Hess(HES) - 2024 Q2 - Quarterly Report

Financial Performance - Net income for the six months ended June 30, 2024, was $1,918 million, compared to$633 million for the same period in 2023, reflecting a significant increase of 203.5%[9] - For the three months ended June 30, 2024, net income was $757 million, compared to$119 million for the same period in 2023, representing a significant increase[15] - The company reported comprehensive income attributable to Hess Corporation of $733 million for the three months ended June 30, 2024, compared to$449 million for the same period in 2023, an increase of 63.4%[9] - Net income attributable to Hess Corporation for the six months ended June 30, 2024, was $1,729 million, compared to$465 million for the same period in 2023[32] - In Q2 2024, Hess Corporation reported a net income of $757 million, a significant increase from$119 million in Q2 2023, with adjusted net income rising to $809 million from$201 million[53] - Exploration and Production segment net income for Q2 2024 was $765 million, up from$155 million in Q2 2023, with adjusted net income increasing to $817 million from$237 million[54] - Net income attributable to Hess Corporation for the first six months of 2024 was $1,762 million, compared to$560 million in the same period of 2023, representing a 214.3% increase[63] Assets and Liabilities - Total current assets increased to $3,833 million as of June 30, 2024, up from$3,430 million at December 31, 2023, representing an increase of 11.8%[4] - Total liabilities increased to $14,609 million as of June 30, 2024, compared to$14,405 million at December 31, 2023, an increase of 1.4%[4] - Long-term debt increased to $8,548 million as of June 30, 2024, from$8,302 million at December 31, 2023, an increase of 3%[4] - The company’s total equity rose to $11,201 million as of June 30, 2024, compared to$9,602 million at December 31, 2023, reflecting an increase of 16.6%[4] - Total debt as of June 30, 2024, was $8,865 million, compared to$8,613 million at December 31, 2023[80] - The company's long-term debt had a carrying value of $8,865 million and a fair value of$9,030 million as of June 30, 2024[88] Cash Flow and Liquidity - Cash and cash equivalents at the end of the period rose to $2,025 million, up from$1,688 million at the beginning of the year, marking an increase of 20%[12] - Net cash provided by operating activities for the six months ended June 30, 2024, was $2,778 million, compared to$1,612 million for the same period in 2023, an increase of 72.2%[12] - Cash and cash equivalents as of June 30, 2024, were $2,025 million, up from$1,688 million at December 31, 2023[80] - As of June 30, 2024, the company had $1.9 billion in cash and cash equivalents and total liquidity of approximately$5.2 billion[83] - The company expects cash flow from operating activities to be sufficient to fund upcoming debt maturities and capital investment programs in 2024[83] Inventory and Retained Earnings - Total inventories increased to $382 million as of June 30, 2024, from$304 million as of December 31, 2023, reflecting a rise of approximately 25.7%[19] - Retained earnings grew to $3,771 million as of June 30, 2024, up from$2,318 million at December 31, 2023, indicating a growth of 62.5%[4] - The company’s retained earnings increased to $3,771 million as of June 30, 2024, compared to$1,670 million as of June 30, 2023, marking a growth of approximately 125%[15] Mergers and Acquisitions - On October 22, 2023, the company entered into a merger agreement with Chevron Corporation, with stockholders set to receive 1.025 shares of Chevron common stock for each share of Hess common stock[17] - The merger is anticipated to complete regulatory reviews by the third quarter of 2024, pending arbitration outcomes related to Hess Guyana Exploration Limited[17] - The company entered into a Merger Agreement with Chevron, where Hess stockholders will receive 1.025 shares of Chevron common stock for each share of Hess common stock if the merger is completed[52] - The arbitration proceedings regarding the applicability of the Stabroek ROFR to the Merger are scheduled for a hearing in May 2025[96] Stock and Shareholder Activities - The company declared dividends on common stock totaling $135 million for the three months ended June 30, 2024, consistent with the previous year[15] - The company approved a new stock repurchase authorization of up to$1 billion on March 1, 2023, but no shares were repurchased during the three months ended June 30, 2024[98] - The company is subject to certain restrictions on stock repurchases due to the ongoing Merger Agreement[98] Operational Highlights - Total net production averaged 494,000 barrels of oil equivalent per day (boepd) in Q2 2024, compared to 387,000 boepd in Q2 2023[54] - Net production in Guyana increased to 29,000 bopd in Q2 2024 from 13,000 bopd in Q2 2023, marking a 123.1% increase[69] - The average realized crude oil selling price was $80.29 per barrel in Q2 2024, up from$71.13 per barrel in Q2 2023[54] - Exploration and Production (E&P) revenues for Q2 2024 were $3,226 million, up 40.5$2,295 million in Q2 2023[63] Financial Risk Management - Financial risk management activities include the use of futures, swaps, or options to mitigate commodity price risks, with notional amounts of outstanding contracts at June 30, 2024, being $232 million for foreign exchange forwards/swaps and$100 million for interest rate swaps[47] - The company has outstanding foreign exchange contracts with notional amounts totaling $232 million to mitigate foreign exchange risks[88] - A 15$420 million or $450 million, respectively[88] Other Financial Metrics - The debt to capitalization ratio for debt covenants improved to 30.8$18 million in Q2 2024 from $20 million in Q2 2023, primarily due to lower legal and professional fees[77] - Additions to property, plant, and equipment were$2,108 million in the first six months of 2024, an increase of $450 million compared to the same period in 2023[81] - The company reported a share-based compensation expense of$71 million for the six months ended June 30, 2024[15]