................................................................

Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards ........................................................................................................................................
Total derivative contracts not designated as hedging instruments.............................................................................
Gross fair value of derivative contracts......................................................................................................................
Gross amount offset in the Consolidated Balance Sheet............................................................................................

Net Amounts Presented in the Consolidated Balance Sheet ................................................................................... $

92416 10K 03.8.2022

87

Assets

Liabilities

(In millions)

155
2
157

—
—
157
—
157

64
—
5
69

—
—
69
(13)
56

$

$

$

$

—
—
—

(1)
(1)
(1)
—
(1)

—
(54)
—
(54)

(1)
(1)
(55)
13
(42)

At December 31, 2021, the fair value of our crude oil collars is presented within Other current assets in our Consolidated Balance
Sheet. At December 31, 2020, the fair value of our crude oil put options and crude oil swaps is presented within Other current assets
and Accrued liabilities, respectively, in our Consolidated Balance Sheet. The fair value of our interest rate swaps is presented within
Other assets in our Consolidated Balance Sheet. The fair value of our foreign exchange forwards is presented within Accrued
liabilities in our Consolidated Balance Sheet.  All fair values in the table above are based on Level 2 inputs.

Derivative contracts designated as hedging instruments:

Crude oil hedge contracts: In 2021, crude oil price hedging contracts decreased Sales and other operating revenues by $243
million (2020: increase of $547 million; 2019: increase of $1 million). At December 31, 2021, pre-tax deferred losses in Accumulated
other comprehensive income (loss) related to outstanding crude oil price hedging contracts were $68 million ($68 million after income
taxes), all of which will be reclassified into earnings during the next 12 months as the hedged crude oil sales are recognized in
earnings.

Interest rate swaps designated as fair value hedges: At December 31, 2021, we had interest rate swaps with gross notional
amounts of $100 million (2020: $100 million), which were designated as fair value hedges and relate to long-term debt where we have
converted interest payments from fixed to floating rates. Changes in the fair value of interest rate swaps and the hedged fixed‑rate
debt are recorded in Interest expense in the Statement of Consolidated Income. In 2021, the change in fair value of interest rate swaps
was a decrease of $3 million (2020: $4 million increase; 2019: $3 million increase) with a corresponding adjustment in the carrying
value of the hedged fixed‑rate debt.

Derivative contracts not designated as hedging instruments:

Foreign exchange: Total foreign exchange gains and losses were losses of $2 million in 2021 (2020: loss of $6 million; 2019:
gain of $3 million) and are reported in Other, net in Revenues and non-operating income in the Statement of Consolidated Income. A
component of foreign exchange gains or losses is the result of foreign exchange derivative contracts that are not designated as hedges,
which amounted to a net gain of $1 million in 2021 (2020: net gain of $2 million; 2019: net loss of $2 million).

Credit Risk: We are exposed to credit risks that may at times be concentrated with certain counterparties, groups of
counterparties or customers. Accounts receivable are generated from a diverse domestic and international customer base. At
December 31, 2021, our Accounts receivable were concentrated with the following counterparty industry segments:
Integrated
companies — 50%, Independent E&P companies — 31%, Refining and marketing companies — 9%, National oil companies — 3%,

 87

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
8

87

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 87

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

88

8
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Storage and transportation companies — 3%, and Others — 4%. We reduce risk related to certain counterparties, where applicable,
by using master netting arrangements and requiring collateral, generally cash or letters of credit.

At December 31, 2021, we had outstanding letters of credit totaling $259 million (2020: $269 million).

Fair Value Measurement: At December 31, 2021, our total long-term debt, which was substantially comprised of fixed rate debt
instruments, had a carrying value of $8,458 million and a fair value of $9,897 million, based on Level 2 inputs in the fair value
measurement hierarchy. We also have short-term financial instruments, primarily cash equivalents, accounts receivable and accounts
payable, for which the carrying value approximated fair value at December 31, 2021 and December 31, 2020.

21. Subsequent Events

Following the startup of the Liza Phase 2 project in February 2022, we repaid the remaining $500 million outstanding under our
$1 billion term loan and we announced a 50 percent increase in our quarterly dividend on common stock. In January 2022, we paid
accrued Libyan income tax and royalties of approximately $470 million related to operations for the period December 2020 through
November 2021.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
8

88

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 88

3/23/22 1:35 PM

88

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

89

8
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY OIL AND GAS DATA (UNAUDITED)

The Supplementary Oil and Gas Data that follows is presented in accordance with ASC 932, Disclosures about Oil and Gas
Producing Activities, and includes (1) costs incurred, capitalized costs and results of operations relating to oil and gas producing
activities, (2) net proved oil and gas reserves and (3) a standardized measure of discounted future net cash flows relating to proved oil
and gas reserves, including a reconciliation of changes therein.

Costs Incurred in Oil and Gas Producing Activities

For the Years Ended December 31

2021

Property acquisitions
Unproved.....................................................................................
Proved..........................................................................................
Exploration ....................................................................................
Production and development capital expenditures (b) (c).............

2020

Property acquisitions
Unproved.....................................................................................
Proved..........................................................................................
Exploration ....................................................................................
Production and development capital expenditures (b) ..................

2019

Property acquisitions
Unproved.....................................................................................
Proved..........................................................................................
Exploration ....................................................................................
Production and development capital expenditures (b) ..................

$

$

$

Total

United
States

Malaysia and
JDA

Other (a)

Guyana

(In millions)

$

24
—
368
1,645

— $
—
307
1,567

$

26
—
455
2,463

$

4
—
92
653

— $
—
169
804

$

26
—
174
1,735

$

20
—
250
820

— $
—
130
630

— $
—
239
585

— $
—
7
157

— $
—
2
106

— $
—
4
114

—
—
19
15

—
—
6
27

—
—
38
29

(a) Other includes our interests in Denmark (sold in August 2021), Libya, Suriname and Canada.
(b) Includes an increase of $208 million for net accruals and revisions of asset retirement obligations in 2021 (2020: $88 million increase; 2019: $201 million

increase).

(c) Net accruals for asset retirement obligations in the United States exclude a charge of $147 million related to our former interests in the West Delta Field in the
Gulf of Mexico which we sold to a Fieldwood predecessor in 2004.  See Note 8, Asset Retirement Obligations in the Notes to Consolidated Financial Statements.

Capitalized Costs Relating to Oil and Gas Producing Activities

At December 31,

2021

2020

Unproved properties ..................................................................................................................................... $
Proved properties..........................................................................................................................................
Wells, equipment and related facilities.........................................................................................................
Total costs..................................................................................................................................................
Less: Reserve for depreciation, depletion, amortization and lease impairment ........................................
Net Capitalized Costs ............................................................................................................................ $

$

(In millions)
184
2,877
23,745
26,806
15,759
11,047

$

164
2,930
23,224
26,318
15,325
10,993

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
8

89

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 89

3/23/22 1:35 PM

 89

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

90

9
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Results of Operations for Oil and Gas Producing Activities

The results of operations shown below exclude non‑oil and gas producing activities, primarily gains (losses) on sales of oil and
gas properties, sales of purchased crude oil, NGL and natural gas from third parties, interest expense and non-operating income. Sales
and other operating revenues include crude oil hedging results and are net of payments for unutilized committed transportation
capacity. Therefore, these results are on a different basis than the net income (loss) from E&P operations reported in Management’s
Discussion and Analysis of Financial Condition and Results of Operations and in Note 19, Segment Information in the Notes to
Consolidated Financial Statements. Other includes results for Denmark (sold in August 2021), Libya, Suriname and Canada.

For the Years Ended December 31

2021

Total

United
States

Malaysia
and JDA

Other

Guyana (a)

(In millions)

Sales and Other Operating Revenues................................................. $
Costs and Expenses

Operating costs and expenses (b) .....................................................
Production and severance taxes........................................................
Midstream tariffs ..............................................................................
Exploration expenses, including dry holes and lease impairment ...
General and administrative expenses ...............................................
Depreciation, depletion and amortization (b)...................................
Impairment and other .......................................................................
Total Costs and Expenses...............................................................
Results of Operations Before Income Taxes ......................................
Provision (benefit) for income taxes ................................................
Results of Operations........................................................................... $

5,621

$

3,638

$

738

$

738

$

1,073
172
1,094
162
191
1,426
147
4,265
1,356
534
822

$

718
166
1,094
102
162
1,085
147
3,474
164
—
164

$

196
—
—
35
12
109
—
352
386
119
267

$

106
6
—
7
11
205
—
335
403
31
372

$

507

53
—
—
18
6
27
—
104
403
384
19

2020

Sales and Other Operating Revenues................................................. $
Costs and Expenses

Operating costs and expenses...........................................................
Production and severance taxes........................................................
Midstream tariffs ..............................................................................
Exploration expenses, including dry holes and lease impairment ...
General and administrative expenses ...............................................
Depreciation, depletion and amortization ........................................
Impairment and other .......................................................................
Total Costs and Expenses...............................................................
Results of Operations Before Income Taxes ......................................
Provision (benefit) for income taxes ................................................
Results of Operations........................................................................... $

2019

3,794

$

2,747

$

345

$

511

$

191

895
124
946
351
206
1,915
2,126
6,563
(2,769)
(4)
(2,765) $

564
118
946
284
176
1,480
697
4,265
(1,518)
—
(1,518) $

136
—
—
25
9
130
—
300
45
9
36

$

109
6
—
—
12
268
755
1,150
(639)
22
(661) $

Sales and Other Operating Revenues................................................. $
Costs and Expenses

Operating costs and expenses...........................................................
Production and severance taxes........................................................
Midstream tariffs ..............................................................................
Exploration expenses, including dry holes and lease impairment ...
General and administrative expenses ...............................................
Depreciation, depletion and amortization ........................................
Total Costs and Expenses...............................................................
Results of Operations Before Income Taxes ......................................
Provision (benefit) for income taxes ................................................
Results of Operations........................................................................... $

4,719

$

3,361

$

— $

759

$

971
184
722
233
204
1,977
4,291
428
325
103

$

693
176
722
144
176
1,489
3,400
(39)
—
(39) $

47
—
—
47
7
1
102
(102)
(60)
(42) $

139
8
—
3
12
413
575
184
13
171

$

86
—
—
42
9
37
674
848
(657)
(35)
(622)

599

92
—
—
39
9
74
214
385
372
13

(a) Production from Liza Phase 1 commenced in December 2019. Operating costs and expenses also include pre-development costs from the operator for future

phases of development and Hess internal costs.

(b) Operating costs and expenses and depreciation, depletion and amortization, in the United States, include $108 million and $65 million, respectively, related to the

cost of 4.2 million barrels of crude oil stored on two VLCCs at December 31, 2020 that were sold in 2021.

 90

90

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 90

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
9

 
 
 
 
9
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

91

Proved Oil and Gas Reserves

Our proved oil and gas reserves are calculated in accordance with the Securities and Exchange Commission (SEC) regulations
and the requirements of the Financial Accounting Standards Board. Proved oil and gas reserves are quantities, which by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from known reservoirs
under existing economic conditions, operating methods and government regulations. Our estimation of net recoverable quantities of
liquid hydrocarbons and natural gas is a highly technical process performed by our internal teams of geoscience and reservoir
engineering professionals. Estimates of reserves were prepared by the use of appropriate geologic, petroleum engineering, and
evaluation principles and techniques that are in accordance with practices generally recognized by the petroleum industry as presented
in the publication of the Society of Petroleum Engineers entitled “Standards Pertaining to the Estimating and Auditing of Oil and Gas
Reserves Information (Revision as of June 25, 2019).” The method or combination of methods used in the analysis of each reservoir
is based on the maturity of the reservoir, the completeness of the subsurface data available at the time of the estimate, the stage of
reservoir development and the production history. Subsurface data used included well logs, reservoir core and fluid samples,
production and pressure testing, static and dynamic pressure information, and reservoir surveillance. Where applicable, reliable
technologies may be used in reserve estimation, as defined in the SEC regulations. These technologies, including computational
methods, must have been field tested and demonstrated to provide reasonably certain results with consistency and repeatability in the
formation being evaluated or in an analogous formation. In some cases, where appropriate, use of empirical and analytical methods,
combined with analog data were used. Analytic tools, including reservoir simulation, geologic modeling and seismic processing, have
been used in the interpretation of the subsurface data. These technologies were used to increase the quality and confidence in the
reserves estimates.

In order for reserves to be classified as proved, any required government approvals must be obtained and depending on the cost of
the project, either senior management or the Board of Directors must commit to fund the development. Our proved reserves are
subject to certain risks and uncertainties, which are discussed in Item 1A. Risk Factors of this Form 10‑K.

In 2021, we announced our new five year GHG reduction targets for 2025, which are to reduce operated Scope 1 and 2 GHG
emissions intensity by approximately 44% and methane emissions intensity by approximately 52% from 2017. In January 2022, we
announced our plan to reduce routine flaring at Hess operated assets to zero by the end of 2025. The impact of these targets on our
production operations was reflected in the determination of proved reserves at December 31, 2021.

Internal Controls

The Corporation maintains internal controls over its oil and gas reserve estimation processes, which are administered by our
Global Reserves group and our Chief Financial Officer. Estimates of reserves are prepared by technical staff who work directly with
the oil and gas properties using industry standard reserve estimation principles, definitions and methodologies. Each year, reserve
estimates of the Corporation’s assets are subject to internal technical audits and reviews.
In addition, an independent third-party
reserve engineer reviews and audits a significant portion of the Corporation’s reported reserves (see pages 91 through 96). Reserve
estimates are reviewed by senior management and the Board of Directors.

Qualifications

The person primarily responsible for overseeing the preparation of the Corporation’s oil and gas reserves during 2021 was the
Senior Manager, Global Reserves. He is a member of the Society of Petroleum Engineers and has 19 years of experience in the oil
and gas industry with a MSc degree in Petroleum Engineering. His experience has been primarily focused on oil and gas subsurface
understanding and reserves estimation in both domestic and international areas. He is also responsible for the Corporation’s Global
Reserves group, which is the internal organization that establishes the policies and processes used within the operating units to
estimate reserves and perform internal technical reserve audits and reviews.

Reserves Audit

We engaged the consulting firm of DeGolyer and MacNaughton (D&M) to perform an audit of the internally prepared reserve
estimates on certain fields aggregating approximately 88% of 2021 year‑end reported reserve quantities on a barrel of oil equivalent
basis (2020: 92%). The purpose of this audit was to provide additional assurance on the reasonableness of internally prepared reserve
estimates and compliance with SEC regulations. The D&M report, dated February 2, 2022, on the Corporation’s estimated oil and gas
reserves was prepared using standard geological and engineering methods generally recognized in the petroleum industry. D&M is an
independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world for
over 70 years. D&M’s letter report on the Corporation’s December 31, 2021 oil and gas reserves is included as an exhibit to this
Form 10‑K. While the D&M report should be read in its entirety, the report concludes that for the properties reviewed by D&M, the
total net proved reserve estimates prepared by Hess and independently evaluated by D&M, in the aggregate, differed by less than 2.5%
(2020: less than 1%) of total audited net proved reserves on a barrel of oil equivalent basis. The report also includes among other
information, the qualifications of the technical person primarily responsible for overseeing the reserve audit.

91

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 91

3/23/22 1:35 PM

 91

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
9

 
 
 
 
92416 10K 03.8.2022

92

9
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Crude Oil Prices Used to Estimate Proved Reserves

Proved reserves are calculated using the average price during the twelve-month period before December 31 determined as an
unweighted arithmetic average of the first-day-of-the-month price for each month within the year, unless prices are defined by
contractual agreements, excluding escalations based on future conditions. Crude oil prices used in the determination of proved
reserves at December 31, 2021 were $66.34 per barrel for WTI (2020: $39.77; 2019: $55.73) and $68.92 per barrel for Brent (2020:
$43.43; 2019: $62.54). New York Mercantile Exchange (NYMEX) natural gas prices used were $3.68 per mcf in 2021 (2020: $2.16;
2019: $2.54).

At December 31, 2021, spot prices closed at $75.21 per barrel for WTI and $77.02 per barrel for Brent. If crude oil prices in 2022
are at levels below that used in determining 2021 proved reserves, we may recognize negative revisions to our December 31, 2022
In addition, we may recognize negative revisions to proved developed reserves, which can vary
proved undeveloped reserves.
significantly by asset due to differing operating cost structures. Conversely, price increases in 2022 above those used in determining
2021 proved reserves could result in positive revisions to proved developed and proved undeveloped reserves at December 31,
2022.
It is difficult to estimate the magnitude of any potential net negative or positive change in proved reserves at December 31,
2022, due to numerous currently unknown factors, including 2022 crude oil prices, the amount of any additions to proved reserves,
positive or negative revisions in proved reserves related to 2022 reservoir performance, the levels to which industry costs will change
in response to 2022 crude oil prices, and management’s plans as of December 31, 2022 for developing proved undeveloped reserves.

Following are the Corporation’s proved reserves:

Crude Oil & Condensate

Natural Gas Liquids

United
States

Guyana

Malaysia
and
JDA

Other (a)

Total

(Millions of bbls)

United
States

Total

(Millions of bbls)

Net Proved Reserves

At January 1, 2019 ........................................................
Revisions of previous estimates ....................................
Extensions, discoveries and other additions..................
Production .....................................................................
At December 31, 2019 ...................................................
Revisions of previous estimates ....................................
Extensions, discoveries and other additions..................
Sales of minerals in place..............................................
Production .....................................................................
At December 31, 2020 ...................................................
Revisions of previous estimates ...................................
Extensions, discoveries and other additions..................
Sales of minerals in place..............................................
Production .....................................................................
At December 31, 2021 ...................................................

Net Proved Developed Reserves

At January 1, 2019 ..........................................................
At December 31, 2019 ....................................................
At December 31, 2020 ....................................................
At December 31, 2021 ...................................................

Net Proved Undeveloped Reserves

At January 1, 2019 ..........................................................
At December 31, 2019 ....................................................
At December 31, 2020 ....................................................
At December 31, 2021 ...................................................

501
(54)
112
(51)
508
(94)
58
(18)
(53)
401
16
161
(40)
(40)
498

266
293
282
283

235
215
119
215

40
13
33
—
86
78
48
—
(8)
204
3
9
—
(11)
205

—
31
72
65

40
55
132
140

(a) Other includes our interests in Denmark, which were sold in August 2021, and Libya.

8
—
1
(2)
7
—
—
—
(1)
6
—
—
—
(1)
5

4
5
4
3

4
2
2
2

165
(6)
11
(9)
161
(24)
—
—
(3)
134
—
1
(27)
(8)
100

149
139
134
100

16
22
—
—

714
(47)
157
(62)
762
(40)
106
(18)
(65)
745
19
171
(67)
(60)
808

419
468
492
451

295
294
253
357

175
(29)
40
(17)
169
(2)
18
(1)
(22)
162
23
73
(6)
(19)
233

85
90
120
138

90
79
42
95

175
(29)
40
(17)
169
(2)
18
(1)
(22)
162
23
73
(6)
(19)
233

85
90
120
138

90
79
42
95

92

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 92

3/23/22 1:35 PM

 92

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
9

 
 
 
 
9
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

93

United
States

Guyana
(b)

Natural Gas
Malaysia
and
JDA

Other (c)

Total

United
States

Guyana
(b)

Total
Malaysia
and
JDA

Other (c)

Total

(Millions of mcf)

(Millions of boe)

Net Proved Reserves

At January 1, 2019.......................
Revisions of previous estimates ..
Extensions, discoveries and other
additions.......................................
Production (a) ..............................
At December 31, 2019..................
Revisions of previous estimates ..
Extensions, discoveries and other
additions.......................................
Sales of minerals in place ............
Production (a) ..............................
At December 31, 2020..................
Revisions of previous estimates .
Extensions, discoveries and other
additions.......................................
Sales of minerals in place ............
Production (a) ..............................
At December 31, 2021..................

Net Proved Developed Reserves

At January 1, 2019.........................
At December 31, 2019...................
At December 31, 2020...................
At December 31, 2021..................

Net Proved Undeveloped Reserves
At January 1, 2019.........................
At December 31, 2019...................
At December 31, 2020...................
At December 31, 2021..................

813
(197)

164
(80)
700
(17)

78
(5)
(103)
653
138

282
(44)
(94)
935

432
400
490
568

381
300
163
367

12
(7)

2
—
7
68

9
—
(1)
83
(33)

—
—
(2)
48

—
3
36
17

12
4
47
31

784
31

3
(133)
685
81

20
—
(111)
675
(42)

27
—
(135)
525

585
497
543
394

199
188
132
131

206
(11)

15
(9)
201
(32)

—
—
(4)
165
—

—
(63)
(4)
98

192
183
165
98

14
18
—
—

1,815
(184)

184
(222)
1,593
100

107
(5)
(219)
1,576
63

309
(107)
(235)
1,606

1,209
1,083
1,234
1,077

606
510
342
529

812
(116)

179
(81)
794
(99)

89
(20)
(92)
672
62

281
(53)
(75)
887

423
450
484
516

389
344
188
371

42
12

33
—
87
89

50
—
(8)
218
(3)

9
—
(11)
213

—
31
78
68

42
56
140
145

139
4

2
(24)
121
14

3
—
(20)
118
(6)

4
—
(23)
93

102
88
94
69

37
33
24
24

199
(7)

14
(11)
195
(29)

—
—
(4)
162
—

1
(38)
(9)
116

181
170
162
116

18
25
—
—

1,192
(107)

228
(116)
1,197
(25)

142
(20)
(124)
1,170
53

295
(91)
(118)
1,309

706
739
818
769

486
458
352
540

(a) Natural gas production in 2021 includes 19 million mcf used for fuel (2020: 16 million mcf; 2019: 14 million mcf).
(b) Guyana natural gas reserves will be consumed for fuel.
(c) Other includes our interests in Denmark, which were sold in August 2021, and Libya.

Extensions, discoveries and other additions (‘Additions’)

2021: Total Additions were 295 million boe, of which 25 million boe (14 million barrels of crude oil, 7 million barrels of NGL
and 24 million mcf of natural gas) related to proved developed reserves. Additions to proved developed reserves primarily
resulted from drilling activity in the Bakken shale play in North Dakota. Additions to proved undeveloped reserves were 270
million boe (157 million barrels of crude oil, 66 million barrels of NGL and 285 million mcf of natural gas) and are discussed in
further detail on page 95.

2020: Total Additions were 142 million boe, of which 12 million boe (8 million barrels of crude oil, 2 million barrels of NGL and
14 million mcf of natural gas) related to proved developed reserves. Additions to proved developed reserves primarily resulted
from drilling activity in the Bakken shale play in North Dakota. Additions to proved undeveloped reserves were 130 million boe
(98 million barrels of crude oil, 16 million barrels of NGL and 93 million mcf of natural gas) and are discussed in further detail on
page 95.

2019: Total Additions were 228 million boe, of which 25 million boe (13 million barrels of crude oil, 6 million barrels of NGL
and 35 million mcf of natural gas) related to proved developed reserves. Additions to proved developed reserves primarily
resulted from new wells drilled in the Bakken shale play in North Dakota. Additions in the U.S. also included two wells drilled in
the Gulf of Mexico. Additions to proved undeveloped reserves were 203 million boe (144 million barrels of crude oil, 34 million
barrels of NGL and 149 million mcf of natural gas) and are discussed in further detail on page 95.

93

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 93

3/23/22 1:35 PM

 93

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
9

 
 
 
 
92416 10K 03.8.2022

94

9
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Revisions of previous estimates

2021: Total revisions of previous estimates of proved reserves amounted to a net increase of 53 million boe, of which revisions of
proved developed reserves amounted to an increase of 73 million boe (31 million barrels of crude oil, 27 million barrels of NGL
and 88 million mcf of natural gas). In the U.S., net positive revisions to proved developed reserves from the Bakken of 68 million
boe were due to higher commodity prices (39 million boe) and improved well performance (32 million boe), partially offset by
other negative revisions of 3 million boe. In the Gulf of Mexico, positive revisions to proved developed reserves were 10 million
boe,
including 5 million boe of positive price revisions and 5 million boe of other revisions, primarily improved well
performance. In Malaysia and JDA, net negative revisions to proved developed reserves were 6 million boe due to the impact of
higher commodity prices on entitlement allocations in the production sharing contract at JDA (50%) and performance at North
Malay Basin and JDA (50%). Revisions associated with proved undeveloped reserves are discussed in further detail on page 95.

2020: Total revisions of previous estimates of proved reserves amounted to a net decrease of 25 million boe, of which revisions
of proved developed reserves amounted to an increase of 108 million boe (38 million barrels of crude oil, 30 million barrels of
NGL and 237 million mcf of natural gas).
In the U.S., revisions to proved developed reserves from the Bakken were a net
increase of 55 million boe, comprised of positive revisions of 77 million boe and negative price revisions of 22 million boe. The
positive revisions resulted from well performance (50%), updated yield and decline factors (30%) and other changes (20%),
primarily driven by cost reductions. In the Gulf of Mexico, net negative revisions were 8 million boe, including 2 million boe of
negative price revisions.
In Guyana, revisions increased proved developed reserves by 47 million boe related to performance
(55%), improved recovery associated with water injection (35%), and increased natural gas for consumption (10%). In Malaysia
and JDA, net revisions to proved developed reserves were an increase of 18 million boe due to performance at North Malay Basin
and JDA (80%) and the impact of lower crude oil prices on entitlement allocations in the production sharing contract at JDA
(20%). Other had negative revisions to proved developed reserves of 4 million boe, primarily in Libya. Revisions associated with
proved undeveloped reserves are discussed in further detail on page 95.

2019: Total revisions of previous estimates amounted to a net decrease of 107 million boe, of which revisions of proved
developed reserves amounted to a net decrease of 19 million boe (7 million barrels of NGL and 72 million mcf of natural
gas). Revisions to proved developed reserves from the Bakken were a net decrease of 25 million boe with approximately 80%
relating to changes in expected recoveries of NGL and natural gas and approximately 20% relating to the impact of lower
prices. Net revisions from international assets were an increase of 6 million boe. Revisions associated with proved undeveloped
reserves are discussed in further detail on page 95.

Sales of minerals in place (‘Asset sales’)

2021: Asset sales relate to the divestiture of our working interests in Denmark and our acreage interests in the Little Knife and
Murphy Creek area of the Bakken.

2020: Asset sales relate to the divestiture of our 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico.

Proved Undeveloped Reserves

Following are the Corporation’s proved undeveloped reserves:

United
States

Guyana

Malaysia and
JDA

(Millions of boe)

Other (a)

Total

Net Proved Undeveloped Reserves

At January 1, 2019.........................................................................
Revisions of previous estimates ....................................................
Extensions, discoveries and other additions ..................................
Transfers to proved developed reserves ........................................
At December 31, 2019....................................................................
Revisions of previous estimates ....................................................
Extensions, discoveries and other additions ..................................
Transfers to proved developed reserves ........................................
Sales of minerals in place ..............................................................
At December 31, 2020....................................................................
Revisions of previous estimates ....................................................
Extensions, discoveries and other additions ..................................
Transfers to proved developed reserves ........................................
Sales of minerals in place ..............................................................
At December 31, 2021....................................................................

389
(91)
154
(108)
344
(146)
78
(85)
(3)
188
(16)
257
(19)
(39)
371

(a) Other includes our interests in Denmark, which were sold in August 2021, and Libya.

 94

42
9
34
(29)
56
42
50
(8)
—
140
(4)
9
—
—
145

37
—
—
(4)
33
(4)
2
(7)
—
24
—
4
(4)
—
24

18
(6)
15
(2)
25
(25)
—
—
—
—
—
—
—
—
—

486
(88)
203
(143)
458
(133)
130
(100)
(3)
352
(20)
270
(23)
(39)
540

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
9

94

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 94

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
9
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

95

Extensions, discoveries and other additions (‘Additions’)

In the United States, additions from the Bakken shale play in North Dakota were 257 million boe, which resulted from
locations due to improved economic conditions, planned additional drilling activity, and
In Guyana, additions of 9 million boe related to the deepening of the hydrocarbon contact for

2021:
additional undeveloped well
development plan optimization.
Liza Phase 2. In Malaysia and JDA, additions were due to additional planned wells to be drilled.

2020: In the United States, additions from the Bakken shale play in North Dakota were 78 million boe, which primarily resulted
from new wells planned to be drilled in the next five years, including the impact of optimizing locations in the development plan.
In Guyana, additions of 50 million boe were due to the sanction of the Payara project. In Malaysia, additions at the North Malay
Basin were due to additional planned wells to be drilled.

2019: In the United States, additions from the Bakken shale play in North Dakota were 154 million boe, of which approximately
25% of the change results from additional planned wells to be drilled in the next five years, and approximately 75% results from
new wells moved into the five-year plan associated with optimization of drilling locations. Additions in Guyana totaling 34
million boe are from the sanction of Phase 2 development at the Liza Field on the Stabroek Block, offshore Guyana. Other
additions were at the South Arne Field in Denmark and in Libya due to additional planned wells to be drilled.

Revisions of previous estimates

2021: In the United States, net negative reserve revisions of 16 million boe were primarily from the Bakken, which included a
decrease of 88 million boe largely related to wells moved outside the five-year development plan mainly based on optimization of
drilling locations and other net negative revisions of 8 million boe, partially offset by positive revisions of 80 million boe related
to higher prices. In Guyana, net negative reserve revisions were 4 million boe, which included negative revisions of 16 million
boe related to the impact of higher crude oil prices on entitlement allocations in the production sharing contract and negative
revisions of 3 million boe resulting from decreased natural gas for consumption. Positive revisions of 15 million boe in Guyana
resulted from improved recovery associated with water and gas injection.

2020: In the United States, negative reserve revisions of 146 million boe were from the Bakken, which included negative price
revisions of 77 million boe, and a decrease of 121 million boe from wells moved outside our management and Board approved
five-year plan due to a reduction in planned rig count and optimization of drilling locations in response to the decline in crude oil
prices in 2020. These decreases were partially offset by positive revisions of 52 million boe, primarily due to optimized
development spacing and increased well productivity.
In Guyana, net positive reserve revisions for Liza Phase 1 and Phase 2
totaling 42 million boe resulted from improved recovery associated with water injection (45%), the impact of lower crude oil
prices on entitlement allocations in the production sharing contract (40%) and increased natural gas for consumption (15%). For
Other, net negative reserves revisions were 14 million boe in Libya and 11 million boe in Denmark due to moving planned wells
outside our five-year plan in response to the decline in crude oil prices in 2020.

2019: Negative reserve revisions in the United States of 91 million boe were largely from the Bakken (94 million boe), of which
approximately 75% resulted from wells moved outside our five-year plan associated with optimization of drilling locations. The
remaining 25% of negative revisions in the Bakken were caused by lower commodity prices. The net positive reserve revisions in
Guyana of 9 million boe relate to the Liza Phase 1 development due to the impact of lower crude oil prices on entitlement
allocations in the production sharing agreement.

Transfers to proved developed reserves (‘Transfers’)

2021: Transfers from proved undeveloped reserves resulting from drilling activity included 19 million boe in the Bakken, and 4
million boe at JDA. Transfers in 2021 were consistent with the development plan used to determine proved reserves at December
31, 2020.

2020: Transfers from proved undeveloped reserves resulting from drilling activity included 83 million boe in the Bakken, 2
million boe in the Gulf of Mexico, 8 million boe for Liza Phase 1 in Guyana, and 7 million boe in the North Malay Basin.

2019: Transfers from proved undeveloped reserves included 100 million boe in the Bakken associated with drilling activity, 29
million boe at the Stabroek Block in Guyana where first production was achieved in 2019, and 8 million boe at the Tubular Bells
Field in the Gulf of Mexico associated with drilling activity.

In 2021, capital expenditures of $190 million were incurred to convert proved undeveloped reserves to proved developed reserves

(2020: $1,090 million; 2019: $1,750 million).

At December 31, 2021, projects that have proved reserves that have been classified as undeveloped for a period in excess of
five years totaled 11 million boe, or less than 1% of total proved reserves, related to the multi-phase offshore developments, primarily
at North Malay Basin, offshore Malaysia, and the Stabroek Block, offshore Guyana.

95

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
9

95

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 95

3/23/22 1:35 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:47PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

96

9
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Production Sharing Contracts

The Corporation’s proved reserves include crude oil and natural gas reserves relating to long‑term agreements with governments
or authorities in which the Corporation has the legal right to produce or has a revenue interest in the production. The Corporation's
operations with these production sharing arrangements include those in Guyana, Malaysia, and the JDA. Proved reserves for each of
the three years ended December 31, 2021, as well as volumes produced and received during 2021, 2020 and 2019 from these
production sharing contracts are presented in the proved reserve tables on pages 92 and 93. Revisions resulting from the entitlement
impact of price changes in production sharing contracts decreased proved reserves by 17 million boe in 2021 (2020: 22 million boe
increase; 2019: 5 million boe increase).

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
9

96

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 96

3/23/22 1:35 PM

96

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

97

9
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

Future net cash flows are calculated by applying prescribed oil and gas selling prices used in determining year‑end reserve
estimates (adjusted for price changes provided by contractual arrangements) to estimated future production of proved oil and gas
reserves, less estimated future development and production costs, which are based on year‑end costs and existing economic
assumptions. Future income tax expenses are computed by applying the appropriate year‑end statutory tax rates to the pre‑tax net cash
flows, as well as including the effect of tax deductions and tax credits and allowances relating to the Corporation’s proved oil and gas
reserves.  Future net cash flows are discounted at the prescribed rate of 10%.

The prices used for the discounted future net cash flows in 2021 were $66.34 per barrel for WTI (2020: $39.77; 2019: $55.73) and
$68.92 per barrel for Brent (2020: $43.43; 2019: $62.54) and do not include the effects of commodity hedges. NYMEX natural gas
prices used were $3.68 per mcf in 2021 (2020: $2.16; 2019: $2.54). Selling prices have in the past, and can in the future, fluctuate
significantly. As a result, selling prices used in the disclosure of future net cash flows may not be representative of future selling
prices. In addition, the discounted future net cash flow estimates do not include exploration expenses, interest expense or corporate
general and administrative expenses. The amount of tax deductions, credits, and allowances relating to the Corporation’s proved oil
and gas reserves can change year to year due to factors including changes in proved reserves, variances in actual pre-tax cash flows
from forecasted pre-tax cash flows in historical periods, and the impact to year-end carryforward tax attributes associated with
deducting in the Corporation’s income tax returns exploration expenses, interest expense, and corporate general and administrative
expenses that are not contemplated in the standardized measure computations. The future net cash flow estimates could be materially
different if other assumptions were used.

At December 31

2021
Future revenues...............................................................................................
Less:

Future production costs ............................................................................
Future development costs .........................................................................
Future income tax expenses......................................................................

Future net cash flows......................................................................................
Less: Discount at 10% annual rate .................................................................
Standardized Measure of Discounted Future Net Cash Flows...................

$

Total

United
States

Guyana

(In millions)

Malaysia
and
JDA

Other (a)

$

55,788

$

32,054

$

13,940

$

2,759

$

7,035

15,553
8,122
11,257
34,932
20,856
9,603
11,253

$

11,246
4,342
3,625
19,213
12,841
7,073
5,768

$

3,043
3,063
1,516
7,622
6,318
2,091
4,227

$

910
543
151
1,604
1,155
193
962

$

354
174
5,965
6,493
542
246
296

2020
Future revenues...............................................................................................
Less:

Future production costs ............................................................................
Future development costs .........................................................................
Future income tax expenses......................................................................

Future net cash flows......................................................................................
Less: Discount at 10% annual rate .................................................................
Standardized Measure of Discounted Future Net Cash Flows...................

2019
Future revenues...............................................................................................
Less:

Future production costs ............................................................................
Future development costs .........................................................................
Future income tax expenses......................................................................

Future net cash flows......................................................................................
Less: Discount at 10% annual rate .................................................................
Standardized Measure of Discounted Future Net Cash Flows...................

(a) Other includes our interests in Denmark, which were sold in August 2021, and Libya.

$

28,745

$

11,757

$

8,362

$

2,578

$

6,048

12,360
6,322
4,135
22,817
5,928
2,343
3,585

$

6,887
2,593
45
9,525
2,232
1,205
1,027

$

2,784
2,617
380
5,781
2,581
935
1,646

$

1,073
677
110
1,860
718
123
595

$

1,616
435
3,600
5,651
397
80
317

44,778

$

25,223

$

5,326

$

3,473

$

10,756

14,176
8,267
8,560
31,003
13,775
5,390
8,385

$

10,189
5,104
1,291
16,584
8,639
3,872
4,767

$

931
1,549
505
2,985
2,341
539
1,802

$

1,238
823
162
2,223
1,250
270
980

$

1,818
791
6,602
9,211
1,545
709
836

$

$

$

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
9

97

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 97

3/23/22 1:35 PM

 97

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

98

9
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

For the Years Ended December 31

2021

2020

2019

Standardized Measure of Discounted Future Net Cash Flows at January 1 .......................................

$

3,585

(In millions)
8,385
$

$

10,650

Changes during the year:
Sales and transfers of oil and gas produced during the year, net of production costs............................
Development costs incurred during the year ..........................................................................................
Net changes in prices and production costs............................................................................................
Net change in estimated future development costs ................................................................................
Extensions and discoveries (including improved recovery) of oil and gas reserves, less related costs .
Revisions of previous oil and gas reserve estimates...............................................................................
Net purchases (sales) of minerals in place, before income taxes ...........................................................
Accretion of discount..............................................................................................................................
Net change in income taxes ....................................................................................................................
Revision in rate or timing of future production and other changes ........................................................
Total..................................................................................................................................................
Standardized Measure of Discounted Future Net Cash Flows at December 31..................................

$

(3,282)
1,437
11,321
(1,695)
2,419
461
(196)
578
(3,477)
102
7,668
11,253

$

(1,829)
1,479
(10,141)
1,860
543
364
(500)
1,220
2,091
113
(4,800)
3,585

$

(2,842)
2,262
(5,761)
(186)
1,591
(281)
—
1,635
1,305
12
(2,265)
8,385

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
9

98

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 98

3/23/22 1:35 PM

 98

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

99

9
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Based upon their evaluation of the Corporation’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of December 31, 2021, John B. Hess, Chief Executive Officer, and John P. Rielly, Chief Financial Officer,
concluded that these disclosure controls and procedures were effective as of December 31, 2021.

There was no change in internal controls over financial reporting identified in the evaluation required by paragraph (d) of
Rules 13a-15 or 15d-15 in the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially
affect, internal controls over financial reporting.

Management’s report on internal control over financial reporting and the attestation report on the Corporation’s internal controls

over financial reporting are included in Item 8. Financial Statements and Supplementary Data of this annual report on Form 10‑K.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Item 10. Directors, Executive Officers and Corporate Governance

PART III

For information regarding our executive officers, see Part I of this Annual Report on Form 10-K. Additional information required
by this item is incorporated herein by reference to the Corporation’s definitive proxy statement for the 2022 annual meeting of
stockholders.

The Corporation has adopted a Code of Business Conduct and Ethics applicable to the Corporation’s directors, officers (including
the Corporation’s principal executive officer and principal financial officer) and employees. The Code of Business Conduct and
Ethics is available on the Corporation’s website. In the event that we amend or waive any of the provisions of the Code of Business
Conduct and Ethics that relate to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S‑K, we intend
to disclose the same on the Corporation’s website at www.hess.com.

Item 11. Executive Compensation

Information relating to executive compensation is incorporated herein by reference to the Corporation’s definitive proxy statement

for the 2022 annual meeting of stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information pertaining to security ownership of certain beneficial owners and management is incorporated herein by reference to

the Corporation’s definitive proxy statement for the 2022 annual meeting of stockholders.

See Equity Compensation Plans in Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer

Purchases of Equity Securities for information pertaining to securities authorized for issuance under equity compensation plans.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information relating to this item is incorporated herein by reference to the Corporation’s definitive proxy statement for the

2022 annual meeting of stockholders.

Item 14. Principal Accounting Fees and Services

Information relating to this item is incorporated herein by reference to the Corporation’s definitive proxy statement for the

2022 annual meeting of stockholders.

99

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 99

3/23/22 1:36 PM

99

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
9

 
 
 
 
92416 10K 03.8.2022

100

1
0
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) The following documents are made a part of this Annual Report on Form 10-K:

1. and 2. Financial statements and financial statement schedules

The financial statements filed as part of this Annual Report on Form 10‑K are listed in the accompanying index to financial

statements and schedules in Item 8. Financial Statements and Supplementary Data.

All other financial statement schedules required under SEC rules that are not included in this Annual Report on Form 10-K, are
omitted either because they are not applicable or the required information is contained in Item 8. Financial Statements and
Supplementary Data.

3. Exhibits

The exhibits required to be filed pursuant to Item 15(b) of Form 10‑K are listed in the Exhibit Index filed herewith, which Exhibit

Index is incorporated herein by reference.

3(1)

3(2)

3(3)

3(4)

3(5)

4(1)

4(2)

4(3)

4(4)

4(5)

4(6)

4(7)

4(8)

4(9)

4(10)

4(11)

including amendment

thereto dated May 3, 2006
Restated Certificate of Incorporation of Registrant,
incorporated by reference to Exhibit 3(1) of Registrant’s Form 10‑Q for the three months ended June 30,
2006.
Certificate of Amendment to Restated Certificate of Incorporation of Registrant, dated May 22, 2013,
incorporated by reference to Exhibit 3(1) of Form 8‑K of Registrant filed on May 22, 2013.
Certificate of Amendment to Restated Certificate of Incorporation of Registrant, effective May 12, 2014,
incorporated by reference to Exhibit 3(1) of Form 8-K of Registrant filed on May 13, 2014.
Certificate of Elimination of 8.00% Series A Mandatory Convertible Preferred Stock of Registrant,
incorporated by reference to Exhibit 3(4) of Form 10-K of Registrant for the year ended December 31, 2019.
By-Laws of Hess Corporation (as amended effective May 6, 2020) incorporated by reference to Exhibit 3(1)
of Form 10-Q of Registrant for the three months ended March 31, 2020.
Extension and Amendment Agreement, dated as of April 13, 2021, to Credit Agreement among Hess
Corporation, the subsidiary party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as
administrative agent incorporated by reference to Exhibit 10(1) of Form 8-K of the Registrant, filed on April
13, 2021.
Indenture dated as of October 1, 1999, between Registrant and The Chase Manhattan Bank, as Trustee,
incorporated by reference to Exhibit 4(1) of Form 10‑Q of Registrant for the three months ended
September 30, 1999.
First Supplemental Indenture, dated as of October 1, 1999, between Registrant and The Chase Manhattan
Bank, as Trustee, relating to Registrant’s 73/8% Notes due 2009 and 77/8% Notes due 2029, incorporated by
reference to Exhibit 4(2) of Form 10‑Q of Registrant for the three months ended September 30, 1999.
Prospectus Supplement, dated August 8, 2001, to Prospectus dated July 27, 2001 relating to Registrant’s
5.30% Notes due 2004, 5.90% Notes due 2006, 6.65% Notes due 2011 and 7.30% Notes due 2031,
incorporated by reference to Registrant’s prospectus filed pursuant to Rule 424(b)(2) under the Securities Act
of 1933, as amended, on August 9, 2001.
Prospectus Supplement, dated February 28, 2002, to Prospectus dated July 27, 2001 relating to Registrant’s
7.125% Notes due 2033,
to
Rule 424(b)(4) under the Securities Act of 1933, as amended, on March 1, 2002.
Indenture dated as of March 1, 2006, between Registrant and The Bank of New York Mellon, as successor to
JP Morgan Chase Bank, N.A., as Trustee, including form of Note, incorporated by reference to Exhibit 4 to
Registrant’s Form S‑3ASR filed on March 1, 2006.
Form of 6.00% Note due 2040, incorporated by reference to Exhibit 4(1) to Form 8‑K of Registrant filed on
December 15, 2009.
Form of 5.60% Note due 2041, incorporated by reference to Exhibit 4(1) to Form 8‑K of Registrant filed on
August 12, 2010.
Form of 3.50% Note due 2024, incorporated by reference to Exhibit 4(3) to Form 8‑K of Registrant filed on
June 25, 2014.
Form of 4.30% Note due 2027, incorporated by reference to Exhibit 4(1) to Form 8‑K of Registrant filed on
September 28, 2016.
Form of 5.80% Note due 2047, incorporated by reference to Exhibit 4(2) to Form 8‑K of Registrant filed on
September 28, 2016.

incorporated by reference to Registrant’s prospectus filed pursuant

100

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 100

3/23/22 1:36 PM

100

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
0
1

 
 
 
 
92416 10K 03.8.2022

101

1
0
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

4(12)

4(13)

4(14)

4(15)

10(1)*

10(2)*

10(3)*

10(4)*

10(5)*

10(6)*

10(7)*

10(8)*

10(9)*

10(10)*

10(11)*

10(12)*

10(13)*

10(14)*

10(15)*

10(16)*

incorporated by reference to

Description of Hess Corporation’s Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934 incorporated by reference to Exhibit 4(12) of Form 10-K of Registrant for the year ended
December 31, 2019.
Loan Agreement, dated as of March 16, 2020, among Hess Corporation, the lenders party thereto, and
JPMorgan Chase Bank, N.A., as administrative agent incorporated by reference to Exhibit 10(1) of Form 8-K
of the Registrant, filed on March 17, 2020.
Amendment No. 1 dated as of June 9, 2020 to the Term Loan Agreement dated as of March 16, 2020, among
Hess Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent
incorporated by reference to Exhibit 10(1) of Form 10-Q of Registrant for the three months ended June 30,
2020.
Amendment No.2, dated as of October 4, 2021, to the Term Loan Agreement dated as of March 16, 2020, as
amended, among Hess Corporation, the subsidiary party thereto, the lenders party thereto, and JPMorgan
Chase Bank, N.A., as administrative agent incorporated by reference to Exhibit 10(1) of Form 8-K of the
Registrant, filed on October 6, 2021.
Other instruments defining the rights of holders of long-term debt of Registrant and its consolidated
subsidiaries are not being filed since the total amount of securities authorized under each such instrument
does not exceed 10% of the total assets of Registrant and its subsidiaries on a consolidated basis. Registrant
agrees to furnish to the Securities and Exchange Commission a copy of any instruments defining the rights of
holders of long‑term debt of Registrant and its subsidiaries upon request.
Annual Cash Incentive Plan description incorporated by reference to Item 5.02 of Form 8‑K of Registrant
filed on March 4, 2021.
Financial Counseling Program description incorporated by reference to Exhibit 10(6) of Form 10‑K of
Registrant for the fiscal year ended December 31, 2004.
Hess Corporation Savings and Stock Bonus Plan incorporated by reference to Exhibit 10(7) of Form 10‑K of
Registrant for the fiscal year ended December 31, 2006.
Hess Corporation Pension Restoration Plan, dated January 19, 1990,
Exhibit 10(9) of Form 10‑K of Registrant for the fiscal year ended December 31, 1989. (P)
Amendment, dated December 31, 2006, to Hess Corporation Pension Restoration Plan, incorporated by
reference to Exhibit 10(10) of Form 10‑K of Registrant for the fiscal year ended December 31, 2006.
Letter Agreement, dated May 17, 2001, between Registrant and John P. Rielly relating to Mr. Rielly’s
participation in the Hess Corporation Pension Restoration Plan, incorporated by reference to Exhibit 10(18)
of Form 10‑K of Registrant for the fiscal year ended December 31, 2002.
Amended and Restated 2008 Long‑term Incentive Plan, incorporated by reference to exhibit 10(1) of Form 8-
K of the Registrant filed on May 12, 2015.
Forms of Awards under Registrant’s 2008 Long‑term Incentive Plan,
Exhibit 10(14) of Form 10‑K of Registrant for the fiscal year ended December 31, 2009.
Form of Restricted Stock Award Agreement under Registrant’s Amended and Restated 2008 Long‑term
Incentive Plan, incorporated by reference to Exhibit 10(2) of Form 10-Q of Registrant for the three months
ended March 31, 2015.
Compensation program description for non‑employee directors, incorporated by reference to Item 1.01 of
Form 8‑K of Registrant filed on January 4, 2007.
Form of Amended and Restated Change in Control Termination Benefits Agreement, dated as of May 29,
2009, incorporated by reference to Exhibit 10(1) of Form 10‑Q of Registrant for the three months ended
June 30, 2009. A substantially identical agreement (differing only in the signatories thereto) was entered into
between Registrant and John B. Hess.
Amended and Restated Change in Control Termination Benefits Agreement, dated as of May 29, 2009,
between Registrant and John P. Rielly, incorporated by reference to Exhibit 10(17) of Form 10‑K of
Registrant for the fiscal year ended December 31, 2009. Substantially identical agreements (differing only in
the signatories thereto) were entered into between Registrant and other executive officers (including the
named executive officers, other than Barbara Lowery-Yilmaz and John B. Hess).
Form of Change in Control Termination Benefits Agreement, dated as of August 3, 2015, between the
Registrant and Barbara Lowery-Yilmaz, incorporated by reference to Exhibit 10(2) of Form 10‑Q of
Registrant for the three months ended June 30, 2021. Substantially identical agreements (differing only in
the signatories thereto) were entered into between the Registrant and other senior officers.
Agreement between Registrant and Gregory P. Hill, relating to Mr. Hill’s compensation and other terms of
employment, incorporated by reference to Item 5.02 of Form 8‑K of Registrant filed January 7, 2009.
Agreement between Registrant and Timothy B. Goodell, relating to Mr. Goodell’s compensation and other
terms of employment, incorporated by reference to Exhibit 10(20) of Registrant’s Form 10‑K for the fiscal
year ended December 31, 2009.
Deferred Compensation Plan of Registrant, dated December 1, 1999,
Exhibit 10(16) of Form 10‑K of Registrant for the fiscal year ended December 31, 1999.

incorporated by reference to

incorporated by reference to

101

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 101

3/23/22 1:36 PM

101

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
0
1

 
 
 
 
92416 10K 03.8.2022

102

1
0
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

10(17)*

10(18)*

10(19)*

10(20)*

10(21)*

10(22)*

10(23)*

21

24

23(1)

23(2)

31(1)

31(2)

32(1)

32(2)

99(1)

Hess Corporation 2017 Long-Term Incentive Plan, incorporated by reference to Exhibit 10(1) of Form 8-K of
Registrant filed on June 13, 2017.
Form of Restricted Stock Award Agreement under the 2017 Long-Term Incentive Plan incorporated by
reference to Exhibit 10(1) of Form 10-Q of Registrant for the three months ended March 31, 2020.
Form of Stock Option Award Agreement under the 2017 Long-Term Incentive Plan incorporated by
reference to Exhibit 10(2) of Form 10-Q of Registrant for the three months ended March 31, 2020.
Form of 2019 Performance Award Agreement under the 2017 Long-Term Incentive Plan, incorporated by
reference to Exhibit 10(3) of Form 10-Q of Registrant for the three months ended March 31, 2019.
Form of 2020 Performance Award Agreement under the 2017 Long-Term Incentive Plan incorporated by
reference to Exhibit 10(3) of Form 10-Q of Registrant for the three months ended March 31, 2020.
Form of 2021 Performance Award Agreement under the 2017 Long-Term Incentive Plan incorporated by
reference to Exhibit 10(1) of Form 10-Q of the Registrant, filed on May 6, 2021.
Amendment No. 1 to the Hess Corporation 2017 Long-Term Incentive Plan incorporated by reference to
Exhibit 10(1) of Form 8-K of the Registrant, filed on June 3, 2021.
Subsidiaries of Registrant.

Power of Attorney (included on the signatures page of this Annual Report on Form 10-K).

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm, dated March 1, 2022.

Consent of DeGolyer and MacNaughton dated March 1, 2022.

Certification required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)).

Certification required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)).

Certification required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b))
and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).

Certification required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b))
and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).

Letter report of DeGolyer and MacNaughton, Independent Petroleum Engineering Consulting Firm, dated
February 2, 2022, on proved reserves audit as of December 31, 2021 of certain properties attributable to
Registrant.

101(INS)

Inline XBRL Instance Document

101(SCH)

Inline XBRL Schema Document

101(CAL)

Inline XBRL Calculation Linkbase Document

101(LAB)

Inline XBRL Labels Linkbase Document

101(PRE)

Inline XBRL Presentation Linkbase Document

101(DEF)

Inline XBRL Definition Linkbase Document

104

The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2021 has been formatted in Inline XBRL.

* These exhibits relate to executive compensation plans and arrangements.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
0
1

102

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 102

3/23/22 1:36 PM

102

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:48PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
0
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 1st day of March 2022.

SIGNATURES

92416 10K 03.8.2022

103

HESS CORPORATION
(Registrant)

By

(John P. Rielly)
Executive Vice President and
Chief Financial Officer

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
0
1

103

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 103

3/23/22 1:36 PM

103

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

104

1
0
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints John B. Hess, Timothy B. Goodell and John P. Rielly or any
of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all amendments to Annual Report on Form 10-K, and to file
the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and to perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or would
do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons

on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

/s/  John B. Hess
John B. Hess

/s/ James H. Quigley
James H. Quigley

/s/  Terrence J. Checki
Terrence J. Checki

/s/  Leonard S. Coleman Jr.
Leonard S. Coleman Jr.

/s/  Edith E. Holiday
Edith E. Holiday

/s/  Marc S. Lipschultz
Marc S. Lipschultz

/s/  Raymond J. McGuire
Raymond J. McGuire

/s/  David McManus
David McManus

/s/  Dr. Kevin O. Meyers
Dr. Kevin O. Meyers

/s/ Karyn F. Ovelmen
Karyn F. Ovelmen

/s/ John P. Rielly
John P. Rielly

/s/ William G. Schrader
William G. Schrader

Title

Director and
Chief Executive Officer
(Principal Executive Officer)

Director and
Chairman of the Board

Director

Director

Director

Director

Director

Director

Director

Director

Executive Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)

Date

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

Director

March 1, 2022

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
0
1

104

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 104

3/23/22 1:36 PM

104

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
0
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

105

Exhibit 21

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUBSIDIARIES OF THE REGISTRANT

Name of Company

Hess Asia Holdings Inc.

Hess Bakken Investments II, LLC

Hess Bakken Investments III, LLC

Hess Bakken Investments IV, LLC

Hess Bakken Processing LLC

Hess Baldpate-Penn State LLC

Hess Canada (Aspy) Exploration Limited

Hess Canada Exploration Limited

Hess Canada Oil and Gas ULC

Hess Capital Limited

Hess Capital Services Holdings, LLC

Hess Capital Services Limited

Hess Capital Services LLC

Hess Conger LLC

Hess Energy Exploration LLC

Hess Equatorial Guinea Investments Limited

Hess Exploration and Production Holdings LLC

Hess Exploration and Production Malaysia B.V.

Hess Exploration Services, Inc.

Hess Finance

Hess GOM Deepwater LLC

Hess GOM Deepwater Sub-Holdings LLC

Hess GOM Exploration LLC

Hess Guyana (Block B) Exploration Limited

Hess Guyana (Liza) Exploration Limited

Hess Guyana Exploration Limited

Hess Holdings EG Limited

Hess Holdings GOM Ventures LLC

Hess Holdings West Africa Limited

Hess (Indonesia-VIII) Holdings Limited

Hess Infrastructure Partners LP

Hess International Holdings Corporation

Hess International Holdings Limited

Hess International Receivables Limited

Hess International Sales LLC

Hess Libya Exploration Limited

Hess Libya (Waha) Limited

Hess Limited

Hess Llano LLC

Hess Middle East New Ventures Limited

Registrant Ownership %

Jurisdiction

100

100

100

100

43.5

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

43.5

100

100

100

100

100

100

100

100

100

Cayman Islands

Delaware

Delaware

Delaware

Delaware

Delaware

Cayman Islands

Cayman Islands

Nova Scotia, Canada

Cayman Islands

Delaware

Cayman Islands

Delaware

Delaware

Delaware

Cayman Islands

Delaware

The Netherlands

Delaware

England & Wales

Delaware

Delaware

Delaware

Cayman Islands

Cayman Islands

Cayman Islands

Cayman Islands

Delaware

Cayman Islands

Cayman Islands

Delaware

Delaware

Cayman Islands

Cayman Islands

Delaware

Cayman Islands

Cayman Islands

England & Wales

Delaware

Cayman Islands

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
0
1

105

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 105

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
0
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Name of Company

Hess Midstream Operations LP

Hess Midstream Partners GP LP

Hess New Ventures Exploration Limited

Hess North Dakota Export Logistics Holdings LLC

Hess North Dakota Export Logistics LLC

Hess North Dakota Export Logistics Operations LP

Hess North Dakota Pipelines Holdings LLC

Hess North Dakota Pipelines LLC

Hess NWE Holdings

Hess Offshore Response Company, LLC

Hess Ohio Developments, LLC

Hess Ohio Holdings, LLC

Hess Ohio Sub-Holdings LLC

Hess Oil & Gas Sdn. Bhd.

Hess Oil and Gas Holdings Inc.

Hess Oil and Gas International Limited

Hess Oil and Gas International II Limited

Hess Oil Company of Thailand (JDA) Limited

Hess Oil Company of Thailand Ltd. Co.

Hess Oil Production and Exploration LLC

Hess Services UK Limited

Hess Stampede LLC

Hess Suriname Exploration Limited

Hess Tank Cars Holdings II LLC

Hess Tank Cars LLC

Hess Tank Cars II LLC

Hess TGP Finance Company LLC

Hess TGP Holdings LLC

Hess TGP Operations LP

Hess Tioga Gas Plant LLC

Hess Trading Corporation

Hess Tubular Bells LLC

Hess Water Services LLC

Hess West Africa Holdings Limited

92416 10K 03.8.2022

106

Registrant Ownership %

Jurisdiction

43.5

43.5

100

43.5

43.5

43.5

43.5

43.5

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

43.5

43.5

43.5

100

43.5

43.5

43.5

100

100

43.5

100

Delaware

Delaware

Cayman Islands

Delaware

Delaware

Delaware

Delaware

Delaware

England & Wales

Delaware

Delaware

Delaware

Delaware

Malaysia

Cayman Islands

Bermuda

Cayman Islands

Cayman Islands

Texas

Delaware

England & Wales

Delaware

Cayman Islands

Delaware

Delaware

Delaware

Delaware

Delaware

Delaware

Delaware

Delaware

Delaware

Delaware

Cayman Islands

Each of the foregoing subsidiaries conducts business under the name listed. The above list does not include 56 subsidiary holding
companies (20 domestic and 36 non-U.S.) that would otherwise be reported except that they are ultimately 100% owned by the
Registrant and, as their line of business, fulfill similar roles to those holding companies separately identified in the above list. In
addition, we have excluded subsidiaries associated with divested assets, discontinued activities and those that when considered in the
aggregate as a single subsidiary, would not constitute a significant subsidiary.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
0
1

106

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 106

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
0
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

107

Exhibit 23(1)

We consent to the incorporation by reference in the following Registration Statements:

Consent of Independent Registered Public Accounting Firm

(1) Registration Statement (Form S-8 No. 333-43569) pertaining to the Hess Corporation Employees’ Savings Plan,

(2) Registration Statement (Form S-8 No. 333-150992) pertaining to the Hess Corporation Amended and Restated 2008 Long-

Term Incentive Plan and the Hess Corporation 2017 Long-Term Incentive Plan,

(3) Registration Statement (Form S-8 No. 333-167076) pertaining to the Hess Corporation Amended and Restated 2008 Long-

Term Incentive Plan and the Hess Corporation 2017 Long-Term Incentive Plan,

(4) Registration Statement (Form S-8 No. 333-181704) pertaining to the Hess Corporation Amended and Restated 2008 Long-

Term Incentive Plan and the Hess Corporation 2017 Long-Term Incentive Plan,

(5) Registration Statement (Form S-8 No. 333-204929) pertaining to the Hess Corporation Amended and Restated 2008 Long-

Term Incentive Plan and the Hess Corporation 2017 Long-Term Incentive Plan,

(6) Registration Statement (Form S-8 No. 333-219113) pertaining to the Hess Corporation 2017 Long-Term Incentive Plan,

(7) Registration Statement (Form S-8 No. 333-257070) pertaining to the Hess Corporation 2017 Long-Term Incentive Plan, and

(8) Registration Statement (Form S-3 No. 333-253681) of Hess Corporation;

of our reports dated March 1, 2022, with respect to the consolidated financial statements of Hess Corporation and the effectiveness of
internal control over financial reporting of Hess Corporation included in this Annual Report (Form 10-K) of Hess Corporation for the
year ended December 31, 2021.

New York, New York
March 1, 2022

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
0
1

107

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 107

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

108

Exhibit 23(2)

1
0
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

Hess Corporation
1185 Avenue of the Americas
New York, New York 10036

Ladies and Gentlemen:

DeGolyer and MacNaughton
5001 Spring Valley Road
Suite 800 East
Dallas, Texas 75244

March 1, 2022

We hereby consent to the use of the name DeGolyer and MacNaughton, to references to DeGolyer and MacNaughton as an
independent petroleum engineering consulting firm, to references to our report of third party dated February 2, 2022, containing our
opinion on the estimated proved reserves, as of December 31, 2021, attributable to certain properties in which Hess Corporation has
represented it holds an interest (our “Report”) under the heading “Proved Oil and Gas Reserves–Reserves Audit,” and to the inclusion
of our Report as an exhibit in Hess Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021. We also
consent to all such references, including under the heading “Experts,” and to the incorporation by reference of our Report in the
Registration Statements filed by Hess Corporation on Form S-3 (No. 333-253681) and Form S-8 (No. 333-43569, No. 333-150992,
No. 333‑167076, No. 333-181704, No. 333-204929, No. 333-219113, and No. 333-257070).

Very truly yours,

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
0
1

108

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 108

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
0
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

109

Exhibit 31(1)

I, John B. Hess, certify that:

1. I have reviewed this annual report on Form 10-K of Hess Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of
Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.

By

John B. Hess
Chief Executive Officer

Date: March 1, 2022

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
0
1

109

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 109

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

110

Exhibit 31(2)

I, John P. Rielly, certify that:

1. I have reviewed this annual report on Form 10-K of Hess Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of
Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.

By

John P. Rielly
Executive Vice President and
Chief Financial Officer

Date: March 1, 2022

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
1
1

110

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 110

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

111

Exhibit 32(1)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Hess Corporation (the Corporation) on Form 10-K for the period ended
December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John B. Hess,
Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Corporation.

By

John B. Hess
Chief Executive Officer

Date: March 1, 2022

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be

retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
1
1

111

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 111

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

92416 10K 03.8.2022

112

Exhibit 32(2)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Hess Corporation (the Corporation) on Form 10-K for the period ended
December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John P. Rielly,
Executive Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Corporation.

By

John P. Rielly
Executive Vice President and
Chief Financial Officer

Date: March 1, 2022

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be

retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
1
1

112

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 112

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

113

Exhibit 99.1

DeGolyer and MacNaughton
5001 Spring Valley Road
Suite 800 East
Dallas, Texas 75244

February 2, 2022

1
1
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

Board of Directors
Hess Corporation
1185 Avenue of the Americas
New York, New York 10036

Ladies and Gentlemen:

Pursuant to your request, this report of third party presents an independent evaluation, as of December 31, 2021, of the net
proved oil, condensate, natural gas liquids (NGL), and gas reserves of certain properties in which Hess Corporation (Hess) has
represented it holds an interest to determine the reasonableness of Hess’ estimates. This evaluation was completed on February 2,
2022. Hess has represented that these properties account for approximately 88 percent on a net equivalent barrel basis of Hess’ net
proved reserves, as of December 31, 2021, and that the net proved reserves estimates have been prepared in accordance with the
reserves definitions of Rules 4-10(a) (1)–(32) of Regulation S–X of the United States Securities and Exchange Commission (SEC). It
is our opinion that the procedures and methodologies employed by Hess for the preparation of its proved reserves estimates as of
December 31, 2021, comply with the current requirements of the SEC. We have reviewed information provided by Hess that it
represents to be Hess’ estimates of the net reserves, as of December 31, 2021, for the same properties as those which we evaluated.
This report was prepared in accordance with guidelines specified in Item 1202 (a)(8) of Regulation S–K and is to be used for inclusion
in certain SEC filings by Hess.

Reserves estimates included herein are expressed as net reserves as represented by Hess. Gross reserves are defined as the
total estimated petroleum remaining to be produced from these properties after December 31, 2021. Net reserves are defined as that
portion of the gross reserves attributable to the interests held by Hess after deducting all interests held by others.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
1
1

113

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 113

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
92416 10K 03.8.2022

114

1
1
4

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

2

Certain properties evaluated herein are subject to the terms of production sharing contracts (PSC). The terms of these PSCs
generally allow for working interest participants to be reimbursed for portions of capital costs and operating expenses and to share in
the profits. The reimbursements and profit proceeds are converted to a barrel of oil equivalent or standard cubic foot of gas equivalent
by dividing by product prices to estimate the “entitlement quantities.” These entitlement quantities are equivalent in principle to net
reserves and are used to calculate an equivalent net share, termed an “entitlement interest.” In this report, Hess’ net reserves or interest
for the properties subject to these PSCs is the entitlement based on Hess’ working interest.

Estimates of reserves should be regarded only as estimates that may change as further production history and additional
information become available. Not only are such estimates based on that information which is currently available, but such estimates
are also subject to the uncertainties inherent in the application of judgmental factors in interpreting such information.

Information used in the preparation of this report was obtained from Hess. In the preparation of this report we have relied,
without independent verification, upon such information furnished by Hess with respect to the property interests being evaluated,
production from such properties, current costs of operation and development, current prices for production, agreements relating to
current and future operations and sale of production, and various other information and data that were accepted as represented. A field
examination was not considered necessary for the purposes of this report.

Definition of Reserves

Petroleum reserves estimated by Hess included in this report are classified as proved. Only proved reserves have been
evaluated for this report. Reserves classifications used by Hess in this report are in accordance with the reserves definitions of Rules
4–10(a) (1)–(32) of Regulation S–X of the SEC. Reserves are judged to be economically producible in future years from known
reservoirs under existing economic and operating conditions and assuming continuation of current regulatory practices using
conventional production methods and equipment. In the analyses of production-decline curves, reserves were estimated only to the
limit of economic rates of production under existing economic and operating conditions using prices and costs consistent with the
effective date of this report, including consideration of changes in existing prices provided only by contractual arrangements but not
including escalations based upon future conditions. The petroleum reserves are classified as follows:

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

4
1
1

114

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 114

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:49PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
5

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

92416 10K 03.8.2022

115

3

Proved oil and gas reserves – Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from
known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at
which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of
whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have
commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited
by fluid contacts, if any; and, (B) Adjacent undrilled portions of the reservoir that can, with reasonable
certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis
of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known
hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and
reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and
the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher
portions of the reservoir only if geoscience, engineering, or performance data and reliable technology
establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques
(including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than
in the reservoir as a whole, the

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

5
1
1

115

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 115

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
6

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

92416 10K 03.8.2022

116

4

operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable
technology establishes the reasonable certainty of the engineering analysis on which the project or program
was based; and, (B) The project has been approved for development by all necessary parties and entities,
including governmental entities.

(v) Existing economic and operating conditions include prices and costs at which economic producibility
from a reservoir is to be determined. The price shall be the average price during the 12‑month period prior
to the ending date of the period covered by the report, determined as an unweighted arithmetic average of
the first-day-of-the-month price for each month within such period, unless prices are defined by contractual
arrangements, excluding escalations based upon future conditions.

Developed oil and gas reserves – Developed oil and gas reserves are reserves of any category that can be expected to be

recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the
required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves
estimate if the extraction is by means not involving a well.

Undeveloped oil and gas reserves – Undeveloped oil and gas reserves are reserves of any category that are expected to be
recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for
recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that
are reasonably certain of production when drilled, unless evidence using reliable technology exists that
establishes reasonable certainty of economic producibility at greater distances.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

6
1
1

116

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 116

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
DeGolyer and MacNaughton

92416 10K 03.8.2022

117

5

1
1
7

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has
been adopted indicating that they are scheduled to be drilled within five years, unless the specific
circumstances justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for
which an application of fluid injection or other improved recovery technique is contemplated, unless such
techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as
defined in [Section 210.4–10(a) Definitions], or by other evidence using reliable technology establishing
reasonable certainty.

Methodology and Procedures

Estimates of reserves were prepared by the use of appropriate geologic, petroleum engineering, and evaluation principles and
techniques that are in accordance with the reserves definitions of Rules 4–10(a) (1)–(32) of Regulation S–X of the SEC and with
practices generally recognized by the petroleum industry as presented in the publication of the Society of Petroleum Engineers entitled
“Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (revised June 2019) Approved by the SPE
Board on 25 June 2019” and in Monograph 3 and Monograph 4 published by the Society of Petroleum Evaluation Engineers. The
method or combination of methods used in the analysis of each reservoir was tempered by experience with similar reservoirs, stage of
development, quality and completeness of basic data, and production history.

Based on the current stage of field development, production performance, the development plans provided by Hess, and

analyses of areas offsetting existing wells with test or production data, reserves were classified as proved.

The proved undeveloped reserves estimates were based on opportunities identified in the plan of development provided by

Hess.

Hess has represented that its senior management is committed to the development plan provided by Hess and that Hess has
the financial capability to execute the development plan, including the drilling and completion of wells and the installation of
equipment and facilities.

For the evaluation of unconventional reservoirs, a performance-based methodology integrating the appropriate geology and

petroleum engineering data was utilized for this

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

7
1
1

117

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 117

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
8

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

92416 10K 03.8.2022

118

6

report. Performance-based methodology primarily includes (1) production diagnostics, (2) decline-curve analysis, and (3) model-based
analysis (if necessary, based on availability of data). Production diagnostics include data quality control, identification of flow
regimes, and characteristic well performance behavior. These analyses were performed for all well groupings (or type-curve areas).

Characteristic rate-decline profiles from diagnostic interpretation were translated to modified hyperbolic rate profiles,
including one or multiple b-exponent values followed by an exponential decline. Based on the availability of data, model-based
analysis may be integrated to evaluate long-term decline behavior, the effect of dynamic reservoir and fracture parameters on well
performance, and complex situations sourced by the nature of unconventional reservoirs.

When applicable, the volumetric method was used to estimate the original oil in place (OOIP) and original gas in place
(OGIP). Structure maps were prepared to delineate each reservoir, and isopach maps were constructed to estimate reservoir volume.
Electrical logs, radioactivity logs, core analyses, and other available data were used to prepare these maps as well as to estimate
representative values for porosity and water saturation. When adequate data were available and when circumstances justified, material-
balance methods were used to estimate OOIP or OGIP.

Estimates of ultimate recovery were obtained after applying recovery factors to OOIP and OGIP. These recovery factors were
based on consideration of the type of energy inherent in the reservoirs, analyses of the petroleum, the structural positions of the
properties, and the production histories. When applicable, material balance and other engineering methods were used to estimate
recovery factors based on an analysis of reservoir performance, including production rate, reservoir pressure, and reservoir fluid
properties.

For depletion-type reservoirs or those whose performance disclosed a reliable decline in producing-rate trends or other
diagnostic characteristics, reserves were estimated by the application of appropriate decline curves or other performance relationships.
In the analyses of production-decline curves, reserves were estimated only to the limits of economic production as defined under the
Definition of Reserves heading of this report or the expiration of the fiscal agreement, as appropriate.

In certain cases, reserves were estimated by incorporating elements of analogy with similar wells or reservoirs for which

more complete data were available.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

8
1
1

118

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 118

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
1
9

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

92416 10K 03.8.2022

119

7

In the evaluation of undeveloped reserves, type-well analysis was performed using well data from analogous reservoirs for

which more complete historical performance data were available.

Data provided by Hess from wells drilled through December 31, 2021, and made available for this evaluation were used to
prepare the reserves estimates herein. These reserves estimates were based on consideration of monthly production data available only
through August 2021. Estimated cumulative production, as of December 31, 2021, was deducted from the estimated gross ultimate
recovery to estimate gross reserves. This required that production be estimated for up to 4 months.

Oil and condensate reserves estimated herein are to be recovered by normal field separation. NGL reserves estimated herein
include pentanes and heavier fractions (C5+) and liquefied petroleum gas (LPG), which consists primarily of propane and butane
fractions, and are the result of low-temperature plant processing. Oil, condensate, and NGL reserves included in this report are
expressed in millions of barrels (106bbl). In these estimates, 1 barrel equals 42 United States gallons. For reporting purposes, oil and
condensate reserves have been estimated separately and are presented herein as a summed quantity.

Gas quantities estimated herein are expressed as marketable gas and fuel gas. Marketable gas is defined as the total gas
produced from the reservoir after reduction for shrinkage resulting from field separation; processing, including removal of the
nonhydrocarbon gas to meet pipeline specifications; and flare and other losses but not from fuel usage. Fuel gas is that portion of the
gas consumed in field operations. Gas reserves estimated herein are reported as marketable gas; therefore, fuel gas is included as
reserves. Gas quantities are expressed at a temperature base of 60 degrees Fahrenheit (°F) and at a pressure base of 14.7 pounds per
square inch absolute (psia). Gas quantities included in this report are expressed in billions of cubic feet (109ft3).

Gas quantities are identified by the type of reservoir from which the gas will be produced. Nonassociated gas is gas at initial
reservoir conditions with no oil present in the reservoir. Associated gas includes both gas-cap gas and solution gas. Gas-cap gas is gas
at initial reservoir conditions and is in communication with an underlying oil zone. Solution gas is gas dissolved in oil at initial
reservoir conditions. Gas quantities estimated herein include both associated and nonassociated gas.

At the request of Hess, marketable gas reserves estimated herein were converted to oil equivalent using an energy equivalent

factor of 6,000 cubic feet of gas per 1 barrel of oil equivalent.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

9
1
1

119

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 119

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
2
0

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

Primary Economic Assumptions

92416 10K 03.8.2022

120

8

This report has been prepared using initial prices, expenses, and costs provided by Hess in United States dollars (U.S.$).
Future prices were estimated using guidelines established by the SEC and the Financial Accounting Standards Board (FASB). The
following economic assumptions were used for estimating the reserves reported herein:

Oil and Condensate Prices

Hess has represented that the oil and condensate prices were based on a reference price, calculated as the
unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month
period prior to the end of the reporting period, unless prices are defined by contractual agreements. The 12-
month average reference prices used were U.S.$66.34 per barrel for West Texas Intermediate and U.S.
$68.92 per barrel for Brent. Hess supplied differentials by field to the relevant reference prices and the
prices were held constant thereafter. The volume-weighted average price attributable to the estimated
proved reserves over the lives of the independently evaluated properties was U.S.$62.96 per barrel of oil
and condensate.

NGL Prices

Hess has represented that the NGL prices were based on a reference price, calculated as the unweighted
arithmetic average of the first-day-of-the-month price for each month within the 12‑month period prior to
the end of the reporting period, unless prices are defined by contractual agreements. The volume weighted
average price attributable to the estimated proved reserves over the lives of the independently evaluated
properties was U.S.$26.31 per barrel of NGL.

Gas Prices

Hess has represented that gas prices were based on reference prices, calculated as the unweighted
arithmetic average of the first-day-of- the-month price for each month within the 12-month period prior to
the end of the reporting period, unless prices are defined by contractual agreements. The 12-month average
reference price for

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

0
2
1

120

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 120

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
DeGolyer and MacNaughton

92416 10K 03.8.2022

121

9

1
2
1

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

NYMEX was U.S.$3.68 per million Btu. The gas prices were adjusted for each property using differentials
to the NYMEX reference price furnished by Hess and held constant thereafter. The volume-weighted
average price attributable to the estimated proved reserves over the lives of the independently evaluated
properties was U.S.$3.71 per thousand cubic feet of gas.

Operating Expenses, Capital Costs, and Abandonment Costs

Estimates of operating expenses, provided by Hess and based on current expenses, were held constant for
the lives of the properties. Future capital expenditures were estimated using 2021 values, provided by Hess,
and were not adjusted for inflation. In certain cases, future expenditures, either higher or lower than current
expenditures, may have been used because of anticipated changes in operating conditions, but no general
escalation that might result from inflation was applied. Abandonment costs, which are those costs
associated with the removal of equipment, plugging of wells, and reclamation and restoration associated
with the abandonment, were provided by Hess and were not adjusted for inflation. Operating expenses,
capital costs, and abandonment costs were considered, as appropriate, in determining the economic viability
of the undeveloped reserves.

In our opinion, the information relating to estimated proved reserves of oil, condensate, NGL, and gas contained in this report
has been prepared in accordance with Paragraphs 932-235-50-4, 932-235-50-6, 932-235-50-7, and 932
235-50-9 of the Accounting
Standards Update 932-235-50, Extractive Industries – Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures
(January 2010) of the FASB and Rules 4–10(a) (1)–(32) of Regulation S–X and Rules 302(b), 1201, 1202(a) (1), (2), (3), (4), (8), and
1203(a) of Regulation S–K of the SEC; provided, however, that estimates of proved developed and proved undeveloped reserves are
not presented at the beginning of the year.

To the extent the above-enumerated rules, regulations, and statements require determinations of an accounting or legal nature,
we, as engineers, are necessarily unable to express an opinion as to whether the above-described information is in accordance
therewith or sufficient therefor.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

1
2
1

121

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 121

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
2
2

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

DeGolyer and MacNaughton

Summary of Conclusions

92416 10K 03.8.2022

122

10

Hess has represented that its estimated net proved reserves attributable to the evaluated properties were based on the
definition of proved reserves of the SEC. Hess’ estimates of the net proved reserves, as of December 31, 2021, attributable to these
properties, which represent approximately 88 percent of Hess’ reserves on a net equivalent basis, are summarized as follows,
expressed in millions of barrels (106bbl), billions of cubic feet (109ft3), and millions of barrels of oil equivalent (106boe):

Estimated by Hess
Net Proved Reserves as of December 31, 2021

Oil and
Condensate
(106bbl)

NGL
(106bbl)

Marketable
Gas
(109ft3)

Oil Equivalent
(106boe)

United States
Guyana
Malaysia and JDA
Total

466
205
5
676

229
0
0
229

876
48
525
1,449

841
213
93
1,147

Notes:

1.

2.

3.

Marketable gas reserves estimated herein were converted to oil equivalent using an
energy equivalent factor of 6,000 cubic feet of gas per 1 barrel of oil equivalent.
Net proved fuel gas reserves included as a portion of marketable gas reserves were
estimated to be 150 109ft3.
Joint Development Area is abbreviated JDA.

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

2
2
1

122

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 122

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
DeGolyer and MacNaughton

92416 10K 03.8.2022

123

11

1
2
3

9
2
4
1
6

1
0
K
0
3
.
8
.
2
0
2
2

In comparing the detailed net proved reserves estimates by field prepared by DeGolyer and MacNaughton and by Hess,
differences have been found, both positive and negative, resulting in an aggregate difference of less than 2.5 percent when compared
on the basis of net equivalent barrels. It is DeGolyer and MacNaughton’s opinion that the total net proved reserves estimates prepared
by Hess, as of December 31, 2021, on the properties evaluated and referred to above, when compared on the basis of net equivalent
barrels, do not differ materially from those prepared by DeGolyer and MacNaughton.

Hess’ oil and gas reserves were estimated assuming the continuation of the current regulatory environment.

Changes in the regulatory environment by host governments may affect the operating environment and oil and gas reserves
estimates of industry participants. Such regulatory changes could include increased mandatory government participation in producing
contracts, changes in royalty terms, cancellation or amendment of contract rights, or expropriation or nationalization of property.
While the oil and gas industry is subject to regulatory changes that could affect an industry participant’s ability to recover its reserves,
neither we nor Hess are aware of any such governmental actions which restrict the recovery of the December 31, 2021, estimated
reserves.

DeGolyer and MacNaughton is an independent petroleum engineering consulting firm that has been providing petroleum
consulting services throughout the world since 1936. DeGolyer and MacNaughton does not have any financial interest, including stock
ownership, in Hess. Our fees were not contingent on the results of our evaluation. This report has been prepared at the request of Hess.
DeGolyer and MacNaughton has used all data, procedures, assumptions and methods that it considers necessary to prepare this report.

  Submitted,

Federico Dordoni, P.E.
Senior Vice President
DeGolyer and MacNaughton

2
2
0
2
.
8
.
3
0
K
0
1
6
1
4
2
9

3
2
1

123

92416 10K 03.8.2022

92416_10K_03.8.2022_CO6.indd 123

3/23/22 1:36 PM

K

8.500 in x 11.000 in

Hess Corp

03.23.2022 13:50PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.8.2022

tmurray

file://sanjfs5.sa1.com/Sandy2/92416

 
 
 
 
1
2
4

9
2
4
1
6

1
0
K
0
3
.
2
6
.
2
0
2
2

DeGolyer and MacNaughton

CERTIFICATE of QUALIFICATION

92416 10K 03.26.2022

124

12

I, Federico Dordoni, Petroleum Engineer with DeGolyer and MacNaughton, 5001 Spring Valley Road, Suite 800 East, Dallas,

Texas, 75244 U.S.A., hereby certify:

1. That I am a Senior Vice President with DeGolyer and MacNaughton, which firm did prepare the report of third party
addressed to Hess dated February 2, 2022, and that I, as Senior Vice President, was responsible for the preparation of this
report of third party.

2. That I attended Buenos Aires Institute of Technology (ITBA) University, and that I graduated with a degree in Petroleum
Engineering in the year 2004; that I am a Registered Professional Engineer in the State of Texas; that I am a member of the
Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers; and that I have in excess of 17 years of
experience in oil and gas reservoir studies and reserves evaluations.

Federico Dordoni, P.E.
Senior Vice President
DeGolyer and MacNaughton

2
2
0
2
.
6
2
.
3
0
K
0
1

6
1
4
2
9

4
2
1

124

92416 10K 03.26.2022

92416_10K_03.30.2022_CO11.indd 124

3/30/22 9:57 PM

K

8.500 in x 11.000 in

Hess Corp

03.30.2022 22:00PM

92416

awallerstein (sa1) (sa1)

92416 10K 03.26.2022

druggiero

file://sanjfs5.sa1.com/Sandy2/92416

     
 
 
 
 
Corporate Information

COMMON STOCK

DOCUMENTS AVAILABLE

Listed New York Stock Exchange 

Copies of the corporation’s 2021 Annual Report on Form 

(TICKER SYMBOL: HES)

Transfer Agent and Registrar 

Computershare 

P.O. Box 505000 

Louisville, KY 40233-5000 

TELEPHONE: 866-203-6215

FOR OVERNIGHT DELIVERIES: 

Computershare 

462 South 4th Street, Suite 1600 

Louisville, KY 40202

SHAREHOLDER WEBSITE: 

www.computershare.com/investor

SHAREHOLDER ONLINE INQUIRIES:  

www-us.computershare.com/investor/contact

10-K, Quarterly Reports on Form 10-Q, Current Reports 

on Form 8-K and annual proxy statement filed with the 

Securities and Exchange Commission (SEC), as well as the 

corporation’s Code of Business Conduct and Ethics, Corporate 

Governance Guidelines, and charters of the Audit Committee, 

Compensation and Management Development Committee and 

Corporate Governance and Nominating Committee of the Board 

of Directors, are available, without charge, on our website (www.

hess.com) or upon written request to the Corporate Secretary, 

EMAIL: corporatesecretary@hess.com.

The corporation has also filed with the New York Stock 

Exchange (NYSE) its annual certification that the corporation’s 

chief executive officer is not aware of any violation of the NYSE’s 

corporate governance standards. The corporation has also filed 

with the SEC the certifications of its chief executive officer and 

chief financial officer required under SEC Rule 13a-14(a) as 

exhibits to its 2021 Form 10-K. 

DIVIDEND REINVESTMENT PLAN

Information concerning the Dividend Reinvestment Plan available  

to holders of Hess Corporation common stock may be obtained at 

www.computershare.com/investor, by writing to Computershare, 

Dividend Reinvestment Department, P.O. Box 505000, Louisville, 

KY 40233-5000, or by calling 1-866-203-6215.

HESS WEBSITE: www.hess.com

The Hess Annual Report cover and editorial sections are printed on recycled paper made from fiber sourced from well managed 
forests and other controlled wood sources and independently certified to Forest Stewardship Council (FSC) standards.

© 2022 Hess Corporation

www.hess.com