All right, we'll get started in 30 seconds here. Awesome. Umang and I and all Goldman Sachs have the great pleasure of hosting John Hess here for the outlook on Guyana and for Hess. John, it's been an incredible 12 months since he keynoted the conference a year ago, and congratulations on all the success in Guyana. Thanks, Neil. Most of all, thanks to you and your firm's support of our company and interest in our company. You know, I think, you know, your talk with Jeff and Arjun was outstanding in sort of framing the challenges that are ahead and the need for duration. Duration in resource growth, duration in cash flow growth, and that more investment's needed in the industry. Obviously, we invested through the cycle and are benefiting from that today. Well, John, I'll start off talking about Guyana and, you know, Phase 1 and Phase 2, are online. How are those performing, and what are the lessons learned as we start thinking about Phase 3 and Phase 4 of this? Sure. Well, to have everybody know, in 2019, our first ship, Liza, Phase 1, came on. It's producing in excess of 140,000 barrels a day gross. Remember, Hess has 30%, ExxonMobil doing a great job. It's operated with 45%. CNOOC, the remaining 25%. Our 30% interest, you know, accretes to us at about 140 a day. You know, there was some debottlenecking and now, you know, I'd take the over on the 140, meaning it could be $140-$150. Right. On Phase 2, that came on in February of 2022, that ship has been running in excess of 220 a day. I think the safe number would be about 360 a day between the two ships. Over time, as more debottlenecking happens, there'll be some upside to that. Yeah. John, you and I talked about this quite a bit over the last 24 hours, but as a majors analyst, it's sometimes confusing to think about how big Guyana can get. Exxon's talked about at least 850,000 barrels a day in 2027. I think you had an important point of clarification around this. Yeah. The official number from us and from Exxon is six ships in 2027, producing 1.2 million barrels a day. Yeah. How do you think about where we can get to from a plateau perspective? Well, you know, Obviously, we're tying in the biggest prospects, the biggest reservoirs right now, but there are a lot of satellites around these discoveries that we have obviously identified. The ability to plateau, you know, is out there in tiebacks. You know, tiebacks are the best returns in the Gulf of Mexico. They're the best returns in Guyana. We see the prospect for holding these ships on plateau for quite some time. Yeah. Maybe we could just step back. I mean, the, the totality of what you've been able to develop here in a relatively short period of time is extraordinary, I think what's exciting is that you've got 11 billion barrels, which is probably, in our view on its way to 20 billion barrels over time. The risk issues or the biggest risk I think investors have is not geologic anymore. They've proven this thing out that it's unbelievable. It's the above- ground risk. How are... Alongside Exxon, and CNOOC to some extent, working with Guyana to, one, prove the resource curse doesn't always have to be true. Right. You can develop resource and make the country of Guyana a better place, but also create a sustainable relationship where they truly feel like they have a partner even once you get to plateau. No. Great question. Just some context for people. you know, we had nine discoveries last year, 30 discoveries that we've had overall underpinning the 11 billion barrels of oil equivalent. The nine discoveries we had last year is not in that 11 billion barrels of oil equivalent, there's upside. We're also starting to drill the deeper horizons at 18,000 ft. That is Fangtooth that we drilled last year. That was the first deep horizon, this is 18,000 ft versus the majority of the discoveries in production at 15,000 ft, it's not that much deeper. Fangtooth came in. We're doing an appraisal of Fangtooth as we speak that hopefully we can give an update on our quarterly call at the end of January. We see a decent amount of potential at the deeper horizons for those sand channels that we already have at the 15,000 ft. You know, when we talk about resource duration, we've grown from one billion barrels of oil equivalent to 11 billion barrels of oil equivalent. You know, there are multi-billion barrels remaining. You know, the resource that Hess has and our joint venture has, when you were talking earlier with Jeff and Arjun about duration, I think we have one of the best hands in the industry about resource duration. You talk about, you know, managing the above ground political relationship. President Ali and Vice President Jagdeo have said many times in our discussions with them, "Guyana will honor the production sharing contract. We actually want you to go faster to develop our oil resources, so we can turn that into money. To really improve the lives of every Guyanese citizen have shared pro-economic prosperity for them. What the joint venture is doing, besides local hiring and employment, that Exxon is doing a great job, really building more jobs, creating more jobs from the industry and associated services related to that in Guyana. We just announced and have sanctioned a gas-to-energy project that is part of the production sharing contract but will take about $50 million a day of natural gas, give them low-cost electricity. Will save several times what they're paying now for their electric, That'll be, you know, a flagship social project that'll improve the lives of every Guyanese citizen in terms of their electric costs. That's certainly one of the social projects that we're doing. Hess, on its own, is also doing other work. you know, as you know, we've been doing a sustainability report since over 25 years, It's something that we didn't just start to do. It's part of our DNA. Social responsibility is one of our six core values. you know, we believe in investing in the communities where we do business to make a positive social impact that is sustainable. we've done that in and obviously Guyana is so important to us, you know, it's something that we really want to do. One of the things that we have done in partnership with Mount Sinai Hospital in New York, as well as the government, is form a strategic health partnership, to modernize the health in terms of primary preventative care, in and cardiology, and really upgrade the health system there. It's something that's very well supported by Mount Sinai, who is world-class doctors and staff, that have had experience doing this in other parts of the world, not just in New York City, and is something that the government obviously is working as a strategic partner on. That's something that we're doing. Recently, Hess announced with the government, it was in the middle of December, a carbon credits deal. Yeah. It's a key part of our commitment to net zero by 2050. 37.5 million tons of carbon credits, about $750 million to be spread pretty evenly between now and 2032. Most people don't realize how important stopping deforestation is. 130 countries in COP26 committed to stopping deforestation in 2030. About 20% of carbon emissions in the world come from deforestation and land degradation related to that, this is Hess' role in helping, you know, save the world's forests because keeping the carbon sinks we have are integral to the decarbonization commitment that the world has to have the global ambition to get to net zero by 2050. Those are some of the things we're doing. The most important thing is the commitment we've gotten from the President and Vice President, also the opposition party as well, that that contract that we have is gonna be honored. Actually, they want us to go faster to develop the resources so they can have the money to improve the economic prosperity of the country itself. Thank you, John. Umang? I wanna go back to the point which you made on resource. You talked a lot about the deeper zone potential. How prevalent is that zone across your acreage block in Stabroek? It's over the whole zone. You know, you have sand channels going through. You think of the Colorado River at 15,000 ft. You know, there are these sand channels that go. We're starting to see very similar seismic images and sand channels, and we verified it with, you know, some deep tests that we had from shallow drilling that we did. Fangtooth being a standalone at the deep, so we see a lot of prospectivity there. When I say there are multi-billion barrels remaining, there's a significant amount in terms of billions of barrels remaining potential in the deep. We're gonna be drilling some wells this year that will be further extensions of that. That makes sense. There's a lot of running room. Sounds like it could be a standalone discovery or it could be a tieback. It's either standalone or tieback. We think Fangtooth has the potential, subject to the appraisal, that we're drilling one well now, and another well later in the year, that Fangtooth itself could potentially be the seventh boat. Maybe talking about the cost side of the equation, any color you can provide on the inflation side of the equation... Sure. For the fifth project. I understand that most of it gets recovered through the production sharing agreement. Maybe you can talk about that as well. Yeah. You know, to remind everybody, the first four ships that we have sanctioned have a Brent breakeven to make 10%, between $25 and $35 a barrel. You know, what we have in Guyana are some of the best investment returns in the industry. And those, I would say, were I think is the best project manager, but also under budget, world-class performance, and they need to, you know, we need to tip the hat to them. I think they're, you know, protecting the interest of our joint venture, but also the interest of the country, in terms of being very capital-efficient. The first four ships were locked in during the low part of the cost cycle. To your point, Uaru, which we have a development plan, into the government right now, hopefully get the response to that by the end of March. There's some cost pressures there. I can't get ahead of that announcement, but I would say to give some guidance, you know, maybe the break-even cost per barrel will be at the upper end of that $25-$35 number that I talked about. In today's environment, still gonna be one of the best investment returns. You also have to remember that increased capital will go into the cost bank, and there's very quick recovery on that. The economics and returns are very attractive on the fifth ship as they were for the first four ships. Shifting gears a little bit, maybe talking about the Bakken. Yeah. Obviously, weather impacted most companies in North Dakota. What do you foresee is there gonna be the impact for Hess in the Bakken, because of all the weather challenges in that sector? Yeah. The specifics on that, we'll give you in the quarterly call, but I'll give some color and context. Look, the whole industry was impacted, nearly a week. We had, you know, 20 below Fahrenheit with a wind chill of 50 below. Inhumane condition. You can't put people out on work over rigs on that. I think going in zero would be tough enough. There's some impact there. You saw the industry was impacted, Hess was impacted, but it's short term. We probably got 80% of what was lost, recovered already, and that'll come back. I think the important thing for Hess, you know, our corporate guidance for the fourth quarter and the year, you know, we still can meet. The Bakken will be down some, but that's a temporary transitory event. You know, we're already on the road to recovery. It takes some time. You know, you got big snow drifts, you got wind, and you gotta get people back, you gotta get roads working, you gotta put people on the work over crews. There's a deferral of production, but it's a deferral. John, can you talk about getting to plateau in the Bakken? When do you think you get to 200,000 barrels a day? How long can you hold it for? Yeah. Just to give everybody context, we have gone up to a four-rig program. We're not going to a five-rig program, even though oil prices have been higher. We find that four-rig program optimizes our infrastructure. We don't have to make incremental investments. The infrastructure investment we've made in the Bakken is behind us now. There's some work that we do with our midstream, but it's incremental. Running at a four-rig rate, we actually have a 15-year inventory. Everybody talks about inventory life and duration and all that. I realize some of our competitors in the Bakken or in shale in the United States have probably on average a 10-year life. You know, we made a lot of investments over the years to build our acreage position in there, and we're benefiting from it now. We don't wanna do M&A to add to it. That 15-year life is, you know, what we see as optimal. Basically, in drilling those well locations out, we get from where we are now to about 200 a day in 2024. Then we look at holding it probably for the next eight to 10 years at that rate. The Bakken becomes a major cash annuity for us. We put about $1 billion in a year at the four- rig count, including our investment in infrastructure. Then, you know, we look at taking out, you know, at a $65, $60 WTI price, probably $1 billion a year once you've optimized that 200 a day. You gotta remember, and you know this, Neil, before COVID hit, we were at 200 a day. Yeah. We're just going back to where we were. Yeah. How about the Gulf of Mexico? Asia. You know, how does that fit into the portfolio? Yeah. They're both cash engines for the company, annuities for the company. They're both low cost, long life assets. The Gulf, you know, really when oil prices went down before COVID, we really pretty much shut down our activities there once we brought the Stampede project on. Now we're getting back to business. What the Gulf offers is low cost, high cash flow assets, and they need investment. We just brought a rig on contract that should come on, you know, hopefully by the end of the first quarter. That will drill some tiebacks, one near our, you know, our project that we have. We have an exploration project that is Green Canyon Block 69. It's called Huron. There's an offset there. We'll have 40% of it. That was a successful geologic well. We have to see aerial extent if it's gonna be commercial. That project's called Krypton. As we look ahead, there's probably another tieback that we have. We're gonna be doing two tiebacks in 2023, one greenfield. You know, that'll be a program for this year, and then we have some rig extensions that we could continue doing this. We're starting to put money back in the Gulf. In terms of Malaysia, what we have is, you know, an annuity that goes out to 2029, with what we have in the JDA, and then NMB a little past that. In the barrels a day equivalent, it's natural gas. We've invested there in two phases, Phase 3, Phase 4 in North Malay Basin. North Malay Basin is, you know, got an escalator, or index tied to oil, so it's got a reasonably high price right now, benefiting from the higher oil prices. The JDA has a deferral in its price calculation, but that's basically an annuity for us. We look at both the Gulf of Mexico and Malaysia's cash engines to complement the cash engine that we have in the Bakken. Guyana is not only a cash engine, it's also a growth engine. That makes a ton of sense. John, we're gonna talk about the macro for the last 15 minutes. Before we do, Umang, anything else on the asset side? One thing which publicized into the macro as well, I mean, there's a lot of debate about share productivity. Yeah. That share productivity is maturing, and we'll see declines going forward. Would love your thoughts about it. Do you see that as a concern for Hess in the Bakken, and your general views whether we will see more M&A because of that? I think there's a challenge for the industry. I don't know what Scott said, but I've heard Scott talk before. You know, the Tier 2 locations and tier three locations are moving forward, right? But what the industry is finding, and I can't talk to other companies, what we're finding is by changing the spacing and the basically frack intensity of the wells, we're getting IP180s and EURs comparable with our Tier 2 locations now, that we had with Tier 1. We're not seeing the degradation yet. Obviously, what we drill five years from now is gonna have more challenges in terms of EUR and IPs, which you're pointing out, but we're not seeing it yet. I think the industry's innovation and ability, and it also is a function of your real estate, right? The resource quality that you have. You know, when we say we have 15 years, we really have 15 years. But what the quality of the IP180s and also the EURs are five years from now, I think that's open for debate. That was a debate we had five years ago on the Tier 2s when it hit. So far we've been able to offset it with productivity. Obviously there's some inflation. Our inflation in the Bakken, you know, if you say the nominal rate is 12%-15%, our drill and complete costs are probably up 8% last year, 8% this year because Greg Hill and his operating team up there, the Bakken team have done a great job with lean manufacturing to offset some of the cost increases. You know, what does it really mean about shale? I think shale's got, you know, three sort of challenges or drivers ahead of it. I call them three Is. One is investor discipline, which we've talked about at this conference for years. Yep. It's newfound discipline that, you know, I'd say five years ago, people were saying here, you know, "Stop investing so much as an industry. You're making too much oil." Now the shoe's on the other foot. At the end of the day, you know, I think Arjun was talking about it as well, you know, it's the first time he's ever heard oil companies saying, "Well, we don't wanna grow." Well, okay, fine. Hess actually, because of the resource base we have, can offer 10% growth between what we have in the Bakken and what we have in Guyana. That's obviously industry leading. Some people say we're the only growth company left back in the business. When you look at it, you know, you have the investor discipline issue, you have the inflation issue, where the industry's running maxed out. I don't think it could run at a higher rate. You're talking about supply service companies as well. The third is inventory life and inventory quality. When you add it all up, you know, I think if the U.S. ever could get to the 13 million a day of overall U.S. oil production, that's gonna be a task. Maybe it gets to 13.5 this year. Maybe that number's 500 a day. Last year, it turned out to be 800 a day. There was a push at the end of the year, some well productivity, some increased well performance. When you add it all up, you know, I think shale has gone from the swing producer to just being part of the base load. It's gonna be important base load. Then, you know, to the point Neil was making, it's not just Hess plateauing in the Bakken. I think shale itself will plateau in the United States, 2025, 2026, and probably will run as a country 13 million-13.5 million a day and then it plateaus. I think people need to understand, as the world needs more oil and demand grows to your point on macro. Yeah. Shale will be important, but it's no longer the swing producer. I'd say OPEC's back in the driver's seat. Yeah, we have it plateauing probably at closer to 13.5. That would be lower than where I think a lot of folks would come out, and that would call for the need for international barrels for sure. Yes. That's a good pivot, John. For your perspective, you've done a great job of providing perspective on the oil markets during the dark times and. Right. O n the brighter times here as well. How are you thinking about this air pocket that we're kinda working through right now in Q1 around China, and how do you think about the reopening dynamic, has anything changed in your structural positive? Yeah. You know, when Jeff talked before, I think he hit the key points. I think the air pocket really started to hit in the third quarter and the fourth quarter of last year. First, high interest rates, high dollar, risk off, on financial assets. It wasn't just equities and growth equities. It was oil price. It was also oil equities. As you recall, oil went from about $120 a barrel down to $70 or $75 WTI during the second half of the year. I'd say that was the first air pocket. The second. Right now, oil prices are actually lower than they were a year ago. It's hard to believe with all the, you know, the inventory draws that we've had and the Russia-Ukraine crisis. The second issue talked about was China. I think China ended up being a big surprise that the lockdowns were lower for longer, even though that's coming back. Ultimately, you had Russia barrels that were supposed to be off the market that ended up most of them moving to China and India. At the end of the day, where we had eight quarters of inventory draws going back, I'd say to July of 2020, you know, the third quarter and fourth quarter ended up being inventory builds. Inventories globally in the world, probably 250 million barrels lower than pre-COVID levels, but not as tight as they were before 'cause they were closer to 300 looking that they were gonna to 400. I think as you look at 2023, even though we've had a warm winter and maybe there was 500,000 barrels a day to one million barrels a day of fuel switching that was gonna happen, Europe and Asia, from natural gas to oil for electric plants and industrial plants. As you look going into the second quarter and beyond, you know, we think China's gonna be good for 500,000 barrels a day to one million barrels a day growth because lockdowns are over. We think air travel, especially in China and Asia, is gonna go up. That's probably another 500,000 barrels a day. Then, you know, what's the Russia impact, especially with February 5th coming on products? That could be another. That's where the price cap comes in. That could be another 500,000 barrels a day. If shale grows 500 a day, there's gonna be a gap there. We see inventory draws starting to pull, probably second quarter and beyond. We're constructive on the oil price from here. Yeah. Does that change your view around hedging at all? You've left yourself more open to participate in the upside still? Yeah. Look, our financial priorities are clear. Invest in the high return projects, keep a strong balance sheet and cash position, you know, increase the base dividend. We don't believe for us, variable dividends make sense. We don't think it's reflected in the valuation of stocks, be they oil or otherwise. Ultimately, you know, return a capital program that we have for 75% of our free cash each year. The balance will go to share buybacks. We did $650 million last year. That's how we think of a financial priorities. Within that, the second priority of protecting the balance sheet and cash position, you know, we will continue to buy puts to protect the downside, but leave the upside for our investors. We haven't put those puts on now. You can assume that, you know, somewhere in this quarter, we'll put that downside protection on. We don't think the market's gonna run Yeah. At the end of the day, you know, we just think it's prudent, especially with our tax and royalty barrels in the United States, to have that downside protection because, you know, maybe the recession is gonna be worse than we think. Thank God we had those puts on during COVID. It was a lifeline for us because we basically had our oil hedged at $60. When oil prices went to minus $37, I'd see people, and they were sort of sheepish about coming, "John, are you okay?" I'd say, "We're okay." That's a life lesson. Insurance that we should be putting on every year. Some people say, "Well, the higher the prices, you should take the price risk because your balance sheet's stronger." I know you're not saying that, but some people say that. We don't agree with that. The higher the price goes, if anything, you should have more price insurance, not less. It's about risk management. I talked before, you know, putting money back in the Gulf, you know. Some of the things that we do, you know, we talk short cycle and long cycle. I think it's important to realize that, you know, the wells we're drilling, the first one I was trying to remember the name, Tubular Bells, the tieback that we have there. Those, you know, you get your money back in a year. They're very high returns. What we have in Guyana is high returns. The idea of unproductive capital or you sometimes have talked about, you know, having a long-dated resource. Yeah. When is it ever reflected? Hess is on the other side of the coin now. You know, when we make the investment in Guyana, it's three years from the investment decision to oil, coming on. I'd say that short cycle or the long cycle, obviously the tiebacks that we do either in the Bakken or in the Gulf, like Tubular Bells, that's very, very quick, return projects. Yeah. Let's talk a little bit about capital spend. It's again, unique for you because you get recovery on the vast majority of what you spend in Guyana. You, you've done a great job of kind of bridging the market to this already. You're gonna spend $2.7 billion this year in CapEx. Yes. We'll get m ore clarity. Yeah. But $3.7 billion or something like that. Correct. In 2023. Help us understand the moving pieces between, you know, A and B. Yeah. As we go into 2023, we'll have the official announcement, but John Reilly, our CFO, has talked about it on the last two conference calls. You know, we're guiding the market to $3.7 billion. It's a billion dollar increase. If you look at the $2.7 billion and you look at the $3.7 billion, at least 80% is for two major assets, Guyana and the Bakken. The Bakken's being driven by going from three rigs to four with some inflation. And Guyana's being driven by adding a third ship to the development queue. You already have Payara that should come on and it goes back to your earlier question, when does that come on? It comes on the end of 2023, but we're still doing construction. I think construction is 93% complete on that project. We have Yellowtail that's in queue coming on in 2025. Uaru, we're doing some pre-investment in it now. That's gonna be adding to our CapEx in 2023. The drivers of the CapEx increases are basically what we have in three ships being in development in Guyana and we have three of our six drilling rigs in Guyana going to exploration appraisal. That's just a constant program. There is some inflation in the numbers. You have the Bakken. You know, I mentioned before that we're taking a drilling rig on in the Gulf of Mexico. That's gonna be in part of the number of going to $3.7 billion. We will be drilling one well in offshore Newfoundland with BP as the operator, Chevron. We have 25% there. That's a one-off and, you know, if it's successful, we could potentially have another one billion barrels or more of discovered resource, and if not, we can walk away. Mm-hmm. It's partly, I'd say most of it's activity-driven, some of it's inflation driving it, but again, over 80% to the Bakken and Guyana itself. Yeah. I have more questions. Umang, go ahead. Sounds like you're investing a little bit more countercyclically here, right? Like towards good high return projects. Newfoundland, you talked about an exploration program there. How important is that exploration program to keep finding other discoveries outside Guyana to have a third leg of the, of the stool? Then maybe also, how do you think about the pace of developing Guyana? Like how quickly can you. Yes. Develop the Guyana resource? Yeah. I think, you know, design one, build many. As I said before, I think ExxonMobil is the best project manager in the business for these mega projects that we have as Guyana. I think one ship a year is about as fast as they can go. You know, when I first talked about this with Rex Tillerson and then with Darren Woods, they were very clear, and we're very aligned with them, what's the pace of our Guyana development, and it's to go as fast as we can without any leakage. When they say leakage, capital inefficiency, operating inefficiency. That cadence of 1 ship a year, and that means, you know, basically three ships a year in terms of our CapEx, with a ship coming on every year, that's about the right pace. You know, when you think about investment, Hess's investment is up, the industry investment is up, but we talked about this a bit yesterday. Yeah. Neil. I think the biggest challenge for the industry, this goes back to your talk with Jeff and Arjun, the oil industry actually should be investing at a higher rate than it is right now, and that's with the rate having gone up. You know, oil and gas are gonna be needed for decades to come. We talked about that, you know, very rosy pictures about, you know, the energy transition. It's gonna take longer, it's gonna cost more money, it's gonna need technologies don't exist. So, you know, we need to move forward with having oil and gas to have an affordable, just, and secure energy transition. You say, "Well, what does that mean in terms of investment levels?" You know, the IEA, I think, is about as good a resource as you can have in the World Energy Outlook that comes out the fourth quarter of every year. If you look at their three scenarios, including the net zero scenario, I think a reasonable estimate of what the oil and gas industry needs to invest each year, every year for the next 10 years is about $500 billion a year. That number the last five years was between $300 billion and $400 billion. The real issue going forward, you know, we can talk about the demand effects as we go into 2023. We have a structural supply deficit in the oil industry. The only way you're going to address that is to have consistent investment at a higher level than what we have now. This is an investor conference. I think this is something where we as industry leaders and investors and government officials have to come together to say, you know, do we wanna have affordable oil and gas for the transition, however long that transition is? You need more investment, even higher than what we have now. The same applies to clean energy. Clean energy, according to that World Energy Outlook, should be on a global basis $3 trillion-$4 trillion a year. Last year it was $1 trillion too. There's a huge investment challenge in the energy transition, where you need both conventional energy as oil and gas and new energy to work together to make sure the world has affordable energy. I think having, you know, sober eyes about that investment challenge is one of the most important messages we can give government officials and the public. John, you have a unique perspective on this 'cause you ran a refining business for a period of time. You tried renewable investments and clean energy investments, and what you found was pretty challenging. Yeah. What lessons should we as an investment community learn from your own experience around energy transition? Yeah. you know, Jim Collins has a way of saying, when you're making a new innovative investment, shoot bullets before you shoot cannonballs. I think, you know, plant some seeds. We had a fuel cell business called Nuvera, well-intended, hydrogen-based. It was very expensive. You needed a huge balance sheet. It was a cash sink. In that case, we avoided it being a cannonball by getting out of it. We've also had investments in solar farms, et cetera. I think you have to do things, especially if you're an oil company, incrementally, to plant some seeds, to see which of the bullets can become cannonballs. Just diving full in, I think a lot of money can be lost, and it remains to be seen how a lot of the innovative investments that I know are being talked about in clean energy, are gonna evolve. They're gonna need a lot of funding and strong balance sheets, and a lot of them won't work. That's why this approach of, you know, doing things incrementally to plant seeds as opposed to going whole hog is probably the right approach. Well, John, it was a great 2022. I wish you a wonderful 2023 and thank you so much for being here. Neil, grateful to be at the conference. Thank you. Thank you very much. Thank you.