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hes-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒

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

For the quarter ended March 31, 2022


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

For the transition period from to

Commission File Number 1-1204

HESS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE

(State or Other Jurisdiction of Incorporation or Organization)

13-4921002

(I.R.S. Employer Identification Number)

1185 AVENUE OF THE AMERICAS, NEW YORK, NY

(Address of Principal Executive Offices)

10036

(Zip Code)

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

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


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	HES	New York Stock Exchange

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

At March 31, 2022, there were 311,262,547 shares of Common Stock outstanding.

HESS CORPORATION

Form 10-Q

TABLE OF CONTENTS


Item No.		Page Number
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (Unaudited)
	Consolidated Balance Sheet at March 3 1 , 202 2 , and December 31, 202 1	2
	Statement of Consolidated Income for the Three Months Ended March 3 1 , 202 2 , and 202 1	3
	Statement of Consolidated Comprehensive Income for the Three Months Ended March 3 1 , 202 2 , and 202 1	4
	Statement of Consolidated Cash Flows for the Three Months Ended March 3 1 , 202 2 , and 202 1	5
	Statement of Consolidated Equity for the Three Months Ended March 3 1 , 202 2 , and 202 1	6
	Notes to Consolidated Financial Statements (Unaudited)	7
	Note 1 - Basis of Presentation	7
	Note 2 - Inventories	7
	Note 3 - Property, Plant and Equipment	7
	Note 4 - Hess Midstream LP	8
	Note 5 - Accrued Liabilities	8
	Note 6 - Debt	8
	Note 7 - Revenue	9
	Note 8 - Retirement Plans	9
	Note 9 - Weighted Average Common Shares	10
	Note 1 0 - Guarantees and Contingencies	10
	Note 1 1 - Segment Information	12
	Note 1 2 - Financial Risk Management Activities	13
	Note 1 3 - Subsequent Events	14

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
3.	Quantitative and Qualitative Disclosures about Market Risk	28
4.	Controls and Procedures	28

	PART II - OTHER INFORMATION
1.	Legal Proceedings	29
6.	Exhibits	30
	Signatures	31

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

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)


	March 31, 2022		December 31, 2021

	(In millions, except share amounts)
Assets
Current Assets:
Cash and cash equivalents	$	1,370	$	2,713
Accounts receivable:
From contracts with customers	1,388		1,062
Joint venture and other	136		149
Inventories	243		223
Other current assets	129		199
Total current assets	3,266		4,346
Property, plant and equipment:
Total — at cost	31,782		31,178
Less: Reserves for depreciation, depletion, amortization and lease impairment	17,293		16,996
Property, plant and equipment — net	14,489		14,182
Operating lease right-of-use assets — net	343		352
Finance lease right-of-use assets — net	140		144
Goodwill	360		360
Deferred income taxes	65		71
Post-retirement benefit assets	412		409
Other assets	723		651
Total Assets	$	19,798	$	20,515
Liabilities
Current Liabilities:
Accounts payable	$	312	$	220
Accrued liabilities	1,749		1,710
Taxes payable	129		528
Current portion of long-term debt	22		517
Current portion of operating and finance lease obligations	91		89
Total current liabilities	2,303		3,064
Long-term debt	7,934		7,941
Long-term operating lease obligations	381		394
Long-term finance lease obligations	195		200
Deferred income taxes	416		383
Asset retirement obligations	1,036		1,005
Other liabilities and deferred credits	485		502
Total Liabilities	12,750		13,489
Equity
Hess Corporation stockholders’ equity:
Common stock, par value $1.00; Authorized — 600,000,000 shares
Issued 311,262,547 shares (2021: 309,744,953)	311		310
Capital in excess of par value	6,083		6,017
Retained earnings	680		379
Accumulated other comprehensive income (loss)	(766)		(406)
Total Hess Corporation stockholders’ equity	6,308		6,300
Noncontrolling interests	740		726
Total Equity	7,048		7,026
Total Liabilities and Equity	$	19,798	$	20,515

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)


	Three Months Ended March 31,
	2022		2021

	(In millions, except per share amounts)
Revenues and Non-Operating Income
Sales and other operating revenues	$	2,313	$	1,898
Gains on asset sales, net	22		—
Other, net	36		21
Total revenues and non-operating income	2,371		1,919
Costs and Expenses
Marketing, including purchased oil and gas	682		518
Operating costs and expenses	313		265
Production and severance taxes	61		37
Exploration expenses, including dry holes and lease impairment	43		33
General and administrative expenses	110		94
Interest expense	123		117
Depreciation, depletion and amortization	337		396

Total costs and expenses	1,669		1,460
Income (Loss) Before Income Taxes	702		459
Provision (benefit) for income taxes	197		123
Net Income (Loss)	505		336
Less: Net income (loss) attributable to noncontrolling interests	88		84
Net Income (Loss) Attributable to Hess Corporation	$	417	$	252

Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic	$	1.35	$	0.82
Diluted	$	1.34	$	0.82
Weighted Average Number of Common Shares Outstanding:
Basic	308.9		305.8
Diluted	310.4		307.8
Common Stock Dividends Per Share	$	0.375	$	0.250

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended March 31,
	2022		2021

	(In millions)
Net Income (Loss)	$	505	$	336
Other Comprehensive Income (Loss):
Derivatives designated as cash flow hedges
Effect of hedge (gains) losses reclassified to income	92		51
Income taxes on effect of hedge (gains) losses reclassified to income	—		—
Net effect of hedge (gains) losses reclassified to income	92		51
Change in fair value of cash flow hedges	(455)		(102)
Income taxes on change in fair value of cash flow hedges	—		—
Net change in fair value of cash flow hedges	(455)		(102)
Change in derivatives designated as cash flow hedges, after taxes	(363)		(51)
Pension and other postretirement plans
(Increase) reduction in unrecognized actuarial losses	—		14
Income taxes on actuarial changes in plan liabilities	—		—
(Increase) reduction in unrecognized actuarial losses, net	—		14
Amortization of net actuarial losses	3		16
Income taxes on amortization of net actuarial losses	—		—
Net effect of amortization of net actuarial losses	3		16
Change in pension and other postretirement plans, after taxes	3		30
Other Comprehensive Income (Loss)	(360)		(21)
Comprehensive Income (Loss)	145		315
Less: Comprehensive income (loss) attributable to noncontrolling interests	88		84
Comprehensive Income (Loss) Attributable to Hess Corporation	$	57	$	231

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)


	Three Months Ended March 31,
	2022		2021

	(In millions)
Cash Flows From Operating Activities
Net income (loss)	$	505	$	336
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gains) on asset sales, net	(22)		—
Depreciation, depletion and amortization	337		396


Exploration lease and other impairment	6		4
Pension settlement loss	—		1
Stock compensation expense	33		25
Noncash (gains) losses on commodity derivatives, net	55		24
Provision (benefit) for deferred income taxes and other tax accruals	38		29
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(642)		(329)
(Increase) decrease in inventories	(20)		159
Increase (decrease) in accounts payable and accrued liabilities	81		(127)
Increase (decrease) in taxes payable	(399)		87
Changes in other operating assets and liabilities	(128)		(14)
Net cash provided by (used in) operating activities	(156)		591
Cash Flows From Investing Activities
Additions to property, plant and equipment - E&P	(491)		(358)
Additions to property, plant and equipment - Midstream	(55)		(27)
Proceeds from asset sales, net of cash sold	24		—

Net cash provided by (used in) investing activities	(522)		(385)
Cash Flows From Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less	1		(10)
Debt with maturities of greater than 90 days:
Borrowings	—		—
Repayments	(505)		(3)
Proceeds from sale of Class A shares of Hess Midstream LP	—		70
Payments on finance lease obligations	(2)		(2)
Cash dividends paid	(119)		(80)
Employee stock options exercised	33		12
Noncontrolling interests, net	(74)		(67)
Other, net	1		1
Net cash provided by (used in) financing activities	(665)		(79)
Net Increase (Decrease) in Cash and Cash Equivalents	(1,343)		127
Cash and Cash Equivalents at Beginning of Year	2,713		1,739
Cash and Cash Equivalents at End of Period	$	1,370	$	1,866

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED EQUITY (UNAUDITED)


	Common Stock		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Hess Stockholders' Equity		Noncontrolling Interests		Total Equity


For the Three Months Ended March 31, 2022
Balance at January 1, 2022	$	310	$	6,017	$	379	$	(406)	$	6,300	$	726	$	7,026
Net income (loss)	—		—		417		—		417		88		505
Other comprehensive income (loss)	—		—		—		(360)		(360)		—		(360)
Share-based compensation	1		66		—		—		67		—		67
Dividends on common stock	—		—		(116)		—		(116)		—		(116)
Noncontrolling interests, net	—		—		—		—		—		(74)		(74)
Balance at March 31, 2022	$	311	$	6,083	$	680	$	(766)	$	6,308	$	740	$	7,048
For the Three Months Ended March 31, 2021
Balance at January 1, 2021	$	307	$	5,684	$	130	$	(755)	5,366		$	969	$	6,335
Net income (loss)	—		—		252		—		252		84		336
Other comprehensive income (loss)	—		—		—		(21)		(21)		—		(21)
Share-based compensation	1		39		—		—		40		—		40
Dividends on common stock	—		—		(77)		—		(77)		—		(77)
Sale of Class A shares of Hess Midstream LP	—		56		—		—		56		41		97
Noncontrolling interests, net	—		—		—		—		—		(67)		(67)
Balance at March 31, 2021	$	308	$	5,779	$	305	$	(776)	$	5,616	$	1,027	$	6,643

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position at March 31, 2022 and December 31, 2021, the consolidated results of operations for the three months ended March 31, 2022 and 2021, and consolidated cash flows for the three months ended March 31, 2022 and 2021. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by generally accepted accounting principles (GAAP) in the United States have been condensed or omitted from these interim financial statements. These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021.

2. Inventories

Inventories consisted of the following:


	March 31, 2022		December 31, 2021

	(In millions)
Crude oil and natural gas liquids	$	83	$	52
Materials and supplies	160		171
Total Inventories	$	243	$	223

3. Property, Plant and Equipment

Capitalized Exploratory Well Costs:

The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves during the three months ended March 31, 2022 (in millions):


Balance at January 1, 2022	$	681
Additions to capitalized exploratory well costs pending the determination of proved reserves	120
Balance at March 31, 2022	$	801

In the first quarter, additions to capitalized exploratory well costs pending determination of proved reserves related to wells drilled on the Stabroek Block (Hess 30%), offshore Guyana and drilling at the Huron prospect (Hess 40%) in the Gulf of Mexico.

At March 31, 2022, exploratory well costs capitalized for greater than one year following completion of drilling of $467 million was comprised of the following:

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. In April 2022, the government of Guyana and the partners sanctioned the development of the Yellowtail Field, the fourth sanctioned project on the block. Approximately $90 million of capitalized exploratory well costs at March 31, 2022 related to the Yellowtail Field will be reclassified to wells, facilities and equipment in the second quarter of 2022. The operator plans further appraisal drilling on the Block and is conducting pre-development planning for additional phases of development.

Joint Development Area (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 relate to the 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.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4. Hess Midstream LP

At March 31, 2022, Hess Midstream LP (Hess Midstream), a variable interest entity that is fully consolidated by Hess Corporation, had liabilities totaling $2,668 million (December 31, 2021: $2,694 million) that 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 $3 million (December 31, 2021: $2 million), property, plant and equipment with a carrying value of $3,118 million (December 31, 2021: $3,125 million) and an equity-method investment in the Little Missouri 4 (LM4) gas processing plant of $97 million (December 31, 2021: $102 million).

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. The processing fees included in Operating costs and expenses in the Statement of Consolidated Income for the three months ended March 31, 2022 were $5 million (2021: $7 million).

In March 2021, Hess Midstream completed an underwritten public equity offering of 6.9 million Class A shares held by Hess and Global Infrastructure Partners (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 Hess Midstream Operations LP (HESM Opco), a consolidated subsidiary of Hess Midstream. 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's investment in HESM Opco.

5. Accrued Liabilities

Accrued Liabilities consisted of the following:


	March 31, 2022		December 31, 2021

	(In millions)
Accrued operating and marketing expenditures	$	589	$	462
Accrued capital expenditures	513		479
Accrued payments to royalty and working interest owners	255		253
Current portion of asset retirement obligations	204		185
Accrued interest on debt	100		138
Accrued compensation and benefits	70		124
Other accruals	18		69
Total Accrued Liabilities	$	1,749	$	1,710

6. Debt

In February 2022, we repaid the remaining $500 million outstanding under our $1 billion term loan previously scheduled to mature in March 2023.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. 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

Three Months Ended March 31, 2022
Sales of our net production volumes:
Crude oil revenue	$	836	$	226	$	31	$	146	$	1,239	$	—	$	—	$	1,239
Natural gas liquids revenue	181		—		—		—		181		—		—		181
Natural gas revenue	85		—		190		5		280		—		—		280
Sales of purchased oil and gas	660		4		—		35		699		—		—		699
Intercompany revenue	—		—		—		—		—		312		(312)		—
Total revenues from contracts with customers	1,762		230		221		186		2,399		312		(312)		2,399
Other operating revenues (b)	(58)		(15)		—		(13)		(86)		—		—		(86)
Total sales and other operating revenues	$	1,704	$	215	$	221	$	173	$	2,313	$	312	$	(312)	$	2,313
Three Months Ended March 31, 2021
Sales of our net production volumes:
Crude oil revenue	$	885	$	181	$	22	$	116	$	1,204	$	—	$	—	$	1,204
Natural gas liquids revenue	143		—		—		—		143		—		—		143
Natural gas revenue	113		—		163		3		279		—		—		279
Sales of purchased oil and gas	298		4		—		19		321		—		—		321
Intercompany revenue	—		—		—		—		—		289		(289)		—
Total revenues from contracts with customers	1,439		185		185		138		1,947		289		(289)		1,947
Other operating revenues (b)	(41)		(4)		—		(4)		(49)		—		—		(49)
Total sales and other operating revenues	$	1,398	$	181	$	185	$	134	$	1,898	$	289	$	(289)	$	1,898

(a)Other includes Libya and our interests in Denmark, which were sold in the third quarter of 2021.

(b)Includes gains (losses) on commodity derivatives.

There have been no significant changes to contracts with customers or composition thereof during the three months ended March 31, 2022. Generally, we receive payments from customers on a monthly basis, shortly after the physical delivery of the crude oil, natural gas liquids, or natural gas. At March 31, 2022, contract liabilities of $24 million (December 31, 2021: $24 million) resulted from a take-or-pay deficiency payment received in the fourth quarter of 2021 that is subject to a make-up period expiring in December 2023. At March 31, 2022 and December 31, 2021, there were no contract assets.

8. Retirement Plans

Components of net periodic benefit cost consisted of the following:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Service cost	$	13	$	14
Interest cost (a)	16		14
Expected return on plan assets (a)	(53)		(50)
Amortization of unrecognized net actuarial losses (a)	3		15
Settlement loss (a)	—		1
Net periodic benefit cost (income) (a)	$	(21)	$	(6)

(a) Net non-service cost included in Other, net in the Statement of Consolidated Income for the three months ended March 31, 2022 was income of $34 million (2021: income of $20 million).

In 2022, we expect to contribute approximately $45 million to our funded pension plans.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. Weighted Average Common Shares

The Net income (loss) and weighted average number of common shares used in the basic and diluted earnings per share computations were as follows:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Net income (loss) attributable to Hess Corporation:
Net income (loss)	$	505	$	336
Less: Net income (loss) attributable to noncontrolling interests	88		84
Net income (loss) attributable to Hess Corporation	$	417	$	252
Weighted average number of common shares outstanding:
Basic	308.9		305.8
Effect of dilutive securities
Restricted common stock	0.7		0.8
Stock options	0.6		0.4
Performance share units	0.2		0.8
Diluted	310.4		307.8

The following table summarizes the number of antidilutive shares excluded from the computation of diluted shares:


	Three Months Ended March 31,
	2022	2021
Restricted common stock	97	189,000
Stock options	75,413	1,164,214
Performance share units	31,352	36,134

During the three months ended March 31, 2022, we granted 562,530 shares of restricted stock (2021: 695,832), 178,008 performance share units (2021: 205,155) and 269,748 stock options (2021: 319,295).

10. 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 methyl tertiary butyl ether (MTBE) in gasoline. A series of similar lawsuits, many involving water utilities or governmental entities, were filed in jurisdictions across the United States (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.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In September 2003, we received a directive from the New Jersey Department of Environmental Protection (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 Environmental Protection Agency (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. Since 2016, the EPA has issued a Record of Decision (ROD) selecting a dredge and cap remedy for both the lower eight miles and the upper nine miles of the Lower Passaic River at an estimated cost of approximately $1.82 billion. The ROD does not address 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 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 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.

Hess Corporation and its subsidiary HONX, Inc. have also been named as defendants in various personal injury claims alleging exposure to asbestos and/or other alleged toxic substances while working at a former refinery (owned and operated by subsidiaries or related entities) located in St. Croix, U.S. Virgin Islands. HONX, Inc. has initiated a Chapter 11 § 524G process to resolve these asbestos-related claims. While the ultimate outcome and impact to us cannot be predicted with certainty, we believe that the resolution of these proceedings will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 and working interest 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.

11. Segment Information

We currently have two operating segments, Exploration and Production and Midstream. All unallocated costs are reflected under Corporate, Interest and Other. The following table presents operating segment financial data:


	Exploration and Production		Midstream		Corporate, Interest and Other		Eliminations		Total

	(In millions)
For the Three Months Ended March 31, 2022
Sales and Other Operating Revenues - Third parties	$	2,313	$	—	$	—	$	—	$	2,313
Intersegment Revenues	—		312		—		(312)		—
Sales and Other Operating Revenues	$	2,313	$	312	$	—	$	(312)	$	2,313

Net Income (Loss) attributable to Hess Corporation	$	460	$	72	$	(115)	$	—	$	417
Depreciation, Depletion and Amortization	292		45		—		—		337
Provision (Benefit) for Income Taxes	192		5		—		—		197
Capital Expenditures	543		37		—		—		580
For the Three Months Ended March 31, 2021
Sales and Other Operating Revenues - Third parties	$	1,898	$	—	$	—	$	—	$	1,898
Intersegment Revenues	—		289		—		(289)		—
Sales and Other Operating Revenues	$	1,898	$	289	$	—	$	(289)	$	1,898

Net Income (Loss) attributable to Hess Corporation	$	308	$	75	$	(131)	$	—	$	252
Depreciation, Depletion and Amortization	355		40		1		—		396
Provision (Benefit) for Income Taxes	120		3		—		—		123
Capital Expenditures	280		23		—		—		303

Identifiable assets by operating segment were as follows:


	March 31, 2022		December 31, 2021

	(In millions)
Exploration and Production	$	14,403	$	14,173
Midstream	3,651		3,671
Corporate, Interest and Other	1,744		2,671
Total	$	19,798	$	20,515

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. 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. 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 or swaps may also be used to purchase certain currencies in which we conduct business with the intent of reducing exposure to foreign currency fluctuations. At March 31, 2022, these instruments relate to the British Pound 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:


	March 31, 2022		December 31, 2021

	(In millions)
Commodity - crude oil hedge contracts (millions of barrels)	41.3		54.8

Foreign exchange forwards	$	156	$	145
Interest rate swaps	$	100	$	100

At December 31, 2021, we had hedged 90,000 barrels of oil per day (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 for calendar 2022. In the first quarter of 2022, we purchased WTI and Brent call options to remove the ceiling price on our price collars for the period April 1, 2022 through December 31, 2022 for $325 million. As a result, during this period, we are able to realize average monthly WTI and Brent selling prices above $100 per barrel and $105 per barrel, respectively, to the extent that market prices at the time exceed these thresholds. The WTI $60 per barrel put options and the Brent $65 per barrel put options that established the floor price in our collars remain outstanding for 90,000 bopd and 60,000 bopd, respectively, through December 31, 2022.

The table below reflects the fair values of risk management derivative instruments.


	Assets		Liabilities

	(In millions)
March 31, 2022
Derivative Contracts Designated as Hedging Instruments:
Crude oil put options	$	64	$	—
Interest rate swaps	—		(2)
Total derivative contracts designated as hedging instruments	64		(2)
Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards and swaps	—		—
Total derivative contracts not designated as hedging instruments	—		—
Gross fair value of derivative contracts	64		(2)
Gross amounts offset in the Consolidated Balance Sheet	—		—
Net Amounts Presented in the Consolidated Balance Sheet	$	64	$	(2)
December 31, 2021
Derivative Contracts Designated as Hedging Instruments:
Crude oil collars	$	155	$	—
Interest rate swaps	2		—
Total derivative contracts designated as hedging instruments	157		—
Derivative Contracts Not Designated as Hedging Instruments:
Foreign exchange forwards and swaps	—		(1)
Total derivative contracts not designated as hedging instruments	—		(1)
Gross fair value of derivative contracts	157		(1)
Gross amounts offset in the Consolidated Balance Sheet	—		—
Net Amounts Presented in the Consolidated Balance Sheet	$	157	$	(1)

At March 31, 2022 and December 31, 2021, the fair value of our crude oil hedge contracts is presented within Other current assets and the fair value of our foreign exchange forwards and swaps is presented within Accrued liabilities in our Consolidated

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Balance Sheet. The fair value of our interest rate swaps is presented within Other liabilities and deferred credits at March 31, 2022 and within Other assets at December 31, 2021 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 derivatives designated as cash flow hedges: Crude oil hedging contracts decreased Sales and other operating revenues by $92 million in the three months ended March 31, 2022 (2021 Q1: decreased by $51 million). At March 31, 2022, pre-tax deferred losses in Accumulated other comprehensive income (loss) related to outstanding crude oil hedging contracts were $433 million ($433 million after income taxes), all of which will be reclassified into earnings during the remainder of 2022 as the hedged crude oil sales are recognized in earnings.

Interest rate swaps designated as fair value hedges: We had interest rate swaps with gross notional amounts totaling $100 million at March 31, 2022 and December 31, 2021, that convert 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 the three months ended March 31, 2022, the change in fair value of interest rate swaps was a decrease of $4 million (2021 Q1: decrease of $1 million) with a corresponding adjustment in the carrying value of the hedged fixed-rate debt.

Derivative contracts not designated as hedging instruments:

Foreign exchange: Foreign exchange gains and losses, which are reported in Other, net in Revenues and non-operating income in the Statement of Consolidated Income, were nil in the three months ended March 31, 2022 (2021 Q1: losses of $1 million). A component of foreign exchange gains and losses is the result of foreign exchange derivative contracts that are not designated as hedges, which amounted to net gains of $4 million in the three months ended March 31, 2022 (2021 Q1: losses of $1 million).

Fair Value Measurement:

At March 31, 2022, our total long-term debt, which was substantially comprised of fixed-rate debt instruments, had a carrying value of $7,956 million and a fair value of $8,801 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 March 31, 2022 and December 31, 2021.

13. Subsequent Events

In April 2022, Hess Corporation received total proceeds of $346 million related to two Hess Midstream equity transactions. During the month, Hess Midstream completed a public offering of approximately 10.2 million Hess Midstream Class A shares held by Hess Corporation and GIP. We received net proceeds of $146 million from the public offering. Concurrent with the public offering, HESM Opco repurchased approximately 13.6 million HESM Opco Class B units from Hess Corporation and GIP for $400 million, of which we received net proceeds of $200 million. The purchase was financed by HESM Opco's issuance of $400 million of 5.500% senior unsecured notes due 2030. As a result of these transactions, our ownership in Hess Midstream, on a consolidated basis, decreased from approximately 43.5% at March 31, 2022 to approximately 41.0%.

PART I - FINANCIAL INFORMATION (CONT'D.)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the unaudited consolidated financial statements and accompanying footnotes for the quarter ended March 31, 2022 included under Item 1. Financial Statements of this Form 10-Q and the audited consolidated financial statements and related notes included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021.

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 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, with production capacity of approximately 120,000 gross bopd, completed production optimization work in April that expanded its production capacity to more than 140,000 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 by the third quarter. A third development, Payara, was sanctioned in the third quarter of 2020 and is expected to achieve first production in late 2023 with production capacity of approximately 220,000 gross bopd. A fourth development, Yellowtail, was sanctioned in April 2022 and is expected to achieve first production in 2025, with production capacity of approximately 250,000 gross bopd. We currently plan to have six floating production, storage and offloading vessels (FPSO) 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 provides fee-based services, including gathering, compressing and processing natural gas and fractionating natural gas liquids (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.

First Quarter Highlights and 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 in March 2022, we announced a 50% increase in our first quarter dividend on common stock. Excluding our Midstream segment, we ended the first quarter of 2022 with approximately $1.37 billion in cash and cash equivalents.

Oil and gas net production in 2022, excluding Libya, is forecast to be at the low end of the range of 325,000 barrels of oil equivalent per day (boepd) to 330,000 boepd reflecting our initial assessment of the impact from severe weather in North Dakota in April. For the remainder of 2022, we have WTI put options for 90,000 bopd with an average monthly floor price of $60 per barrel and Brent put options for 60,000 bopd with an average monthly floor price of $65 per barrel.

Our E&P capital and exploratory expenditures guidance for 2022 is approximately $2.6 billion. We are considering adding a fourth rig in the Bakken in the second half of this year which could add up to $100 million to our 2022 capital spend, and we also expect industry cost inflation to potentially increase capital spend by $80 million to $100 million for this year, including higher drilling and completion costs in the Bakken that we now expect to average approximately $6.2 million per well, or 7% above last year.

First Quarter Results

In the first quarter of 2022, net income was $417 million, compared with net income of $252 million in the first quarter of 2021. Excluding items affecting comparability of earnings between periods detailed on page 23, adjusted net income was $404 million in the first quarter of 2022. The improvement in first quarter 2022 adjusted after-tax earnings compared to the prior-year quarter primarily reflects higher realized selling prices, partially offset by lower sales volumes.

PART I - FINANCIAL INFORMATION (CONT'D.)

Exploration and Production Results

In the first quarter of 2022, E&P had net income of $460 million compared with net income of $308 million in the first quarter of 2021. Total net production, excluding Libya, averaged 276,000 boepd in the first quarter 2022, compared with 315,000 boepd in the first quarter of 2021, or 304,000 boepd pro forma for assets sold. The average realized crude oil selling price, including hedging, was $86.75 per barrel in the first quarter of 2022, compared with $50.02 per barrel in the first quarter of 2021. The average realized NGL selling price in the first quarter of 2022 was $39.79 per barrel, compared with $29.49 per barrel in the prior-year quarter, while the average realized natural gas selling price was $5.28 per thousand cubic feet (mcf) in the first quarter of 2022, compared with $4.90 per mcf in the first quarter of 2021.

The following is an update of our ongoing E&P activities:

•In North Dakota, net production from the Bakken averaged 152,000 boepd for the first quarter of 2022 (2021 Q1: 158,000 boepd). Our former Little Knife and Murphy Creek nonstrategic acreage interests that were sold in the second quarter 2021 contributed net production of approximately 5,000 boepd in the first quarter of 2021. We operated three rigs, drilled 19 wells, completed 16 wells, and brought 13 new wells online during the first quarter of 2022. We forecast net production to be in the range of 140,000 boepd and 145,000 boepd for the second quarter of 2022 and at the low end of the range of 160,000 boepd and 165,000 boepd for the full year 2022 reflecting our initial assessment of the impact from severe weather in April.

•In the Gulf of Mexico, net production for the first quarter of 2022 averaged 30,000 boepd (2021 Q1: 56,000 boepd), primarily reflecting field decline and unplanned downtime at the Baldpate, Penn State, and Llano fields. In February, we spud an exploration well at the Huron prospect (Hess 40%) located at Green Canyon Block 69. Well results are anticipated in the second quarter.

•At the Stabroek Block (Hess 30%), offshore Guyana, net production totaled 30,000 bopd for the first quarter of 2022 (2021 Q1: 31,000 bopd). In February 2022, production commenced from the Liza Unity FPSO and contributed 7,000 net bopd in the first quarter of 2022.

The Liza Destiny FPSO, recently completed production optimization work initiated in March 2022 that expanded its production capacity to more than 140,000 gross bopd, from 120,000 gross bopd previously. It is expected to reach its full capacity of more than 140,000 bopd in the second quarter. The Liza Unity FPSO is expected to reach its production capacity of approximately 220,000 gross bopd by the third quarter. In the first quarter we sold approximately 2.3 million barrels of oil from Guyana and expect to have 7 one-million barrel liftings in the second quarter and 8 one-million barrel liftings in both the third and fourth quarters.

The third development, Payara, will utilize the Prosperity FPSO with an expected capacity of 220,000 gross bopd. The project is progressing ahead of schedule with first production now expected in late 2023. In April 2022, we announced the final investment decision was made to proceed with development of the Yellowtail Field on the Stabroek Block after the development plan received approval from the government of Guyana. Yellowtail, the largest development thus far on the Block, will utilize the ONE GUYANA FPSO, which is expected to have a production capacity of up to 250,000 gross bopd with first production expected in 2025. Six drill centers are planned with up to 26 production wells and 25 injection wells.

In April, we announced discoveries at Barreleye, Lukanani, and Patwa. The Barreleye-1 well encountered approximately 230 feet of hydrocarbon bearing sandstone reservoirs of which approximately 52 feet is high quality oil bearing. The well was drilled in 3,840 feet of water and is located approximately 20 miles southeast of the Liza Field. The Lukanani-1 well encountered 115 feet of hydrocarbon bearing sandstone reservoirs of which approximately 76 feet is high quality oil bearing. The well was drilled in water depth of 4,068 feet and is located in the southeastern part of the Block, approximately 2 miles west of the Pluma discovery. The Patwa-1 well encountered 108 feet of hydrocarbon bearing sandstone reservoirs. The well was drilled in 6,315 feet of water and is located approximately 3 miles northwest of the Cataback-1 discovery.

•In the Gulf of Thailand, net production from Block A-18 of the JDA averaged 38,000 boepd for the first quarter of 2022 (2021 Q1: 37,000 boepd), including contribution from unitized acreage in Malaysia, while net production from North Malay Basin, offshore Peninsular Malaysia, averaged 26,000 boepd for the first quarter of 2022 (2021 Q1: 27,000 boepd).

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations

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


	Three Months Ended March 31,
	2022		2021

	(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess Corporation:
Exploration and Production	$	460	$	308
Midstream	72		75
Corporate, Interest and Other	(115)		(131)
Total	$	417	$	252
Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic	$	1.35	$	0.82
Diluted	$	1.34	$	0.82

Items Affecting Comparability of Earnings Between Periods

The following table summarizes, on an after-tax basis, items of income (expense) that are included in net income (loss) and affect comparability of earnings between periods:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Items Affecting Comparability of Earnings Between Periods, After-Tax:
Exploration and Production	$	—	$	—
Midstream	—		—
Corporate, Interest and Other	13		—
Total	$	13	$	—

The items in the table above are explained on page 23.

Reconciliations of GAAP and non-GAAP measures

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


	Three Months Ended March 31,
	2022		2021

	(In millions)
Adjusted Net Income (Loss) Attributable to Hess Corporation:
Net income (loss) attributable to Hess Corporation	$	417	$	252
Less: Total items affecting comparability of earnings between periods, after-tax	13		—
Adjusted Net Income (Loss) Attributable to Hess Corporation	$	404	$	252

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:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Net cash provided by operating activities before changes in operating assets and liabilities:
Net cash provided by (used in) operating activities	$	(156)	$	591
Changes in operating assets and liabilities	1,108		224
Net cash provided by (used in) operating activities before changes in operating assets and liabilities	$	952	$	815

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

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 page 23. 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 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.

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.

Comparison of Results

Exploration and Production

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


	Three Months Ended March 31,
	2022		2021

	(In millions)
Revenues and Non-Operating Income
Sales and other operating revenues	$	2,313	$	1,898

Other, net	33		16
Total revenues and non-operating income	2,346		1,914
Costs and Expenses
Marketing, including purchased oil and gas	703		542
Operating costs and expenses	251		208
Production and severance taxes	61		37
Midstream tariffs	287		262
Exploration expenses, including dry holes and lease impairment	43		33
General and administrative expenses	57		49
Depreciation, depletion and amortization	292		355

Total costs and expenses	1,694		1,486
Results of Operations Before Income Taxes	652		428
Provision (benefit) for income taxes	192		120
Net Income (Loss) Attributable to Hess Corporation	$	460	$	308

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, depreciation, depletion and amortization, exploration expenses and income taxes, as discussed below.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Selling Prices: Higher realized selling prices in the first quarter of 2022, increased after-tax earnings by approximately $430 million compared to the same period in 2021. Average selling prices were as follows:


	Three Months Ended March 31,
	2022		2021

Average Selling Prices (a)
Crude Oil – Per Barrel (Including Hedging)
United States
North Dakota (b)	$	84.77	$	44.97
Offshore	85.17		53.03
Total United States	84.85		46.73
Guyana	90.90		60.37
Malaysia and JDA	89.27		63.27
Other (c)	90.91		57.66
Worldwide	86.75		50.02
Crude Oil – Per Barrel (Excluding Hedging)
United States
North Dakota (b)	$	91.55	$	47.62
Offshore	91.52		56.53
Total United States	91.54		49.56
Guyana	99.76		61.85
Malaysia and JDA	89.27		63.27
Other (c)	101.04		59.61
Worldwide	94.04		52.52
Natural Gas Liquids – Per Barrel
United States
North Dakota	$	39.88	$	30.32
Offshore	37.48		21.25
Worldwide	39.79		29.49
Natural Gas – Per Mcf
United States
North Dakota	$	4.32	$	5.93
Offshore	4.46		2.95
Total United States	4.35		4.78
Malaysia and JDA	5.81		5.04
Other (c)	4.79		2.69
Worldwide	5.28		4.90

(a)Selling prices in the United States and Guyana are adjusted for certain processing and distribution fees included in Marketing expenses. Excluding these fees worldwide selling prices for the first quarter of 2022 would be $91.18 (Q1 2021: $56.54) per barrel for crude oil (including hedging), $98.47 (Q1 2021: $59.04) per barrel for crude oil (excluding hedging), $39.98 (Q1 2021: $29.73) per barrel for NGLs and $5.39 (Q1 2021: $5.02) per mcf for natural gas.

(b)Excluding the two VLCC cargo sales totaling 4.2 million barrels, the first quarter 2021 North Dakota crude oil price excluding hedging was $53.30 per barrel and $49.73 per barrel including hedging.

(c)Other includes Libya and our former interests in Denmark, which were sold in the third quarter of 2021.

Crude oil hedging activities were a net loss of $92 million before and after income taxes in the first quarter of 2022, and a net loss of $51 million before and after income taxes in the first quarter of 2021. For the remainder of 2022, we have hedged 90,000 bopd with WTI put options with an average monthly floor price of $60 per barrel, and 60,000 bopd with Brent put options with an average monthly floor price of $65 per barrel. We expect noncash premium amortization, which will be reflected in realized selling prices, to reduce our second, third and fourth quarter results each by approximately $165 million.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

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


	Three Months Ended March 31,
	2022		2021

	(In thousands)
Crude Oil – Barrels
United States
North Dakota	77		84
Offshore	22		36
Total United States	99		120
Guyana	30		31
Malaysia and JDA	3		4
Other (a)	19		22
Total	151		177
Natural Gas Liquids – Barrels
United States
North Dakota	49		49
Offshore	1		4
Total United States	50		53
Natural Gas – Mcf
United States
North Dakota	158		151
Offshore	43		95
Total United States	201		246
Malaysia and JDA	364		360
Other (a)	12		11
Total	577		617
Barrels of Oil Equivalent (b)	297		333

Crude oil and natural gas liquids as a share of total production	68	%	69	%

(a)Other includes Libya and our former interests in Denmark, which were sold in the third quarter of 2021. Net production from Libya was 21,000 boepd in the first quarter of 2022 compared with 18,000 boepd in the first quarter of 2021. Net production from Denmark was 6,000 boepd in the first quarter of 2021.

(b)Reflects natural gas production converted based on relative energy content (six mcf equals one barrel). 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. In addition, NGLs do not sell at prices equivalent to crude oil. See the average selling prices in the table on page 19.

We forecast net production, excluding Libya, to be approximately 310,000 boepd for the second quarter and at the low end of the range of 325,000 boepd to 330,000 boepd for the full year 2022 reflecting our initial assessment of the impact from severe weather in North Dakota in April.

United States: North Dakota net production was lower in the first quarter of 2022, compared to the year-ago quarter, primarily due to the sale of Little Knife and Murphy Creek nonstrategic acreage interests in the second quarter of 2021, which contributed net production of approximately 5,000 boepd in the first quarter of 2021. Total offshore net production was lower in the first quarter of 2022, compared to the year-ago quarter, primarily due to field decline and unplanned downtime at the Baldpate, Penn State, and Llano fields.

International: Net production in Guyana was lower in the first quarter of 2022 by 1,000 bopd, compared to the year-ago quarter, due to the planned downtime on the Liza Destiny FPSO for production optimization work in the first quarter of 2022. In February 2022, production commenced from the Liza Unity FPSO and averaged 7,000 net bopd in the first quarter of 2022.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Sales Volumes: Lower sales volumes in the first quarter of 2022, reduced after-tax earnings by approximately $260 million compared to the same period in 2021. 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:


	Three Months Ended March 31,
	2022	2021

	(In thousands)
Crude oil – barrels (a)	12,580	20,395
Natural gas liquids – barrels	4,539	4,802
Natural gas – mcf	51,898	55,513
Barrels of Oil Equivalent (b)	25,769	34,449
Crude oil – barrels per day	140	227
Natural gas liquids – barrels per day	50	53
Natural gas – mcf per day	577	617
Barrels of Oil Equivalent Per Day (b)	286	383

(a)Sales volumes for the first quarter of 2021 include 4.2 million barrels that were produced and stored on VLCCs during 2020.

Marketing, including Purchased Oil and Gas: 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 the first quarter of 2022, compared with the corresponding period in 2021, primarily due to higher third party crude oil volumes purchased and prices paid for purchased volumes. First quarter 2021 marketing expense 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 the first quarter of 2021.

Cash Operating Costs: Cash operating costs consist of operating costs and expenses, production and severance taxes and E&P general and administrative expenses. Cash operating costs increased in the first quarter of 2022 compared with the corresponding period in 2021, primarily due to production commencing in February at Liza Phase 2 in Guyana and higher production and severance taxes associated with higher crude oil prices. On a per-unit basis, cash operating costs in the first quarter of 2022 reflect the higher costs and the impact of the lower production volumes compared with the corresponding period in 2021.

Midstream Tariffs Expense: Tariffs expense increased in the first quarter of 2022, compared with the corresponding period in 2021, primarily due to higher minimum volume commitments. We estimate Midstream tariffs expense to be in the range of $290 million and $300 million in the second quarter of 2022 and in the range of $1,190 million and $1,215 million for the full year 2022.

Depreciation, Depletion and Amortization (DD&A): DD&A expense was lower in the first quarter of 2022, compared with the corresponding period in 2021, primarily due to lower production volumes and lower DD&A rates resulting from year-end 2021 additions to proved reserves.

Unit Costs: Unit cost per boe information is based on total net production volumes. Actual and forecast unit costs per boe are as follows:


	Actual				Forecast range (a)
	Three Months Ended March 31,					Three Months Ended June 30,	Twelve Months Ended December 31,
	2022		2021				2022	2022
Cash operating costs (b)	$	13.79	$	9.81			$15.00 — $15.50	$13.50 — $14.00
DD&A (c)	10.96		11.83				12.00 — 12.50	11.50 — 12.50
Total Production Unit Costs	$	24.75	$	21.64			$27.00 — $28.00	$25.00 — $26.50

(a)Forecast information excludes any contribution from Libya.

(b)Cash operating costs per boe, excluding Libya, were $14.54 in the first quarter of 2022, compared with $10.21 in the first quarter of 2021.

(c)DD&A per boe, excluding Libya, was $11.54 in the first quarter of 2022, compared with $12.36 in the first quarter of 2021.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Exploration Expenses: Exploration expenses were as follows:


	Three Months Ended March 31,
	2022		2021

	(In millions)

Exploration lease and other impairment	$	6	$	4
Geological and geophysical expense and exploration overhead	37		29
Total Exploration Expense	$	43	$	33

Exploration expenses, excluding dry hole expense, are estimated to be in the range of $35 million to $40 million in the second quarter of 2022 and in the range of $170 million and $180 million for the full year 2022.

Income Taxes:

E&P income tax expense was $192 million in the first quarter of 2022 and $120 million in the first quarter of 2021. The increase in income tax expense was primarily due to higher pre-tax income in Libya. Income tax expense from Libya operations was $154 million in first quarter of 2022 compared with $80 million in first quarter of 2021. We are generally not recognizing deferred tax benefit or expense in certain countries, primarily the U.S. (non-Midstream), 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. Excluding items affecting comparability of earnings between periods and Libyan operations, E&P income tax expense is expected to be in the range of $135 million to $140 million for the second quarter of 2022 and in the range of $460 million and $470 million for the full year 2022.

Midstream

Following is a summarized income statement for our Midstream operations:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Revenues and Non-Operating Income
Sales and other operating revenues	$	312	$	289
Other, net	1		3
Total revenues and non-operating income	313		292
Costs and Expenses
Operating costs and expenses	66		60
General and administrative expenses	6		7
Interest expense	31		23
Depreciation, depletion and amortization	45		40
Total costs and expenses	148		130
Results of Operations Before Income Taxes	165		162
Provision (benefit) for income taxes	5		3
Net Income (Loss)	160		159
Less: Net income (loss) attributable to noncontrolling interests	88		84
Net Income (Loss) Attributable to Hess Corporation	$	72	$	75

Sales and other operating revenues for the first quarter of 2022 increased, compared to the prior-year quarter, primarily associated with higher minimum volume commitments.

Operating costs and expenses for the first quarter of 2022 increased, compared to the prior-year quarter, primarily due to higher rail transportation costs. DD&A expense for the first quarter of 2022 increased, compared to the prior-year quarter, primarily due to additional assets placed in service. Interest expense for the first quarter of 2022 increased, compared to the prior-year quarter, primarily due to the $750 million of 4.250% fixed-rate senior unsecured notes issued in August 2021.

Excluding items affecting comparability of earnings, net income attributable to Hess Corporation from the Midstream segment is estimated to be in the range of $60 million and $65 million in the second quarter of 2022 and in the range of $265 million and $275 million for the full year 2022.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Corporate, Interest and Other

The following table summarizes Corporate, Interest and Other expenses:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Corporate and other expenses	$	36	$	37
Interest expense	92		94
Corporate, Interest and Other expenses before income taxes	128		131
Provision (benefit) for income taxes	—		—
Net Corporate, Interest and Other expenses after income taxes	128		131
Items affecting comparability of earnings between periods, after-tax	(13)		—
Total Corporate, Interest and Other Expenses after income taxes	$	115	$	131

Second quarter 2022 corporate expenses are expected to be approximately $30 million and in the range of $120 million and $130 million for the full year 2022. Interest expense is expected to be in the range of $85 million to $90 million for the second quarter and in the range of $345 million and $355 million for the full year 2022.

Items Affecting Comparability of Earnings Between Periods: First quarter 2022 results included a pre-tax gain of $22 million ($22 million after income taxes) associated with the sale of property and a charge of $9 million ($9 million after income taxes) for litigation related to our former downstream business.

Other Items Potentially Affecting Future Results

Our future results may be impacted by a variety of factors, including but not limited to, volatility in the selling prices of crude oil, NGLs and natural gas, reserve and production changes, asset sales, impairment charges and exploration expenses, industry cost inflation and/or deflation, changes in foreign exchange rates and income tax rates, changes in deferred tax asset valuation allowances, the effects of weather, crude oil storage capacity, political risk, environmental risk and catastrophic risk, including risks associated with the global COVID-19 pandemic (COVID-19). For a more comprehensive description of the risks that may affect our business, see Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021.

Liquidity and Capital Resources

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


	March 31, 2022			December 31, 2021

	(In millions, except ratio)
Cash and cash equivalents (a)	$	1,370		$	2,713
Current portion of long-term debt	22			517
Total debt (b)	7,956			8,458
Total equity	7,048			7,026
Debt to capitalization ratio for debt covenants (c)	40.2		%	42.3		%

(a)Includes $4 million of cash attributable to our Midstream segment at March 31, 2022 (December 31, 2021: $2 million) of which, $3 million is held by Hess Midstream LP at March 31, 2022 (December 31, 2021: $2 million).

(b)At March 31, 2022, includes $2,561 million of debt outstanding from our Midstream segment (December 31, 2021: $2,564 million) that is non-recourse to Hess Corporation.

(c)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.

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Cash Flows

The following table summarizes our cash flows:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Net cash provided by (used in):
Operating activities	$	(156)	$	591
Investing activities	(522)		(385)
Financing activities	(665)		(79)
Net Increase (Decrease) in Cash and Cash Equivalents	$	(1,343)	$	127

Operating activities: Net cash used in operating activities was $156 million in the first quarter of 2022, compared with net cash provided by operating activities of $591 million in the first quarter of 2021. Net cash provided by operating activities before changes in operating assets and liabilities was $952 million in the first quarter of 2022, compared with $815 million in the prior-year quarter primarily due to higher realized selling prices, partially offset by the impact of lower sales volumes. During the first quarter of 2022, changes in operating assets and liabilities reduced net cash provided by operating activities by $1,108 million, reflecting payments made for previously accrued Libyan income tax and royalties of approximately $470 million for the period December 2020 through November 2021, premiums paid of $325 million to remove the ceiling price on outstanding WTI and Brent crude oil collars effective April 1, 2022, and an increase in accounts receivable due to higher crude oil prices. During the first quarter of 2021, changes in operating assets and liabilities decreased cash flow from operating activities by $224 million.

Investing activities: Additions to property, plant and equipment of $546 million in the first quarter of 2022 were up $161 million compared with the corresponding period in 2021. The increase is primarily due to higher drilling and development activities in Guyana, the Bakken, and Malaysia and JDA.

The following table reconciles capital expenditures incurred on an accrual basis to Additions to property, plant and equipment:


	Three Months Ended March 31,
	2022		2021

	(In millions)
Additions to property, plant and equipment - E&P:
Capital expenditures incurred - E&P	$	(543)	$	(280)
Increase (decrease) in related liabilities	52		(78)
Additions to property, plant and equipment - E&P	$	(491)	$	(358)
Additions to property, plant and equipment - Midstream:
Capital expenditures incurred - Midstream	$	(37)	$	(23)
Increase (decrease) in related liabilities	(18)		(4)
Additions to property, plant and equipment - Midstream	$	(55)	$	(27)

Financing activities: In the first quarter of 2022, we repaid the remaining $500 million outstanding under our $1 billion term loan previously scheduled to mature in March 2023. Common stock dividends paid were $119 million in the first quarter of 2022, compared to $80 million in the first quarter of 2021. Net cash outflows to noncontrolling interests were $74 million in the first quarter of 2022 and $67 million in the first quarter of 2021. In the first quarter of 2021, we received net proceeds of $70 million from the public offering of 3,450,000 Hess-owned Class A shares in Hess Midstream LP.

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Future Capital Requirements and Resources

At March 31, 2022, we had $1.37 billion in cash and cash equivalents, excluding Midstream, and total liquidity, including available committed credit facilities, of approximately $4.94 billion. In March 2022, we announced a 50% increase in our first quarter dividend on common stock. As we become increasingly free cash flow positive, we plan to return up to 75% of our annual adjusted free cash flow to shareholders through further dividend increases and/or common stock repurchases.

In 2022, based on current forward strip crude oil prices, we expect cash flow from operating activities and cash and cash equivalents at March 31, 2022, will be sufficient to fund our capital investment and capital return programs. 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.

The table below summarizes the capacity, usage, and available capacity for borrowings and letters of credit under committed and uncommitted credit facilities at March 31, 2022:


	Expiration Date	Capacity		Borrowings		Letters of Credit Issued		Total Used		Available Capacity

		(In millions)
Hess Corporation
Revolving credit facility	May 2024	$	3,500	$	—	$	—	$	—	$	3,500
Committed lines	Various (a)	100		—		29		29		71
Uncommitted lines	Various (a)	248		—		248		248		—
Total - Hess Corporation		$	3,848	$	—	$	277	$	277	$	3,571
Midstream
Revolving credit facility (b)	December 2024	$	1,000	$	105	$	—	$	105	$	895
Total - Midstream		$	1,000	$	105	$	—	$	105	$	895

(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.

Hess Corporation:

The revolving credit 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 if the Corporation’s credit rating changes. The revolving credit facility is 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). The indentures for the Corporation's 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 March 31, 2022, Hess Corporation was in compliance with these financial covenants.

Two of the three major credit rating agencies that rate our debt have assigned an investment grade credit rating. In March 2022, Standard and Poor’s Ratings Services affirmed our credit rating at BBB- with stable outlook. 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.

We have a shelf registration under which we may issue additional debt securities, warrants, common stock or preferred stock.

Midstream:

At March 31, 2022, 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

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

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 March 31, 2022. 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 March 31, 2022, borrowings of $105 million were drawn under HESM Opco’s revolving credit facility, and borrowings of $385 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.

Market Risk Disclosures

We are exposed in the normal course of business 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. See Note 12, Financial Risk Management Activities, in the Notes to Consolidated Financial Statements.

We have outstanding foreign exchange contracts with notional amounts totaling $156 million at March 31, 2022 that are used to reduce our exposure to fluctuating foreign exchange rates for various currencies. A 10% strengthening or weakening in the U.S. Dollar exchange rate is estimated to be a gain or loss, respectively, of approximately $15 million at March 31, 2022.

At March 31, 2022, consolidated long-term debt, which was substantially comprised of fixed-rate instruments, had a carrying value of $7,956 million and a fair value of $8,801 million. A 15% increase or decrease in interest rates would decrease or increase the fair value of debt by approximately $420 million or $440 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.

At March 31, 2022, we have WTI put options with an average monthly floor price of $60 per barrel for 90,000 bopd, and Brent put options with an average monthly floor price of $65 per barrel for 60,000 bopd. As of March 31, 2022, an assumed 10% increase in the forward WTI and Brent crude oil prices used in determining the fair value of our put options would reduce the fair value of these derivative instruments by approximately $15 million, while an assumed 10% decrease in the same crude oil prices would increase the fair value of these derivative instruments by approximately $20 million.

PART I - FINANCIAL INFORMATION (CONT'D.)

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, 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 the future. Forward-looking statements are subject to certain known and unknown risks and 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:

•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 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 the section entitled “Risk Factors” in Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021 as well as any additional risks described in our other filings with the SEC.

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.

PART I - FINANCIAL INFORMATION (CONT'D.)

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The information required by this item is presented under Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures.”

Item 4. 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 March 31, 2022, John B. Hess, Chief Executive Officer, and John P. Rielly, Chief Financial Officer, concluded that these disclosure controls and procedures were effective as of March 31, 2022.

There was no change in internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 in the quarter ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Information regarding legal proceedings is contained in Note 10, Guarantees and Contingencies in the Notes to Consolidated Financial Statements and is incorporated herein by reference.

PART II – OTHER INFORMATION (CONT'D)

Item 6. Exhibits.


Exhibits
10(1)*			Form of Performance Award Agreement for three-year period ending December 31, 202 4 under the 2017 Long-Term Incentive Plan.
31(1)			Certification required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)).
31(2)			Certification required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)).
32(1)			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).
32(2)			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).
101(INS)			Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101(SCH)			Inline XBRL Taxonomy Extension Schema Document.
101(CAL)			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101(LAB)			Inline XBRL Taxonomy Extension Label Linkbase Document.
101(PRE)			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101(DEF)			Inline XBRL Taxonomy Extension Definition Linkbase Document.
104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, has been formatted in Inline XBRL.

*The exhibit relates to executive compensation plans and arrangements.

SIGNATURES

Pursuant to the requirements 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.


HESS CORPORATION
(REGISTRANT)


By						/s/ John B. Hess
						JOHN B. HESS
						CHIEF EXECUTIVE OFFICER


By						/s/ John P. Rielly
						JOHN P. RIELLY
						EXECUTIVE VICE PRESIDENT AND
						CHIEF FINANCIAL OFFICER

Date: May 5, 2022

Document

Exhibit 10(1)

HESS CORPORATION 2017 LONG-TERM INCENTIVE PLAN

Performance Award Agreement


Participant:			FIRST NAME - LAST NAME
Grant Date:			DATE
Number of Performance Shares			# OF PERFORMANCE SHARE UNITS

* * * * *

This PERFORMANCE AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between HESS CORPORATION, a Delaware corporation (the “Corporation”), and the Participant specified above, pursuant to the Shareholder Value Program under the Hess Corporation 2017 Long-Term Incentive Plan, as in effect and as amended from time to time (the “Plan”).

WHEREAS, it has been determined under the Plan that it would be in the best interests of the Corporation to grant the Performance Award provided for herein to the Participant as an inducement to remain in the employment of the Corporation (and/or any Subsidiary), and as an incentive for improved performance toward corporate goals during such employment;

WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized the grant to the Participant of a Performance Award in accordance with the terms and conditions of this Agreement; and

WHEREAS, the Participant and the Corporation desire to enter into this Agreement to evidence and confirm the grant of such Performance Award on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and premises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows.

1. Incorporation By Reference; Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly not intended to apply to the grant of the Performance Award hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if each were expressly set forth mutatis mutandis herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto under the Plan. The Participant hereby acknowledges receipt of a prospectus describing the Plan and the Awards thereunder and that he has read it carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

2. Grant of Performance Award. Pursuant to the provisions of the Plan, the Corporation as of the date set forth above (the “Grant Date”) has granted to the Participant, and hereby evidences the grant to the Participant of, subject to the terms and conditions set forth herein and in the Plan, a Performance Award consisting of the number of Performance Shares specified above. A Performance Share is an unfunded and unsecured obligation to deliver up to two Shares (or a portion thereof) or the cash equivalent thereof (determined in accordance with Section 3), subject to the terms and conditions of this Agreement and those of the Plan. References herein to Performance Shares are to the Performance Shares comprising such Performance Award granted pursuant to this Agreement.

3. Payment of Earned Performance Shares. Subject to the provisions of Section 5 and Section 6, after the end of the Performance Cycle described in Section 4(a), the Committee shall certify in writing on the date (the “vesting date”) of its first regular meeting following the end of the Performance Cycle whether, and to what extent, the performance goal set forth in Section 4(b) has been achieved and determine and certify in writing the number of Performance Shares earned pursuant to Section 4. The number of such Performance Shares so earned shall be paid by the Corporation as soon as administratively practicable after the vesting date; provided that in no event shall such payment be made later than March 15 of the calendar year that immediately follows the last day of the Performance Cycle. To the extent that the Performance Shares are not earned pursuant to Section 4, such Performance Shares shall be forfeited. Payments hereunder shall be made in Shares, unless the Committee, in its sole discretion, affirmatively determines that such payments shall be made in cash, or a combination of Shares and cash. If a cash payment is made in lieu of delivering Shares, the amount of such payment shall be equal to the Fair Market Value of such Shares as of the trading date immediately prior to the date of such payment, less applicable tax withholdings in accordance with Section 12.03 of the Plan.

4. Vesting Criteria Applicable to Performance Shares.

(a) Performance Cycle. The Performance Cycle for the Performance Award granted pursuant to this Agreement shall commence on January 1, 2022, and shall end on December 31, 2024.

(b) Performance Goal. The performance goal for the Performance Cycle is the total return per Share to the Corporation’s shareholders, inclusive of dividends paid, during the Performance Cycle in comparison to the total return per share of common stock, inclusive of dividends paid, during the Performance Cycle achieved by the companies that are listed in Exhibit A attached hereto (the “Comparison Companies”) as well as the S&P 500 Total Return Index (the “S&P Total Return Index”), in each case as set forth in this Section 4(b). For purposes of this Agreement, such total shareholder return (“Total Shareholder Return”) for the Corporation and each of the Comparison Companies shall be measured by dividing (A) the sum of (1) the dividends paid (regardless of whether paid in cash or property) on the common stock of such company during the Performance Cycle, assuming reinvestment of such dividends in such stock (based on the closing price of such stock on the date such dividend is paid), plus (2) the average closing price of a share of such stock on the

principal United States exchange on which the stock trades for the 60 trading days immediately prior to and including the last day of the Performance Cycle (appropriately adjusted for any stock dividend, stock split, spin-off, merger or other similar corporate events)(the “Ending Average Value”) minus the average closing price of a share of such company’s common stock on the principal United States exchange on which the stock trades for the 60 trading days occurring immediately prior to the first day of the Performance Cycle (the “Beginning Average Value”), by (B) the Beginning Average Value. For the avoidance of doubt, it is intended that the foregoing calculation of Total Shareholder Return for the Corporation and each of the Comparison Companies shall take into account not only the reinvestment of dividends in a share of common stock of the Corporation and any Comparison Company but also capital appreciation or depreciation in the shares deemed acquired by such reinvestment. For purposes of this Agreement, Total Shareholder Return for the S&P 500 Total Return Index shall be measured by dividing (A) the average closing price of a share of such index on the principal United States exchange on which the index trades for the 60 trading days immediately prior to and including the last day of the Performance Cycle, minus the average closing price of a share of such index on the principal United States exchange on which the index trades to the 60 trading days occurring immediately prior to the first day of the Performance Cycle (the “S&P Beginning Average Value”) by (B) the S&P Beginning Average Value. The S&P 500 Total Return Index includes both the capital gains of its underlying securities but also assumes that all distributions, such as dividends are reinvested back into the index. All determinations under this Section 4 shall be made by the Committee.

(c) Percentage of Performance Shares Earned. Except as provided in Section 6, the Performance Shares shall be earned based on where the Corporation’s Total Shareholder Return during the Performance Cycle ranks in comparison to the Total Shareholder Returns of the Comparison Companies and the S&P Total Return Index during the Performance Cycle. As soon as practicable after the completion of the Performance Cycle, the Total Shareholder Returns of the Corporation, each of the Comparison Companies and the S&P Total Return Index shall be calculated and ranked from first to last (the “TSR Ranking”). The extent to which Performance Shares shall become earned on the vesting date described in Section 3 shall be based on the TSR Ranking attained by the Corporation. The percentage of Performance Shares earned (the “Percentage of Performance Shares Earned”) shall be the percentage set forth in the Percentage of Performance Shares Earned column of the schedule set forth in Exhibit B attached hereto that corresponds to the TSR Ranking attained by the Corporation set forth in the TSR Ranking column of such schedule. The number of Performance Shares earned shall be the product of the number of Performance Shares set forth in Section 2 multiplied by the Percentage of Performance Shares Earned. If at any time during the Performance Cycle, a Comparison Company is acquired, ceases to exist, ceases to be a publicly-traded company, files for bankruptcy, spins off 50% or more of its assets (except as otherwise provided in Exhibit A), or sells all, or substantially all, of its assets, such Comparison Company shall be removed and treated as if it had never been a Comparison Company. The Total Shareholder Returns of the Corporation and the remaining Comparison Companies and the S&P Total Return Index shall be ranked from first to last, and the Percentage of Performance Shares Earned shall be determined as

described in this Section 4(c) based on the Corporation’s TSR Ranking among the remaining Comparison Companies and S&P Total Return Index: (i) to the extent the number of Comparison Companies and the S&P Total Return Index plus the Corporation is reduced to 12, 11, 10, 9 or 8, in accordance with the percentage corresponding to Corporation’s TSR Ranking as set forth in Exhibit C-1, C-2, C-3, C-4 or C-5 attached hereto, respectively, and (ii) to the extent that the number of Comparison Companies and the Total Return Index plus the Corporation is reduced to fewer than 8, in accordance with the percentage corresponding to the Corporation’s TSR Ranking as set forth in Exhibit C-5, provided that (1) the Committee may use negative discretion to reduce the Percentage of Performance Shares Earned corresponding to such TSR Ranking of the Corporation such that the Percentage of Performance Shares Earned shall be as reasonably commensurate as possible with the Percentage of Performance Shares Earned that would have resulted if the number of Comparison Companies and the S&P Total Return Index plus the Corporation had been 8, using similar percentile hurdles as exist in Exhibit C-5, with straight-line interpolation between points, and (2) if the Corporation ranks last among the remaining Comparison Companies and the S&P Total Return Index, the Percentage of Performance Shares Earned shall be 0%. Notwithstanding the foregoing provisions of this Section 4(c) to the contrary, if the Corporation’s Total Shareholder Return during the Performance Cycle is negative, the Percentage of Performance Shares Earned shall not exceed 100%.

5. Termination of Employment. Except as provided in this Section 5, the Participant shall not have any right to any payment hereunder unless the Participant is employed by the Corporation or a Subsidiary on the vesting date pursuant to Section 3.

(a) Death, Permanent Total Disability or Full Retirement. If (i) the Participant’s employment with the Corporation or any Subsidiary terminates prior to the vesting date pursuant to Section 3 by reason of the Participant’s death, permanent total disability or “Full Retirement” (as defined below), the Participant shall be entitled to receive the same payment, if any (without pro-ration), in respect of the Performance Shares as would have been payable, and at the same time and subject to the same conditions, had the Participant’s employment continued until such vesting date. The existence and date of permanent total disability shall be determined by the Committee and its determination shall be final and conclusive. For purposes of this Agreement, “Full Retirement” shall mean voluntary retirement after attaining at least age 65 with at least five years of continuous service with the Corporation or any Subsidiary prior to the date of such retirement.

(b) Other than Death, Permanent Total Disability or Full Retirement. If the Participant’s employment with the Corporation or any Subsidiary terminates prior to the vesting date pursuant to Section 3 for any reason other than the Participant’s death, permanent total disability or Full Retirement, all of the Performance Shares and the Participant’s rights with respect thereto shall be immediately forfeited and cancelled without further action by the Corporation or the Participant as of the date of such termination of employment.

(c) Early Retirement/Termination other than Cause. Notwithstanding Section 5(b), if (i) the Participant’s employment with the Corporation

or any Subsidiary terminates prior to the vesting date pursuant to Section 3 by reason of the Participant’s “Early Retirement” (as defined below) or on account of a termination by the Corporation or a Subsidiary other than for Cause, the Participant shall be entitled to receive the same payment, if any, in respect of the Performance Shares as would have been payable, and at the same time and subject to the same conditions, had the Participant’s employment continued until such vesting date, provided that such payment shall be pro-rated based on the number of calendar days of the Performance Cycle elapsed through the date of such Early Retirement or termination other than for Cause. For purposes of this Agreement, “Early Retirement” shall mean voluntary retirement after attaining at least age 55 with at least ten years of continuous service with the Corporation or any Subsidiary prior to the date of such retirement.

(d) Forfeiture Following Early Retirement or Termination other than Cause. Notwithstanding any other provision of this Agreement to the contrary, if, following termination of the Participant’s employment with the Corporation or any Subsidiary due to Early Retirement or a termination other than for Cause, as described in Section 5(c), the Committee determines in its good faith discretion that the Participant shall have engaged in any Prohibited Activity (as hereinafter defined) at any time during the time through the otherwise applicable vesting date with respect to the Performance Cycle, all of the Performance Shares and the Participant’s rights with respect thereto shall be immediately forfeited and cancelled without further action by the Corporation or the Participant as of the date on which the Participant shall have first entered into such Prohibited Activity. This Section 5(d) shall not constitute the Corporation’s exclusive remedy for the Participant’s engagement in any Prohibited Activity, and the Corporation may seek any additional legal or equitable remedy, including injunctive relief, in any such circumstances. If any provision contained in this Section 5(d) shall be held by any court of competent jurisdiction to be unenforceable, void or invalid, the parties intend that such provision be modified to make it valid and enforceable to the fullest extent permitted by law. If any such provision cannot be modified to be valid and enforceable, such provision shall be severed from this Agreement and the invalidity or unenforceability of such provision shall not affect the validity or enforceability of the remaining provisions. Notwithstanding any other provision of this Section 5(d) to the contrary, upon the occurrence of a Change of Control, the foregoing provisions of this Section 5(d) shall automatically terminate and cease to apply with respect to any Performance Shares that are outstanding and have not previously been forfeited under this Section 5(d). For purposes of this Agreement:

(i) “Prohibited Activity” shall mean either Competitive Activity or Interference.

(ii) “Competitive Activity” shall mean that the Participant, directly or indirectly, in any manner or capacity, shall be employed by, serve as a director or manager of, act as a consultant to or maintain any material ownership interest in, any E&P Company or M&R Company that competes with the business of the Corporation or any Subsidiary or affiliate thereof in geographical areas in which the Participant is aware that the Corporation or any Subsidiary or affiliate is engaged, or is considering engaging, unless the Committee agrees to such activity of the Participant in

writing; provided, however, that the Participant’s ownership solely as an investor of less than 1% of the outstanding securities of any publicly-traded securities of any E&P Company or M&R Company shall not, by itself, be considered to be Competitive Activity.

(iii) “Interference” shall mean that the Participant shall, directly or indirectly, interfere with the relationship between the Corporation or any Subsidiary or affiliate of the Corporation and any person (including, without limitation, any business or governmental entity) that to the Participant’s knowledge is, or was, a client, customer, supplier, licensee or partner of the Corporation or any Subsidiary, or had any other business relationship with the Corporation or any Subsidiary.

(iv) “E&P Company” shall mean any business which is engaged in the business of exploring for, or developing or producing, crude oil or natural gas.

(v) “M&R Company” shall mean any business which is engaged in the manufacture, generation, purchase, marketing or trading of refined petroleum products, natural gas or electricity.

6. Change of Control. Notwithstanding anything in Section 3, 4, 5(a) or 5(c) to the contrary, in the event a Change of Control occurs during the Performance Cycle, the Corporation’s Total Shareholder Return, TSR Ranking and the Percentage of Performance Shares Earned shall be determined in accordance with Section 4 for the portion of the Performance Cycle that ends on the date immediately prior to the date of the Change of Control. Provided that the Performance Shares have not been forfeited pursuant to Section 5 prior to the date of the Change of Control, the number of the Performance Shares earned shall be the sum of (a) the product of the number of Performance Shares set forth in Section 2, multiplied by a fraction, the numerator of which is the number of calendar days of the Performance Cycle that elapse through the date immediately prior to the date of the Change of Control and the denominator of which is the full number of calendar days during the Performance Cycle, multiplied by the Percentage of Performance Shares Earned, plus (b) the product of the number of Performance Shares set forth in Section 2, multiplied by a fraction, the numerator of which is the number of calendar days remaining in the Performance Cycle on and following the date of the Change of Control and the denominator of which is the full number of calendar days during the Performance Cycle. The amount payable subject to the terms and conditions hereof in respect of such earned Performance Shares shall be equal to the product of such number of earned Performance Shares multiplied by the Change of Control Price, without interest or other additional earnings (such amount, the “CoC Earned Performance Share Amount”). Except as otherwise provided in this Section 6, the CoC Earned Performance Share Amount shall be paid in a cash lump-sum during, and no later than March 15 of, the calendar year that immediately follows the last day of the Performance Cycle. If, following a Change of Control, the Participant’s employment with the Corporation or any Subsidiary terminates prior to payment of the CoC Earned Performance Share Amount by reason of (w) termination by the Corporation or such Subsidiary without Cause, (x) resignation by the Participant for Good Reason, (y) the Participant’s death or permanent total disability (determined as described in Section 5(a)) or (z) the Participant’s Full Retirement, the Participant shall be

entitled to receive payment of the CoC Earned Performance Share Amount in a cash lump-sum not later than 5 business days after the effective date of such termination of employment, provided that if such payment would result in accelerated or additional taxes under Section 409A of the Code then such payment shall be made at the time specified in the immediately preceding sentence as if the Participant’s employment had not so terminated. If, following a Change of Control, the Participant’s employment with the Corporation or any Subsidiary terminates under any circumstances other than those described in the immediately preceding sentence, then the Participant shall not have any right to any payment in respect of the Performance Shares, whether or not earned.

7. Dividend Equivalents. With respect to the number of Performance Shares set forth in Section 2, the Participant shall be credited with Dividend Equivalents with respect to each such Performance Share equal to the amount per Share of any ordinary cash dividends declared by the Board with record dates during the period beginning on the first day of the Performance Cycle and ending on the earliest to occur of: (a) the last day of the Performance Cycle; (b) the date of a Change of Control and (c) the date such Performance Share terminates or is forfeited under Section 3 or Section 5. The Corporation shall pay in cash to the Participant an amount equal to the product of (i) sum of the aggregate amount of such Dividend Equivalents credited to the Participant, multiplied by (ii) the Percentage of Performance Shares Earned, such amount to be paid as and when the related Performance Shares are paid in accordance with Section 3 or Section 6, as applicable. Any Dividend Equivalents shall be forfeited as and when the related Performance Shares are forfeited in accordance with Section 3, Section 5 or Section 6.

8. No Rights as a Shareholder. Until shares of Common Stock are issued, if at all, in satisfaction of the Corporation’s obligations under this Agreement, in the time and manner specified in Section 3 or 6, the Participant shall have no rights as a shareholder as to the Shares underlying the Performance Shares.

9. Beneficiary. The Participant may designate the beneficiary or beneficiaries to receive any payments which may be made in respect of the Performance Shares after the Participant’s death. Any such designation shall be made by the Participant in writing on a beneficiary designation form provided by or on behalf of the Corporation and (unless the Participant has waived such right) may be changed by the Participant from time to time by filing a new beneficiary designation form as provided therein. If the Participant does not designate a beneficiary or if no designated beneficiary survives the Participant, the Participant’s beneficiary shall be the legal representative of his estate.

10. Tax Withholding. No payment of Shares or cash in respect of the Performance Shares shall be made unless and until the Participant (or his or her beneficiary or legal representative) shall have made arrangements satisfactory to the Committee for the payment of any amounts required to be withheld with respect thereto under all present or future federal, state, local and non-United States tax laws and regulations and other laws and regulations in accordance with Section 12.03 of the Plan. The Corporation shall have the right to deduct from all amounts paid to the Participant in cash in respect of Performance Shares any such amounts. In the case of any payments of

Performance Shares in the form of Shares, unless the Participant elects otherwise in advance in writing or is prohibited by law, upon payment of such Shares, such number of such Shares as shall be necessary to pay such amounts shall be sold by the Corporation or its designee on the Participant’s behalf, and the proceeds thereof shall be delivered to the Corporation for remittance to the appropriate governmental authorities. In the event the Committee determines that any amounts are required to be withheld in respect of the Performance Shares prior to payment of such Performance Shares, the Participant shall thereupon pay to the Corporation in cash the full amount so required to be withheld.

11. Limitations; Governing Law. Nothing herein or in the Plan shall be construed as conferring on the Participant or anyone else the right to continue in the employ of the Corporation or any Subsidiary. The rights and obligations under this Agreement are governed by and construed in accordance with the laws of the State of Delaware, without reference to the principles of conflict of laws thereof.

12. Non-transferability. Except as otherwise provided by Section 8, the Performance Shares, and any rights and interests with respect thereto, may not be sold, exchanged, transferred, assigned or otherwise disposed of in any way by the Participant (or the Participant’s beneficiary), and may not be pledged or encumbered in any way by the Participant (or the Participant’s beneficiary), and shall not be subject to execution, attachment or similar legal process.

13. Entire Agreement; Amendment. This Agreement (including the Plan which is incorporated herein by reference) contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties hereto relating to such subject matter. The Board has the right, in its sole discretion, to amend, alter, suspend, discontinue or terminate the Plan, and the Committee has the right, in its sole discretion, to amend, alter, suspend, discontinue or terminate this Agreement from time to time in accordance with and as provided in the Plan; provided, however, that no such amendment, alteration, suspension, discontinuance or termination of the Plan may materially impair the Participant’s previously accrued rights under this Agreement or the Plan without the Participant’s consent, except as otherwise provided in Section 11 of the Plan. This Agreement may also be modified, amended or terminated by a writing signed by the Participant and the Corporation.

14. Notices. Any notice which may be required or permitted under this Agreement shall be in writing and shall be delivered in person, or via facsimile transmission, overnight courier service or certified mail, return receipt requested, postage prepaid, properly addressed as follows:

(a) If the notice is to the Corporation, to the attention of the Secretary of Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036, or at such other address as the Corporation by notice to the Participant may designate in writing from time to time.

(b) If the notice is to the Participant, at the Participant’s address as shown on the Corporation’s records, or at such other address as the Participant, by notice to the Corporation, may designate in writing from time to time.

15. Compliance with Laws. The issuance of any Shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act of 1933, as amended, the Exchange Act and the respective rules and regulations promulgated thereunder), any applicable rules of any exchange on which the Common Stock is listed (including, without limitation, the rules and regulations of the New York Stock Exchange), and any other law, rule or regulation applicable thereto. The Corporation shall not be obligated to issue any of the Common Stock subject to this Agreement if such issuance would violate any such requirements and if issued shall be deemed void ab initio.

16. Binding Agreement; Further Assurances. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Corporation and its successors and assigns. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

17. Counterparts; Headings. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

18. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

19. Terms of Employment. The Plan is a discretionary plan. The Participant hereby acknowledges that neither the Plan nor this Agreement forms part of the Participant’s terms of employment and nothing in the Plan may be construed as imposing on the Corporation or any Subsidiary a contractual obligation to offer participation in the Plan to any employee of the Corporation or any Subsidiary. Neither the Corporation nor any Subsidiary is under any obligation to grant any further Awards to the Participant under the Plan. If the Participant ceases to be an employee of the Corporation or any Subsidiary for any reason, the Participant shall not be entitled by way of compensation for loss of office or otherwise howsoever to any sum or other benefit to compensate the Participant for the loss of any rights under this Agreement or the Plan. The Participant also acknowledges that the Corporation has adopted a policy prohibiting recipients of equity awarded from the Corporation, including the Performance Shares, from trading in equity derivative instruments to hedge the economic risks of holding Corporation common stock or interests therein. The Participant hereby acknowledges

that he will abide by such policy in all respects.

20. Data Protection. By signing this Agreement, the Participant hereby consents to the holding and processing of personal data provided by the Participant to the Corporation for all purposes necessary for the operation of the Plan. These include, but are not limited to:

(a) administering and maintaining the Participant’s records;

(b) providing information to any registrars, brokers or third party administrators of the Plan; and

21. Code Section 409A. Payment of the Performance Shares and this Agreement are intended to comply with Section 409A of the Code, and shall be administered and construed in accordance with such intent. Accordingly, the Corporation shall have the authority to take any action, or refrain from taking any action, with respect to this Agreement that it determines is necessary or appropriate to ensure compliance with Code Section 409A (provided that the Corporation shall choose the action that best preserves the value of payments provided to the Participant under this Agreement that is consistent with Code Section 409A). In furtherance, but not in limitation, of the foregoing, notwithstanding any other provisions of this Agreement to the contrary:

(a) in no event may the Participant designate, directly or indirectly, the calendar year of any payment to be made hereunder;

(b) if at the time of the Participant’s separation from service, the Corporation determines that the Participant is a “specified employee” within the meaning of Code Section 409A, payments, if any, hereunder that constitute a “deferral of compensation” under Code Section 409A and that would otherwise become due on account of such separation from service shall be delayed and all such delayed payments shall be paid in full upon the earlier to occur of (i) a date during the thirty-day period commencing six months and one day following such separation from service and (ii) the date of the Participant’s death, provided that such delay shall not apply to any payment that is excepted from coverage by Code Section 409A, such as a payment covered by the short-term deferral exception described in Treasury Regulations Section 1.409A-1(b)(4); and

(c) notwithstanding any other provision of this Agreement to the contrary, a termination or retirement of Participant's employment hereunder shall mean and be interpreted consistent with a “separation from service” within the meaning of Code Section 409A with respect to any payments hereunder that constitute a “deferral of compensation” under Code Section 409A that become due on account of such separation from service.

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by its duly authorized officer, and the Participant has also executed this Agreement and acknowledged receipt of other related materials including the Plan prospectus, all as of the Grant Date.

HESS CORPORATION

/s/ John B. Hess

John B. Hess

Chief Executive Officer

Acknowledged and Agreed to:

____________________________

Exhibit A

Comparison Companies

and S&P Total Return

Index

•APA Corporation

•Coterra Energy, Inc.

•ConocoPhillips Company

•Continental Resources, Inc.

•Devon Energy Corporation

•EOG Resources, Inc.

•EQT Corporation

•Marathon Oil Corporation

•Murphy Oil Corporation

•Occidental Petroleum Corporation

•Pioneer Natural Resources Co.

•S&P 500 Total Return Index

Exhibit B

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies and the S&P Total Return Index plus the Corporation is 13:


TSR Ranking			Percentage of Performance Shares Earned
1st			200%
2nd			200%
3rd			175%
4th			150%
5th			125%
6th			100%
7th			88%
8th			75%
9th			63%
10th			50%
11th			0%
12th			0%
13th			0%

Exhibit C-1

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies and the S&P Total Return Index plus the Corporation is 12:


TSR Ranking			Percentage of Performance Shares Earned
1st			200%
2nd			200%
3rd			175%
4th			150%
5th			125%
6th			100%
7th			83%
8th			66%
9th			50%
10th			0%
11th			0%
12th			0%

Exhibit C-2

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies and the S&P Total Return Index plus the Corporation is 11:


TSR Ranking			Percentage of Performance Shares Earned
1st			200%
2nd			200%
3rd			175%
4th			150%
5th			100%
6th			83%
7th			67%
8th			50%
9th			0%
10th			0%
11th			0%

Exhibit C-3

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies and the S&P Total Return Index plus the Corporation is 10:


TSR Ranking			Percentage of Performance Shares Earned
1st			200%
2nd			175%
3rd			150%
4th			125%
5th			100%
6th			75%
7th			50%
8th			0%
9th			0%
10th			0%

Exhibit C-4

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies and the S&P Total Return Index plus the Corporation is 9:


TSR Ranking			Percentage of Performance Shares Earned
1st			200%
2nd			167%
3rd			133%
4th			100%
5th			83%
6th			67%
7th			50%
8th			0%
9th			0%

Exhibit C-5

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies and the S&P Total Return Index plus the Corporation is 8:


TSR Ranking			Percentage of Performance Shares Earned
1st			200%
2nd			167%
3rd			133%
4th			100%
5th			75%
6th			50%
7th			0%
8th			0%

Document

Exhibit 31(1)

CERTIFICATIONS

I, John B. Hess, certify that:

1.I have reviewed this quarterly report on Form 10-Q 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						/s/ John B. Hess
						JOHN B. HESS
						CHIEF EXECUTIVE OFFICER

Date: May 5, 2022

Document

Exhibit 31(2)

I, John P. Rielly, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Hess Corporation;

(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						/s/ John P. Rielly
						JOHN P. RIELLY
						EXECUTIVE VICE PRESIDENT AND
						CHIEF FINANCIAL OFFICER

Date: May 5, 2022

Document

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 Quarterly Report of Hess Corporation (the "Corporation") on Form 10-Q for the period ending March 31, 2022 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						/s/ John B. Hess
						JOHN B. HESS
						CHIEF EXECUTIVE OFFICER
						Date: May 5, 2022

A signed original of this written statement required by Section 906 has been provided to Hess Corporation and will be retained by Hess Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

Document

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 Quarterly Report of Hess Corporation (the "Corporation") on Form 10-Q for the period ending March 31, 2022 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						/s/ John P. Rielly
						JOHN P. RIELLY
						EXECUTIVE VICE PRESIDENT AND
						CHIEF FINANCIAL OFFICER
						Date: May 5, 2022