Hess Corp. (NYSE:HES)

The financial data over the five-year period reveals significant fluctuations in both revenue and profitability, with a notable recovery in the latter years following a period of substantial losses.

Revenues and Income

Sales and other operating revenues displayed volatility, declining sharply in 2020 to 4,667 million US dollars from the previous year’s 6,495 million, likely reflecting adverse market conditions. However, a strong rebound occurred in 2021 and 2022, with revenues increasing to 7,473 million and further to 11,324 million US dollars, respectively. Gains on asset sales also saw peaks in 2020 and 2022, with the highest net gain of 101 million US dollars recorded in 2022. Overall revenues and non-operating income followed a similar pattern, dipping in 2020 before a recovery surpassing prior levels by 2022.

Cost Structure

Marketing costs, including purchased oil and gas, were considerably lower in 2020 at 936 million US dollars, reflecting reduced revenue, but increased sharply to 3,328 million in 2022, consistent with the rebound in sales. Operating costs and expenses remained relatively stable from 2018 to 2021, around 1,200 million US dollars, before increasing to 1,452 million in 2022. Production and severance taxes fluctuated but rose notably in 2022 to 255 million US dollars. Exploration expenses saw a decline from 2018 to 2021 but increased slightly in 2022. General and administrative expenses showed a decline from 2018 through 2021 but spiked in 2022 to 531 million US dollars. Depreciation, depletion and amortization steadily decreased from 2018 through 2021 before increasing in 2022.

Impairments

Impairment and other expenses were absent early in the period but presented a significant charge in 2020 amounting to 2,126 million US dollars, which had a material negative impact on profitability. This figure decreased substantially in the following years, remaining comparatively low in 2021 and 2022.

Profitability

Income before interest and income taxes mirrors the revenue trends, with positive results in 2018 and 2019 followed by a major loss in 2020 of -2,382 million US dollars. This was reversed in 2021 and 2022, with income rising to 1,971 million and then to 4,039 million US dollars. Interest expenses hovered around 400 to 500 million US dollars throughout the period, incrementally increasing in the last two years. Loss on debt extinguishment was noted only in 2018. Income before income taxes followed a similar trajectory to operating income, moving from small profits to a considerable loss in 2020 and then substantial gains in the subsequent two years.

Tax Provision and Net Income

The tax provision varied considerably, with negative benefits in most years except for a slight benefit in 2020 correlating with its loss position. Net income was negative in the first three years, with a drastic loss of -2,839 million US dollars in 2020, followed by recovery to positive territory in 2021 and substantial growth in 2022, reaching 2,447 million US dollars. The net income attributable to Hess Corporation common stockholders parallels this trend, moving from losses in the initial years to meaningful positive income in the final years.

In summary, the period analyzed was characterized by significant volatility, with a substantial downturn in 2020 driven primarily by impairments and decreased revenue, followed by a strong recovery in 2021 and 2022. Costs increased alongside the rebound in revenues in the later years, but effective operational management and market recovery contributed to a restoration of profitability. The data suggests stabilization and improved financial health toward the end of the period.