Hess Corporation
Q1 2013 Earnings Call Transcript
Published:
- Operator:
- Good day, ladies and gentlemen, and welcome to the First Quarter 2013 Hess Corporation Earnings Conference Call. My name is Matthew, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now, I would like to turn the call over to Mr. Jay Wilson, Vice President of Investor Relations. Please proceed, sir.
- Jay R. Wilson:
- Thank you, Matthew. Good morning, everyone, and thank you for participating in our first quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hess.com. Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the Risk Factors section of Hess's annual and quarterly reports filed with the SEC. With me today are John Hess, Chairman of the Board and Chief Executive Officer; Greg Hill, President, Worldwide Exploration and Production; and John Rielly, Senior Vice President and Chief Financial Officer. I'll now turn the call over to John Hess.
- John B. Hess:
- Thank you, Jay, and welcome to our first quarter conference call. I will make a few brief comments, after which Greg Hill will provide an operational date and John Rielly will review our financial results. As most of you are aware, our management team and Board of Directors have been in the process of undertaking a multiyear transformation of Hess Corporation into a more focused, higher-growth, lower-risk pure-play E&P company. We are successfully executing our plan and are gratified by the results of our first quarter adjusted earnings of $669 million, which, from last year's first quarter of $509 million, represents an increase of 31%. We achieved these results even after the loss of production from the sale of our interest in the Beryl, Schiehallion and Bittern Fields in the United Kingdom North Sea, as well as the downtime associated with the Valhall redevelopment project in Norway. This accomplishment, in the context of our continuing transformation, bears testimony to the focus, commitment and hard work of our dedicated team of senior managers and employees. While we will get into the financial details behind these results later, I would like to spend the next few minutes reviewing the progress we have made toward becoming a pure-play E&P company. On March 4 of this year, we announced the final steps of the strategy, with 3 overarching goals
- Gregory P. Hill:
- Thanks, John. First, I'd like to comment on the recent changes to our portfolio announced on March 4. And then I'd like to provide an update of our progress in executing against our three-pronged growth strategy of unconventionals, exploitation and focused exploration. As John mentioned, we've taken numerous actions this quarter to ensure our portfolio is focused on higher-growth, lower-risk assets. During the first quarter, we announced that we had reached agreements to sell our interest in several noncore assets, including ACG, Beryl and the Eagle Ford, and began the process to divest our assets in Indonesia and Thailand. On April 1, just after quarter end, we also announced an agreement to sell Samara-Nafta in Russia. We expect to close the Samara-Nafta transaction in the second quarter for net proceeds of approximately $1.8 billion, generating an after-tax gain on sale of approximately $900 million. The ACG and Beryl transactions resulted in gains of $360 million and $323 million, respectively. While we incurred an after-tax loss in the fourth quarter of 2012 of $192 million related to the sale of our Eagle Ford position, we were not able to establish a core acreage position there, and we'll now be able to reallocate approximately $500 million in future capital expenditures to higher-return opportunities in our portfolio. Following these divestitures, roughly 80% of our remaining reserves in production will be confined to 5 principal geographical areas. These 5 areas can be described as long-lived, good-margin areas with low-risk growth that leverage our capabilities and competitive advantage. The opportunities within these 5 areas reflect our three-pronged strategy for future growth through
- John P. Rielly:
- Thanks, Greg. Hello, everyone. In my remarks today, I will compare results from the first quarter of 2013 to the fourth quarter of 2012. But before I begin, I want to highlight some changes we have made in our first quarter earnings release and supplemental data. As a result of the corporation's previously announced plans to divest its downstream businesses and complete its transformation into a pure-play Exploration and Production company, we have presented the after-tax downstream results for all periods as discontinued operations. With this change, we now operate with 2 segments
- Operator:
- [Operator Instructions] And your first question comes from the line of Doug Terreson of ISI.
- Douglas Terreson:
- So I wanted to see -- a strategic question. I wanted to see if we can get an updated view on Australia in light of the recent commentary that Woodside is no longer going to seek third-party gas for its Pluto development. And then second, the next steps or plan for the other position, the one in the Beetaloo Basin in Australia. So 2 Australia questions.
- Gregory P. Hill:
- Yes, thanks, Doug. On your first question related to the offshore position in Western Australia 390-P, recall we are negotiating with 3 different parties for liquefaction of that gas. And so there's other parties besides Woodside in the mix. And both discussions are continuing with the parties. For the second thing on the Beetaloo Basin, we're in the process of processing the new seismic that we just shot. And then we have to make a drill-or-drop decision by midyear, and so that's where we are in the process.
- Douglas Terreson:
- Midyear '13?
- Gregory P. Hill:
- Yes.
- Operator:
- Your next question comes from the line of Roger Read of Wells Fargo.
- Roger D. Read:
- I guess, following up on your Bakken expectations, can you walk us through maybe right now -- I mean, are we seeing production actually declining into the month of May and kind of reflecting depletion rates? And then obviously, as wells come on, beginning in May all the way through the end of the year, production ramps up and could exceed your level, or 70 is really as good as it gets in 2013? I'm just trying to understand the moving parts there.
- Gregory P. Hill:
- Yes, I think as we announced previously, as a result of our switch to pad drilling from held-by-production drilling, you build inventory of drilled but not completed wells. So your completion rate is lower than what it was last year. So as a result of that, your production for the first 5 months of the year is flat to slightly declining. In the first quarter, our production was 65. For the next couple of months, that could decline just a little bit. So it'll be flattish. And then as we put wells on completion as we move the completion spreads in, our completion rate really doubles the last half of the year. So our production is very much back-end loaded for the year. As we said in the opening remarks, we feel confident of our range of 64,000 to 70,000 barrels a day.
- Roger D. Read:
- Okay. And then on Ghana, what -- is there a timeline we can think about there in terms of -- okay, obviously great success story on the exploration front. You start working with the government here. I mean, I say "start working." You already have been. But any expectations for when something might occur there that you could talk about in terms of a future development plan or anything like that?
- Gregory P. Hill:
- Sure, I think -- so there's 2 things that we have to do. The first thing, which is the most important piece of business right now for us, is to get the approval -- appraisal program approved by the government. That has to occur by midyear, and so we're in the process of having those discussions with the Ghanaian government. In parallel, we're also doing predevelopment studies. Now once we get the appraisal program approved by the government, then we have a 2-year clock to get our appraisal activities done. So that kind of lays out a time frame for you. Lots of appraisal activity over the next couple of years, predevelopment studies in parallel, and then we aim to make a decision, obviously, after that appraisal period is done.
- Operator:
- Your next question comes from the line of Eliot Javanmardi from Capital One Southcoast.
- Eliot Javanmardi:
- Just a question. You spoke about, in the last quarter, your expectations for your Middle Bakken wells in EURs, and I want to say the range between 600,000 to 700,000 barrels equivalent. Are you seeing something along those lines with that range in the Middle Bakken? And also, I don't know if you can, but could you give us maybe a percentage acreage split on what you have in the Middle Bakken and Three Forks?
- Gregory P. Hill:
- And I think as we said in our opening remarks, we plan to drill about 1/3 of our wells in the Middle Bakken this year, right? And 2/3 of the wells this year will be -- or sorry, 1/3 Three Forks, 2/3 Middle Bakken wells this year. Regarding your question on EUR, the range is still valid. The EURs in the first quarter that came out of the wells that we drilled were in the low 600,000s.
- Eliot Javanmardi:
- Very good. Last question, then. With the increasing appraisal activity likely for Ghana, should we expect the exploration budget to -- exploration appraisal budget to swell a bit in the coming years versus where we are now?
- Gregory P. Hill:
- No, I think as we've guided previously, this $500 million to $600 million level is where we want to keep that budget. So we're going to fit -- live within those means.
- Eliot Javanmardi:
- Excellent. And lastly, on the Utica well, the Capstone well, could you -- was there a timing duration you guys could give on the results that you provided there? If not, I'll just leave it at that.
- Gregory P. Hill:
- Yes. On the Utica wells, we're trying to give comparables to what all the competitors are giving, so that -- these are early-time tests, right? Typically, 24-hour kind of test, right?
- Operator:
- Your next question comes from the line of Doug Leggate of Bank of America.
- Douglas George Blyth Leggate:
- Greg, on the, I guess, the commentary around the Utica and the Bakken, there's a couple of questions, if I may. First of all, on the Bakken, what proportion of your acreage is perspective for Three Forks? And if you could maybe help us with how the activity level there might accelerate given that you're now starting to go to the Three Forks. And I guess a similar question on the Utica in terms of pace of development. I've got a follow-up, please.
- Gregory P. Hill:
- Yes, Doug. I think as we previously discussed, the Three Forks underlies the majority of our acreage. And the acreage we consider core, this 550,000 to 650,000 acres, a lot of that is underlined by the Three Forks. Regarding the Three Forks, we have -- at the end of 2012, we had 52 wells in the Three Forks. By the end of this year, we'll have another 65 or so in the Three Forks. So that gives you a sense of where we are. And again, our drilling program, 1/3 Three Forks this year, 2/3 Middle Bakken.
- Douglas George Blyth Leggate:
- So I guess what I'm really trying to figure out is if you're -- you've essentially doubled your locations, then, if you're saying the Three Forks underlies most of the acreage. So what does that mean in terms of pace of development? I mean, 175 wells seems fairly modest given the opportunity set.
- Gregory P. Hill:
- Yes, I think, Doug, on the Three Forks, while it underlies all our acreage, we still have to do some appraisal of that. Just like everyone else, I think there will be really good parts of the Three Forks, which we've seen, and there may be some not so good parts of the Three Forks. So that's really what we have to figure out in our drilling program this year and next year is how much of that is really, really perspective. Our focus this year, obviously, in 2013 is capital efficiency, so we're going in and drilling some of the best locations in the Three Forks, as well as appraising some of the other acreage.
- Douglas George Blyth Leggate:
- Got it. So the same question for the Utica in terms of -- are we at the point where you're ready to talk about a development plan yet, or still too early?
- Gregory P. Hill:
- No, Doug, it's -- gosh, it's still too early. I mean, to put it in context if you add up 2012 and 2013, we've drilled 11 wells in '12 and '13 so far, and we've only tested 10. So clearly, we've got a lot more drilling to do. We plan to drill about 30 wells this year. So at the end of this year, we'll have about 42 wells under our belt. And contrast that to the Bakken, of course, where we have over 600 wells. So it's still early days in the Utica. But we're encouraged by the results so far, particularly in Belmont, Jefferson, Harrison counties.
- Douglas George Blyth Leggate:
- My quick follow-up is for John Rielly. It's on the operating cost guidance, John. Does that still include Russia? And can you -- now that you've got a deal in Russia, can you give an idea what the OpEx would look like, x Russia? And I'll leave it there.
- John P. Rielly:
- Sure, Doug. And just to let you know, Doug, we do -- it's on our website now in that supplemental presentation, we have pro forma results up there showing what the portfolio would look like with Russia out, and Indonesia and Thailand, all the assets sold as if it went back to the beginning of 2012. But just to give you an answer to your questions here, if you're looking at 2013, what we expect from -- overall, first on our revenue per barrel revenue. Our revenue per barrel will go up over $5 a barrel because of Russia exiting the portfolio. So first, you get that higher uplift, then, on the revenue line. When it comes to cash cost, we see that basically from a guidance standpoint being relatively flat for the full year of pulling out all those assets. In the first quarter, for example, I told you the portfolio had a cash cost of $21.20. On a pro forma basis with the assets sold, it would have been $21.08. Now when it gets to DD&A, when you start removing some of these assets from DD&A, they have a lower overall DD&A rate in the portfolio. So we expect -- I would tell you the guidance then on the DD&A would be about $4 higher from an overall portfolio standpoint. And then, for example, in the first quarter, I said the DD&A rate for the total E&P assets were $19.28; for the first quarter pro forma basis would be $22.45. So that's our cost guidance. And just to round it off to give you all the guidance, on a tax -- what we see from a tax rate standpoint is somewhere around, from a portfolio standpoint, between 100 and 200 basis points higher. And we have some of the U.K. assets, obviously, with tax rates higher than the portfolio, but Russia and Azerbaijan being below it. And that's why the tax rate then effectively goes up. And then we expect, again, as we have said, that our cash margin overall goes up $5 per barrel.
- Operator:
- Your next question comes from the line of Arjun Murti of Goldman Sachs.
- Arjun N. Murti:
- Just a few follow-up questions just on the Utica results. Just sounds like it's liquids-richy type gas at this point, mostly NGLs. If you can confirm that? And any comments on maybe the black oil potential of the Utica? Maybe you've not drilled that part yet, but any thoughts there would be very helpful.
- Gregory P. Hill:
- Yes. I think, particularly in Belmont, Jefferson and Harrison counties, we're in that liquids-rich part of the play. As you move east, as we've said before, in our Marquette acreage, then you move more into the dry gas as the Point Pleasant plunges deeper to the East. Regarding the oil activity in the West, so far, I would say the results are disappointing. It's like the Eagle Ford oil window. You get shallower, and the reservoir just doesn't have the energy required.
- Arjun N. Murti:
- That's very helpful. Any update on Pony? I don't think I heard an update there.
- Gregory P. Hill:
- Yes, Arjun. Pony, we're continuing the FEED, and we'll continue FEED through this year, and we're aiming for a sanction decision, both us and the partners, in 2014.
- Arjun N. Murti:
- And we can add 4 years from sanction to start-up, something like that?
- Gregory P. Hill:
- Yes, that's probably a reasonable expectation.
- Operator:
- Your next question comes from the line of Evan Calio of Morgan Stanley.
- Evan Calio:
- On your statement, you expect to begin the $4 billion buyback in the second half. I mean per your ordering of priorities in the opening comments, should we assume that you go to work only after you've paid down $2.5 billion of debt and built the $1 billion cash cushion?
- Gregory P. Hill:
- Yes, that's correct. And as I mentioned, we actually expect our Russian asset sale to close fairly soon. And with the proceeds from that, we will have fully paid off our short-term debt at that point. And actually, we'll be starting to build that cash cushion. So when we're saying the second half of the year is as these next asset sales come in, we're going to be in this position to be able to start buying back shares.
- Evan Calio:
- Right. So have you assumed, to work in the buyback in the second half, you're assuming that some number of the Indonesia, Thailand terminal sales are completed by year end. Is that fair?
- Gregory P. Hill:
- That is fair.
- Evan Calio:
- Okay. And do you -- can you give me just the cash, the operating cash flow on the quarter? Were you just going to tell me what the working capital adjustment is?
- Gregory P. Hill:
- The working capital was approximately $600 million in the first quarter. I mean, typically, in the first quarter, we have a very high working capital as you saw compared to the first quarter. I've already started to see some of that turn in April, and we expect, like usual, the majority of that to turn by the end of the year
- Evan Calio:
- Great. And then lastly for me. On Valhall, can you discuss the ramp in 2013 or where the exit rate was in the quarter? And are you still on track for the average guidance of 24, 28 through '13?
- Gregory P. Hill:
- Yes. Evan, as we said in our opening remarks, the operator forecast range of 24 to 28, we think we'll be at the low end of that range. First quarter production averaged about 5,000 barrels per day. Just as a reference point, production reached about 16,000 barrels per day by the middle of April. In addition to just the routine ramp, I'll say in the flesh production associated with that, you also have the drilling rigs in there with our aim to get 6 wells drilled this year. So there will be some back-end contribution from those wells also.
- Operator:
- Your next question comes from the line of Paul Cheng of Barclays.
- Paul Y. Cheng:
- Greg, when you say Valhall, say BP is 24 to 28, is that the gross number or your net to you?
- Gregory P. Hill:
- No, no, that's net to us, Paul. Thank you, I should have clarified that.
- Paul Y. Cheng:
- Net to you, okay. And on Ghana, is it too early that you gave a rough estimate of what you think may be the total recoverable resource of the 7 discoveries? And also, do you have a rough estimate on the liquid and gas split on those resource base?
- Gregory P. Hill:
- Yes, Paul. It is too early to give a resource estimate for one reason. We're not allowed to speak about resources without the approval of the Ghanaian government. And they have not allowed us to do that until we get done with our appraisal plan. So that's the reason.
- Paul Y. Cheng:
- Okay. How about, say, in terms of the split between the liquid and black oil and NGL and natural gas? Were you -- are you allowed to talk about that?
- Gregory P. Hill:
- No, we can't do that yet either, Paul. But clearly, with our 7 discoveries and a number of them black oil, the predevelopment studies are focused on the black oil.
- Paul Y. Cheng:
- And going on the -- in Bakken, is there a rough estimate kind of number, then, or any, let's say, trend you can guide us that what is the cash operating cost right now and how that may look like in 2014?
- John P. Rielly:
- Paul, there's no difference actually, I think, from basically what we have been guiding there in the Bakken right now. So including production and severance taxes, in North Dakota, when you put that together with our Bakken operating cost, the cash costs right now are just slightly below our portfolio average in the Bakken.
- Paul Y. Cheng:
- John, when you say the portfolio average, you're talking about U.S. portfolio or total company portfolio?
- John P. Rielly:
- Total company portfolio.
- Paul Y. Cheng:
- Right now, you're slightly below total company?
- John P. Rielly:
- I'm sorry?
- Paul Y. Cheng:
- Right now, you're slightly below total company.
- John P. Rielly:
- Yes. Yes, it is.
- Paul Y. Cheng:
- And then how about your target for 2014?
- John P. Rielly:
- Well, again, as production begins to ramp up, then obviously, then we -- you can take those fixed costs going over more barrels. So we see a declining cash cost per barrel. We'll be focused on that as well as just as the maturity of the reserve bookings and the additional wells coming on will be a slow decline in the DD&A rate as well.
- Paul Y. Cheng:
- But you're not going to be willing to give us some numbers, say that it declines by $2, $3 average for next year comparing to this year, or anything of that like that, that you can provide?
- John P. Rielly:
- No. Not at this point. I mean first of all, we -- from guidance on next year and what we're doing capital and what wells we're going to drill and all that, I mean it would still -- very early for us to be able to do that. What we can say is, as we know our production is going to ramp up to 120,000 barrels a day, as we said, in mid-decade. So clearly, we can -- if you can tell from that standpoint that they'll just be the cost will go over more barrels. As Greg is saying -- has just alluded to, our well cost on our drilling completer coming down. So again, we've been basically focused in driving down operating costs, well cost. And so both cash costs and DD&A costs will decline over time. But I can't give you specific guidance on that at any point.
- Paul Y. Cheng:
- John, how about in terms of on a pro forma basis that how's your CapEx going forward may look like, is that something that you can give some light?
- John P. Rielly:
- Yes, sure. So first of all then, again, on the pro forma data that we included on the supplemental presentation. So on a pro forma basis, the capital was -- the capital and exploratory expenditures was $1,405,000,000 versus our total portfolio of $1,613,000,000 E&P. So it gives you some type of range from that standpoint. We've given guidance that on a pro forma basis, our full year capital would be $6.2 billion. So that's with all the assets out of the portfolio essentially effective at the beginning of the year. We clearly are giving guidance that our capital will have a 5 handle, can I call that in? So we'll have a 5 at the start of it. So our capital will be in the $5 billion range next year. I just can't give you any further guidance at that point. And with that driving that down, we expect with our portfolio and enhancement of the cash margin that we'll be driving towards a balance between cash flow and capital spend in 2014. And then beyond that, we expect to be able to become cash positive.
- Paul Y. Cheng:
- Greg, in Bakken, have you guys start testing on the down spacing to 160? And so far, what's the result in there?
- Gregory P. Hill:
- Yes, we have, Paul. So we've done an awful lot of work in down spacing. I think the Bakken will be down spaced. That's clear from the pilots that we've run. The one thing I will say is the degree of down spacing will depend upon where you are in the field. And so for higher productivity areas, you probably don't need to down space as low as you might in some of the lower productivity areas of the field. So the answer is, is it depends on the degree of down spacing, but there will be down spacing potential in the Bakken.
- Paul Y. Cheng:
- A final one. Since that majority of your acreage is in the Three Forks, when do you think it's going to reach the inflection point you started drilling the majority of the well in Three Forks and not in the Middle Bakken?
- Gregory P. Hill:
- Well gosh, Paul, we've got 2,500 well locations to drill and even more if you consider infill and --
- Paul Y. Cheng:
- In the Middle Bakken?
- Gregory P. Hill:
- No, in Middle Bakken and Three Forks combined. And then if you down space an infill lower in some parts of the field, obviously, that number's going to go up. We're prioritizing wells based on highest return and also in pads, where we can capitalize on the efficiencies, right, of being on the pad, say, drilling Middle Bakken wells. We'll add a couple of Three Forks since we're there on the pad, right? But as I said, I think, to Doug, we've got 52 Three Forks wells in the ground at the end of 2012. We'll have 65 more at the end of this year. So we'll have a good understanding of the Three Forks. In addition to that, we have 30 cores in the Three Forks. We've done a major study of the Three Forks, including all of the Three Forks production data that exists from the NDIC as well as our own data. So we have a pretty good understanding of Three Forks. It's going to be a good play for us.
- Operator:
- Your next question comes from the line of Robert Kessler of Tudor, Pickering, Holt.
- Robert A. Kessler:
- I had a follow-up question on Stampede or Pony. You characterized this as being too early, I think, previously, to consider divestment of that asset. And I was curious what you need to see in order to possibly put it in the development queue? I know you've got pre-FID work ongoing. Is this more of a commercial kind of cost structure delineation that you need to accomplish, or is there more actual drilling you need to do to better understand the resource before deciding to sell?
- Gregory P. Hill:
- No, I think this project will be at its maximum kind of value point at sanction, right? And so at that point in time, we'll know all the costs because FEED will be done. We have a good understanding of the subsurface already. It's a combination of our data plus the partner's data. And at the end of the day, the decision will be focused on returns.
- Robert A. Kessler:
- With a good understanding now of the subsurface, how many barrels do expect to recover for Stampede?
- Gregory P. Hill:
- We haven't said that yet, only because we haven't got all the development studies done. That's part of the FEED process, right? We will announce that at the point of sanction, obviously.
- Robert A. Kessler:
- And then, unrelated question for me. Retail divestment. Have you gotten any further on that in terms of the form of that divestment may take? Are you considering a spinout, an IPO or an outright sale to a third party for cash?
- John P. Rielly:
- Yes. We're looking at all options to maximize shareholder value. And as I said, in all of our downstream divestitures, the sales processes are well underway.
- Operator:
- The next question comes from the line of Edward Westlake from Credit Suisse.
- Scott Willis:
- This is Scott Willis on for Ed. I was just wondering, as far as the international asset portfolio, is there going to be further rationalization of that portfolio in the future beyond the assets already announced?
- John B. Hess:
- We gave a lot of study between our leadership team, our board and advisors on the optimum portfolio to, hopefully, create the portfolio that will generate a lot of returns to our investors. And that's this focused liquids-rich portfolio that is lower risk with the 5% to 8% compounded average annual growth rate. So there are no current plans for any other divestitures there. It's a dynamic business. Obviously, we'll always look at opportunities as we move ahead to continue to refocus and strengthen our portfolio, but there are no current plans beyond the ones we've already announced.
- Scott Willis:
- Okay. And then just on reserve replacement, looking kind of longer term even past Ghana. Could you just talk a little bit about where you think that reserve replacement could come from?
- Gregory P. Hill:
- Well, I think if you look at our portfolio and this 5% to 8% compounded annual growth rate that we've talked about, certainly, we'll be able to replace all of that in the 5-year period and some, right? And obviously, that comes from the Bakken, Utica, Ghana, North Malay Basin, T-Bells, all of the developments we've announced.
- Operator:
- Your next question comes from the line of Pavel Molchanov from Raymond James.
- Pavel Molchanov:
- Just wanted to ask about 2 international exploration areas that I don't think you've touched on yet. First, Kurdistan. I think you had 2 commitment wells for this year. Any status update on that?
- Gregory P. Hill:
- Yes. So we are currently mobilizing drilling rigs to begin drilling in the back half of 2013 in Kurdistan.
- Pavel Molchanov:
- Okay, in the back half. Have you identified sites up for those?
- Gregory P. Hill:
- Yes, we have. We've got both locations picked. Theyβre in the process of building locations, roads, et cetera, to mobilize the rigs.
- Pavel Molchanov:
- Okay. And then on your legacy acreage in France, obviously, the unconventional stuff is out of the picture right now. But are you still planning to do some conventional work this year?
- Gregory P. Hill:
- Yes. In fact, we finished one well, and the rig is moving to the second well. The first well, we cut almost 400 meters of core. So we got a lot of core out of the well. And now, the core is off to be studied. But so far, looks good. And the rig, as I said, is moving to the second well.
- Pavel Molchanov:
- Okay. And is this oil or gas?
- Gregory P. Hill:
- Oil.
- Operator:
- Ladies and gentlemen, I would now like to turn the call over to Mr. John Hess for the closing remarks.
- John B. Hess:
- Thank you. In closing, I'd like to say that we are excited about the opportunities for Hess and our shareholders. You've just heard how well we did in the first quarter, both operationally and in terms of our strategic repositioning. We are on track to complete our transformation into a pure-play E&P company and are also making steady progress towards increasing our future production at a compound average annual growth rate of 5% to 8%, as forecast on March 4. Just as importantly, we expect to begin returning capital to shareholders, as John Rielly talked about, in the second half of this year as a consequence of these actions. We also have a wonderful opportunity to add a world-class slate of new and independent directors to our board. John Krenicki is the former Vice Chairman of GE, former President and CEO of GE Energy and a partner at Clayton, Dubilier. Kevin Meyers was the senior executive, ConocoPhillips, that led their U.S. E&P business, transformed it and spearheaded development of their U.S. unconventional plays. Fred Reynolds is one of the best CFOs in Corporate America. He created tremendous value at CBS and later Viacom, transforming those companies and making them leaders in returning capital to shareholders, and is lead Independent Director at AOL. Bill Schrader is the person BP put in charge of its best and most valued E&P assets, including ACG in Azerbaijan, BP exploration Angola, TNK-BP in Russia. And Mark Williams is well known as one of the best oil and gas executives in the industry. He was on the executive committee of Royal Dutch Shell and has spent 2/3 of his 33-year career in the upstream and midstream businesses. Their objectivity and counsel have already been a tremendous addition to our company, and all of us at Hess look forward to continuing to benefit from their extensive experience in the future. Finally, I'd like to thank our shareholders for their thoughtful input and continued support. Thank you very much.
- Operator:
- Thank you, John. Ladies and gentlemen, thank you for joining today's conference. This concludes the presentation. You may now disconnect. Have a good day.
Other Hess Corporation earnings call transcripts:
- Q2 (2023) HES earnings call transcript
- Q1 (2023) HES earnings call transcript
- Q4 (2022) HES earnings call transcript
- Q3 (2022) HES earnings call transcript
- Q2 (2022) HES earnings call transcript
- Q1 (2022) HES earnings call transcript
- Q4 (2021) HES earnings call transcript
- Q3 (2021) HES earnings call transcript
- Q2 (2021) HES earnings call transcript
- Q1 (2021) HES earnings call transcript