Good morning. Welcome to another oil and gas session at the 38th Annual Strategic Decisions Conference. My name is Bob Brackett. I'm Bernstein's oil and gas E&P analyst and Global Metals and Mining analyst. We are not expecting a fire drill, so if the fire alarm rings, take it seriously. The primary exit is out the door to the back, to the right, down to the escalators that you came up, down the escalators and muster on Sixth Avenue. If that path is blocked, you'll go directly back through the refreshment area to the right and then down and muster in the same point. In terms of how this session will be organized, you see QR codes on the sides in the front of the room. That gets you into the Pigeonhole app. This is your conversation. Ask questions. What my role is to moderate. The way we'll moderate the session, I'll start, think of it like a pyramid. We'll start with sort of macro questions, talk about where we are in the cycle. We'll go down, talk to the Hess strategy, and then we'll dive into the individual assets. Again, your conversation, so ask the questions that you want answered. With that, it's my pleasure to introduce and sit next to John Hess, the CEO of Hess Corporation, and begin. Excellent. Thank you so much, John, for being here. We've had multiple oil and gas sessions. Not a lot of exuberance. Which is good. The most bullish oil analyst at the conference was Jamie Dimon, calling for $150-$175 a barrel yesterday. Right. How do you think about this oil cycle? We'll talk about how you plan around oil cycles. Well, you know, this oil cycle already was constructive going into the year. WTI was about $75 a barrel, and we would have taken the over that prices would go up. Why is that? We've had seven quarters of supply deficits, inventory draws. Inventories two years ago, April, were about 1.2 billion barrels above pre-COVID levels. Right now, they're 400 million barrels less than pre-COVID levels, meaning there's no surge in the system, there's no cushion in the system. You know, when you look at all the different forces going on, people are flying more, you know, probably 10% down from pre-COVID levels, where it was 20% down a year ago. You know, Memorial Day was a busy flying weekend, and the real issue there was supply chain and not getting enough pilots or stewards on the planes. More people are driving. China lockdown opening up. That's probably two million barrels a day more on the market. The market was running at about 98 million barrels a day. We think by the end of the year, it'll be 101 million barrels a day. Gasoline and diesel demand are almost at pre-COVID levels. Demand is robust. On the supply side, you know, just having a hard time keeping up with demand, mainly because the market shut down in April two years ago. You know, people just were running for cash on looking where to store the oil, and it's slower for supply to come up. We always say demand recovery has been V-shaped, supply recovery has been U-shaped, and it's still struggling to keep up. On top of that, you add what happened in Russia in March, about one million barrels a day is off the market. Now, the EU says they're gonna ban probably another two-three million barrels a day. And, you know, I remember CNBC two days ago, Becky Quick asked Brian Sullivan, "Well, you know, who's gonna make up the oil?" Well, there's no extra oil to make up. Yes, OPEC has some spare capacity. Maybe the Saudis have a million a day. Maybe, UAE has 500 a day. Libya's down 250 a day. The deal that OPEC just announced doing 600 a day instead of 400 a day for July and August is a drop in the bucket relative to what we may lose from Russia, which is somewhere between two-three million barrels a day by the end of the year. You know, the market's very constructive. You know, I would say I would take the over on where prices are now. You know, they did touch $120. They could go higher than $120. The question is, how do you solve the problem? Investment. If the issue is supply, you need more investment. You know, the industry hasn't been investing in part because of low prices, in part because of inflation, in part because of investors, and in part because of ESG pressure. What we like to try to get people to understand is oil and gas is gonna be needed for the next 20-30 years. It's an integral part to making the energy transition affordable. It's not just about, do you need to invest more in clean energy? You need to invest more in oil and gas. At the end of the day, prices are where they are right now, and I'd say they're gonna be higher during the second half of the year. The only way you're gonna balance the market is investment that takes a longer time or demand destruction to try to make the market balance. What do you think? We'll talk to the Hess portfolio. Where is the quickest barrel in the Hess portfolio, and how could that deliver oil? Yeah. The quickest barrel in the Hess portfolio is the Bakken. We're one of the leading oil and gas producers in the Bakken. We're running about 150-160 thousand barrels a day. By the end of the year, you know, that's I think where we'd probably end up. Ultimately, we're gonna go to 200,000 barrels a day. We were running a three-rig program. We just announced officially last week at our annual meeting that we're gonna be adding a fourth rig. That won't affect production this year, but it'll affect production next year. You and I just talking before this session started, it really, from the time you make the investment decisions to the time that you have first oil is approximately 12 months. They call it short cycle. It's not one month, it's 12 months. The fact is, it is 12 months. Hess is already doing that, one, because it's good returns, and two, the world needs the oil. I think actually more people in our industry should be accelerating. If they had plans to add rigs, they should be adding them now. The problem is, the rig market's really tight. You have inflation as a challenge, and you also have supply chain as the challenge that either the people or the equipment isn't ready to go to work. The market is very tight right now in terms of getting access to equipment, access to people, to actually be able to add a rig. We really took this decision and moved forward thinking about it in March once the Russian invasion happened. That's where our quickest barrel comes from. You think about a year for shale. We had Mike Wirth of Chevron here yesterday. He talked about a Gulf of Mexico sanction this year, three years out for a tieback, not a standalone. Then you start to talk about 5-10 years for sort of full-cycle traditional oil and gas. There's not much else faster in the system. Well, actually, the one exception to that in the offshore is Guyana, where Hess is fortunate to have a 30% interest in a six-million-acre block. ExxonMobil's the operator with 45%. Chinese National Offshore Oil Company has 25%. Actually, for us, from the investment decision to add an FPSO that could add 220,000-250,000 barrels a day is actually three years. Mm-hmm. Our tiebacks would probably be about 18 months. In Guyana tieback. Our tiebacks. in the Gulf of Mexico. The Gulf of Mexico. Guyana itself, where we're getting these big floating production storage and offloading facilities built. Exxon's an outstanding project manager. They've done a superb job managing and executing these $6 billion-$10 billion oil in projects for each FPSO and all the drilling that has to go. You know, as we define more oil, we find more oil, which we're keeping doing. Growing resource does matter in our business, and it's actually very low cost, high margin, low carbon footprint oil, so it's gonna be needed 20 years from now. It's a real advantage for our company versus other companies. It takes about three years from when you make the investment. We just got sanction on April first of this year on the Yellowtail project, which is our fourth development. It's gonna be a 250,000-barrel-a-day ship. That oil will come on in 2025. For Guyana, it's three years. For the Gulf of Mexico, between drilling, appraisal, etc., for a greenfield project, Mike's right, it's probably about five years. Yeah. Guyana is actually different. It's actually accelerating oil development and production, which the world's gonna need. We're gonna spend a bunch of time, I imagine, on Guyana, but I can't help but ask, the cadence of Guyana is, has been extremely measured, right? Yes. Sort of about a year-ish between FPSOs. You've got four sanctioned, line of sight to 10. Resource could support twice that. My words, not yours. Clearly the price signal says accelerate, but what's the desire to pull those developments forward? Well, you know, first of all, you have to spend enough time doing both the exploration and appraisal work to define a 600 million barrel to a one billion barrels of resource to underpin a ship, depending upon the size of the ship. Let's say from 220,000 barrels a day of oil production to 250,000 barrels a day of production. We're queued up now where we're really looking at what will the oil be for the fifth ship that will get sanctioned, hopefully by the end of this year, then the sixth ship, the end of the next year. It's really the approach, you know, when we first were fortunate enough to have our first discovery in 2015, I remember talking to Rex Tillerson about this, and he said, "John, we wanna go as fast as we can, but we don't wanna have any leakage." What was he really saying? Let's be capital efficient and operating expense efficient. Doing one ship a year is a huge task. I'd say so. For project management, for execution, for the yards to handle it. Exxon’s probably the best in the business at doing this. This, their philosophy of design one and build many, doing one a year is industry-leading. We have a page in our investor pack that actually shows our development of oil production is two-three times faster than any other global offshore development. We are going fast, and we are bringing value forward, and we’re going about as fast as I think you can to be capital efficient and operating efficient. For a global deepwater development. Absolutely. It's probably two-three times better than any other industry player. Clearly you're not budgeting around today's spot price. How do you think about budgeting capital? What's the right price? What's the right strategy? Right. You know, if you look at the strip right now, it's probably $110 for the rest of the year for a barrel of WTI. Next year it's $90. We'll say $75 WTI. I think that's high enough to encourage investment in the world for oil and gas that's needed. And at the same time, it works for consumers. We have to get the market back into balance. We have to get more investment to grow supply. We're probably gonna have to get more demand destruction to get the market to stabilize. Obviously, the Russia factor has to be off the market. Once the Russia factor is off the market, you got to remember, at the end of the year, we were at $75 a barrel. I think that's a reasonable number. John Rielly, who's our CFO, is here. You know, we stress test below that. We also have a range above that. I would say we really look at $65-$75 for Brent as sort of, you know, the range of, you know, this project better work. You've spent years facing the consumer, thinking about refining, thinking about refined products. You mentioned demand destruction. How does that play out? Is it a recession? Is it a soft landing? Any thoughts there? Well, yeah, I know Jamie Dimon yesterday said it's a hurricane and spooked people, including myself. But at the end of the day, I think that's what the market and all of us are grappling with. Obviously, the headwinds that we faced in interest rates going up, in inflation going up, in wages going up, you know, the market's on a boil. Can we have a soft landing? Right now, I'm very concerned that we won't have a soft landing because inflation is running so fast. The Russia invasion actually creates even more problems. It's not just about oil and gas. You got to remember that Russia produces 10% of the world's nickel. Nickel's used in batteries, it's used in steel. Russia also is about 42% of the world's palladium. That's for catalytic converters and the potential for electrolyzers for hydrogen. We'll see where that goes. That's a long-term project, that conversion. And then on top of it, on the food side of things, I think between Ukraine and Russia, there's 30% of wheat exports in the world, wheat supply. And then, on corn, Ukraine's 20% of the world's corn supply. So you have food inflation, you have materials inflation, you have oil and gas inflation. I think Europe is already starting to have a recession. And the question is, how does it spread? The thing that's countering that is obviously the consumer has a strong balance sheet, in part because of PPP. Also housing prices are up. Stock market until recently has been up outside of energy, thank you, Bob. You know, yes, there's some hope that we have a soft landing. I'm very worried that we will have a harder landing as we look forward, simply because we have to get inflation under control. The only way to do that is to raise interest rates high enough to slow things down. You know, where we probably overshot the runway in getting the economy back on its feet, now I think, you know, we're gonna have to take ourself off the adrenaline rush the world's having, and that could make the landing a little bit harder. Whether you call it a recession or an economic slowdown, I think the stock market is already selling to us. Selling, yeah. We got ahead of ourselves. You know, yes, I do think there's a recession coming. Hopefully, it's a mild one. Yeah, I'd, I tend to concur. If we're gonna fix oil price, you fix it on the supply side, you fix it on the demand side. We've talked supply side just takes time, right? Yes. Demand side, you can do more quickly. You mentioned inflation. Is inflation good for Hess, neutral for Hess, bad for Hess? I would say it's good. You know, why do you have inflation? Demand is greater than supply. If demand is greater than supply, what happens? Price goes up. That's good for us. We're long oil. We're long natural gas. 80% of our resource in the ground is oil and liquids, and about 20% is natural gas. That's a good place for us to be. It's a net plus. Now, obviously, the challenge that comes out of it is the inflation in the supply chain. Our costs in the Bakken this year are up about 7%. You know, we practice lean manufacturing. We're the only oil company that does that in the oil field. We've been able to keep our costs in the 7% range where drilling complete costs for a Bakken well have gone from $5.8 million per well to $6.2 million per well. That's a 7% increase. What's interesting, Guyana, which is $1 billion in our budget, where the Bakken's about $800 million in our budget, our Guyana costs have stayed flat because we pre-committed to them, and that's really for the first, second, third, and fourth ship that you talked about. Exxon's done a great job of getting ahead of inflation and keeping that under control. We're not seeing cost inflation in Guyana because we've already had those costs committed. Our overall budget at $2.8 billion, inflation's only affected that number. We raised our cost guidance, our capital expenditure guidance, which will be official as we get into July. John has already talked about it in our prior quarterly call. It's gone from $2.6 billion of capital expenditures for this year to $2.8 billion. $100 million of that is for adding the fourth rig in the Bakken, and we're not adding a fifth rig. Fourth is where it stops. And then about $100 million for inflationary effects on the $2.8 billion. It's only a 3%-4% impact on our company. Obviously, the Permian players that you have talked to, the number's closer to 20%. There's two issues around just getting things done in shale. One is inflation cost. The other is just supply chain and time. Yes. Any issues around supply chains in executing the plan? Well, yeah. The reason, when we saw and understood the Russian invasion and saw that this is gonna be a long, protracted war, we wanted to make sure we got access to the equipment we needed. That fourth rig, you know, and the quality of that rig is a high-performing rig like the other three rigs we had. I think it was the last one that was available, that we could get. We stayed ahead of it. We've been able to manage the supply chain fairly well. Not really real problems with sand. Work over crews is an area, getting people for the work over crews, and that's a big deal to complete wells and re-complete wells. That's one area where I think is a pinch point. Again, we're trying to work with our service providers there to make sure we have high-quality crews. You are starting to see pinch points in the supply chain. We're going from three rigs to four rigs. That's a very manageable rig count for us to manage. Yeah. If we talk about the Hess strategy, in many ways, you know, you're a zebra compared to horses. If I pulled up IR decks for most of the stocks I look at, somewhere in that deck will be a chart, and it'll be a dividend chart. On the left will be company X and then the S&P dividend and then on down, and everyone's sort of bragging about today's cash returns. Yeah. In contrast, you've got a chart in your IR deck which is cash flow per share growth, and you're sitting at the left compared to the S&P and compared to tech and whatnot. What drives that growth strategy for Hess compared to the peers? Look, oil and gas, as you know better than anybody, is a resource business. You have to grow your resource over time and invest in growing that resource if your cash flow is gonna be greater five and 10 years from now. The challenge for shale producers, they're not growing the resource. They can keep their production flat, but they're not growing the resource. They're actually liquidating it, which allows them to return a lot of capital to shareholders, but not grow their intrinsic value. We're the only oil company that actually can grow intrinsic value while at the same time in growing cash returns or cash yield to our shareholders. That's based upon a strategy of three things. Grow the resource, high returns, go down the cost curve, have a low cost of supply, and have industry-leading cash flow growth. On the resource side, our very focused but balanced portfolio. We think to grow that resource, you can't just stay in shale. We have the Bakken Shale. We have a gas annuity basically in Malaysia that has you know certainly another 10 years to go in it. By the way, the Bakken is a 15-year well inventory, which most people have a 10-year inventory. You know, we just have better acreage in the Bakken than most people have. Then you have the Gulf of Mexico, where we do have some growth potential, and then you have Guyana. It's a very focused, balanced portfolio, short cycle, long cycle, onshore, offshore, very oil-dominated. The important thing is that portfolio. We're able to grow our production 10% a year. An investor recently, when we were on the road, said, "You're the only growth company left in the oil and gas industry." Well, that's because we have focused on growing the resource. Now, we were criticized three years ago for investing. They just wanted a number of investors. "Stop investing, just give us the cash back." I said, "Look, we have higher returns, specifically in Guyana. You know, we are gonna benefit from that investment. As we grow the resource, we grow the cash flow." Now that we have a second ship on, every ship at $65 Brent adds $1 billion a year of EBITDA. And as a consequence, our cash flow, because we have these low-cost developments coming on every year, our cash flow growth is 25% a year compounded each year for the next five years. Quite frankly, with more ships, it can actually go out to 2030. Part of that also is go down the cost curve. Our cost per barrel, our cash cost per barrel goes down 25% to $9 per BOE by 2026. Our break-even as a company will be $45 Brent for 2026. At the end of the day, that cash flow growth is going to compound where we're growing intrinsic value, but also start to return cash along the way as well. We announced at the beginning of this year in March, we increased our dividend 50% after we paid $500 million of our term loan, a billion dollars that we needed to get through the cycle to continue the Guyana investment. Then as we go forward, we are gonna continue to grow our dividend. We'd like it to be a premium to the S&P, probably in the range of 2%-3%, on what our market value is, and be attractive to growth income investors. That will be gradual. It won't be 50% going forward, but it'll be a respectable amount. The majority of the free cash will go back as share buybacks. We don't believe in variable returns of dividends. The variable returns will be share buybacks. You know, we're getting in a position now, we've already put out a framework that 75% of our free cash every year will go back as return to capital. A growing proportion of that return to capital will be share buybacks, will be opportunistic, but will be also programmatic, getting the balance right, and then, at the same time, grow the dividends. You know, again, it's a unique value proposition. It's an industry-leading rate of change story and an industry-leading durability story. If you just think about this year, we have three liftings in Guyana, in the first quarter, one million barrels a ship. The second quarter is about seven liftings. The third and fourth quarter, eight liftings each. Each lifting is one million barrels. We got over $100/barrel price. We get a Brent price, by the way. You're going from $300 million of incremental cash flow from Guyana to $700 million, $300 million going to $700 million in the second quarter, $800 million in the third, $800 million in the fourth. That's a rate of change just for this year. People used to say, "Well, why invest in Hess? You know, I'll wait for the production to come on in Guyana." It's on. Then that continues to compound at $1 billion a year of incremental cash flow, as each ship comes on. Our third ship comes on, called Payara development, that comes on in the second half of 2023. Then we have Yellowtail in 2025. A fifth ship will get sanctioned for 2026. It's not just rate of change for this year, it's rate of change in the years ahead, and that's why it's a durable cash flow story, and it's unequaled in the business. You mentioned liftings, and one thing I found fascinating about Guyana, which you can see as an analyst, when the government gets a lifting, one million barrels a day. Yes They will post who the counterparty they sold that cargo to. Yes Shell Midstream, or Shell Trade, whatever, and the price they got. You can go on Bloomberg and say they got $75 million bucks, and Brent was about $75 million, goes into a sovereign wealth fund. Talk to the host government and talk to like what Guyana's going to do with that wealth and what's the relationship like. Yeah. Well, a couple things. You know, Guyana is a small country. It's the only English-speaking country in South America. Used to be a British colony, parliamentary system. It's independent. Contract sanctity is honored. It's run now by President Ali and Vice President Jagdeo, who was president for 10 years, after a five-year gap, where a different party were running. It's, you know, a democratic system, peaceful transfer of power and all that. This government that is running the country is very pro-business, wants us to accelerate investing in their oil resources so they can monetize it, so they can lift the country out of poverty. The country two years ago had a GDP per capita of Jordan. In the next five years, it'll have GDP per capita superior to Brazil or Mexico. Hess and Exxon as well are working hard with the country to help them help themselves to build a sustainable economic value proposition. You know, we worked and encouraged them to work with Michael Porter independently of Exxon and Hess to where they have a country development plan focused on human development, which is really education and healthcare infrastructure development. How do you tie Brazil to the Caribbean with a deepwater port and also have a regional tie and a corridor economically with Suriname, really to make them a logistical powerhouse, if you will, as a regional center in the northern part of South America. They have a plan to do that, and now they're starting to execute that. Exxon, on behalf of our joint venture, is working with the government to build an electric plant. Right now, the electric plant in the country is based on diesel, obviously very high price for multiple reasons, not the least of which was the, you know, the Russian invasion of Ukraine. We're gonna convert that plant and build a new plant, where the government will own and operate it. Our joint venture will have 60 million a day of natural gas fueling it. It'll be lower cost electricity for the people of Guyana, as well as a lower carbon footprint that should come on in 2024. They're also working with The Mount Sinai Hospital. I happen to be on the board of Mount Sinai Hospital. They have an international practice to have Mount Sinai as a strategic partner to help them modernize their healthcare system. So, you know, Hess has always believed in social responsibility and making a positive social impact on the communities where we do business. Obviously, at the top of the list is Guyana. We're doing that. Our partners are also doing their share, both the Chinese National Offshore Oil Company as well as Exxon. I'd be very bullish about this really being a role model for how to develop oil resource the right way, in a sustainable way that benefits their citizens and brings economic prosperity to their citizens. We're early in the journey. We have a question. Are you worried about windfall taxes? We've seen them in the U.K. Could they creep out? Export ban. What are some of the uncertainties you grapple with, certainly with the U.S. portfolio? Yeah. I'd say they're uncertainties, but I'd say they're low likelihood. The windfall profit tax has been bandied about by some politicians. Obviously, in the U.K., it did happen. I don't think it'll happen in the U.S., mainly just the way the Senate's divided. I don't think Joe Manchin would vote for it, and that would be the tiebreaker if it were to go forward. So I think that's low likelihood. You know, the ban on crude oil exports, you know, when we were starting to go up as a country in shale, I was one of the industry leaders, along with Ryan Lance, I think, is following this session, who worked hard to get the ban on crude oil exports lifted. We were exporting gasoline. We were exporting, as a country, gasoline. Diesel The diesel, etc., but we couldn't export the crude that basically we manufactured those products with. It was an antiquated rule. It went back to the Arab oil embargo in 1974, and it had to be lifted from the books. I don't think it's going back on the books. I don't think there's any legislative support for that. I know one person, I think it was Ron Klain in the administration that was pushing it maybe three-six months ago. He was shut down in the White House itself, so it never got anywhere. Do you worry about physical shortages of diesel or gasoline in the U.S. or? Well, I think we're already having them, actually. You know, I hear stories about certain refining centers having trucks take oil large distances away because we are starting to have logistical problems. As the world needs more diesel and we export more, or we export more of our petroleum products, I think there will be some tight spots for sure. Because what's the issue? What did I say before? Inventories are 400 million barrels lower than they were a year ago globally. You're always gonna have pinch points, whether it's in the U.S. or other places. I've got a question around refining capacity. You're uniquely suited. You once ran one of the largest refineries in the world, Hovensa, in the U.S. Virgin Islands. It's an island-based refinery which had challenges when shale gas came into the market. Exactly, Bob. Is there an ability to expand refining capacity in the U.S.? Well, you know, in the last year, in response to demand destruction because of COVID, about three million barrels a day of refining capacity was either shut down or mothballed. Bringing those refineries back, you can't just do it with a light switch. Yeah, I do think there's some spare capacity. At the end of the day, you know, I think a lot of oil companies are, you know, grappling with that issue. How much more capacity should I put on? Because maybe we're dealing with a short-term shortage, not a long-term shortage. You're almost right. The payback period, adding capital for refining expansion to solve a summer problem when those investments take 10 years to pay off. That's right. Two-three years to execute. It's a challenge. It's a challenge. I think that's a structural problem that we're dealing with on the product side. We do have a question around the portfolio for exploration. Why an exploration well in Suriname this year with a decade of development potential in Guyana? Well, you know, we are a company that wants to grow our resource, go down the cost curve, and generate industry-leading cash flow. Exploration's the best way to do it. Shale is a liquidating resource. There really aren't opportunities there. The offshore still has great potential. We focused our exploration efforts really on the western side of the Atlantic margin. That's Guyana, that's Suriname, that's the Gulf of Mexico, and actually we potentially have a well next year in Newfoundland with BP and Chevron. We are looking to add resource, so we're well positioned for 2030-2040. Because the oil and gas is gonna be needed for the next 30+ years. You know, when you look at the world energy outlook of the IEA, which I recommend to all of you, they came out with their last outlook. They do it every year right before COP26. They usually come out in November. This year, last year, they came out in October. If you look at the 4 scenarios they have, including net zero, oil and gas are still gonna be needed for the next 30 plus years. The key challenge is investment, the global industry investment for oil and gas from those scenarios. I think a reasonable number is about $500 billion a year each year for the next 10 years. We need to invest more in clean energy. The numbers for clean energy have to go from $1 trillion a year to $3 trillion a year. Oil and gas have to go from basically $300 billion two years ago, $340 billion last year, to about $500 billion on a rate going forward. Exploration itself within that value chain has gone from $60 billion a year global exploration to $20 billion. Really, partly because of COVID, partly because so much money was going to shale, not enough money was going to exploration. Remember, I said the key to being successful in the oil and gas industry is to be able to grow your resource. We wanna be able to have sustainable growth, not just to 2030, but to 2040. The key is it low cost, and is it low carbon. Suriname fits into that. There's been some success in Suriname, not the success that has happened on the Stabroek Block that we have, where we've had 26 discoveries. We just upgraded our resource after five discoveries this year to get to that 26th discovery number to 11 billion barrels of oil equivalent. We think there are multi-billion barrels remaining. Neil Chapman at the Exxon Investor Day actually mentioned that, you know, it's the potential that what we have in Guyana could double in resource size. We have plenty to say grace over and be thankful for there, but we wanna have some other irons in the fire. Suriname is one. Another is the Deepwater Gulf, where we bought 60 tracts for $120 million over the last five years while everybody was going to the Permian. We actually built, I think, an enviable acreage position in the Gulf. We'll do probably one tieback a year, one greenfield a year, to get a hub class well. It has to compete with what we have in Guyana. We have this unique opportunity in Canada. We have a healthy inventory to sustain resource growth for the company, not just for the next 10 years, for the next 20. If you think about the portfolio, the only obvious gas in the portfolio is Southeast Asia. Yes. That's sort of pseudo oil linked. Yes. You don't have much exposure to Henry Hub. It's low emission, and today at least the price is strong. What are your thoughts around U.S. Henry Hub? Well, you know, obviously, you know, the lack of investment that hurts supply as demand recovered in oil, it also recovered in natural gas. You have the gap. With a late cold winter, you know, prices were high. The energy system in Europe was uniquely vulnerable, in China, uniquely vulnerable. Prices already were high for LNG and natural gas, in both Asia and Europe. That translated to the Henry Hub, by the way. When the Russian invasion happened, Europe is dependent on Russia for 40% of its gas supply. The market just skyrocketed to $8. I do think that will be more short-lived than the oil strength in prices, mainly because there are more gas shale basins than there are oil shale basins in the U.S., and I think there's more resiliency to add to world supply. The limiting factor will be LNG projects to liquefy and gasify the gas. I think the strength in natural gas could last, you know, certainly for the next year. You got to remember, gas is very dependent on the weather. If the weather's not too hot or it's not too cold, inventories rebuild. Right now, inventories of gas, like inventories for oil, are on the low side. They have to be replenished. Because there's more supply in the U.S. to replenish them, I think there's more vulnerability to prices abating with the passage of time. Going back to exploration, we talked about cash flow per share growing 20% a year. CapEx, including sort of exploration spend, at low single digits. Is that fair? Well, I think a good number to use for our CapEx is $3-$3.2 billion. You know, we know what we're gonna do in the Bakken. We're gonna stay at the four rigs. We have a pretty steady reinvestment program, both in the Gulf and Malaysia, where we have the joint development area and North Malay Basin for about 65,000 equivalent of production. And we have a pretty secure number on what we're doing in Guyana. Looking out for the next five years, a $3-$3.2 billion number is probably a pretty safe number. Our capital intensity or reinvestment risk is a lot less than a lot of other oil companies. We have in our slide pack. I think it's on page four where you see, you know, what's the value proposition for us going forward. You know, we're targeting $3-3.2 billion of CapEx in 2026. At $65 Brent, we're gonna have about $6 billion of cash flow. That means we're gonna have free cash flow of $3 billion. That sort of, you know, gives you a feel for what our reinvestment targets are, and they're pretty defined. That wedge, so if you look at that free cash flow, you know, the 75% of it's committed to the dividend you mentioned and the buyback, and that cadence grows with cash flow per share growth. What's the appetite for modifying the portfolio other than organic exploration? Look, we're always. In or out? Looking to upgrade our portfolio, whether it's selling assets or buying assets. We think we have the best portfolio in the business. When we look outside, we can't find anything in shale that improves our rate of returns or improves our cash flow growth and free cash flow growth. While we look, we're not interested in M&A. Yeah. We don't need to do it. We wanna run our company to maximize returns for our shareholders. That's by growing the resource, going down the cost curve, and generating both industry leading rate of change cash flow growth as well as durability cash flow growth. Whatever is excess in free cash flow, 75% at least will go back to our shareholders while we're still growing intrinsic value. What are spot prices in the local markets you sell into in Malaysia, and could there be a call on those offshore assets to grow? Yeah, no. I think Malaysia is going to be pretty much a flat line, annuity where we're not trying to grow it, but really trying to optimize the infrastructure and the markets that we have. Because North Malay Basin, for example, is, you know, repriced every month based upon high sulfur fuel oil, which has ended up performing very well, much better than the Malaysia reference price, you know, as a consequence, we're getting a pretty decent price out there right now. We're gonna run that business to optimize our cash flow, and really run it as an annuity. It's nice to have that in the portfolio. Actually, during COVID, it was our most profitable, in fact, the only profitable asset that we had. Lag in pricing and whatnot. Yes. Yeah. Exactly. I'll broaden this question. The specific question is, where is the ONE GUYANA FPSO in development? Talk to each of the vessels. Sure. Almost talk to the Liza Destiny and talk to debottlenecking, and then talk to the early ramp of Unity and, Right Keep going. You know, this is where Exxon has really proven themselves as an industry leader in project management and execution. The first ship, Liza Phase I, called the Destiny, but let's just call it Phase I. Nameplate was 120,000 barrels a day of production. They've debottlenecked it where it's running 140,000 barrels a day plus. You know, the prospects are for that to continue. That's ahead of schedule. Liza Phase II, the Unity, that has capacity of 220,000 barrels a day, and it's ramping up to that number as we speak. That's ahead of schedule. The third ship, Payara, you know, it was supposed to come on stream 220,000 barrels a day gross. Remember Hess has 30% in 2024. It's been moved up really to the fourth quarter of 2023. You know, I would say both Liza Phase II, the second ship, and Payara, the third ship, both have the opportunity to debottleneck to go up maybe another 10%, let's say, just like Liza Phase I has. Yellowtail that just got approved, the hull's being built, and that's on slate for 2025. That's the largest ship that we are building to date, which is 250,000 barrels a day. It will cost more. I think the overall project's about $10 billion, and people can have sticker shock. The offset to that is we're developing over 900 million barrels of oil resources, where the other developments we're developing a lower amount. The break evens for these four ships are between 25- and 35-dollar Brent. The Yellowtail project itself, Neil Chapman of Exxon, has said it is the best return investment in the industry today, and that's coming from someone at Exxon. If you think about the 250,000, I had an investor ask yesterday, is that 250 simply debottlenecking ahead of installation or there's still opportunity? There's opportunity on top of that. We did have a question on exploration. How is the Upper Campanian exploration going? Could deeper reservoirs still double the resource? Everybody understands the majority of the oil that has been discovered in Guyana is at 15,000 feet. That's what's called the Upper Campanian. It's the Cretaceous age in geology. What we're finding now at 18,000 feet, they're very similar sand channels. Those sand channels are actually starting to trap the oil that's also being trapped at 15,000 feet. By the way, when I say 15,000 and 18,000 feet, it may take 30 days to drill a well. It's much cheaper to drill a well here than, let's say, in the deep water Gulf of Mexico, 'cause shallower, you don't have salt. You know, the drilling time and complete time is much shorter, so less capital exposed. Like $30 million-$50 million, let's say. On a gross basis, we have 30%. What we're starting to find, even though a number of those shallow wells that we drilled, we drill deeper to 18,000 feet, we would find oil in those, but they were never optimally located to drill the biggest prospect. This year we drilled a well called Fangtooth that was optimally located for 18,000 feet, and we found a material oil deposit that in and of itself, with more appraisal drilling, could underpin another FPSO. It's very high-quality oil as well. Now that we've correlated the wells that we're drilling for not only 15,000 feet but 18,000 feet, correlated it to the well logs that we have, we're starting to find other attractive deep prospects. You know, there's a lot of potential in the deep for either tiebacks to the 15,000 feet into an FPSO or in and of themselves be a standalone project. There's still a lot of upside for Hess and the Stabroek Block and our joint venture. We've already discovered 11 billion barrels of oil equivalent, just having gone up one billion barrels of oil equivalent in the last year. We think there are multi-billion barrels remaining on top of it. We still think we're in the early innings of this exploration opportunity. It's the largest oil and gas discovery in the last 20 years. Talk to ESG, and we've got specific questions. What are your targets around greenhouse gas emissions? How do you get there? How do you think about the energy transition and what, Sure. Hess looks like in 30 years? Look, Hess has always been committed to sustainability. We're a leader in our sustainability practices. We're honored that we've gotten awards just recently in the top hundred corporate citizens. We were recognized on that list for the 15th consecutive year, and the only energy company on that list. We'll be doing our sustainability report for the 25th year this summer. You know, we have set new targets for reductions in greenhouse gas intensity and methane intensity, 50% reduction by 2025, zero routine flaring by the end of 2025, and we're committed to the global ambition of net zero. So our board's climate change literate. We have experts come in and talk. We look at emerging technologies in that regard. You know, nature-based solutions are gonna be key for us to have a net zero strategy. We don't just wanna put that net zero strategy out there without having definition of how we're gonna get there. A lot of companies do for political reasons, but they can't back them up. When we're gonna put that commitment out, we're gonna back it up. We're gonna be looking not at industrial-based solutions like direct air capture. You know, we have been in the hydrogen business. You remember the company had a fuel cell company. Yeah. It was a cash pit and, you know, would have required a big balance sheet for a long time before hydrogen fuel cell ever could become a reality. From those experiences, we say, "Well, where can we differentiate ourselves, and how best can we get to net zero?" It's gonna be nature-based solutions. We're gonna be looking at areas like in deforestation, reforestation, carbon credits from that, but which will be real and verified and certifiable, and as well as, you know, registered. But we're also investing in, I'd say, groundbreaking research at the Salk Institute, where we're looking at crops. There's more carbon stored in the ground than there is in the atmosphere. How can crops be wider, longer, and more absorptive to store carbon? This is a long-term research project that hopefully then will become scalable and have a real impact. It could save gigatons of carbon per year from going in the atmosphere. That's, you know, what our position is. You know, we're gonna be industry leading, not industry bleeding, in that, but we wanna maintain our leadership as a leader in sustainability. Certainly support the global ambition to get to net zero, even though, as Fatih Birol says, it's a very narrow pathway to get there. That's why he has four scenarios, not just one scenario. They're scenarios, not forecasts. In terms of the energy transition, I think it's really important for government officials and business leaders together to have climate literacy, energy literacy, and economic literacy. They go together. People need to realize oil and gas are a key part of that transition. The world has a dual challenge. How do you grow energy 20%, in the next 20 years, let's say to 2040, and how do you get to net zero in 2050? It comes down to two major challenges. How do you decarbonize liquid fuel, and how do you make the electric grid stable based upon intermittent energy. The energy transition's gonna take a long time, costs a lot of money. We already talked about it. The supply chain pressures don't just affect oil, they affect alternate energy as well. The transition's gonna cost a lot more money than people expect. Really, for half the emissions that we need to get to net zero, the technologies don't even exist today. So we have to have, you know, really realistic aspirations of how we get there. I think one of the biggest challenges is government itself and the Biden administration is at the forefront. They're well-intended when they say we wanna get to net zero. You know, I think there's three things they should do if they're gonna be more pragmatic about the journey. One, they should have a master plan. If you're gonna be spending trillions of dollar on the energy transition in your company, you should show your financial plan and operating plan to your board of directors, to your shareholders, to the public at large. Government doesn't have a master plan, and I would argue neither did the European Union. You know, a lot of things were just sort of scattered, a shotgun approach as opposed to a rifle approach, where it really was backed up. Second, you have to have a price on carbon. The Biden administration does. You know, even when oil prices were low, they didn't wanna do it because they were afraid of energy prices going up. With energy prices where they are, that's a no-brainer. But if you really wanna attract trillions of dollars, you got to have a price on carbon. You can't manage what you can't measure. The third thing is government and business should be working together. The Biden administration or any government should have people that are subject matter experts in business with experience and leadership, as well as in energy to help come up with a realistic master plan. You know, everybody is well-intended on this, but I don't think we're putting the best minds and the best policies in place. A lot of the energy transition is focused on politics as opposed to economics. We've hit our time. I'm gonna ask one question, then I'll ask you to close with a thought. I have to ask a question. Guyana seems to be the natural laboratory to think about plant-based solutions for. Yes. for net zero. It's previously a plantation economy, if you go back 100- 200 years. It has rainforest. Yes. There's a natural place where Hess could interact, and you are a partner in their economic growth. That's an interesting. I can tell you that it's one of the largest carbon sinks in the world, with their rainforest and jungle. That's definitely an area where we're discussing with the government of how we might partner together. Interesting. Finally, just in closing, talk to the value proposition for owning Hess shares. Well, the value proposition was I said before. We're providing cash flow growth that's industry leading, but also in the top 10% of the S&P. A company that has not only a rate of change story, but also a durability story. When you invest, you're gonna keep compounding that cash flow growth, which gives you intrinsic value growth. At the same time, you're getting free cash flow growth as well. That's a unique value proposition. There's still a lot of upside to our stock from where we are today. All right. Thank you so much, John. Thank you, audience. Again, if we could give a round of applause for John. Thank you. Bye.