Analysis of Debt
Total Debt (Carrying Amount)
Hess Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
Total debt and finance lease obligations exhibited a general upward trajectory from 2018 through 2021, followed by a slight contraction in 2022. The total carrying amount increased from 6,672 million US dollars in 2018 to a peak of 8,677 million US dollars in 2021, representing an overall increase of approximately 30% over the four-year period before retreating to 8,481 million US dollars at the end of 2022.
- Long-Term Debt Composition
- The primary driver of the total debt profile is long-term debt excluding the current portion. This figure rose steadily from 6,605 million US dollars in 2018 to 8,286 million US dollars in 2020, experienced a slight reduction to 7,941 million US dollars in 2021, and returned to 8,278 million US dollars by the end of 2022. This suggests a strategy of maintaining a high level of long-term leverage to fund operations or capital expenditures.
- Short-Term Debt Volatility
- The current portion of long-term debt showed significant volatility. After remaining relatively low between 2018 and 2020, there was a substantial spike to 517 million US dollars in 2021. This increase likely indicates a concentration of debt maturities falling due within the 2022 fiscal year. By December 31, 2022, this amount decreased sharply to 3 million US dollars, indicating the successful repayment or refinancing of those obligations.
- Finance Lease Obligations
- Finance lease obligations emerged in the reporting from 2019 onward. A divergent trend is observed between current and long-term lease obligations; while the current portion grew marginally from 17 million US dollars in 2019 to 21 million US dollars in 2022, the long-term portion declined consistently from 238 million US dollars in 2019 to 179 million US dollars in 2022. This pattern indicates a gradual amortization of lease liabilities over the observed period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Total Debt (Fair Value)
| Dec 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Long-term debt | 8,192) |
| Finance lease obligations | 200) |
| Total debt and finance lease obligations (fair value) | 8,392) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.99 |
Based on: 10-K (reporting date: 2022-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt and finance lease obligations: 5.67%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 3.50% | 300) | 11) | |
| 4.30% | 996) | 43) | |
| 7.88% | 464) | 37) | |
| 7.30% | 629) | 46) | |
| 7.12% | 537) | 38) | |
| 6.00% | 742) | 45) | |
| 5.60% | 1,237) | 69) | |
| 5.80% | 494) | 29) | |
| 5.63% | 793) | 45) | |
| 5.13% | 544) | 28) | |
| 4.25% | 740) | 31) | |
| 5.50% | 395) | 22) | |
| 7.90% | 200) | 16) | |
| Total | 8,071) | 458) | |
| 5.67% | |||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 458 ÷ 8,071 = 5.67%
Interest Costs Incurred
Hess Corp., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The total interest costs incurred exhibit a general upward trajectory over the five-year period ending December 31, 2022, following a period of relative stability between 2018 and 2019. Total costs increased from US$ 419 million in 2018 to US$ 503 million in 2022.
- Interest Expense Trends
- Interest expense experienced a slight contraction in 2019, decreasing to US$ 380 million from US$ 399 million in 2018. A notable increase followed in 2020, with expenses rising to US$ 468 million. This upward trend persisted through 2021 and 2022, reaching US$ 493 million by the end of the period.
- Capitalized Interest Analysis
- Capitalized interest represents a small and inconsistent portion of the total interest burden. After an increase from US$ 20 million in 2018 to US$ 38 million in 2019, no capitalized interest was reported for the years 2020 and 2021. A nominal amount of US$ 10 million was recorded in 2022.
- Aggregate Interest Cost Progression
- The overall interest costs incurred remained nearly flat between 2018 and 2019, moving from US$ 419 million to US$ 418 million. A significant escalation occurred in 2020, where costs jumped to US$ 468 million, marking a period of sustained growth. By December 31, 2022, total costs reached US$ 503 million, representing an overall increase of approximately 20% since 2019.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 4,039 ÷ 493 = 8.19
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 4,039 ÷ 503 = 8.03
The analysis of debt coverage from 2018 to 2022 reveals a period of extreme volatility, characterized by an initial phase of marginal coverage, a severe collapse in 2020, and a subsequent robust recovery. The overall trajectory indicates a significant strengthening of the company's ability to service its interest obligations by the end of the period.
- Interest coverage ratio (without capitalized interest)
- Between 2018 and 2019, the ratio remained low and stable, moving from 1.55 to 1.58, which indicates a limited margin of safety for interest payments. A sharp reversal occurred in 2020, where the ratio fell to -5.09, signifying that operating earnings were negative and unable to cover interest expenses. A rapid recovery followed in 2021 and 2022, with the ratio climbing to 4.10 and then to 8.19, respectively, reflecting a substantial increase in the capacity to meet debt obligations.
- Adjusted interest coverage ratio (with capitalized interest)
- The adjusted ratio closely tracks the non-adjusted trend, starting at 1.48 in 2018 and slightly decreasing to 1.44 in 2019. The metric plummeted to -5.09 in 2020, aligning with the operational downturn observed in the non-adjusted figure. Recovery was evident in 2021 at 4.10, concluding with a strong ratio of 8.03 in 2022. The minimal variance between the adjusted and non-adjusted ratios throughout the five-year period suggests that capitalized interest does not materially alter the company's overall interest coverage profile.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?