Commission File Number 1-1204

(Exact Name of Registrant as Specified in Its Charter)

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)

1185 AVENUE OF THE AMERICAS, NEW YORK, ~~N.Y.~~

(Address of Principal Executive Offices)

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

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

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.

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,~~June 30, 2020, there were ~~307,158,340~~307,144,424 shares of Common Stock outstanding.

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

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED EQUITY (UNAUDITED)

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,~~June 30, 2020 and December 31, 2019, the consolidated results of operations for the three and six months ended ~~March 31,~~June 30, 2020 and 2019, and consolidated cash flows for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019. 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, 2019.

In the first quarter of 2020, we adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses. This ASU makes changes to the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments. The standard requires the use of a forward-looking "expected loss" model compared with the prior "incurred loss" model. We calculate expected credit losses for our receivables using the probability of default and the expected loss given default. Historical data, current market conditions, and forecasts of future economic conditions are used to determine the probability of default and the expected loss given default. The adoption of this ASU did not have a material impact to our financial statements.

Inventories consisted of the following:

We have chartered 3 very large crude carriers (VLCCs) to load a total of approximately 6 million barrels of oil during May through August to sell in Asian markets later this year. During the second quarter, the Corporation loaded 3.7 million barrels of Bakken crude oil on VLCCs and included costs of the produced volumes totaling $113 million in crude oil inventories with a corresponding reduction to Marketing, including purchased oil and gas. In the first quarter of 2020, we recognized charges of $53 million ($52 million after income taxes) recorded in Marketing, including purchased oil and gas to reflect crude oil inventories at net realizable value.

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 six months ended June 30, 2020 (in millions):

The table above does not include well costs incurred and expensed during the first six months of 2020 of $10 million associated with the Oldfield-1 well in the Gulf of Mexico. In the first quarter of 2020, the Corporation expensed previously capitalized well costs of $125 million, primarily related to the northern portion of the Shenzi Field (Hess 28%) in the Gulf of Mexico due to reprioritization of the Corporation’s forward capital program in response to the significant decline in crude oil prices.Capitalized exploratory well costs capitalized for greater than one year following completion of drilling were $360 million at June 30, 2020 and primarily related to:

Guyana: Approximately 80% of the capitalized well costs in excess of one year relate to successful exploration wells where hydrocarbons were encountered on the Stabroek Block (Hess 30%), offshore Guyana. The operator plans further appraisal

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

drilling for certain fields and is conducting pre-development planning for additional phases of development beyond the two existing sanctioned phases of development.

Joint Development Area (JDA): Approximately 10% 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 3 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 10% of the capitalized well costs in excess of one year relate to the NorthMalay Basin (Hess 50%), offshore Peninsular Malaysia, where hydrocarbons were encountered in 5 successful exploration wells. Subsurface evaluation and pre-development studies for future phases of development are ongoing.

4. Hess Midstream LP

At June 30, 2020 Hess Midstream LP (Hess Midstream), a variable interest entity that is fully consolidated by Hess Corporation, had liabilities totaling $1,972 million (December 31, 2019: $1,941 million) that are on a nonrecourse basis to Hess Corporation, while Hess Midstream assets available to settle the obligations of Hess Midstream include cash and cash equivalents totaling $3 million (December 31, 2019: $3 million) and property, plant and equipment with a carrying value of $3,069 million (December 31, 2019: $3,010 million).

In the first quarter of 2020, we entered into a $1.0 billion three year term loan agreement with a maturity date of March 16, 2023. In the second quarter of 2020, we successfully syndicated the loan. Borrowings under the term loan generally bear interest at LIBOR plus an applicable margin of 2.25%. The applicable margin varies based on the credit rating of the Corporation’s senior, unsecured, non-credit enhanced long-term debt, and will increase by 0.25% on each anniversary of the term loan. The term loan agreement contains customary representations, warranties and covenants, including the same financial covenant as our revolving credit facility which limits the ratio of Total Consolidated Debt to Total Capitalization (as such terms are defined in the revolving credit facility and term loan agreements) of the Corporation and its consolidated subsidiaries to 65%, and customary events of default. At June 30, 2020, Hess Corporation had borrowings of $1.0 billion under this term loan agreement and was in compliance with this financial covenant.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revenue from contracts with customers on a disaggregated basis was as follows:

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

There have been no significant changes to contracts with customers or composition thereof during the six months ended June 30, 2020. 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.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Oil and Gas Properties:

As a result of the significant decline in crude oil prices due to the global economic slowdown from the coronavirus (COVID-19) pandemic, we reviewed our oil and gas properties within the Exploration and Production operating segment for ~~impairment.~~ Inimpairment in the first quarter of ~~2020, we~~2020. We recognized pre-tax impairment charges in the first quarter of 2020 to reduce the carrying value of our oil and gas properties and certain related right-of-use assets at the North Malay Basin in Malaysia by $755 million ($755 million after income taxes), the South Arne Field in Denmark by $670 million ($594 million after income taxes), and in the Gulf of Mexico, the Stampede Field by $410 million ($410 million after income taxes) and the Tubular Bells Field by $270 million ($270 million after income taxes) primarily as a result of a lower long-term crude oil price outlook. The impairment charges were based on estimates of fair value at March 31, 2020 determined by discounting internally developed future net cash flows, a Level 3 fair value measurement. The total of the fair value estimates was approximately $1.05 billion. Significant inputs used in determining the discounted future net cash flows include future prices, projected production volumes using risk adjusted oil and gas reserves, and discount rates. The future pricing assumptions used were based on forward strip crude oil prices as of March 31, 2020 for the remainder of 2020 through 2022, and $50 per barrel for WTI ($55 per barrel for Brent) in 2023 and thereafter to the end of field life. The weighted average crude oil benchmark price based on total projected crude oil volumes for the impaired assets was $48.82 per barrel. A discount rate of 10% was used in each of the fair value measurements which represents the estimated discount rate a market participant would use. We determined the discount rate by considering the weighted average cost of capital for a group of peer companies.

In the first quarter of 2020, we recognized impairment charges totaling $21 million pre-tax ($20 million after income taxes) related to drilling rig right-of-use assets in the Bakken and surplus materials and supplies.

~~3. Inventories~~

~~Inventories consisted of the following:~~

March 31,

December 31,

2020

2019

(In millions)

Crude oil and natural gas liquids

$
74

$
92

Materials and supplies

156

169

Total Inventories

$
230

$
261

Balance at January 1, 2020

$
584

Additions to capitalized exploratory well costs pending the determination of proved reserves

47

Capitalized exploratory well costs charged to expense

(125
)
Balance at March 31, 2020

$
506

Components of net periodic pension cost consisted of the following:

(a) Net non-service pension cost included in Other, net in the Statement of Consolidated Income infor the ~~first quarter of~~three and six months ended June 30, 2020 was income of ~~$15~~$14 million ~~(2019: $10~~and $29 million, respectively, compared with income of ~~income).~~$9 million and $19 million for the three and six months ended June 30, 2019, respectively.

To preserve cash in 2020, we are minimizing non-required cash contributions to funded pension plans. In 2020, we expect to contribute approximately $2 million to our funded pension plans. ~~Through March 31, 2020, we have contributed less than $1 million.~~

~~8. Revenue~~

~~Revenue from contracts with customers on a disaggregated basis was as follows:~~

Exploration and Production

Midstream

Eliminations

Total

United States

Guyana

Malaysia & JDA

Denmark

Libya

E&P Total

(In millions)

Three Months Ended March 31, 2020

Sales of our net production volumes:

Crude oil revenue

$
656

$
38

$
2

$
36

$
—

$
732

$
—

$
—

$
732

Natural gas liquids revenue

49

—

—

—

—

49

—

—

49

Natural gas revenue

38

—

139

2

2

181

—

—

181

Sales of purchased oil and gas

324

1

—

—

—

325

—

—

325

Intercompany revenue

—

—

—

—

—

—

291

(291
)

—

Total sales and other operating revenues before other operating revenues

1,067

39

141

38

2

1,287

291

(291
)

1,287

Other operating revenues (a)

55

6

1

5

—

67

—

—

67

Total sales and other operating revenues

$
1,122

$
45

$
142

$
43

$
2

$
1,354

$
291

$
(291
)

$
1,354

Three Months Ended March 31, 2019

Sales of our net production volumes:

Crude oil revenue

$
682

$
—

$
21

$
16

$
91

$
810

$
—

$
—

$
810

Natural gas liquids revenue

68

—

—

—

—

68

—

—

68

Natural gas revenue

42

—

180

3

6

231

—

—

231

Sales of purchased oil and gas

426

—

—

—

22

448

—

—

448

Intercompany revenue

—

—

—

—

—

—

190

(190
)

—

Total sales and other operating revenues before other operating revenues

1,218

—

201

19

119

1,557

190

(190
)

1,557

Other operating revenues (a)

15

—

—

—

—

15

—

—

15

Total sales and other operating revenues

$
1,233

$
—

$
201

$
19

$
119

$
1,572

$
190

$
(190
)

$
1,572

~~(a)~~

~~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, 2020. 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.

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						Three Months Ended June 30,						Six Months Ended June 30,
	March 31,						2020		2019		2020		2019
	2020			2019
	(In millions)						(In millions)
Net income (loss) attributable to Hess Corporation Common Stockholders:						Net income (loss) attributable to Hess Corporation Common Stockholders:
Net income (loss)	$	(2,366	)	$	75	Net income (loss)	$	(263)	$	34	$	(2,629)	$	109
Less: Net income (loss) attributable to noncontrolling interests		67			43	Less: Net income (loss) attributable to noncontrolling interests	57		40		124		83
Less: Preferred stock dividends		—			4	Less: Preferred stock dividends	—		—		—		4
Net income (loss) attributable to Hess Corporation Common Stockholders	$	(2,433	)	$	28	Net income (loss) attributable to Hess Corporation Common Stockholders	$	(320)	$	(6)	$	(2,753)	$	22

Weighted average number of common shares outstanding:						Weighted average number of common shares outstanding:
Basic		304.0			297.4	Basic	305.0		302.2		304.5		299.8
Effect of dilutive securities						Effect of dilutive securities
Restricted common stock		—			1.2	Restricted common stock	—		—		—		0.9
Stock options		—			0.2	Stock options	—		—		—		0.2
Performance share units		—			0.9	Performance share units	—		—		—		1.2
Diluted		304.0			299.7	Diluted	305.0		302.2		304.5		302.1

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

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, we granted ~~1,117,009~~1,120,356 shares of restricted stock (2019: ~~941,082)~~945,009), 307,999 performance share units (2019: 234,866) and 686,639 stock options (2019: 526,968).

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 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 3 remaining active cases, filed by Pennsylvania, Rhode Island, 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 September 2016, the State of Rhode Island also filed a lawsuit alleging that we and other major oil companies damaged the groundwater in Rhode Island by introducing thereto gasoline with MTBE. The suit filed in Rhode Island is proceeding in Federal court. In December 2017, the State of Maryland filed a lawsuit alleging that we and other major oil companies damaged the

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

groundwater in Maryland by introducing thereto

~~PART I~~ - ~~FINANCIAL INFORMATION (CONT’D.)~~

~~HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

gasoline with MTBE. The suit filed in Maryland state court, was served on us in January 2018 and has been removed to Federal court by the defendants.

In September 2003, we received a directive from the 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. On March 4, 2016, the EPA issued a Record of Decision (ROD) in respect of the lower eight miles of the Lower Passaic River, selecting a remedy that includes bank-to-bank dredging at an estimated cost of ~~$1.38~~$1.38 billion. The ROD does not address the upper nine miles of the Lower Passaic River or the Newark Bay, which may require additional remedial action. In addition,the Federal trustees for natural resources have begun a separate assessment of damages to natural resources in the Passaic River. Given that the EPA has not selected a remedy for the entirety of the Lower Passaic River or the Newark Bay, total remedial costs cannot be reliably estimated at this time. Based on currently known facts and circumstances, we do not believe that this matter will result in a significant liability to us because our former terminal did not store or use contaminants which are of concern in the river sediments and could not have contributed contamination along the river’s length. Further, there are numerous other parties who we expect will bear the cost of remediation and damages.

In March 2014, we received an Administrative Order from the EPA requiring us and 26 other parties to undertake the Remedial Design for the remedy selected by the EPA for the Gowanus Canal Superfund Site in Brooklyn, New York. Our alleged liability derives from our former ownership and operation of a fuel oil terminal and connected shipbuilding and repair facility adjacent to the Canal. The remedy selected by the EPA includes dredging of surface sediments and the placement of a cap over the deeper sediments throughout the Canal and in-situ stabilization of certain contaminated sediments that will remain in place below the cap. The EPA’s original estimate was that this remedy would cost $506 ~~million~~;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 is anticipated to begin in the fourth quarter of 2020. The costs will continue to be allocated amongst the parties, as they were for the Remedial Design.

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. The ultimate impact of these 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 but is not expected to be material.

From time to time, we are involved in other judicial and administrative proceedings, including proceedings relating to other environmental matters. 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.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

11. Segment Information

We currently have 2 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:

Identifiable assets by operating segment were as follows:

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 of a portion of our crude oil or natural gas production. Forward contracts may also be used to purchase certain currencies in which we conduct business with the intent of reducing exposure to foreign currency fluctuations. At ~~March 31,~~June 30, 2020, these forward contracts relate to the British Pound and the Danish Krone. 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:

For calendar year 2020 we have West Texas Intermediate (WTI) put options with an average monthly floor price of $55 per barrel for 130,000 barrels of oil per day (bopd), and Brent put options with an average monthly floor price of $60 per barrel for 20,000 bopd.

The table below reflects the gross and net fair values of risk management derivative instruments and their respective financial statement caption in the 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: Crude oil hedging contracts increased Sales and other operating revenues by ~~$64~~$228 million and ~~$15~~$292 million in the ~~first quarter~~three and six months ended June 30, 2020, respectively. In the three and six months ended June 30, 2019, the impact from crude oil hedging contracts on Sales and other operating revenues was a decrease of ~~2020~~$14 million and ~~2019~~,an increase of $1 million, respectively. At ~~March 31,~~June 30, 2020, pre-tax deferred gains in Accumulated other comprehensive income (loss)related to outstanding crude

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

oil price hedging contracts were $~~831~~$386 million ~~all of~~ which will be reclassified into earnings during the remainder of 2020 as the originally hedged crude oil sales are recognized in earnings.

Interest rate swaps designated as fair value hedges: At ~~March 31,~~June 30, 2020 and December 31, 2019, we had interest rate swaps with gross notional amounts totaling $100 million, which were designated as fair value hedges and relate to debt where we have converted interest payments ~~on certain long-term debt~~ from fixed to floating rates. Changes in the fair value of interest rate swaps and the hedged fixed-rate debt are recorded inInterest expensein theStatement of Consolidated Income. In the ~~first quarter of~~three and six months ended June 30, 2020, the change in fair value of interest rate swaps was an increase in the asset of $5$1 million ~~(2019 Q1:~~and $6 million, respectively, compared with a decrease in the liability of ~~$1 million)~~$2 million and $3 million in the three and six months ended June 30, 2019, respectively, 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, netin Revenues and non-operating income in theStatement of Consolidated Incomewere ~~a loss~~losses of $1$2 million and $3 million in the ~~first quarter~~three and six months ended June 30, 2020, respectively, compared with losses of ~~2020 (2019 Q1: $5~~$2 million ~~gain).~~and gains of $3 million in the three and six months ended June 30, 2019, respectively. A component of foreign exchange ~~gain~~gains and losses is the result of foreign exchange derivative contracts that are not designated as hedges which amounted to a net ~~gain~~gains of $2$1 million and $3 million in the ~~first quarter~~three and six months ended June 30, 2020, respectively, compared with net gains of ~~2020 (2019 Q1: a net loss of less than~~ $1 ~~million).~~million and $1 million in the three and six months ended June 30, 2019, respectively.

Fair Value Measurement:

We have other short-term financial instruments, primarily cash equivalents, accounts receivable and accounts payable, for which the carrying value approximated fair value at ~~March 31,~~June 30, 2020. At ~~March 31,~~June 30, 2020, total long-term debt, which was primarily comprised of fixed-rate debt instruments, had a carrying value of ~~$8,194~~$8,210 million and a fair value of ~~$6,468~~$8,736 million based on Level 2 inputs.

PART I - FINANCIAL INFORMATION ~~(CONT’D.~~(CONT'D.)

~~Item 2.~~

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,~~June 30, 2020 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, 2019. 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 identified below under the section entitled “Risk Factors” and those discussed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

2019 and Part II, Item 1A. in our Form 10-Q for the fiscal quarter ended March 31, 2020.

Hess Corporation is a global Exploration and Production (E&P) company engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGLs), and natural gas with production operations located primarily in the United States (U.S.), Guyana, the Malaysia/Thailand Joint Development Area (JDA), Malaysia, and Denmark. We conduct exploration activities primarily offshore Guyana, the U.S. Gulf of Mexico, and offshore Suriname and Canada. At the Stabroek Block (Hess 30%), offshore Guyana, we have announced sixteen significant discoveries. The Liza Phase 1 development achieved first production in December 2019, with peak production expected to reach ~~up to~~ 120,000 gross ~~bopd.~~bopd in August. The Liza Phase 2 development was sanctioned in the second quarter of 2019 and is expected to start up in early 2022 with production reaching ~~up to~~ 220,000 gross bopd.

Our Midstream operating segment, which is comprised of Hess Corporation’s 47% consolidated ownership interest in Hess Midstream LP, provides fee-based services, including gathering, compressing and processing natural gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota.

Hess Response to Global Pandemic and Market Conditions

The global COVID-19 pandemic continues to have a profound impact on society and industry. The Corporation’s first priority in the midst of the COVID-19 pandemic has been the health and safety of the Hess workforce and local communities. A multidisciplinary Hess emergency response team has been overseeing plans and precautions to reduce the risks of COVID-19 in the work environment while maintaining business continuity based on the most current recommendations by government and public health agencies. The Corporation has implemented a variety of health and safety measures including enhanced cleaning procedures and modified work practices such as travel restrictions, health screenings, reduced personnel at offshore platforms and onshore work sites wherever this can be done safely, and remote working arrangements for office workers.

In July 2020, Hess Midstream LP announced that the planned maintenance turnaround at the Tioga Gas Plant originally scheduled for the third quarter of 2020 will be deferred until 2021 to ensure safe and timely execution in light of the COVID-19 pandemic.

In addition to the global health concerns of COVID-19, the pandemic has severely impacted demand for oil. In response to the resulting sharp decline in oil prices, the Corporation’s focus is on preserving cash and capability, while protecting the long-term value of its assets. In the first quarter of 2020, Hess entered into a new $1.0 billion ~~three-year~~three year term loan agreement and further reduced its E&P capital and exploratory budget for 2020 to $1.9 billion, a 37% reduction from the original budget of $3.0 billion. This reduction will be achieved primarily by shifting from a six-rig program to one rig in the Bakken, which was accomplished in May, and deferring discretionary spending across the portfolio, including ~~a six to twelve month deferral in the development of the Payara Field and~~ reduced 2020 drilling activity on the Stabroek Block offshore ~~Guyana.~~

~~As a result~~Guyana and deferral of some development activities for the Payara Field pending government approval of the ~~unprecedented reduction~~project, creating a potential delay in ~~demand due~~production startup of six to COVID-19, commercial storage in the United States is expected to reach capacity in the second quarter, which is requiring curtailments and shut-ins of production by the industry. To maximize the value of Hess production, the Corporation has chartered three very large crude carriers (VLCCs) to store 2 million barrels each of May, June and July Bakken crude oil production that is expected to be sold in the fourth quarter of 2020.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~Overview (continued)~~

Slowing economic activity caused by the pandemic has impacted natural gas nominations at the Corporation’s North Malay Basin (NMB) and JDA assets in Southeast Asia. Production in the first quarter for NMB and JDA was 58,000 barrels of oil equivalent per day (boepd) compared to 68,000 boepd in the first quarter of 2019. Nominations have been reduced due to the decline in business activity and production from NMB and JDA is forecast to be approximately 35,000 boepd in the second quarter and approximately 50,000 boepd for the full year 2020. In Guyana, the operator has temporarily idled two of the four drilling rigs on the Stabroek Block due to pandemic-related travel restrictions. The Liza Destiny floating production, offloading, and storage vessel (FPSO) is expected to reach its full capacity of 120,000 gross bopd, in June, with April gross production of approximately 75,000 bopd. Despite pandemic-related delays, the Liza Phase 2 development remains on schedule to start production in 2022.

~~First Quarter Results~~

~~In the first quarter of 2020, we incurred a net loss~~ of $2,433 million, compared with net income of $32 million in the first quarter of 2019. Excluding items affecting comparability of earnings between periods detailed on page 22, we incurred an adjusted net loss of $182 million in the first quarter of 2020. The decline in adjusted first quarter 2020 results, compared with the prior-year quarter, primarily reflects lower realized selling prices from the weak commodity price environment, partially offset by higher production volumes.

Net cash provided by operating activities was $445 million in the first quarter of 2020, compared with $238 million in the first quarter of 2019. Net cash provided by operating activities before changes in operating assets and liabilities were $502 million in the first quarter of 2020 and $635 million in the first quarter of 2019. Capital expenditures were $666 million in the first ~~quarter~~ ~~of 2020 and $642 million in the first quarter of 2019.~~

twelve months.

2020 Outlook

~~With~~

We project our ~~revised~~E&P capital and exploratory ~~budget of~~expenditures will be approximately $1.9 billion ~~we forecast oil~~in 2020. Oil and gas production in 2020, excluding Libya, is forecast to be approximately ~~320,000 boepd, which is down from the original guidance range of~~ 330,000 boepd, ~~to 335,000~~up from previous guidance of 320,000 boepd. We have ~~in excess of~~more than 80% of our forecasted crude oil production for the remainder of 2020 hedged with $55 WTI put options for 130,000 bopd and $60 Brent put options for 20,000 bopd. The fair value of the open crude oil put option contracts at June 30, 2020 was approximately $450 million. We also have no ~~near-term~~ debt maturities ~~aside from~~until 2023 when the ~~new~~three year term loan matures.

Net cash provided by operating activities was $711 million in ~~March 2023.~~

the first six months of 2020, compared with $913 million in the first six months of 2019. Net cash provided by operating activities before changes in operating assets and liabilities was $803 million in the first six months of 2020 and $1,195 million in the first six months of 2019. Capital expenditures were $1,173 million in the first six months of 2020 and $1,336 million in the first six months of 2019.

In 2020, based on current forward strip crude oil prices, we expect cash flow from operating activities, including settlements from crude oil put option contracts, cash and cash equivalents existing at ~~March 31,~~June 30, 2020 of ~~$2.1~~$1.6 billion, and our available committed revolving credit facility will be sufficient to fund our capital investment program and dividends. Due to the weak commodity price

PART I - FINANCIAL INFORMATION (CONT'D.)

Overview (continued)

environment, we may take any of the following steps, or a combination thereof, to improve our liquidity and financial position: further reduce the planned capital program and other cash outlays, including dividends, pursue asset sales or issue debt or equity ~~securities,~~securities.

Second Quarter Results

In the second quarter of 2020, we incurred a net loss of $320 million, compared with a net loss of $6 million in the second quarter of 2019. Excluding items affecting comparability of earnings between periods detailed on pages 24 and ~~pursue asset sales.~~

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~Overview (continued)~~

25, we incurred an adjusted net loss of $28 million in the second quarter of 2019. The decrease in second quarter 2020 results compared with adjusted results in the prior-year quarter, primarily reflects lower realized selling prices.

Exploration and Production Results

In the ~~first~~second quarter of 2020, E&P had a net loss of ~~$2,371~~$249 million, compared with net income of ~~$109~~$68 million in the ~~first~~second quarter of 2019. Excluding items affecting comparability of earnings between periods, the adjusted net ~~loss~~income for the ~~first~~second quarter of ~~2020~~2019 was ~~$120~~$46 million. Total net production, excluding Libya, averaged ~~344,000~~ 334,000 boepd in the ~~first~~second quarter of 2020, compared with ~~278,000~~273,000 boepd in the ~~first~~second quarter of 2019. The av~~erage~~average realized crude oil selling price, excluding the effect of hedging, was $20.63 per barrel in the second quarter of 2020, compared with $61.37 per barrel in the prior-year quarter reflecting a decrease in benchmark oil prices and widening of crude differentials realized as a result of reduced demand caused by the COVID-19 pandemic. In addition, a higher proportion of Bakken and Guyana production was sold in April and May which had lower prices than the month of June. Realized gains from crude oil hedging activities improved after-tax results by $228 million in the second quarter of 2020 and reduced after-tax results by $14 million in the second quarter of 2019. The average realized crude oil selling price, including hedging, was ~~$45.94~~$38.46 per barrel, down from ~~$55.91~~$60.45 per barrel in the ~~first~~second quarter of 2019. The average realized NGLs selling price in the ~~first~~second quarter of 2020 was ~~$9.32~~$7.32 per barrel, down from ~~$18.46~~$12.18 per barrel in the prior-year quarter, while the average realized natural gas selling price was ~~$3.16~~$2.41 per thousand cubic feet (mcf), down from ~~$4.43~~$3.92 per mcf in the ~~first~~second quarter of 2019.

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

•

In North Dakota, net production from the Bakken oil shale play averaged 190,000 boepd for the first quarter of 2020 (2019 Q1: 130,000 boepd), with net oil production up 34% to 114,000 bopd from 85,000 bopd in the year-ago period, primarily due to increased drilling activity and improved well performance. Natural gas and NGLs production were also higher due to the increased drilling activity, as well as additional natural gas captured with the start-up of the Little Missouri 4 natural gas processing plant in July 2019 and additional NGLs received under percentage of proceeds contracts resulting from lower prices. The Corporation operated six rigs in the first quarter, drilling 41 wells, completing 50 wells and bringing 37 new wells online. We forecast net production to average approximately 175,000 boepd for full year 2020 versus original guidance of 180,000 boepd, reflecting a reduction in the rig count to one from six by the end of May in response to the weak commodity price environment. To date, we have chartered three VLCCs to store 2 million barrels each of May, June and July Bakken crude oil production that is expected to be sold in the fourth quarter of 2020, to maximize the value of Hess production.

•In North Dakota, net production from the Bakken oil shale play averaged 194,000 boepd for the second quarter of 2020 (2019 Q2: 140,000 boepd), with net oil production up 26% to 108,000 bopd from 86,000 bopd in the year-ago period, primarily due to increased wells online and improved well performance. Natural gas and NGL production also increased from higher wells online, additional natural gas captured and processed at the Little Missouri 4 natural gas processing plant that commenced operations in July 2019, and additional volumes received under percentage of proceeds contracts resulting from lower prices. The Corporation reduced the number of rigs operating in the Bakken from six to one in May and drilled 17 wells, completed 31 wells, and brought 40 new wells online during the second quarter of 2020. We now forecast net production to average approximately 185,000 boepd for the third quarter and for the full year 2020 due to year to date performance and the deferral of the planned maintenance turnaround at the Tioga Gas Plant.

~~In the Gulf of Mexico, net production for the first quarter of 2020~~ ~~averaged~~ 74,000 boepd (2019 Q1: 70,000 boepd). The Esox-1 oil discovery in Mississippi Canyon (Hess - 57%) achieved first production in February as a low-cost tieback to the Tubular Bells production facilities.

•

~~At the Stabroek Block (Hess - 30%), offshore Guyana, net production from the Liza Phase 1 development for~~We have chartered three VLCCs to load a total of approximately 6 million barrels of oil during May through August to improve 2020 cash flow and enhance the value of our Bakken production. During the second quarter, we loaded 3.7 million barrels of crude oil on VLCCs and plan to load an additional 2.3 million barrels during the third quarter. The first VLCC cargo of 2 million barrels has been sold for delivery in China in September at a premium to Brent prices. The additional 4 million barrels of oil are expected to be sold in Asia in the fourth quarter of 2020 averaged 15,000 bopd following first production in December 2019. The operator, Esso Exploration and Production Guyana Limited, expects the Liza Destiny FPSO to reach full capacity of 120,000 gross bopd in June. The first one million barrel cargo of oil allocated to Hess was sold in March 2020.

We have committed capacity on Dakota Access Pipeline (DAPL) of approximately 55,000 bopd. On July 6, 2020, the United States District Court for the District of Columbia (District Court) ordered that the easement granted by the United States Army Corps of Engineers (Corps) for DAPL be vacated due to a failure of the Corps to produce an environmental impact statement and that DAPL be shut down and emptied of oil within 30 days. Dakota Access, LLC and the Corps are appealing the District Court’s decision on the merits to the United States Court of Appeals for the District of Columbia Circuit (Appeals Court) and requesting a stay of the District Court’s decision while the appeal is pending. On August 5, 2020, the Appeals Court stayed the District Court’s order insofar as it required that DAPL be shut down and emptied of oil, but declined to stay the portion of the order that vacated the easement granted by the Corps for DAPL. The partial stay of the District Court’s order will be in place until further proceedings are completed at the District Court and Appeals Court. If DAPL is ultimately required to shut in for any period of time, we expect to have capacity to move all of our Bakken production via alternative routes because of the flexibility provided by multiple takeaway alternatives, including rail and long term pipeline commitments, although the cost of moving any displaced DAPL barrels may increase by a few dollars per barrel.

PART I - FINANCIAL INFORMATION (CONT'D.)

Overview (continued)

•In the Gulf of Mexico, net production for the second quarter of 2020 averaged 68,000 boepd (2019 Q2: 65,000 boepd). The Esox-1 well, which commenced production in February, is expected to reach its gross peak rate of approximately 17,000 boepd, or 9,000 boepd net to Hess in the third quarter and is expected to average approximately 5,000 boepd net to Hess in 2020. The Corporation is participating in the BP operated Galapagos Deep exploration well (Hess 25%) which is a hub-class, Cretaceous-aged opportunity in the Mississippi Canyon area. The well spud in May and is still drilling.

•At the Stabroek Block (Hess 30%), offshore Guyana, net production from the Liza Phase 1 development averaged 22,000 bopd for the second quarter of 2020 following first production in December 2019. The operator, Esso Exploration and Production Guyana Limited, is currently commissioning water injection equipment and bringing natural gas injection fully online that should enable the Liza Destiny floating production, offloading and storage vessel (FPSO) to reach its capacity of 120,000 gross bopd in August. Phase 2 of the Liza Field development, which will utilize the Liza Unity FPSO with an expected capacity of ~~up to~~ 220,000 gross bopd, remains on target to achieve first oil in early 2022. AAs previously announced, some activities for a third development, Payara, with expected production capacity of ~~up to~~ 220,000 gross bopd, ~~is planned. Pending~~have been deferred pending government approval ~~to proceed, some 2020 activities at Payara are now being deferred,~~of the project creating a potential delay in ~~first~~ production startup of six to twelve ~~months beyond~~months.

As a result of COVID-19 related travel restrictions in Guyana, the ~~initial start-up target~~operator temporarily idled two drillships but both drillships resumed drilling operations by the end of the second quarter. The Stena Carron rig recently completed appraisal drilling at Yellowtail-2, located 1 mile southeast of Yellowtail-1. The well identified two additional high quality reservoirs, one adjacent to, and the other below the Yellowtail field. The well results are being evaluated and are expected to help form the basis for a potential future development. The Noble Don Taylor commenced drilling of the Redtail exploration well, which is 1.25 miles northwest of Yellowtail-1, in ~~2023.~~

~~As previously announced a 16th discovery~~July. The other two drillships, the Noble Bob Douglas and the Noble Tom Madden, are drilling and completing Liza Phase 1 and Phase 2 development wells.

•In the Gulf of Thailand, net production from Block A-18 of the JDA averaged 23,000 boepd for the second quarter of 2020 (2019 Q2: 35,000 boepd), including contribution from unitized acreage in Malaysia, while net production from North Malay Basin, offshore Peninsular Malaysia, averaged 21,000 boepd for the second quarter of 2020 (2019 Q2: 24,000 boepd). Net production was ~~made in the first quarter~~lower at the ~~Uaru-1 well, which encountered approximately 94 feet~~JDA and North Malay Basin due to reduced natural gas nominations caused by COVID-19 impacts on economic activity.

•At the Waha fields (Hess 8%), onshore Libya, production ceased following the declaration of ~~high-quality oil-bearing sandstone reservoir and is located approximately 10 miles northeast~~force majeure in January by the Libyan National Oil Corporation as a result of civil unrest. Net production averaged 20,000 boepd for the ~~Liza Field.~~

•second quarter of 2019.

In the Gulf of Thailand, net production from Block A-18 of the JDA averaged 32,000 boepd for the first quarter of 2020 (2019 Q1: 37,000 boepd), including contribution from unitized acreage in Malaysia. Net production from North Malay Basin, ~~offshore Peninsular Malaysia, averaged 26,000 boepd for the first quarter of 2020 (2019 Q1: 31,000 boepd).~~

•

~~At the Waha fields (Hess - 8%), onshore Libya, production ceased following the declaration of force majeure in January by the~~ ~~Libyan National Oil Corporation as a result of civil unrest. Net production averaged 5,000 boepd for the first quarter of 2020 (2019 Q1: 21,000 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,

2020

2019

(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess Corporation:

Exploration and Production

$
(2,371
)

$
109

Midstream

61

37

Corporate, Interest and Other

(123
)

(114
)
Total

$
(2,433
)

$
32

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

$
(8.00
)

$
0.09

~~(a)~~

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess Corporation:
Exploration and Production	$	(249)	$	68	$	(2,620)	$	177
Midstream	51		35		112		72
Corporate, Interest and Other	(122)		(109)		(245)		(223)
Total	$	(320)	$	(6)	$	(2,753)	$	26
Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic (a)	$	(1.05)	$	(0.02)	$	(9.04)	$	0.07
Diluted (b)	$	(1.05)	$	(0.02)	$	(9.04)	$	0.07

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

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

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

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						Three Months Ended June 30,						Six Months Ended June 30,
	March 31,						2020		2019		2020		2019
	2020			2019
	(In millions)						(In millions)
Items Affecting Comparability of Earnings Between Periods, After-Tax:						Items Affecting Comparability of Earnings Between Periods, After-Tax:
Exploration and Production	$	(2,251	)	$	—	Exploration and Production	$	—	$	22	$	(2,251)	$	22
Midstream		—			—	Midstream	—		—		—		—
Corporate, Interest and Other		—			—	Corporate, Interest and Other	—		—		—		—
Total	$	(2,251	)	$	—	Total	$	—	$	22	$	(2,251)	$	22

The items in the table above are explained on ~~page 22.~~

pages 24 and 25.

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						Three Months Ended June 30,						Six Months Ended June 30,
	March 31,						2020		2019		2020		2019
	2020			2019
	(In millions)						(In millions)
Adjusted Net Income (Loss) Attributable to Hess Corporation:						Adjusted Net Income (Loss) Attributable to Hess Corporation:
Net income (loss) attributable to Hess Corporation	$	(2,433	)	$	32	Net income (loss) attributable to Hess Corporation	$	(320)	$	(6)	$	(2,753)	$	26
Less: Total items affecting comparability of earnings between periods, after-tax		(2,251	)		—	Less: Total items affecting comparability of earnings between periods, after-tax	—		22		(2,251)		22
Adjusted Net Income (Loss) Attributable to Hess Corporation	$	(182	)	$	32	Adjusted Net Income (Loss) Attributable to Hess Corporation	$	(320)	$	(28)	$	(502)	$	4

The following table reconciles reported net cash provided by (used in) operating activities and cash provided by (used in) operating activities before changes in operating assets and liabilities:

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 22.~~pages 24 and 25. 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.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

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:

Excluding the E&P items affecting comparability of earnings between periods detailed on ~~page 22,~~pages 24 and 25, 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 (DD&A), exploration expenses and income taxes, as discussed below.

PART I - FINANCIAL INFORMATION ~~(CONT’D.~~(CONT'D.)

Consolidated Results of Operations (continued)

Selling Prices: Lower realized selling prices in the second quarter and first ~~quarter~~six months of 2020, decreased after-tax results by approximately ~~$235~~$285 million and $520 million, respectively, compared to the same ~~period~~periods in 2019. Average selling prices were as follows:

Three Months Ended

March 31,

2020

2019

Average Selling Prices (a)

Crude Oil – Per Barrel (Including Hedging)

United States

Onshore

$
44.05

$
52.16

Offshore

49.33

59.30

Total United States

45.63

54.76

Guyana

43.26

—

Malaysia and JDA

51.24

59.38

Denmark

55.60

67.26

Libya

—

62.71

Worldwide

45.94

55.91

Crude Oil – Per Barrel (Excluding Hedging)

United States

Onshore

$
40.54

$
50.91

Offshore

45.65

58.05

Total United States

42.07

53.51

Guyana (b)

36.79

—

Malaysia and JDA

51.24

59.38

Denmark

49.14

67.26

Libya

—

62.71

Worldwide

42.08

54.84

Natural Gas Liquids – Per Barrel

United States

Onshore

$
9.31

$
18.69

Offshore

9.39

17.21

Worldwide

9.32

18.46

Natural Gas – Per Mcf

United States

Onshore

$
1.28

$
2.46

Offshore

1.32

2.54

Total United States

1.30

2.50

Malaysia and JDA

4.71

5.28

Denmark

3.73

4.02

Libya

4.89

5.14

Worldwide

3.16

4.43

~~(a)~~

Selling prices in the United States are adjusted for certain processing and distribution fees included in Marketing expenses. Excluding these fees Worldwide selling prices for the first quarter of 2020 were $49.44 (Q1 2019: $59.18) per barrel for crude oil (including hedging), $45.58 (Q1 2019: $58.11) per barrel for crude oil (excluding hedging), $9.52 (Q1 2019: $18.62) per barrel for NGLs and $3.26 (Q1 2019: $4.49) per mcf for natural gas.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Average Selling Prices (a)
Crude Oil – Per Barrel (Including Hedging)
United States
Onshore	$	38.23	$	56.08	$	42.26	$	54.14
Offshore	39.10		62.23		44.49		60.73
Total United States	38.57		58.22		43.03		56.49
Guyana	35.28		—		38.41		—
Malaysia and JDA	15.62		66.88		26.73		63.11
Denmark	50.29		70.27		53.49		69.51
Libya	—		69.87		—		66.72
Worldwide	38.46		60.45		42.98		58.25
Crude Oil – Per Barrel (Excluding Hedging)
United States
Onshore	$	18.93	$	57.19	$	32.52	$	54.09
Offshore	22.78		63.42		34.61		60.68
Total United States	20.48		59.36		33.23		56.43
Guyana	19.23		—		26.11		—
Malaysia and JDA	15.62		66.88		26.73		63.11
Denmark	29.16		70.27		41.19		69.51
Libya	—		69.87		—		66.72
Worldwide	20.63		61.37		32.90		58.20
Natural Gas Liquids – Per Barrel
United States
Onshore	$	7.59	$	12.16	$	8.39	$	15.22
Offshore	4.71		12.32		7.23		14.97
Worldwide	7.32		12.18		8.27		15.19
Natural Gas – Per Mcf
United States
Onshore	$	0.94	$	1.41	$	1.10	$	1.86
Offshore	1.14		2.19		1.23		2.37
Total United States	1.01		1.76		1.15		2.11
Malaysia and JDA	3.97		5.08		4.39		5.19
Denmark	3.51		3.74		3.63		3.89
Libya	—		5.78		4.90		5.44
Worldwide	2.41		3.92		2.81		4.18

~~(b)~~(a)Selling prices in the United States are adjusted for certain processing and distribution fees included in Marketing expenses. Excluding these fees Worldwide selling prices for the second quarter of 2020 would be $41.33 (Q2 2019: $63.33) per barrel for crude oil (including hedging), $23.50 (Q2 2019: $64.25) per barrel for crude oil (excluding hedging), $7.49 (Q2 2019: $12.38) per barrel for NGLs and $2.55 (Q2 2019: $3.99) per mcf for natural gas. Excluding these fees Worldwide selling prices for the first six months of 2020 would be $46.20 (2019: $61.32) per barrel for crude oil (including hedging), $36.12 (2019: $61.27) per barrel for crude oil (excluding hedging), $8.46 (2019: $15.37) per barrel for NGLs and $2.93 (2019: $4.25) per mcf for natural gas.

Hess Corporation sold its first allocated one million barrel cargo of oil from the Liza Field in March 2020. The realized price reflects the Brent benchmark prices used in the pricing formula at the time of sale in March.

Crude oil hedging activities were a net gain of ~~$64~~$228 million and $292 million before and after income taxes in the second quarter and first ~~quarter~~six months of 2020, respectively, and a net loss of $14 million and a net gain of ~~$15~~$1 million before and after income taxes in the second quarter and first ~~quarter~~six months of ~~2019.~~2019, respectively. For calendar year 2020, we have WTI put options with an average monthly floor price of $55 per barrel for 130,000 bopd, and Brent put options with an average monthly floor price of $60 per barrel for 20,000 bopd. At ~~March 31,~~June 30, 2020, the fair value of the open crude oil put option contracts was ~~$1,098~~approximately $450 million. Sales volumes will be underlifted by approximately 4 million barrels of oil in the second quarter and 2 million barrels of oil in the third quarter as a result of using the VLCCs. While we will receive cash for settlement gains as the $55 WTI put option contracts mature, the net realized gain on contracts associated with the 6 million barrels of underlifted oil, comprised of the cash settlement less the associated amortization of premiums paid, will be deferred until the volumes stored in the VLCCs are sold. We ~~now~~ expect noncash put option premium amortization, which will be reflected in realized selling prices, to reduce our ~~second~~third quarter results by approximately ~~$50~~$70 million and reduce our full year 2020 results by approximately $280 million, which is unchanged from our previous full-year guidance.

PART I - FINANCIAL INFORMATION ~~(CONT’D.~~(CONT'D.)

Consolidated Results of Operations (continued)

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

Three Months Ended

March 31,

2020

2019

(In thousands)

Crude Oil – Barrels

United States

North Dakota (a)

114

86

Offshore

48

49

Total United States

162

135

Guyana

15

—

Malaysia and JDA

4

4

Denmark

6

6

Libya

4

19

Total

191

164

Natural Gas Liquids – Barrels

United States

North Dakota (a)

49

34

Offshore

7

6

Total United States

56

40

Natural Gas – Mcf

United States

North Dakota (a)

162

79

Offshore

113

92

Total United States

275

171

Malaysia and JDA

325

381

Denmark

6

7

Libya

5

13

Total

611

572

Barrels of Oil Equivalent (b)

349

299

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

71
%

68
%

~~(a)~~

~~Net production from the Bakken was 190,000 boepd in the first quarter of 2020 compared with 130,000 boepd in the first quarter of 2019.~~


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Crude Oil – Barrels
United States
North Dakota (a)	108		87		111		86
Offshore	45		46		47		47
Total United States	153		133		158		133
Guyana	22		—		18		—
Malaysia and JDA	3		4		3		4
Denmark	5		6		6		6
Libya	—		18		2		19
Total	183		161		187		162
Natural Gas Liquids – Barrels
United States
North Dakota (a)	57		38		53		36
Offshore	6		5		6		6
Total United States	63		43		59		42
Natural Gas – Mcf
United States
North Dakota (a)	177		103		170		91
Offshore	101		83		107		88
Total United States	278		186		277		179
Malaysia and JDA	245		332		285		355
Denmark	5		6		6		6
Libya	—		11		3		12
Total	528		535		571		552
Barrels of Oil Equivalent (b)	334		293		341		296

Crude oil and natural gas liquids as a share of total production	74	%	70	%	72	%	69	%

~~(b)~~(a)Net production from the Bakken was 194,000 boepd and 192,000 boepd in the second quarter and first six months of 2020, respectively, compared with 140,000 boepd and 135,000 boepd in the second quarter and first six months of 2019, respectively.

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.

(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 21.

We forecast net production, excluding Libya, to be in the range of ~~310,000~~320,000 boepd to ~~315,000~~325,000 boepd for the ~~second~~third quarter and approximately ~~320,000~~330,000 boepd for the full year of 2020.

United States: North Dakota net oil production was higher in the second quarter and first ~~quarter~~six months of 2020, compared to the ~~year-ago quarter,~~corresponding periods in 2019, primarily due to increased ~~drilling activity~~wells online and improved well performance. North Dakota net natural gas and NGLs production was higher in the second quarter and first ~~quarter~~six months of 2020, compared to the ~~year-ago quarter,~~corresponding periods in 2019, also due to ~~the increased drilling activity, as well as~~higher wells online, additional natural gas captured ~~with the start-up of~~and processed at the Little Missouri 4 natural gas processing plant that commenced operations in July 2019, and additional ~~NGLs~~volumes received under percentage of proceeds contracts resulting from lower ~~NGLs commodity pricing.~~prices. Total offshore net production in the second quarter and first ~~quarter~~six months of 2020 was comparable to the ~~year-ago quarter.~~corresponding periods in 2019.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~Consolidated Results of Operations (continued)~~

International: Net production at Guyana was higher in the second quarter and first ~~quarter~~six months of 2020, compared to the ~~year-ago quarter,~~corresponding periods in 2019, due to commencement of production from the Liza Phase 1 development in December 2019. Net production at Libya was lower due to ~~production~~the cessation ~~in February 2020~~of production following the declaration of force majeure in January by the Libyan National Oil Corporation ~~caused by~~as a result of civil unrest. Net production was lower at Malaysia and JDA ~~primarily~~ due to ~~lower~~reduced natural gas nominations caused by COVID-19 impacts on ~~reduced gas demand from COVID-19 restrictions.~~economic activity.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Sales Volumes: The impact of lower sales volumes decreased after-tax results by approximately $10 million in the second quarter of 2020, compared to corresponding period in 2019. The impact of higher sales volumes improved after-tax results by ~~approximately $185~~$175 million in the first ~~quarter~~six months of 2020, compared to the ~~first quarter of~~corresponding period in 2019. 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,

2020

2019

(In thousands)

Crude oil – barrels

16,052

13,940

Natural gas liquids – barrels

5,097

3,631

Natural gas – mcf

55,620

51,435

Barrels of Oil Equivalent (a)

30,419

26,144

Crude oil – barrels per day

176

155

Natural gas liquids – barrels per day

56

40

Natural gas – mcf per day

611

572

Barrels of Oil Equivalent Per Day (a)

334

290

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Crude oil – barrels (a) 12,764 15,061 28,816 29,001
Natural gas liquids – barrels 5,690 3,931 10,787 7,562
Natural gas – mcf 48,081 48,638 103,701 100,073
Barrels of Oil Equivalent (b) 26,468 27,098 56,887 53,242
Crude oil – barrels per day (a) 140 166 158 160
Natural gas liquids – barrels per day 63 43 59 42
Natural gas – mcf per day 528 535 571 552
Barrels of Oil Equivalent Per Day (b) 291 298 312 294

(a)During the second quarter of 2020, 3.7 million barrels of crude oil were loaded on VLCCs for sale later in the year.

~~(a)~~

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 lower in the second quarter and first ~~quarter~~six months of 2020, compared with the corresponding ~~period~~periods in 2019, primarily due to lower benchmark crude oil prices on purchased volumes ~~partially offset by higher purchased volumes~~ and a ~~$53~~reduction of $113 million ~~pre-tax charge~~ for the cost of crude oil inventory ~~valuation.~~capitalized for the 3.7 million barrels of crude oil loaded on the VLCCs in the second quarter. In the first quarter of 2020, we incurred a pre-tax charge of $53 million to reflect crude oil inventory at its net realizable value at March 31, 2020 (see

Items Affecting Comparability of Earnings Between Periods below).

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 on an absolute basis and~~ decreased ~~on a per barrel basis~~ in the second quarter and first ~~quarter~~six months of 2020, compared with the corresponding ~~period~~periods in 2019, ~~due to a~~from lower production and severances taxes associated with lower crude oil prices and the impact of cost reduction initiatives. Per-unit costs were down in the second quarter and first six months of 2020 on the lower costs and the impact of higher ~~proportion of lower-cost~~ production ~~from the Bakken.~~volumes.

Midstream Tariffs Expense: Tariffs expense increased ~~from~~in the second quarter and first six months of 2020, compared with the corresponding periods in 2019, primarily due to higher throughput volumes in 2020. We estimate Midstream tariffs expense to be in the range of ~~$215~~$220 million to $230 million in the ~~second~~third quarter and in the range of $905 million to $930 million for the full year 2020.

DD&A: DD&A expenses were higher in the second quarter and first ~~quarter~~six months of 2020, ~~on an absolute basis,~~ compared with the corresponding ~~period~~periods in 2019, reflecting higher production volumes. DD&A expense on a per-unit basis was lower in the second quarter and first ~~quarter~~six months of 2020, compared with the corresponding ~~period~~periods in 2019, primarily due to the year-over-year mix of ~~production.~~production and as a result of the impairment charges in the first quarter of 2020.

Unit Costs: Unit cost per barrel of oil equivalent (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

Three Months Ended

Twelve Months Ended

March 31,

June 30,

December 31,

2020

2019

2020

2020
Cash operating costs (b)

$
9.70

$
11.00

$10.00  — $10.50

$10.00  — $10.50
DD&A (c)

16.44

17.25

14.00  —  15.00

15.00  —  16.00
Total Production Unit Costs

$
26.14

$
28.25

$24.00 — $25.50

$25.00 — $26.50

~~(a)~~

~~Forecast information excludes any contribution from Libya.~~


	Actual											Forecast range (a)
	Three months ended June 30,						Six months ended June 30,				Three Months Ended September 30,	Twelve Months Ended December 31,
	2020		2019		2020		2019		2020	2020
Cash operating costs (b)	$	8.81	$	12.11	$	9.26	$	11.55	$10.00 — $10.50	$9.50 — $10.00
DD&A (c)	15.45		17.20		15.95		17.23		16.00 — 17.00	16.00 — 17.00
Total Production Unit Costs	$	24.26	$	29.31	$	25.21	$	28.78	$26.00 — $27.50	$25.50 — $27.00

~~(b)~~(a)Forecast information excludes any contribution from Libya.

~~Cash operating costs per boe, excluding Libya, were $9.61 in the first quarter of 2020, compared to $11.54 in the first quarter of 2019.~~

~~(c)~~(b)Cash operating costs per boe, excluding Libya, were $8.64 and $9.13 in the three and six months ended June 30, 2020, respectively, compared with $12.72 and $12.12 in the same periods of 2019, respectively.

~~DD&A per boe, excluding Libya, was $16.64 in the first quarter of 2020, compared to $18.37 in the first quarter of 2019.~~

(c)DD&A per boe, excluding Libya, was $15.45 and $16.05 in the three and six months ended June 30, 2020, respectively, compared with $18.31 and $18.34 in the same periods of 2019, respectively.

PART I - FINANCIAL INFORMATION ~~(CONT’D.~~(CONT'D.)

Consolidated Results of Operations (continued)

Exploration Expenses: Exploration expenses were as follows:

Three Months Ended

March 31,

2020

2019

(In millions)

Exploratory dry hole costs (a)

$
135

$
—

Exploration lease and other impairment (b)

32

7

Geological and geophysical expense and exploration overhead

22

27

Total Exploration Expense

$
189

$
34

~~(a)~~

First quarter 2020 primarily relates to previously capitalized exploratory wells (see Items Affecting Comparability of Earnings Between Periods below) and the Oldfield-1 exploration well in the Gulf of Mexico.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In millions)
Exploratory dry hole costs (a)	$	—	$	—	$	135	$	—
Exploration lease and other impairment (b)	6		4		38		11
Geological and geophysical expense and exploration overhead	25		39		47		66
Total Exploration Expense	$	31	$	43	$	220	$	77

~~(b)~~(a)First six months of 2020 primarily relates to previously capitalized exploratory wells (see Items Affecting Comparability of Earnings Between Periods below) and the Oldfield-1 exploration well in the Gulf of Mexico.

~~First quarter 2020 includes impaired leasehold costs due to a reprioritization of the Corporation’s forward capital program.~~

(b)First six months of 2020 includes impaired leasehold costs due to a reprioritization of the Corporation’s forward capital program.

Exploration expenses, excluding dry hole expense, are estimated to be in the range of $35 million to $40 million in the ~~second~~third quarter of 2020 and ~~$145~~$140 million to ~~$155~~$150 million for the full year of 2020.

Income Taxes: The decline in income tax expense in the second quarter and first ~~quarter~~six months of 2020, compared to the ~~year-ago quarter,~~corresponding periods in 2019, is primarily due to lower pre-tax income in Libya as a result of the declaration of force majeure in January 2020. Excluding items affecting comparability of earnings between periods and Libyan operations, E&P income tax expense in the second quarter and first six months of 2020 was $9a benefit of $3 million and an expense of $6 million, respectively, compared with an expense of $2$7 million and $9 million in the second quarter and first ~~quarter~~six months of ~~2019.~~ 2019, respectively. Excluding items affecting comparability of earnings between periods and Libyan operations, E&P income tax expense is expected to be an expense in the range of $5$10 million to ~~$10~~$15 million for the ~~second~~third quarter of 2020 and $20 million to $30 million for the full year of 2020.

Items Affecting Comparability of Earnings Between Periods:

The following table summarizes, on ~~a pre-tax and~~ an after-tax basis, income (expense) items affecting comparability of E&P earnings between periods:

	Three Months Ended
	March 31,											Three Months Ended June 30,						Six Months Ended June 30,
	Pre-tax					After-tax						2020		2019		2020		2019
	2020			2019		2020			2019
	(In millions)											(In millions)
Impairment	$	(2,126	)	$	—	$	(2,049	)	$	—	Impairment	$	—	$	—	$	(2,049)	$	—
Dry hole, lease impairment and other exploration expenses		(152	)		—		(150	)		—	Dry hole, lease impairment and other exploration expenses	—		—		(150)		—
Crude oil inventories write-down		(53	)		—		(52	)		—	Crude oil inventories write-down	—		—		(52)		—
Gain on asset sale, net											Gain on asset sale, net	—		22		—		22
	$	(2,331	)	$	—	$	(2,251	)	$	—		$	—	$	22	$	(2,251)	$	22

The following table summarizes, on a pre-tax basis, income (expense) items affecting comparability of E&P earnings between periods:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In millions)
Impairment	$	—	$	—	$	(2,126)	$	—
Dry hole, lease impairment and other exploration expenses	—		—		(152)		—
Crude oil inventories write-down	—		—		(53)		—
Gain on asset sale, net	—		22		—		22
	$	—	$	22	$	(2,331)	$	22

Impairment: In the first quarter of 2020, we recorded noncash impairment charges totaling $2.1 billion ($2.0 billion after income taxes) related to our oil and gas properties at North Malay Basin in Malaysia, the South Arne Field in Denmark, and the Stampede Field and the Tubular Bells Field in the Gulf of Mexico, primarily as a result of a lower long-term crude oil price outlook. Other charges totaling $21 million pre-tax ($20 million after income taxes) related to drilling rig right-of-use assets in the Bakken and surplus materials and supplies. See Note 2,7, Impairment in the Notes to Consolidated Financial Statements.

Dry hole, lease impairment and other exploration expenses: In the first quarter of 2020, we incurred pre-tax charges totaling $152 million ($150 million after income taxes), primarily related to the write-off of previously capitalized exploratory wells in the Gulf of Mexico as detailed in Note 4,3, Property, plant and equipment in the Notes to Consolidated Financial Statements, and to impair certain exploration leasehold costs.

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Crude oil inventories write-down: In the first quarter of 2020, we incurred a pre-tax charge of $53 million ($52 million after income taxes) to reduce crude oil inventories to their net realizable value. These charges are included in Marketing, including purchased oil and gas in the Statement of Consolidated Income. See Note 3,2, Inventories in the Notes to Consolidated Financial Statements.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~Gain on asset sale, net:

~~Consolidated Results~~ In the second quarter of ~~Operations (continued)~~2019, we recorded a pre-tax gain of $22 million ($22 million after income taxes) associated with the sale of our remaining acreage in the Utica shale play.

Midstream

Following is a summarized income statement for our Midstream operations:


	Three Months Ended					Three Months Ended June 30,						Six Months Ended June 30,
	March 31,					2020		2019		2020		2019
	2020		2019
	(In millions)					(In millions)
Revenues and Non-Operating Income					Revenues and Non-Operating Income
Sales and other operating revenues	$	291	$	190	Sales and other operating revenues	$	270	$	190	$	561	$	380
Other, net		2		—	Other, net	1		—		3		—
Total revenues and non-operating income		293		190	Total revenues and non-operating income	271		190		564		380

Costs and Expenses					Costs and Expenses
Operating costs and expenses		92		55	Operating costs and expenses	95		58		187		113
General and administrative expenses		8		6	General and administrative expenses	4		5		12		11
Depreciation, depletion and amortization		38		34	Depreciation, depletion and amortization	39		35		77		69
Interest expense		25		15	Interest expense	23		17		48		32
Total costs and expenses		163		110	Total costs and expenses	161		115		324		225

Results of Operations Before Income Taxes		130		80	Results of Operations Before Income Taxes	110		75		240		155
Provision (benefit) for income taxes		2		—	Provision (benefit) for income taxes	2		—		4		—
Net Income (Loss)		128		80	Net Income (Loss)	108		75		236		155
Less: Net income (loss) attributable to noncontrolling interests		67		43	Less: Net income (loss) attributable to noncontrolling interests	57		40		124		83
Net Income (Loss) Attributable to Hess Corporation	$	61	$	37	Net Income (Loss) Attributable to Hess Corporation	$	51	$	35	$	112	$	72

Sales and other operating revenues for the second quarter and first ~~quarter~~six months of 2020 increased, compared to the ~~first quarter of~~corresponding periods in 2019, primarily due to higher throughput volumes and increased rail transportation revenues associated with third-party services. Operating costs and expenses for the second quarter and first ~~quarter~~six months of 2020 increased, compared to the ~~first quarter of~~corresponding periods in 2019, primarily due to ~~higher maintenance activity, and~~ increased third-party rail transportation ~~charges.~~

charges, maintenance expenditures on expanded infrastructure and initial costs related to the Tioga Gas Plant turnaround.

The increase in interest expense from 2019 reflects higher borrowings by the Midstream business.

Excluding items affecting comparability of earnings, net income attributable to Hess Corporation from the Midstreamsegment is estimated to be in the range of $40 million to ~~$50~~$50 million in the ~~second~~third quarter of 2020 and in the range of ~~$185~~ $195 million to ~~$195~~$205 million for the full year of 2020.

~~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							Three Months Ended June 30,						Six Months Ended June 30,
	March 31,							2020		2019		2020		2019
	2020			2019
	(In millions)							(In millions)
Corporate and other expenses (excluding items affecting comparability)	$	39		$	32		Corporate and other expenses (excluding items affecting comparability)	$	26	$	28	$	65	$	60
Interest expense		88			90		Interest expense	96		89		184		179
Less: Capitalized interest		—			(7	)	Less: Capitalized interest	—		(9)		—		(16)
Interest expense, net		88			83		Interest expense, net	96		80		184		163
Corporate, Interest and Other expenses before income taxes		127			115		Corporate, Interest and Other expenses before income taxes	122		108		249		223
Provision (benefit) for income taxes		(4	)		(1	)	Provision (benefit) for income taxes	—		1		(4)		—
Net Corporate, Interest and Other expenses after income taxes		123			114		Net Corporate, Interest and Other expenses after income taxes	$	122	$	109	$	245	$	223
Items affecting comparability of earnings between periods, after-tax		—			—
Total Corporate, Interest and Other Expenses After Income Taxes	$	123		$	114

PART I - FINANCIAL INFORMATION (CONT'D.)

Consolidated Results of Operations (continued)

Corporate and other expenses were higher in the first ~~quarter~~six months of 2020, compared to the corresponding period in 2019, primarily due to a charge of $7 million for legal costs related to former downstream businesses. Interest expense, net was higher in the second quarter and first ~~quarter~~six months of 2020, compared to the ~~first quarter of~~corresponding periods in 2019, due to the cessation of capitalized interest at the Liza Field, offshore Guyana, upon commencement of production in December ~~2019.~~

~~Second~~2019, and due to interest on a new $1.0 billion three year term loan entered into in the first quarter of 2020.

Third quarter 2020 corporate expenses are expected to be in the range of $25 million to $30 million, and interest expense is expected to be in the range of $95 million to $100 million. We estimate corporate expenses for full year 2020 to be in the range of $115 million to $125 million, and interest expense to be in the range of $375 million to ~~$385~~$380 million.

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 COVID-19. For a more comprehensive description of the risks that may affect our business, see the section entitled Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, ~~and~~ in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

2019 and Part II, Item 1A. Risk Factors in our Form 10-Q for the fiscal quarter ended March 31, 2020.

Proved reserves are calculated using the average price during the twelve month period before December 31 determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within the year, unless prices are defined by contractual agreements, excluding escalations based on future conditions. Crude oil prices used in the determination of proved reserves at December 31, 2019 were $55.73 per barrel for WTI and $62.54 per barrel for Brent, which are significantly higher than the average crude oil benchmark prices ~~at March 31,~~for the six months ended June 30, 2020 (WTI - ~~$20.48~~$36.82 per barrel; Brent - ~~$17.68~~$42.10 per barrel). If crude oil prices for the rest of 2020 remain significantly below prices used for proved reserves at December 31, 2019, proved reserves at December 31, 2020 ~~could~~are expected to be significantly lower than proved reserves at December 31, 2019. It is difficult to estimate the magnitude of any net negative change in proved reserves that may result from lower crude oil prices due to a number of factors that are currently unknown, including 2020 crude oil prices, any revisions in proved reserves that may occur based on 2020 reservoir performance, the levels to which industry costs will decline in response to lower prices, and management’s plans as of December 31, 2020 for developing proved undeveloped reserves. Any ~~changes in~~reductions to proved reserves will ~~impact~~increase depreciation, depletion and amortization expense and reduce the Standardized Measure of Discounted Future Net Cash Flows.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

Liquidity and Capital Resources

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

March 31,

December 31,

2020

2019

(In millions, except ratio)

Cash and cash equivalents (a)

$
2,080

$
1,545

Current maturities of long-term debt

3

—

Total debt (b)

8,194

7,142

Total equity

8,178

9,706

Debt to capitalization ratio as defined under debt covenants (c)

42.0
%

39.6
%

~~(a)~~

~~Includes $3 million of cash attributable to our Midstream segment, at March 31, 2020 (December 31, 2019: $3 million).~~


	June 30, 2020			December 31, 2019

	(In millions, except ratio)
Cash and cash equivalents (a)	$	1,646		$	1,545
Current maturities of long-term debt	5			—
Total debt (b)	8,210			7,142
Total equity	7,366			9,706
Debt to capitalization ratio (c)	44.3		%	39.6		%

~~(b)~~(a)Includes $3 million of cash attributable to our Midstream segment, at June 30, 2020 (December 31, 2019: $3 million).

~~At March 31, 2020, includes $1,815 million of debt outstanding from our Midstream Segment (December 31, 2019: $1,753 million) that is non-recourse to Hess Corporation.~~

~~(c)~~(b)At June 30, 2020, includes $1,828 million of debt outstanding from our Midstream segment (December 31, 2019: $1,753 million) that is non-recourse to Hess Corporation.

Total debt (including finance lease obligations) as a percentage of the sum of total debt (including finance lease obligations) plus equity (excluding impact of noncash impairment charges) as defined under debt covenants.

(c)The debt of Hess Corporation (excluding Midstream non-recourse debt) as a percentage of the sum of debt plus equity (excluding the impact of noncash impairment charges and non-controlling interests) as defined under Hess Corporation’s revolving credit facility and term loan debt covenants.

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Cash Flows

The following table summarizes our cash flows:


	Three Months Ended							Six Months Ended June 30,
	March 31,							2020		2019
	2020			2019
	(In millions)							(In millions)
Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	$	445		$	238		Operating activities	$	711	$	913
Investing activities		(818	)		(680	)	Investing activities	(1,388)		(1,297)
Financing activities		908			48		Financing activities	778		(102)
Net Increase (Decrease) in Cash and Cash Equivalents	$	535		$	(394	)	Net Increase (Decrease) in Cash and Cash Equivalents	$	101	$	(486)

Operating activities: Net cash provided by operating activities was ~~$445~~$711 million in the first ~~quarter~~six months of 2020, compared to ~~$238~~$913 million in the first ~~quarter~~six months of 2019. Changes in operating assets and liabilities was a use of cash of ~~$57~~$92 million in the first ~~quarter~~six months of 2020, and a use of cash of ~~$397~~$282 million in the first ~~quarter~~six months of 2019. Changes in operating assets and liabilities in 2019 ~~which~~ included a one-time payment of approximately $130 million to our joint venture partner for its share of sale/leaseback proceeds related to our sale of the North Malay Basin floating storage and offloading vessel that we received in 2018.

Investing activities: Additions to property, plant and equipment of ~~$818~~$1,397 million in the first ~~quarter~~six months of 2020 were up ~~$147~~$102 million compared with the corresponding period in 2019. The increase primarily reflects ~~higher activity~~payments in the ~~Bakken and Gulf of Mexico and first quarter payments on accrued fourth quarter 2019 capital expenditures. The~~ first quarter of 2020 to settle capital expenditures accrued in the fourth quarter of 2019, partially offset by lower overall activity across the portfolio. The first six months of 2019 included ~~Midstream~~ additions of approximately $90 million associated with the Midstream operating segment's acquisition of assets from Summit ~~acquisition.~~Midstream Partners LP.

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


	Three Months Ended							Six Months Ended June 30,
	March 31,							2020		2019
	2020			2019
	(In millions)							(In millions)
Additions to property, plant and equipment - E&P:							Additions to property, plant and equipment - E&P:
Capital expenditures incurred - E&P	$	(609	)	$	(515	)	Capital expenditures incurred - E&P	$	(1,037)	$	(1,140)
Increase (decrease) in related liabilities		(131	)		(6	)	Increase (decrease) in related liabilities	(213)		55
Additions to property, plant and equipment - E&P	$	(740	)	$	(521	)	Additions to property, plant and equipment - E&P	$	(1,250)	$	(1,085)

Additions to property, plant and equipment - Midstream:							Additions to property, plant and equipment - Midstream:
Capital expenditures incurred - Midstream	$	(57	)	$	(127	)	Capital expenditures incurred - Midstream	$	(136)	$	(196)
Increase (decrease) in related liabilities		(21	)		(23	)	Increase (decrease) in related liabilities	(11)		(14)
Additions to property, plant and equipment - Midstream	$	(78	)	$	(150	)	Additions to property, plant and equipment - Midstream	$	(147)	$	(210)

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~Liquidity and Capital Resources (continued)~~

Financing activities: Borrowings in the first ~~quarter~~six months of 2020 include $1.0 billion related to our new ~~three-year~~three year term loan. Hess Midstream borrowed a total of ~~$60~~$72 million from their revolving credit facilities in the first ~~quarter~~six months of 2020 and ~~$199~~$160 million in the first ~~quarter~~six months of 2019. We paid common stock dividends totaling ~~$81~~$157 million in the first ~~quarter~~six months of 2020, compared to common stock and preferred dividends of ~~$88~~$164 million in the first ~~quarter~~six months of 2019. In addition, net cash outflows to noncontrolling interests were ~~$63~~$128 million in the first ~~quarter~~six months of 2020 and ~~$13~~$27 million in the first ~~quarter~~six months of 2019.

Future Capital Requirements and Resources

At ~~March 31,~~June 30, 2020, we had ~~$2.1~~ $1.6 billion in cash and cash equivalents, excluding Midstream, and total liquidity, including available committed credit facilities, of approximately ~~$5.9~~ $5.3 billion. Our fully undrawn $3.5 billion committed revolving credit facility matures in May 2023, and we have no ~~significant near-term~~ debt maturities ~~aside from~~until 2023 when the ~~new~~three year term loan ~~in March 2023.~~ matures. Oil and gas production in 2020, excluding Libya, is forecast to be approximately ~~320,000 boepd~~. 330,000 boepd. We have more than 80% of our ~~remaining~~forecasted crude oil production infor the remainder of 2020 hedged with $55 WTI put options for 130,000 bopd and $60 Brent put options for 20,000 bopd. The fair value of the open crude oil put option contracts at June 30, 2020 was approximately $450 million.

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

Net cash provided by operating activities was ~~$445~~$711 million in the first ~~quarter~~six months of 2020, compared with ~~$238~~$913 million in the first ~~quarter~~six months of 2019. Net cash provided by operating activities before changes in operating assets and liabilities was ~~$502~~$803 million in the first ~~quarter~~six months of 2020 and ~~$635~~$1,195 million in the first ~~quarter~~six months of 2019. Capital expenditures were ~~$666~~$1,173 million in the first ~~quarter~~six months of 2020 and ~~$642~~$1,336 million in the first ~~quarter~~six months of 2019. In 2020, based on current forward strip crude oil prices, we expect cash flow from operating activities, including settlements from crude oil put option contracts, cash and cash equivalents existing at ~~March 31,~~June 30, 2020, and our available committed revolving credit facility will be sufficient to fund our capital investment program and dividends. Due to the weak commodity price environment, we may take any of the following steps, or a combination thereof, to improve our liquidity and financial position: further reduce the planned capital program and other cash outlays, including dividends, pursue asset sales or issue debt or equity ~~securities, and pursue asset sales.~~

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,~~June 30, 2020:

Letters of

Expiration

Credit

Total

Available

Date

Capacity

Borrowings

Issued

Used

Capacity

(In millions)

Hess Corporation

Revolving credit facility

May 2023

$
3,500

$
—

$
—

$
—

$
3,500

Committed lines

Various (a)

345

—

54

54

291

Uncommitted lines

Various (a)

205

—

205

205

—

Total - Hess Corporation

$
4,050

$
—

$
259

$
259

$
3,791

Midstream

Revolving credit facility (b)

December 2024

$
1,000

$
92

$
—

$
92

$
908

Total - Midstream

$
1,000

$
92

$
—

$
92

$
908

~~(a)~~

~~Committed and uncommitted lines have expiration dates through 2020.~~


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

		(In millions)
Hess Corporation
Revolving credit facility	May, 2023	$	3,500	$	—	$	—	$	—	$	3,500
Committed lines	Various (a)	175		—		54		54		121
Uncommitted lines	Various (a)	207		—		207		207		—
Total - Hess Corporation		$	3,882	$	—	$	261	$	261	$	3,621
Midstream
Revolving credit facility (b)	December, 2024	$	1,000	$	104	$	—	$	104	$	896
Total - Midstream		$	1,000	$	104	$	—	$	104	$	896

~~(b)~~(a)Committed and uncommitted lines have expiration dates through 2020.

~~This credit facility~~ ~~may only be utilized by HESM Opco and is non-recourse to Hess Corporation.~~

(b)This credit facility may only be utilized by HESM Opco and is non-recourse to Hess Corporation.

Hess Corporation:

In the first quarter of 2020, ~~the Corporation~~we entered into a $1.0 billion three year term loan agreement with ~~JPMorgan Chase Bank N.A. with~~ a maturity date of March 16, 2023. ~~The term loan agreement contains provisions that require us to reduce JPMorgan’s initial funded amount~~In the second quarter of ~~$1.0 billion. The Corporation is currently in~~2020, we successfully syndicated the ~~process of syndicating with other lenders.~~loan. Borrowings under the term loan generally bear interest at ~~the~~LIBOR plus an applicable ~~interest rates either, at the Corporation’s option, the adjusted LIBOR rate in effect from time to time or the alternate base rate (as described in the term loan agreement) plus the~~margin of 2.25%. The applicable ~~margins specified in the term loan agreement, which generally vary~~margin varies based on the credit rating of the Corporation’s senior, unsecured, non-credit enhanced long-term ~~debt. This loan has been classified as noncurrent in~~debt, and will increase by 0.25% on each anniversary of the consolidated balance sheet due to the Corporation’s ability and intent to refinance any amount we are unable to syndicate to other banks on a long-term basis through the Corporation’s existing $3.5 billion revolving credit facility with a maturity date of May 15, 2023.term loan. The term loan agreement contains customary representations, warranties and covenants, including athe same financial covenant ~~limiting~~as our revolving credit facility which limits the ratio of Total Consolidated Debt to Total Capitalization (as such terms are defined in the revolving credit facility and term loan ~~agreement)~~agreements) of the Corporation and its consolidated subsidiaries to 65%, and customary events of default. At ~~March 31,~~June 30, 2020, Hess Corporation had borrowings of $1.0 billion under this term loan agreement and was in compliance with this financial covenant.

At ~~March 31,~~June 30, 2020, Hess Corporation had no outstanding borrowings or letters of credit under its revolving credit facility and was in compliance with its financial covenants.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~Liquidity and Capital Resources (continued)~~

Two of the three major credit rating agencies that rate our debt have assigned an investment grade rating. In March 2020, Standard and Poor’s Ratings Services affirmed our credit rating at BBB- and revised the outlook to negative (from stable) while Fitch Ratings assigned a BBB- rating to the $1.0 billion term loan, with no change to our BBB- credit rating and stable outlook. In March 2020, Moody’s Investors Service affirmed our credit rating at Ba1 with stable outlook, which is below investment grade.

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

Midstream:

At ~~March 31,~~June 30, 2020, Hess Midstream Operations LP (formerly Hess Midstream Partners LP, or 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 $1.0 billion 5-year revolving credit facility and a fully drawn $400 million 5-year term loan A facility. The revolving credit facility can be used for borrowings and letters of credit to fund HESM Opco’s operating activities, capital expenditures, distributions and for other general corporate purposes. Borrowings under the 5-year term loan A facility will generally bear interest at LIBOR plus an applicable margin ranging from 1.55% to 2.50%, while the applicable margin for the 5-year syndicated revolving credit facility ranges from 1.275% to 2.000%. Pricing levels for the facility fee and interest-rate margins are based on HESM Opco’s ratio of total debt to EBITDA (as defined in the credit facilities). If HESM Opco obtains an investment grade credit rating, the pricing levels will be based on HESM Opco’s credit ratings in effect from time to time. The credit facilities contain covenants that require HESM Opco to maintain a ratio of total debt to EBITDA (as defined in the credit facilities) for the prior four fiscal quarters of not

PART I - FINANCIAL INFORMATION (CONT'D.)

Liquidity and Capital Resources (continued)

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,~~June 30, 2020. The credit facilities are secured by first-priority perfected liens on substantially all the presently owned and after-acquired 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,~~June 30, 2020, borrowings of ~~$92~~$104 million were drawn under HESM Opco’s revolving credit facility, and borrowings of $400 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.

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

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. SeeNote 12, Financial Risk Management Activities, in the Notes to Consolidated Financial Statements.

We have outstanding foreign exchange contracts with notional amounts totaling ~~$65~~$74 million at ~~March 31,~~June 30, 2020 that are used to reduce our exposure to fluctuating foreign exchange rates for various currencies. The change in fair value of foreign exchange contracts from a 10% ~~weakening~~strengthening in the U.S. Dollar exchange rate is estimated to be a loss of less than $5 million at ~~March 31,~~June 30, 2020.

At ~~March 31,~~June 30, 2020, our total long-term debt, which was substantially comprised of fixed-rate instruments, had a carrying value of ~~$8,194~~$8,210 million and a fair value of ~~$6,468~~$8,736 million. A 15% increase or decrease in interest rates would decrease or increase the fair value of debt by approximately ~~$500~~$460 million or ~~$590~~$510 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,~~June 30, 2020, we have outstanding WTI and Brent crude oil put option contracts. As of ~~March 31,~~June 30, 2020, 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 ~~$115~~$90 million, while an assumed 10% decrease in the same crude oil prices would increase the fair value of these derivative instruments by approximately ~~$125~~$115 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; ~~our plan to syndicate the $1 billion term loan;~~ 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 the global COVID-19 pandemic;

•fluctuations in market prices of crude oil, natural gas liquids and natural gas and competition in the oil and gas exploration and production industry, including as a result of the global COVID-19 pandemic;

potential disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks or health measures related to COVID-19;

•potential disruption or interruption of our operations due to catastrophic events, such as accidents, severe weather, geological events, shortages of skilled labor, cyber-attacks or health measures related to COVID-19;

reduced demand for our products, including due to the global COVID-19 pandemic or the outbreak of any other public health threat, or due to the impact of competing or alternative energy products and political conditions and events, such as instability, changes in governments, armed conflict and economic sanctions;

•reduced demand for our products, including due to the global COVID-19 pandemic or the outbreak of any other public health threat, or due to the impact of competing or alternative energy products and political conditions and events, such as instability, changes in governments, armed conflict and economic sanctions;

~~potential failures or delays in increasing oil and gas reserves, including as a result of unsuccessful exploration activity, drilling risks and unforeseen reservoir conditions;~~

•potential failures or delays in increasing oil and gas reserves, including as a result of unsuccessful exploration activity, drilling risks and unforeseen reservoir conditions;

~~potential failures or delays in achieving expected production levels given inherent uncertainties in estimating quantities of proved reserves;~~

•potential failures or delays in achieving expected production levels given inherent uncertainties in estimating quantities of proved reserves;

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 well fracking bans;

•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 well fracking bans;

~~the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures under which we may not control;~~

•the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures under which we may not control;

~~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;~~

•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;~~

~~PART I - FINANCIAL INFORMATION (CONT’D.)~~

~~Cautionary Note Regarding Forward-Looking Statements (continued)~~

•

any limitations on our access to capital or increase in our cost of capital, including our ability to fully syndicate the term loan, as a result of weakness in the oil and gas industry or negative outcomes within commodity and financial markets;

•availability and costs of employees and other personnel, drilling rigs, equipment, supplies and other required services;

~~liability resulting from litigation, including heightened risks associated with being a general partner of Hess Midstream LP; and~~

•any limitations on our access to capital or increase in our cost of capital as a result of weakness in the oil and gas industry or negative outcomes within commodity and financial markets;

~~other factors described in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in~~ ~~Item 1A—Risk Factors~~ ~~in our Annual Report on Form 10-K for the year ended December 31, 2019 as well as any additional risks described in our other filings with the SEC.~~

•liability resulting from 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 this Quarterly Report on Form 10-Q and in Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 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.~~(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,~~June 30, 2020, 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,~~June 30, 2020.

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,~~June 30, 2020 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.

Item 1A. Risk Factors.

Part I, Item 1A. Risk Factorsin our Annual Report on Form 10-K for the year ended December 31, 2019 ~~includes~~and Part II, Item 1A. Risk Factors in our Form 10-Q for the fiscal quarter ended March 31, 2020 include certain risk factors that could materially affect our business, financial condition, or future results. Those risk factors have not materially changed, except as set forth and as supplemented below:

Our business and operations have been and may continue to be adversely affected by the COVID-19 global pandemic or other similar public health developments and the recent reduced demand for oil and natural gas.

The COVID-19 global pandemic and related actions taken by governments and businesses, including voluntary and mandatory quarantines and travel and other restrictions, has resulted in a significant and swift reduction in economic activity. Certain jurisdictions have begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases. As a result of the COVID-19 global pandemic, our operations, and those of our business partners, service companies and suppliers, have experienced and may continue to experience further adverse effects, including disruptions, delays or temporary suspensions of operations and supply chains; temporary inaccessibility or closures of facilities; and workforce impacts from illness, school closures and other community response measures. We have implemented a variety of health and safety measures including enhanced cleaning procedures and modified work practices such as travel restrictions, health screenings, reduced personnel at offshore platforms and onshore work sites wherever this can be done safely, and remote working arrangements for office workers. There is no certainty that these or any other future measures will be sufficient to mitigate the risks posed by the disease, including the risk of infection of key employees, and our ability to perform certain functions could be impaired by these new business practices. For example, our reliance on technology has necessarily increased due to our encouragement of remote communications and other work-from-home practices, which could make us more vulnerable to cyber attacks. To the extent we or our business partners, service companies or suppliers continue to experience restrictions or other effects, our financial condition, results of operations and future expansion projects may be adversely affected.

~~The timeline and potential magnitude of the COVID-19 pandemic is currently unknown.~~

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

The timeline and potential magnitude of the COVID-19 pandemic remains unknown. In the event one or more of our business partners is adversely affected by COVID-19 or the current market environment, that may impact our costs and ability to conduct business with them. In addition, we may face an increased risk of changes in the regulation related to our business, such as the imposition of limitations on the production of oil and gas by states or other jurisdictions, that may result in additional limits on our products. We also are subject to litigation risk and possible loss contingencies related to COVID-19, including with respect to commercial contracts, employee matters and insurance arrangements. We may face additional asset impairments, decreases in proved reserves, along with other accounting charges as demand for crude oil, natural gas and NGLs decreases. The current environment may make it more difficult to ~~syndicate our term loan and~~ comply with ~~our~~ covenants and other restrictions in agreements governing our debt, and a lack of confidence in our industry on the part of the financial markets may result in a lack of access to capital, any of which could lead to reduced liquidity.

As the ~~potential~~ impact from the COVID-19 pandemic isremains difficult to predict, the extent to which it may negatively affect our operating results is uncertain. Any impact will depend on future developments and new information that may emerge regarding the severity and duration of COVID-19 and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in our annual report on Form 10-K for the year ended December 31, 2019.

PART II – OTHER INFORMATION ~~(CONT’D.)~~

~~Item 2. Share Repurchase Activities.~~

~~Our common share repurchase activities for the three months ended March 31, 2020, were as follows:~~

Period

Total Number of Shares Purchased (a)

Average Price Paid
per Share (b)

Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Approximate Dollar Value of Shares that
May Yet be Purchased Under the Plans or Programs (c)
(In millions)

January

—

$
—

—

$
650

February

—

—

—

650

March

35,202

32.34

—

650

Total

35,202

$
32.34

—

(CONT'D)

~~(a)~~

Represents common shares repurchased at a price of $32.32 per common share on the open market, of which substantially all were granted to Directors in accordance with the Non-Employee Directors’ Stock Plan.

~~(b)~~

~~The average price paid per share was inclusive of transaction fees.~~

~~(c)~~

In March 2013, we announced that our Board of Directors approved a stock repurchase program that authorized the purchase of common stock up to a value of $4.0 billion. In May 2014, the share repurchase program was increased to $6.5 billion and in March 2018, it was increased further to $7.5 billion.

~~Item 5. Other Information.~~

On May 6, 2020, the Board of Directors of the Corporation approved and adopted amendments to the Corporation’s By-Laws (as amended, the By-Laws), to help facilitate the conduct of a virtual annual meeting of stockholders in 2020 as a result of the COVID-19 pandemic.

Article III, Section 1 of the By-Laws was amended to clarify that the Corporation’s meetings of stockholders may be held by means of remote communications and to permit appropriate arrangements relevant to such a meeting, including without limitation, arrangements as to format, procedures and notices, in accordance with applicable law.

The foregoing summary description of the amendments to the By-Laws is subject to, and qualified in its entirety by reference to, the full text of the amended By-Laws, filed as Exhibit 3(1) hereto and incorporated herein by reference.

~~PART II – OTHER INFORMATION (CONT’D.)~~

Item 6. Exhibits.

	~~Exhibits~~
Exhibits
3(1)		3(1)*	By-Laws of Hess Corporation (as amended effective May 6, 2020)., incorporated by reference to Exhibit 3(1) of Form 10-Q of Registrant for the three months ended March 31, 2020.
10(1)			10(1)*	~~Form~~Amendment No. 1 dated as of ~~Restricted Stock Award Agreement under~~June 9, 2020 to the ~~2017 Long-Term Incentive Plan.~~
	10(2)*	~~Form of Stock Option Award Agreement under the 2017 Long-Term Incentive Plan.~~
	10(3)*	~~Form of Performance Award Agreement for three-year period ending December 31, 2022 under the 2017 Long-Term Incentive Plan.~~
	~~10(4)~~	Term Loan Agreement dated as of March 16, 2020, among Hess Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative ~~agent incorporated by reference to Exhibit 10(1) of Form 8-K of the registrant, filed on March 17, 2020.~~agent.
31(1)			~~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)			~~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)			~~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)			~~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)			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)			101(SCH)*	Inline XBRL Taxonomy Extension Schema Document.
101(CAL)			101(CAL)*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101(LAB)			101(LAB)*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101(PRE)			101(PRE)*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101(DEF)			101(DEF)*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104			~~104~~	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2020, has been formatted in Inline XBRL.

* These exhibits relate 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)~~

HESS CORPORATION

(REGISTRANT)

/s/ John B. Hess

JOHN B. HESS

CHIEF EXECUTIVE OFFICER

/s/ John P. Rielly

JOHN P. RIELLY

~~SENIOR~~EXECUTIVE VICE PRESIDENT AND

CHIEF FINANCIAL OFFICER

~~Date~~

Date: August 6, 2020

~~: May 7, 2020~~


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

	March 31,		December 31,
	2020		2019				June 30, 2020		December 31, 2019
	(In millions,
	except share amounts)						(In millions, except share amounts)
Assets						Assets
Current Assets:						Current Assets:
Cash and cash equivalents	$	2,080	$	1,545		Cash and cash equivalents	$	1,646	$	1,545
Accounts receivable:						Accounts receivable:
From contracts with customers		600		940		From contracts with customers	428		940
Joint venture and other		194		230		Joint venture and other	168		230
Crude oil derivative contracts		1,098		125		Crude oil derivative contracts	450		125
Inventories		230		261		Inventories	360		261
Other current assets		68		55		Other current assets	63		55
Total current assets		4,270		3,156		Total current assets	3,115		3,156
Property, plant and equipment:						Property, plant and equipment:
Total — at cost		31,704		35,820		Total — at cost	32,209		35,820
Less: Reserves for depreciation, depletion, amortization and lease impairment		16,893		19,006		Less: Reserves for depreciation, depletion, amortization and lease impairment	17,384		19,006
Property, plant and equipment — net		14,811		16,814		Property, plant and equipment — net	14,825		16,814
Operating lease right-of-use assets — net		386		447		Operating lease right-of-use assets — net	344		447
Finance lease right-of-use assets — net		187		299		Finance lease right-of-use assets — net	182		299
Goodwill		360		360		Goodwill	360		360
Deferred income taxes		77		80		Deferred income taxes	78		80
Other assets		626		626		Other assets	642		626
Total Assets	$	20,717	$	21,782		Total Assets	$	19,546	$	21,782
Liabilities						Liabilities
Current Liabilities:						Current Liabilities:
Accounts payable	$	431	$	411		Accounts payable	$	307	$	411
Accrued liabilities		1,334		1,803		Accrued liabilities	1,110		1,803
Taxes payable		33		97		Taxes payable	34		97
Current maturities of long-term debt		3		—		Current maturities of long-term debt	5		—
Current portion of operating and finance lease obligations		146		199		Current portion of operating and finance lease obligations	108		199
Total current liabilities		1,947		2,510		Total current liabilities	1,564		2,510
Long-term debt		8,191		7,142		Long-term debt	8,205		7,142
Long-term operating lease obligations		357		353		Long-term operating lease obligations	349		353
Long-term finance lease obligations		233		238		Long-term finance lease obligations	229		238
Deferred income taxes		328		415		Deferred income taxes	319		415
Asset retirement obligations		929		897		Asset retirement obligations	944		897
Other liabilities and deferred credits		554		521		Other liabilities and deferred credits	570		521
Total Liabilities		12,539		12,076		Total Liabilities	12,180		12,076
Equity						Equity
Hess Corporation stockholders’ equity:						Hess Corporation stockholders’ equity:
Common stock, par value $1.00; Authorized — 600,000,000 shares						Common stock, par value $1.00; Authorized — 600,000,000 shares
Issued — 307,158,340 shares (2019: 304,955,472)		307		305
Issued — 307,144,424 shares (2019: 304,955,472)						Issued — 307,144,424 shares (2019: 304,955,472)	307		305
Capital in excess of par value		5,633		5,591		Capital in excess of par value	5,650		5,591
Retained earnings		1,021		3,535		Retained earnings	625		3,535
Accumulated other comprehensive income (loss)		239		(699	)	Accumulated other comprehensive income (loss)	(187)		(699)
Total Hess Corporation stockholders’ equity		7,200		8,732		Total Hess Corporation stockholders’ equity	6,395		8,732
Noncontrolling interests		978		974		Noncontrolling interests	971		974
Total equity		8,178		9,706
Total Equity						Total Equity	7,366		9,706
Total Liabilities and Equity	$	20,717	$	21,782		Total Liabilities and Equity	$	19,546	$	21,782

	Three Months Ended
	March 31,							Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019				2020		2019		2020		2019
	(In millions)
								(In millions)
Net Income (Loss)	$	(2,366	)	$	75		Net Income (Loss)	$	(263)	$	34	$	(2,629)	$	109

Other Comprehensive Income (Loss):							Other Comprehensive Income (Loss):

Derivatives designated as cash flow hedges							Derivatives designated as cash flow hedges
Effect of hedge (gains) losses reclassified to income		(64	)		(15	)	Effect of hedge (gains) losses reclassified to income	(228)		14		(292)		(1)
Income taxes on effect of hedge (gains) losses reclassified to income		—			—		Income taxes on effect of hedge (gains) losses reclassified to income	—		—		—		—
Net effect of hedge (gains) losses reclassified to income		(64	)		(15	)	Net effect of hedge (gains) losses reclassified to income	(228)		14		(292)		(1)
Change in fair value of cash flow hedges		990			(346	)	Change in fair value of cash flow hedges	(214)		—		776		(346)
Income taxes on change in fair value of cash flow hedges		—			—		Income taxes on change in fair value of cash flow hedges	—		—		—		—
Net change in fair value of cash flow hedges		990			(346	)	Net change in fair value of cash flow hedges	(214)		—		776		(346)
Change in derivatives designated as cash flow hedges, after taxes		926			(361	)	Change in derivatives designated as cash flow hedges, after taxes	(442)		14		484		(347)

Pension and other postretirement plans							Pension and other postretirement plans
(Increase) reduction in unrecognized actuarial losses		—			6		(Increase) reduction in unrecognized actuarial losses	4		(24)		4		(18)
Income taxes on actuarial changes in plan liabilities		—			—		Income taxes on actuarial changes in plan liabilities	—		—		—		—
(Increase) reduction in unrecognized actuarial losses, net		—			6		(Increase) reduction in unrecognized actuarial losses, net	4		(24)		4		(18)
Amortization of net actuarial losses		12			11		Amortization of net actuarial losses	12		12		24		23
Income taxes on amortization of net actuarial losses		—			—		Income taxes on amortization of net actuarial losses	—		—		—		—
Net effect of amortization of net actuarial losses		12			11		Net effect of amortization of net actuarial losses	12		12		24		23
Change in pension and other postretirement plans, after taxes		12			17		Change in pension and other postretirement plans, after taxes	16		(12)		28		5
Other Comprehensive Income (Loss)		938			(344	)	Other Comprehensive Income (Loss)	(426)		2		512		(342)

Comprehensive Income (Loss)		(1,428	)		(269	)	Comprehensive Income (Loss)	(689)		36		(2,117)		(233)
Less: Comprehensive income (loss) attributable to noncontrolling interests		67			43		Less: Comprehensive income (loss) attributable to noncontrolling interests	57		40		124		83
Comprehensive Income (Loss) Attributable to Hess Corporation	$	(1,495	)	$	(312	)	Comprehensive Income (Loss) Attributable to Hess Corporation	$	(746)	$	(4)	$	(2,241)	$	(316)

	Three Months Ended
	March 31,					Three Months Ended June 30,			Six Months Ended June 30,
	2020		2019			2020	2019	2020	2019
Restricted common stock		2,015,659		57,252	Restricted common stock	2,173,061	2,156,525	2,094,360	28,970
Stock options		4,086,340		3,394,418	Stock options	4,429,642	4,894,731	4,239,533	2,920,944
Performance share units		1,296,356		65,661	Performance share units	992,166	1,858,050	1,144,261	32,831
Common shares from conversion of preferred stock		—		3,930,663	Common shares from conversion of preferred stock	—	—	—	1,954,473

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

Item No.		Page Number
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (Unaudited)
	Consolidated Balance Sheet at March 31, 2020, and December 31, 2019	2
	Statement of Consolidated Income for the Three Months Ended March 31, 2020, and 2019	3
	Statement of Consolidated Comprehensive Income for the Three Months Ended March 31, 2020, and 2019	4
	Statement of Consolidated Cash Flows for the Three Months Ended March 31, 2020, and 2019	5
	Statement of Consolidated Equity for the Three Months Ended March 31, 2020, and 2019	6
	Notes to Consolidated Financial Statements (Unaudited)	7
	Note 1 - Basis of Presentation	7
	Note 2 - Impairment	7
	Note 3 - Inventories	7
	Note 4 – Property Plant and Equipment	8
	Note 5 - Hess Midstream LP	8
	Note 6 - Debt	8
	Note 7 - Retirement Plans	9
	Note 8 - Revenue	9
	Note 9 - Weighted Average Common Shares	10
	Note 10 - Guarantees and Contingencies	10
	Note 11 - Segment Information	12
	Note 12 - Financial Risk Management Activities	12

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
3.	Quantitative and Qualitative Disclosures about Market Risk	30
4.	Controls and Procedures	30

	PART II - OTHER INFORMATION
1.	Legal Proceedings	31
1A.	Risk Factors	31
2.	Share Repurchase Activities	32
5.	Other Information	32
6.	Exhibits	33
	Signatures	34

	Mandatory Convertible Preferred Stock			Common Stock		Capital in Excess of Par			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Hess Stockholders' Equity			Noncontrolling Interests			Total Equity
	(In millions)																								Mandatory Convertible Preferred Stock		Common Stock		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Hess Stockholders' Equity		Noncontrolling Interests		Total Equity
For the Three Months Ended March 31, 2020

																									(In millions)
For the Three Months Ended June 30, 2020																								For the Three Months Ended June 30, 2020
Balance at April 1, 2020																								Balance at April 1, 2020	$	—	$	307	$	5,633	$	1,021	$	239	$	7,200	$	978	$	8,178
Net income (loss)																								Net income (loss)	—		—		—		(320)		—		(320)		57		(263)
Other comprehensive income (loss)																								Other comprehensive income (loss)	—		—		—		—		(426)		(426)		—		(426)
Share-based compensation																								Share-based compensation	—		—		17		—		—		17		—		17
Dividends on common stock																								Dividends on common stock	—		—		—		(76)		—		(76)		—		(76)
Noncontrolling interests, net																								Noncontrolling interests, net	—		—		—		—		—		—		(64)		(64)
Balance at June 30, 2020																								Balance at June 30, 2020	$	—	$	307	$	5,650	$	625	$	(187)	$	6,395	$	971	$	7,366
For the Three Months Ended June 30, 2019																								For the Three Months Ended June 30, 2019
Balance at April 1, 2019																								Balance at April 1, 2019	$	—	$	304	$	5,481	$	4,207	$	(650)	$	9,342	$	1,211	$	10,553
Net income (loss)																								Net income (loss)	—		—		—		(6)		—		(6)		40		34
Other comprehensive income (loss)																								Other comprehensive income (loss)	—		—		—		—		2		2		—		2
Share-based compensation																								Share-based compensation	—		—		32		—		—		32		—		32
Dividends on common stock																								Dividends on common stock	—		—		—		(76)		—		(76)		—		(76)
Noncontrolling interests, net																								Noncontrolling interests, net	—		—		—		—		—		—		(14)		(14)
Balance at June 30, 2019																								Balance at June 30, 2019	$	—	$	304	$	5,513	$	4,125	$	(648)	$	9,294	$	1,237	$	10,531
For the Six Months Ended June 30, 2020																								For the Six Months Ended June 30, 2020
Balance at January 1, 2020	$	—		$	305	$	5,591		$	3,535		$	(699	)	$	8,732		$	974		$	9,706		Balance at January 1, 2020	$	—	$	305	$	5,591	$	3,535	$	(699)	$	8,732	$	974	$	9,706
Net income (loss)		—			—		—			(2,433	)		—			(2,433	)		67			(2,366	)	Net income (loss)	—		—		—		(2,753)		—		(2,753)		124		(2,629)
Other comprehensive income (loss)		—			—		—			—			938			938			—			938		Other comprehensive income (loss)	—		—		—		—		512		512		—		512
Share-based compensation		—			2		42			(5	)		—			39			—			39		Share-based compensation	—		2		59		(5)		—		56		—		56
Dividends on common stock		—			—		—			(76	)		—			(76	)		—			(76	)	Dividends on common stock	—		—		—		(152)		—		(152)		—		(152)
Noncontrolling interests, net		—			—		—			—			—			—			(63	)		(63	)	Noncontrolling interests, net	—		—		—		—		—		—		(127)		(127)
Balance at March 31, 2020	$	—		$	307	$	5,633		$	1,021		$	239		$	7,200		$	978		$	8,178

For the Three Months Ended March 31, 2019
Balance at June 30, 2020																								Balance at June 30, 2020	$	—	$	307	$	5,650	$	625	$	(187)	$	6,395	$	971	$	7,366
For the Six Months Ended June 30, 2019																								For the Six Months Ended June 30, 2019
Balance at January 1, 2019	$	1		$	291	$	5,386		$	4,257		$	(306	)	$	9,629		$	1,259		$	10,888		Balance at January 1, 2019	$	1	$	291	$	5,386	$	4,257	$	(306)	$	9,629	$	1,259	$	10,888
Net income (loss)		—			—		—			32			—			32			43			75		Net income (loss)	—		—		—		26		—		26		83		109
Other comprehensive income (loss)		—			—		—			—			(344	)		(344	)		—			(344	)	Other comprehensive income (loss)	—		—		—		—		(342)		(342)		—		(342)
Preferred stock conversion		(1	)		12		(11	)		—			—			—			—			—		Preferred stock conversion	(1)		12		(11)		—		—		—		—		—
Share-based compensation		—			1		28			—			—			29			—			29		Share-based compensation	—		1		60		—		—		61		—		61
Dividends on preferred stock		—			—		—			(4	)		—			(4	)		—			(4	)	Dividends on preferred stock	—		—		—		(4)		—		(4)		—		(4)
Dividends on common stock		—			—		—			(78	)		—			(78	)		—			(78	)	Dividends on common stock	—		—		—		(154)		—		(154)		—		(154)
Sale of water business to Hess Infrastructure Partners		—			—		78			—			—			78			(78	)		—		Sale of water business to Hess Infrastructure Partners	—		—		78		—		—		78		(78)		—
Noncontrolling interests, net		—			—		—			—			—			—			(13	)		(13	)	Noncontrolling interests, net	—		—		—		—		—		—		(27)		(27)
Balance at March 31, 2019	$	—		$	304	$	5,481		$	4,207		$	(650	)	$	9,342		$	1,211		$	10,553
Balance at June 30, 2019																								Balance at June 30, 2019	$	—	$	304	$	5,513	$	4,125	$	(648)	$	9,294	$	1,237	$	10,531


Balance at January 1, 2020	$	584
Additions to capitalized exploratory well costs pending the determination of proved reserves	70
Capitalized exploratory well costs charged to expense	(125)
Balance at June 30, 2020	$	529


	Exploration and Production																		Midstream	Eliminations	Total
	United States		Guyana		Malaysia & JDA		Denmark		Libya		E&P Total

	(In millions)
Three Months Ended June 30, 2020
Sales of our net production volumes:
Crude oil revenue	$	254	$	31	$	1	$	14	$	—	$	300	$	—	$	—	$	300
Natural gas liquids revenue	43		—		—		—		—		43		—		—		43
Natural gas revenue	32		—		89		2		—		123		—		—		123
Sales of purchased oil and gas	143		—		—		—		—		143		—		—		143
Intercompany revenue	—		—		—		—		—		—		270		(270)		—
Total revenues from contracts with customers	472		31		90		16		—		609		270		(270)		609
Other operating revenues (a)	188		27		—		9		—		224		—		—		224
Total sales and other operating revenues	$	660	$	58	$	90	$	25	$	—	$	833	$	270	$	(270)	$	833
Three Months Ended June 30, 2019
Sales of our net production volumes:
Crude oil revenue	$	762	$	—	$	24	$	51	$	130	$	967	$	—	$	—	$	967
Natural gas liquids revenue	48		—		—		—		—		48		—		—		48
Natural gas revenue	33		—		154		2		6		195		—		—		195
Sales of purchased oil and gas	439		—		—		—		22		461		—		—		461
Intercompany revenue	—		—		—		—		—		—		190		(190)		—
Total revenues from contracts with customers	1,282		—		178		53		158		1,671		190		(190)		1,671
Other operating revenues (a)	(11)		—		—		—		—		(11)		—		—		(11)
Total sales and other operating revenues	$	1,271	$	—	$	178	$	53	$	158	$	1,660	$	190	$	(190)	$	1,660
Six Months Ended June 30, 2020
Sales of our net production volumes:
Crude oil revenue	$	919	$	69	$	3	$	50	$	—	$	1,041	$	—	$	—	$	1,041
Natural gas liquids revenue	91		—		—		—		—		91		—		—		91
Natural gas revenue	70		—		228		4		2		304		—		—		304
Sales of purchased oil and gas	459		1		—		—		—		460		—		—		460
Intercompany revenue	—		—		—		—		—		—		561		(561)		—
Total revenues from contracts with customers	1,539		70		231		54		2		1,896		561		(561)		1,896
Other operating revenues (a)	243		33		1		14		—		291		—		—		291
Total sales and other operating revenues	$	1,782	$	103	$	232	$	68	$	2	$	2,187	$	561	$	(561)	$	2,187
Six Months Ended June 30, 2019
Sales of our net production volumes:
Crude oil revenue	$	1,444	$	—	$	45	$	67	$	221	$	1,777	$	—	$	—	$	1,777
Natural gas liquids revenue	116		—		—		—		—		116		—		—		116
Natural gas revenue	75		—		334		5		12		426		—		—		426
Sales of purchased oil and gas	865		—		—		—		44		909		—		—		909
Intercompany revenue	—		—		—		—		—		—		380		(380)		—
Total revenues from contracts with customers	2,500		—		379		72		277		3,228		380		(380)		3,228
Other operating revenues (a)	4		—		—		—		—		4		—		—		4
Total sales and other operating revenues	$	2,504	$	—	$	379	$	72	$	277	$	3,232	$	380	$	(380)	$	3,232

	March 31, 2020		December 31, 2019
	(In millions)
Commodity - crude oil (millions of barrels)		41.3		54.9
Foreign exchange	$	65	$	90
Interest rate swaps	$	100	$	100

						Letters of
	Expiration					Credit		Total		Available
	Date	Capacity		Borrowings		Issued		Used		Capacity
		(In millions)
Hess Corporation
Revolving credit facility	May 2023	$	3,500	$	—	$	—	$	—	$	3,500
Committed lines	Various (a)		345		—		54		54		291
Uncommitted lines	Various (a)		205		—		205		205		—
Total - Hess Corporation		$	4,050	$	—	$	259	$	259	$	3,791

Midstream
Revolving credit facility (b)	December 2024	$	1,000	$	92	$	—	$	92	$	908
Total - Midstream		$	1,000	$	92	$	—	$	92	$	908

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (c) (In millions)
January		—	$	—		—	$	650
February		—		—		—		650
March		35,202		32.34		—		650
Total		35,202	$	32.34		—

☒