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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
Form 10-Q 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2020
or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 1-1204 
HESS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
13-4921002
(I.R.S. Employer Identification Number)

1185 AVENUE OF THE AMERICAS, NEW YORK, NY
(Address of Principal Executive Offices)
10036
(Zip Code)
(Registrant’s Telephone Number, Including Area Code is (212) 997-8500)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common StockHESNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No  ý
At September 30, 2020, there were 307,077,424 shares of Common Stock outstanding.



HESS CORPORATION
Form 10-Q
TABLE OF CONTENTS
 
Item
No.
 Page
Number
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
  
 
 
Unless the context indicates otherwise, references to “Hess”, the “Corporation”, “Registrant”, “we”, “us”, “our” and “its” refer to the consolidated business operations of Hess Corporation and its subsidiaries.





PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30,
2020
December 31,
2019
(In millions,
except share amounts)
Assets  
Current Assets:  
Cash and cash equivalents$1,285 $1,545 
Accounts receivable:
From contracts with customers551 940 
Joint venture and other148 230 
Inventories422 261 
Assets held for sale483  
Other current assets247 180 
Total current assets3,136 3,156 
Property, plant and equipment:
Total — at cost30,166 35,820 
Less: Reserves for depreciation, depletion, amortization and lease impairment15,931 19,006 
Property, plant and equipment — net14,235 16,814 
Operating lease right-of-use assets — net324 447 
Finance lease right-of-use assets — net175 299 
Goodwill360 360 
Deferred income taxes67 80 
Other assets672 626 
Total Assets$18,969 $21,782 
Liabilities
Current Liabilities:
Accounts payable$200 $411 
Accrued liabilities1,074 1,803 
Taxes payable45 97 
Current maturities of long-term debt8  
Current portion of operating and finance lease obligations99 199 
Total current liabilities1,426 2,510 
Long-term debt8,280 7,142 
Long-term operating lease obligations334 353 
Long-term finance lease obligations224 238 
Deferred income taxes316 415 
Asset retirement obligations932 897 
Other liabilities and deferred credits575 521 
Total Liabilities12,087 12,076 
Equity
Hess Corporation stockholders’ equity:
Common stock, par value $1.00; Authorized — 600,000,000 shares
Issued — 307,077,424 shares (2019: 304,955,472)
307 305 
Capital in excess of par value5,668 5,591 
Retained earnings304 3,535 
Accumulated other comprehensive income (loss)(363)(699)
Total Hess Corporation stockholders’ equity5,916 8,732 
Noncontrolling interests966 974 
Total Equity6,882 9,706 
Total Liabilities and Equity$18,969 $21,782 
See accompanying Notes to Consolidated Financial Statements.
2


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
 (In millions, except per share amounts)
Revenues and Non-Operating Income  
Sales and other operating revenues$1,159 $1,580 $3,346 $4,812 
Gains on asset sales, net  8 22 
Other, net17 (65)33 (23)
Total revenues and non-operating income1,176 1,515 3,387 4,811 
Costs and Expenses
Marketing, including purchased oil and gas221 423 655 1,308 
Operating costs and expenses308 321 905 872 
Production and severance taxes34 47 92 132 
Exploration expenses, including dry holes and lease impairment71 50 291 127 
General and administrative expenses84 90 275 266 
Interest expense118 90 350 285 
Depreciation, depletion and amortization518 544 1,588 1,536 
Impairment  2,126  
Total costs and expenses1,354 1,565 6,282 4,526 
Income (Loss) Before Income Taxes(178)(50)(2,895)285 
Provision (benefit) for income taxes5 116 (83)342 
Net Income (Loss)(183)(166)(2,812)(57)
Less: Net income (loss) attributable to noncontrolling interests60 46 184 129 
Net Income (Loss) Attributable to Hess Corporation(243)(212)(2,996)(186)
Less: Preferred stock dividends   4 
Net Income (Loss) Attributable to Hess Corporation Common Stockholders$(243)$(212)$(2,996)$(190)
Net Income (Loss) Attributable to Hess Corporation Per Common Share:
Basic$(0.80)$(0.70)$(9.83)$(0.63)
Diluted$(0.80)$(0.70)$(9.83)$(0.63)
Weighted Average Number of Common Shares Outstanding:
Basic305.0 302.5 304.7 300.7 
Diluted305.0 302.5 304.7 300.7 
Common Stock Dividends Per Share$0.25 $0.25 $0.75 $0.75 
See accompanying Notes to Consolidated Financial Statements.

3


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
 (In millions)
Net Income (Loss)$(183)$(166)$(2,812)$(57)
Other Comprehensive Income (Loss):
Derivatives designated as cash flow hedges
Effect of hedge (gains) losses reclassified to income(143)(2)(435)(3)
Income taxes on effect of hedge (gains) losses reclassified to income    
Net effect of hedge (gains) losses reclassified to income(143)(2)(435)(3)
Change in fair value of cash flow hedges(44)12 732 (334)
Income taxes on change in fair value of cash flow hedges    
Net change in fair value of cash flow hedges(44)12 732 (334)
Change in derivatives designated as cash flow hedges, after taxes(187)10 297 (337)
Pension and other postretirement plans
(Increase) reduction in unrecognized actuarial losses (239)4 (257)
Income taxes on actuarial changes in plan liabilities    
(Increase) reduction in unrecognized actuarial losses, net (239)4 (257)
Amortization of net actuarial losses11 101 35 124 
Income taxes on amortization of net actuarial losses    
Net effect of amortization of net actuarial losses11 101 35 124 
Change in pension and other postretirement plans, after taxes11 (138)39 (133)
Other Comprehensive Income (Loss)(176)(128)336 (470)
Comprehensive Income (Loss)(359)(294)(2,476)(527)
Less: Comprehensive income (loss) attributable to noncontrolling interests60 46 184 129 
Comprehensive Income (Loss) Attributable to Hess Corporation$(419)$(340)$(2,660)$(656)
See accompanying Notes to Consolidated Financial Statements.

4


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
 20202019
 (In millions)
Cash Flows From Operating Activities  
Net income (loss)$(2,812)$(57)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gains) losses on asset sales, net(8)(22)
Depreciation, depletion and amortization1,588 1,536 
Impairment2,126  
Exploratory dry hole costs166 10 
Exploration lease and other impairment48 14 
Pension settlement loss 88 
Stock compensation expense63 66 
Noncash (gains) losses on commodity derivatives, net187 87 
Provision (benefit) for deferred income taxes and other tax accruals(87)(5)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable539 (129)
(Increase) decrease in inventories(161)(44)
Increase (decrease) in accounts payable and accrued liabilities(681)(127)
Increase (decrease) in taxes payable(52)22 
Changes in other operating assets and liabilities(69)(83)
Net cash provided by (used in) operating activities847 1,356 
Cash Flows From Investing Activities
Additions to property, plant and equipment - E&P(1,577)(1,720)
Additions to property, plant and equipment - Midstream(246)(284)
Payments for Midstream equity investments (33)
Proceeds from asset sales, net of cash sold11 22 
Other, net(2)(3)
Net cash provided by (used in) investing activities(1,814)(2,018)
Cash Flows From Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less146 176 
Debt with maturities of greater than 90 days:
Borrowings1,000  
Repayments (8)
Payments on finance lease obligations(6)(47)
Common stock acquired and retired (25)
Cash dividends paid(233)(241)
Noncontrolling interests, net(194)(41)
Other, net(6)17 
Net cash provided by (used in) financing activities707 (169)
Net Increase (Decrease) in Cash and Cash Equivalents(260)(831)
Cash and Cash Equivalents at Beginning of Year1,545 2,694 
Cash and Cash Equivalents at End of Period$1,285 $1,863 
See accompanying Notes to Consolidated Financial Statements.

5


PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED EQUITY (UNAUDITED)
 Mandatory Convertible Preferred StockCommon StockCapital in Excess of ParRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Hess Stockholders' EquityNoncontrolling InterestsTotal Equity
 (In millions)
For the Three Months Ended September 30, 2020       
Balance at July 1, 2020$ $307 $5,650 $625 $(187)$6,395 $971 $7,366 
Net income (loss)— — — (243)— (243)60 (183)
Other comprehensive income (loss)— — — — (176)(176)— (176)
Share-based compensation—  18  — 18 — 18 
Dividends on common stock— — — (78)— (78)— (78)
Noncontrolling interests, net— — — — — — (65)(65)
Balance at September 30, 2020$ $307 $5,668 $304 $(363)$5,916 $966 $6,882 
For the Three Months Ended September 30, 2019
Balance at July 1, 2019$ $304 $5,513 $4,125 $(648)$9,294 $1,237 $10,531 
Net income (loss)— — — (212)— (212)46 (166)
Other comprehensive income (loss)— — — — (128)(128)— (128)
Share-based compensation— 1 30 — — 31 — 31 
Dividends on common stock— — — (77)— (77)— (77)
Noncontrolling interests, net— — — — — — (14)(14)
Balance at September 30, 2019$ $305 $5,543 $3,836 $(776)$8,908 $1,269 $10,177 
For the Nine Months Ended September 30, 2020
Balance at January 1, 2020$ $305 $5,591 $3,535 $(699)$8,732 $974 $9,706 
Net income (loss)— — — (2,996)— (2,996)184 (2,812)
Other comprehensive income (loss)— — — — 336 336 — 336 
Share-based compensation— 2 77 (5)— 74 — 74 
Dividends on common stock— — — (230)— (230)— (230)
Noncontrolling interests, net— — — — — — (192)(192)
Balance at September 30, 2020$ $307 $5,668 $304 $(363)$5,916 $966 $6,882 
For the Nine Months Ended September 30, 2019
Balance at January 1, 2019$1 $291 $5,386 $4,257 $(306)$9,629 $1,259 $10,888 
Net income (loss)— — — (186)— (186)129 (57)
Other comprehensive income (loss)— — — — (470)(470)— (470)
Preferred stock conversion(1)12 (11)— —  —  
Share-based compensation— 2 90 — — 92 — 92 
Dividends on preferred stock— — — (4)— (4)— (4)
Dividends on common stock— — — (231)— (231)— (231)
Sale of water business to Hess Infrastructure Partners— — 78 — — 78 (78) 
Noncontrolling interests, net— — — — — — (41)(41)
Balance at September 30, 2019$ $305 $5,543 $3,836 $(776)$8,908 $1,269 $10,177 
See accompanying Notes to Consolidated Financial Statements.


6

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 September 30, 2020 and December 31, 2019, the consolidated results of operations for the three and nine months ended September 30, 2020 and 2019, and consolidated cash flows for the nine months ended September 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.
 2.  Inventories
Inventories consisted of the following:
September 30,
2020
December 31,
2019
 (In millions)
Crude oil and natural gas liquids$241 $92 
Materials and supplies181 169 
Total Inventories$422 $261 
We chartered three very large crude carriers (VLCCs) and have loaded a total of 6.3 million barrels of Bakken crude oil during the second and third quarters of this year for sale in Asian markets. The first VLCC cargo of 2.1 million barrels was sold in September and cash proceeds were received in October. At September 30, 2020, we have a total of 4.2 million barrels of crude oil loaded on the second and third VLCCs, and crude oil inventories include $147 million associated with the cost of these volumes.
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
Assets Held for Sale:
On October 5, 2020, we entered into an agreement to sell our 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico for total consideration of $505 million, subject to customary adjustments, with an effective date of July 1, 2020. See Note 14. Subsequent Events. At September 30, 2020, property, plant and equipment totaling $483 million and asset retirement obligations totaling $79 million associated with the Shenzi Field were presented as Assets held for sale and as liabilities held for sale within Accrued Liabilities, respectively, in our Consolidated Balance Sheet.
7

PART I - FINANCIAL INFORMATION (CONT’D.)
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Capitalized Exploratory Well Costs:  
The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves during the nine months ended September 30, 2020 (in millions):
Balance at January 1, 2020$584 
Additions to capitalized exploratory well costs pending the determination of proved reserves96 
Reclassifications to wells, facilities and equipment based on the determination of proved reserves(80)
Capitalized exploratory well costs charged to expense(125)
Balance at September 30, 2020$475 
In September, we sanctioned the development plan for the Payara Field on the Stabroek Field, Offshore Guyana and reclassified well costs totaling $80 million to wells, facilities and equipment based on the determination of proved reserves. 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. The table above does not include $41 million of well costs incurred and expensed during the first nine months of 2020.
Capitalized exploratory well costs capitalized for greater than one year following completion of drilling were $329 million at September 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 drilling for certain fields and is conducting pre-development planning for additional phases of development beyond the three 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 three successful exploration wells drilled in the western part of Block A-18.  The operator has submitted a development plan concept to the regulator to facilitate ongoing commercial negotiations for an extension of the existing gas sales contract to include development of the western part of the Block.
Malaysia:  Approximately 10% of the capitalized well costs in excess of one year relate to the North Malay Basin (Hess 50%), offshore Peninsular Malaysia, where hydrocarbons were encountered in five successful exploration wells.  Subsurface evaluation and pre-development studies for future phases of development are ongoing.
4.  Hess Midstream LP
At September 30, 2020 Hess Midstream LP (Hess Midstream), a variable interest entity that is fully consolidated by Hess Corporation, had liabilities totaling $2,031 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 $3,103 million (December 31, 2019: $3,010 million).
5.  Debt
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.  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 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 September 30, 2020, outstanding borrowings were $1.0 billion under the term loan agreement.
8

PART I - FINANCIAL INFORMATION (CONT’D.)
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6.  Revenue
Revenue from contracts with customers on a disaggregated basis was as follows:
 Exploration and ProductionMidstreamEliminationsTotal
 United StatesGuyanaMalaysia & JDADenmarkLibyaE&P Total   
 (In millions)
Three Months Ended September 30, 2020         
Sales of our net production volumes:         
Crude oil revenue$471 $80 $13 $11 $ $575 $ $— $575 
Natural gas liquids revenue68     68  — 68 
Natural gas revenue34  116 1  151  — 151 
Sales of purchased oil and gas220 1    221  — 221 
Intercompany revenue      264 (264)— 
Total revenues from contracts with customers793 81 129 12  1,015 264 (264)1,015 
Other operating revenues (a)125 18  1  144   144 
Total sales and other operating revenues$918 $99 $129 $13 $ $1,159 $264 $(264)$1,159 
Three Months Ended September 30, 2019         
Sales of our net production volumes:         
Crude oil revenue$749 $ $22 $31 $122 $924 $ $— $924 
Natural gas liquids revenue46     46  — 46 
Natural gas revenue34  160 2 5 201  — 201 
Sales of purchased oil and gas381  3  23 407  — 407 
Intercompany revenue      215 (215)— 
Total revenues from contracts with customers1,210  185 33 150 1,578 215 (215)1,578 
Other operating revenues (a)2     2   2