Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Hess Corp., solvency ratios
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 solvency profile exhibits a distinct cyclical pattern characterized by a significant increase in leverage and a deterioration of coverage ratios in 2020, followed by a consistent recovery through 2022. The overall trend indicates a period of financial stress during the 2020 fiscal year, succeeded by a strategic reduction in debt dependency and a substantial improvement in the capacity to meet fixed obligations.
- Leverage and Capital Structure
- Debt to equity and debt to capital ratios showed a sharp upward trajectory, peaking in 2020 at 1.59 and 0.61, respectively. Following this peak, both metrics declined steadily, with debt to equity reaching 1.08 and debt to capital falling to 0.52 by December 31, 2022. A similar pattern is observed when including operating lease liabilities, which consistently maintain slightly higher ratio values but follow the same directional trend of peak stress in 2020 and subsequent moderation.
- Asset Utilization and Financial Leverage
- The debt to assets ratio increased from 0.31 in 2018 to a peak of 0.45 in 2020, before retreating to 0.39 by the end of 2022. This movement is mirrored by the financial leverage ratio, which rose from 2.23 in 2018 to a maximum of 3.51 in 2020, then decreased to 2.76 by 2022. These figures suggest a temporary expansion of the balance sheet through debt financing that was later corrected.
- Debt Serviceability
- The most volatile changes are observed in the coverage ratios. Interest coverage and fixed charge coverage both transitioned from positive values in 2019 to deep negative territory in 2020, reaching -5.09 and -3.27, respectively. However, a robust recovery ensued, with interest coverage climbing to 8.19 and fixed charge coverage rising to 6.84 by December 31, 2022. This represents a significant strengthening of the company's ability to service its interest and fixed obligations relative to its earnings.
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Debt Ratios
Coverage Ratios
Debt to Equity
Hess Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt | 3) | 517) | 10) | —) | 67) | |
| Current portion of finance lease obligations | 21) | 19) | 18) | 17) | —) | |
| Long-term debt, excluding current portion | 8,278) | 7,941) | 8,286) | 7,142) | 6,605) | |
| Long-term finance lease obligations | 179) | 200) | 220) | 238) | —) | |
| Total debt | 8,481) | 8,677) | 8,534) | 7,397) | 6,672) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.08 | 1.38 | 1.59 | 0.85 | 0.69 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | 0.15 | 0.23 | — | — | — | |
| ConocoPhillips | 0.35 | 0.44 | — | — | — | |
| Exxon Mobil Corp. | 0.21 | 0.28 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.20 | 0.28 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Energy | 0.22 | 0.31 | — | — | — | |
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).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Hess Corporation stockholders’ equity
= 8,481 ÷ 7,855 = 1.08
2 Click competitor name to see calculations.
An analysis of the solvency profile indicates a period of significant leverage expansion peaking in 2020, followed by a gradual trend toward deleveraging and equity recovery through 2022. The fluctuations in the debt-to-equity ratio are primarily driven by the inverse correlation between rising total debt and a sharp, temporary contraction in stockholders' equity.
- Total Debt Trends
- Total debt exhibited a consistent upward trajectory from 2018 to 2021, rising from 6,672 million US$ to a peak of 8,677 million US$. A slight reduction was observed in 2022, with the balance decreasing to 8,481 million US$, suggesting a stabilization of borrowing levels.
- Stockholders' Equity Fluctuations
- Equity experienced a marked decline between 2018 and 2020, dropping from 9,629 million US$ to a low of 5,366 million US$. This decline was reversed in the subsequent two years, with equity recovering to 6,300 million US$ in 2021 and further increasing to 7,855 million US$ by the end of 2022.
- Debt to Equity Ratio Analysis
- The debt to equity ratio rose sharply from 0.69 in 2018 to 1.59 in 2020, marking the period of highest financial leverage. Following this peak, the ratio trended downward to 1.38 in 2021 and 1.08 in 2022. While the solvency position improved significantly after 2020, the 2022 ratio remains elevated relative to the 2018 baseline.
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Debt to Equity (including Operating Lease Liability)
Hess Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt | 3) | 517) | 10) | —) | 67) | |
| Current portion of finance lease obligations | 21) | 19) | 18) | 17) | —) | |
| Long-term debt, excluding current portion | 8,278) | 7,941) | 8,286) | 7,142) | 6,605) | |
| Long-term finance lease obligations | 179) | 200) | 220) | 238) | —) | |
| Total debt | 8,481) | 8,677) | 8,534) | 7,397) | 6,672) | |
| Current portion of operating lease obligations | 200) | 70) | 63) | 182) | —) | |
| Long-term operating lease obligations | 469) | 394) | 478) | 353) | —) | |
| Total debt (including operating lease liability) | 9,150) | 9,141) | 9,075) | 7,932) | 6,672) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 1.16 | 1.45 | 1.69 | 0.91 | 0.69 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.17 | 0.25 | — | — | — | |
| ConocoPhillips | 0.36 | 0.45 | — | — | — | |
| Exxon Mobil Corp. | 0.24 | 0.31 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.23 | 0.31 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Energy | 0.25 | 0.34 | — | — | — | |
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).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Hess Corporation stockholders’ equity
= 9,150 ÷ 7,855 = 1.16
2 Click competitor name to see calculations.
The analysis of solvency metrics reveals a period of heightened financial leverage that peaked in 2020, followed by a gradual improvement in the capital structure through the end of 2022.
- Total Debt Trends
- Total debt, including operating lease liabilities, experienced a consistent upward trajectory between 2018 and 2020, rising from US$ 6,672 million to US$ 9,075 million. Following this period of expansion, debt levels stabilized, showing negligible increases through 2021 and 2022, concluding the period at US$ 9,150 million.
- Equity Fluctuations
- Stockholders' equity exhibited significant volatility. A substantial contraction occurred between 2019 and 2020, with equity dropping from US$ 8,732 million to a low of US$ 5,366 million. This decline was followed by a consistent recovery phase, with equity increasing to US$ 6,300 million in 2021 and reaching US$ 7,855 million by December 31, 2022.
- Debt to Equity Ratio Analysis
- The debt to equity ratio reflects the combined impact of rising liabilities and fluctuating equity. The ratio increased from 0.69 in 2018 to a peak of 1.69 in 2020, signifying a period of increased financial leverage and a higher reliance on borrowed capital. Subsequently, the ratio entered a downward trend, declining to 1.45 in 2021 and 1.16 in 2022, indicating a strengthening of the solvency position as equity recovered while total debt remained relatively flat.
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Debt to Capital
Hess Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt | 3) | 517) | 10) | —) | 67) | |
| Current portion of finance lease obligations | 21) | 19) | 18) | 17) | —) | |
| Long-term debt, excluding current portion | 8,278) | 7,941) | 8,286) | 7,142) | 6,605) | |
| Long-term finance lease obligations | 179) | 200) | 220) | 238) | —) | |
| Total debt | 8,481) | 8,677) | 8,534) | 7,397) | 6,672) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Total capital | 16,336) | 14,977) | 13,900) | 16,129) | 16,301) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.52 | 0.58 | 0.61 | 0.46 | 0.41 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | 0.13 | 0.18 | — | — | — | |
| ConocoPhillips | 0.26 | 0.31 | — | — | — | |
| Exxon Mobil Corp. | 0.17 | 0.22 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.17 | 0.22 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Energy | 0.18 | 0.24 | — | — | — | |
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).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 8,481 ÷ 16,336 = 0.52
2 Click competitor name to see calculations.
The solvency profile reflects a period of increasing leverage between 2018 and 2020, followed by a gradual trend toward deleveraging through the end of 2022.
- Total Debt Evolution
- Total debt exhibited a consistent upward trajectory from 2018 to 2021, rising from 6,672 million US$ to a peak of 8,677 million US$. A slight reduction occurred in 2022, with debt decreasing to 8,481 million US$, suggesting a shift toward debt stabilization or repayment.
- Total Capital Dynamics
- Total capital remained relatively stable between 2018 and 2019 before experiencing a notable contraction in 2020, reaching a low of 13,900 million US$. Subsequent years showed a recovery trend, returning to 16,336 million US$ by 2022, which aligns closely with the levels observed in 2018.
- Debt to Capital Ratio Analysis
- The debt to capital ratio increased steadily from 0.41 in 2018 to a peak of 0.61 in 2020. This peak was driven by the simultaneous increase in total debt and the contraction of total capital. From 2021 onward, the ratio declined to 0.58 and further to 0.52 in 2022, indicating an improvement in the capital structure and a reduction in financial risk relative to the total capital base.
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Debt to Capital (including Operating Lease Liability)
Hess Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt | 3) | 517) | 10) | —) | 67) | |
| Current portion of finance lease obligations | 21) | 19) | 18) | 17) | —) | |
| Long-term debt, excluding current portion | 8,278) | 7,941) | 8,286) | 7,142) | 6,605) | |
| Long-term finance lease obligations | 179) | 200) | 220) | 238) | —) | |
| Total debt | 8,481) | 8,677) | 8,534) | 7,397) | 6,672) | |
| Current portion of operating lease obligations | 200) | 70) | 63) | 182) | —) | |
| Long-term operating lease obligations | 469) | 394) | 478) | 353) | —) | |
| Total debt (including operating lease liability) | 9,150) | 9,141) | 9,075) | 7,932) | 6,672) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Total capital (including operating lease liability) | 17,005) | 15,441) | 14,441) | 16,664) | 16,301) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.54 | 0.59 | 0.63 | 0.48 | 0.41 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.15 | 0.20 | — | — | — | |
| ConocoPhillips | 0.26 | 0.31 | — | — | — | |
| Exxon Mobil Corp. | 0.19 | 0.24 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.19 | 0.23 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Energy | 0.20 | 0.25 | — | — | — | |
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).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 9,150 ÷ 17,005 = 0.54
2 Click competitor name to see calculations.
The solvency profile between 2018 and 2022 is characterized by an initial increase in financial leverage followed by a period of stabilization and capital recovery. A significant shift in the debt-to-capital structure occurred during 2020, which served as a pivot point for the company's solvency trajectory.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trend from 2018 to 2020, rising from 6,672 million US$ to 9,075 million US$. Following this period of growth, debt levels reached a plateau, ending 2022 at 9,150 million US$, indicating a stabilization of borrowing activities in the final two years of the period.
- Total Capital Dynamics
- Total capital demonstrated volatility, with a notable contraction in 2020 where it fell to 14,441 million US$ from a 2019 high of 16,664 million US$. This decline coincided with the peak in leverage. Subsequently, a recovery phase was observed, with total capital expanding steadily to 17,005 million US$ by December 31, 2022.
- Debt to Capital Ratio Interpretation
- The debt to capital ratio rose from 0.41 in 2018 to a peak of 0.63 in 2020. This increase was driven by the simultaneous rise in total debt and the contraction of total capital. From 2021 onward, a downward trend in the ratio is observed, declining to 0.59 and further to 0.54 by 2022. This reduction suggests an improved solvency position resulting from capital growth while debt remained relatively constant.
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Debt to Assets
Hess Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt | 3) | 517) | 10) | —) | 67) | |
| Current portion of finance lease obligations | 21) | 19) | 18) | 17) | —) | |
| Long-term debt, excluding current portion | 8,278) | 7,941) | 8,286) | 7,142) | 6,605) | |
| Long-term finance lease obligations | 179) | 200) | 220) | 238) | —) | |
| Total debt | 8,481) | 8,677) | 8,534) | 7,397) | 6,672) | |
| Total assets | 21,695) | 20,515) | 18,821) | 21,782) | 21,433) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.39 | 0.42 | 0.45 | 0.34 | 0.31 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | 0.09 | 0.13 | — | — | — | |
| ConocoPhillips | 0.18 | 0.22 | — | — | — | |
| Exxon Mobil Corp. | 0.11 | 0.14 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.11 | 0.15 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Energy | 0.12 | 0.16 | — | — | — | |
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).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 8,481 ÷ 21,695 = 0.39
2 Click competitor name to see calculations.
The solvency analysis between 2018 and 2022 reveals a period of increasing financial leverage that peaked in 2020, followed by a steady improvement in the company's asset-to-debt relationship.
- Total Debt Trajectory
- Total debt demonstrated a consistent upward trend for the majority of the period, increasing from 6,672 million US$ in 2018 to a peak of 8,677 million US$ in 2021. A slight reduction was observed in 2022, where total debt decreased to 8,481 million US$.
- Asset Base Volatility
- Total assets remained relatively stable through 2019 before experiencing a significant contraction in 2020, falling to 18,821 million US$. A recovery phase followed, with assets increasing to 20,515 million US$ in 2021 and reaching 21,695 million US$ by the end of 2022, effectively recovering the losses incurred during the 2020 dip.
- Debt to Assets Ratio Interpretation
- The debt to assets ratio rose from 0.31 in 2018 to a peak of 0.45 in 2020. This spike was driven by the simultaneous occurrence of increasing total debt and a sharp decline in total assets. From 2021 onward, the ratio began a downward trend, falling to 0.42 and then to 0.39 in 2022. This movement indicates a strengthening of the solvency position and a reduction in the proportion of assets financed through debt.
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Debt to Assets (including Operating Lease Liability)
Hess Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt | 3) | 517) | 10) | —) | 67) | |
| Current portion of finance lease obligations | 21) | 19) | 18) | 17) | —) | |
| Long-term debt, excluding current portion | 8,278) | 7,941) | 8,286) | 7,142) | 6,605) | |
| Long-term finance lease obligations | 179) | 200) | 220) | 238) | —) | |
| Total debt | 8,481) | 8,677) | 8,534) | 7,397) | 6,672) | |
| Current portion of operating lease obligations | 200) | 70) | 63) | 182) | —) | |
| Long-term operating lease obligations | 469) | 394) | 478) | 353) | —) | |
| Total debt (including operating lease liability) | 9,150) | 9,141) | 9,075) | 7,932) | 6,672) | |
| Total assets | 21,695) | 20,515) | 18,821) | 21,782) | 21,433) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.42 | 0.45 | 0.48 | 0.36 | 0.31 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.11 | 0.15 | — | — | — | |
| ConocoPhillips | 0.18 | 0.23 | — | — | — | |
| Exxon Mobil Corp. | 0.13 | 0.16 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.13 | 0.16 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Energy | 0.14 | 0.17 | — | — | — | |
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).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 9,150 ÷ 21,695 = 0.42
2 Click competitor name to see calculations.
Between 2018 and 2022, the solvency profile of the organization was characterized by an initial increase in leverage followed by a period of stabilization and gradual improvement in the debt-to-assets ratio. The overall trend indicates a peak in financial leverage in 2020, with a subsequent recovery in the asset base that moderated the solvency ratio through 2022.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trajectory over the five-year period. The balance grew from US$ 6,672 million in 2018 to US$ 9,150 million in 2022. The most significant accumulation occurred between 2018 and 2020, after which the debt level plateaued, showing only marginal increases in 2021 and 2022.
- Total Asset Fluctuations
- Total assets experienced notable volatility, beginning at US$ 21,433 million in 2018 and reaching US$ 21,782 million in 2019. A sharp contraction was observed in 2020, where assets declined to US$ 18,821 million. This was followed by a steady recovery over the next two years, returning to US$ 21,695 million by the end of 2022.
- Debt to Assets Ratio Analysis
- The debt-to-assets ratio rose from 0.31 in 2018 to a peak of 0.48 in 2020. This spike was driven by the simultaneous increase in total liabilities and a significant reduction in total assets during that fiscal year. Following the 2020 peak, the ratio declined to 0.45 in 2021 and further to 0.42 in 2022. This improvement is attributed to the restoration of the asset base while total debt remained relatively stagnant.
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Financial Leverage
Hess Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 21,695) | 20,515) | 18,821) | 21,782) | 21,433) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.76 | 3.26 | 3.51 | 2.49 | 2.23 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | 1.62 | 1.72 | — | — | — | |
| ConocoPhillips | 1.95 | 2.00 | — | — | — | |
| Exxon Mobil Corp. | 1.89 | 2.01 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.79 | 1.90 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Energy | 1.82 | 1.93 | — | — | — | |
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).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Hess Corporation stockholders’ equity
= 21,695 ÷ 7,855 = 2.76
2 Click competitor name to see calculations.
Between 2018 and 2022, the company's capital structure experienced a period of significant volatility, characterized by a sharp increase in financial leverage followed by a consistent deleveraging trend.
- Financial Leverage Analysis
- The financial leverage ratio increased steadily from 2.23 in 2018 to a peak of 3.51 in 2020, indicating a period of increased financial risk and a higher proportion of debt relative to equity. Following this peak, a downward trend is observed, with the ratio improving to 3.26 in 2021 and further decreasing to 2.76 by the end of 2022.
- Equity Position
- A significant contraction in stockholders' equity occurred between 2018 and 2020, with values falling from US$ 9,629 million to US$ 5,366 million. This sharp decline in the equity base was the primary catalyst for the spike in the leverage ratio. A recovery phase followed, with equity rising to US$ 6,300 million in 2021 and reaching US$ 7,855 million in 2022.
- Asset Base Trends
- Total assets exhibited a dip in 2020, falling to US$ 18,821 million from a 2019 high of US$ 21,782 million. However, the asset base recovered quickly, returning to US$ 21,695 million by December 31, 2022, effectively restoring the company's total resource scale to pre-2020 levels.
The overall trajectory indicates a strategic recovery of the balance sheet. While the leverage ratio at the end of 2022 remains higher than the 2018 baseline, the steady increase in stockholders' equity and the simultaneous reduction in the leverage ratio suggest a strengthening of the company's solvency position since 2020.
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Interest Coverage
Hess Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | 2,096) | 559) | (3,093) | (408) | (282) | |
| Add: Net income attributable to noncontrolling interest | 351) | 331) | 254) | 168) | 167) | |
| Add: Income tax expense | 1,099) | 600) | (11) | 461) | 335) | |
| Add: Interest expense | 493) | 481) | 468) | 380) | 399) | |
| Earnings before interest and tax (EBIT) | 4,039) | 1,971) | (2,382) | 601) | 619) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 8.19 | 4.10 | -5.09 | 1.58 | 1.55 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | 97.27 | 31.39 | — | — | — | |
| ConocoPhillips | 36.07 | 15.38 | — | — | — | |
| Exxon Mobil Corp. | 98.43 | 33.98 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 74.46 | 26.79 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Energy | 62.30 | 23.05 | — | — | — | |
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).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 4,039 ÷ 493 = 8.19
2 Click competitor name to see calculations.
Analysis of the interest coverage ratio reveals a period of extreme volatility followed by a robust recovery in solvency capacity. Between 2018 and 2022, the ability to service interest obligations from operational earnings shifted from a marginal position to a critical deficit, and finally to a strong surplus.
- Earnings Before Interest and Tax (EBIT)
- Operational earnings remained relatively stable between 2018 and 2019 before experiencing a severe contraction in 2020, where EBIT fell to negative US$ 2,382 million. This decline was followed by a sharp reversal, with earnings growing to US$ 1,971 million in 2021 and further increasing to US$ 4,039 million by the end of 2022.
- Interest Expense
- Interest expenses exhibited a gradual upward trend over the five-year period. Costs rose from US$ 399 million in 2018 to US$ 493 million in 2022. The relative stability of these expenses, despite the volatility in EBIT, indicates a consistent debt servicing requirement.
- Interest Coverage Ratio
- The interest coverage ratio was low but positive in 2018 and 2019, at 1.55 and 1.58 respectively, indicating a narrow margin of safety. The ratio became negative in 2020 (-5.09), reflecting an inability to cover interest costs through operating profit. A significant recovery is observed in the subsequent two years, with the ratio climbing to 4.10 in 2021 and reaching 8.19 by December 31, 2022, marking a substantial improvement in financial solvency.
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Fixed Charge Coverage
Hess Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| U.S. statutory tax rate | 21.00% | 21.00% | 21.00% | 21.00% | 21.00% | |
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hess Corporation | 2,096) | 559) | (3,093) | (408) | (282) | |
| Add: Net income attributable to noncontrolling interest | 351) | 331) | 254) | 168) | 167) | |
| Add: Income tax expense | 1,099) | 600) | (11) | 461) | 335) | |
| Add: Interest expense | 493) | 481) | 468) | 380) | 399) | |
| Earnings before interest and tax (EBIT) | 4,039) | 1,971) | (2,382) | 601) | 619) | |
| Add: Operating lease cost | 114) | 88) | 200) | 414) | 154) | |
| Earnings before fixed charges and tax | 4,153) | 2,059) | (2,182) | 1,015) | 773) | |
| Interest expense | 493) | 481) | 468) | 380) | 399) | |
| Operating lease cost | 114) | 88) | 200) | 414) | 154) | |
| Preferred stock dividends | —) | —) | —) | 4) | 46) | |
| Preferred stock dividends, tax adjustment1 | —) | —) | —) | 1) | 12) | |
| Preferred stock dividends, after tax adjustment | —) | —) | —) | 5) | 58) | |
| Fixed charges | 607) | 569) | 668) | 799) | 611) | |
| Solvency Ratio | ||||||
| Fixed charge coverage2 | 6.84 | 3.62 | -3.27 | 1.27 | 1.26 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors3 | ||||||
| Chevron Corp. | 18.28 | 8.43 | — | — | — | |
| ConocoPhillips | 28.76 | 11.94 | — | — | — | |
| Exxon Mobil Corp. | 31.21 | 13.55 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 25.07 | 10.99 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Energy | 20.61 | 9.19 | — | — | — | |
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).
1 2022 Calculation
Preferred stock dividends, tax adjustment = (Preferred stock dividends × U.S. statutory tax rate) ÷ (1 − U.S. statutory tax rate)
= (0 × 21.00%) ÷ (1 − 21.00%) = 0
2 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 4,153 ÷ 607 = 6.84
3 Click competitor name to see calculations.
The solvency profile between 2018 and 2022 is characterized by extreme volatility, featuring a severe contraction in 2020 followed by a rapid and substantial expansion of coverage capacity.
- Earnings Before Fixed Charges and Tax
- A highly volatile trajectory is observed in earnings, which rose from US$ 773 million in 2018 to US$ 1,015 million in 2019 before falling to a deficit of US$ 2,182 million in 2020. A strong recovery ensued in 2021, with earnings reaching US$ 2,059 million, and continuing upward to a peak of US$ 4,153 million by the end of 2022.
- Fixed Charges
- Fixed obligations remained relatively stable across the five-year period. After peaking at US$ 799 million in 2019, these charges fluctuated within a narrow range between US$ 569 million and US$ 668 million from 2020 through 2022. The relative constancy of these charges suggests that the variance in solvency ratios was driven by operational performance rather than changes in the fixed cost structure.
- Fixed Charge Coverage Ratio
- The coverage ratio indicates a transition from marginal solvency to a critical deficit and finally to a position of strength. The ratio remained flat at approximately 1.26 to 1.27 during 2018 and 2019, then plummeted to -3.27 in 2020, reflecting an inability to cover fixed charges from earnings. This was followed by a significant upward trend, with the ratio climbing to 3.62 in 2021 and reaching 6.84 in 2022, representing a marked improvement in the ability to service fixed obligations.
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