Analysis of Reportable Segments
Hess Corp. operates in 2 segments: Exploration and Production and Midstream.
Segment Profit Margin
Hess Corp., profit margin by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 21.16% | 10.30% | -60.87% | 0.82% | 0.81% |
| Midstream | 21.13% | 23.75% | 21.06% | 16.98% | 16.83% |
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 financial performance of the reportable segments reveals a stark contrast in volatility and stability between Exploration and Production and Midstream operations from 2018 to 2022.
- Exploration and Production Profitability
- This segment exhibited extreme volatility over the analyzed period. After maintaining marginal profitability in 2018 and 2019, the margin collapsed to -60.87% in 2020. A sharp recovery followed in 2021, with the margin rising to 10.30%, and continuing an upward trajectory to reach 21.16% by the end of 2022.
- Midstream Profitability
- The Midstream segment demonstrated consistent and stable margins. Profitability grew steadily from 16.83% in 2018 to a peak of 23.75% in 2021, before experiencing a slight contraction to 21.13% in 2022.
A comparative analysis indicates that while the Midstream segment provides a reliable and steady stream of profitability, the Exploration and Production segment is characterized by high sensitivity and cyclicality. Despite the severe downturn in 2020, the Exploration and Production segment ended the period with its highest recorded margin, converging with the Midstream segment's level of profitability in 2022.
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Segment Profit Margin: Exploration and Production
Hess Corp.; Exploration and Production; segment profit margin calculation
| 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 | 2,396) | 770) | (2,841) | 53) | 51) |
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 21.16% | 10.30% | -60.87% | 0.82% | 0.81% |
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
Segment profit margin = 100 × Net income (loss) attributable to Hess Corporation ÷ Sales and other operating revenues
= 100 × 2,396 ÷ 11,324 = 21.16%
The financial performance of the Exploration and Production segment between 2018 and 2022 was marked by significant volatility, transitioning from marginal stability through a severe contraction to a period of rapid expansion.
- Revenue Trajectory
- Operating revenues remained relatively stagnant between 2018 and 2019 before experiencing a decline in 2020 to 4,667 million US dollars. Following this trough, revenues surged significantly, reaching 11,324 million US dollars by December 31, 2022, demonstrating a robust recovery in top-line growth.
- Segment Profit Margin Fluctuations
- The profit margin remained near break-even levels in 2018 and 2019, recorded at 0.81% and 0.82%, respectively. A substantial collapse occurred in 2020, with the margin falling to -60.87%. This downturn was followed by a sharp upward reversal, with margins expanding to 10.30% in 2021 and further increasing to 21.16% by the end of 2022.
- Net Income Correlation
- Net income mirrored the margin volatility, shifting from modest gains in the initial years to a substantial loss of 2,841 million US dollars in 2020. The subsequent recovery was pronounced, with net income climbing to 2,396 million US dollars in 2022. The acceleration of profit growth relative to revenue growth suggests a significant increase in operational efficiency or favorable pricing environments during the 2021-2022 period.
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Segment Profit Margin: Midstream
Hess Corp.; Midstream; segment profit margin calculation
| 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 | 269) | 286) | 230) | 144) | 120) |
| Sales and other operating revenues | 1,273) | 1,204) | 1,092) | 848) | 713) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 21.13% | 23.75% | 21.06% | 16.98% | 16.83% |
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
Segment profit margin = 100 × Net income (loss) attributable to Hess Corporation ÷ Sales and other operating revenues
= 100 × 269 ÷ 1,273 = 21.13%
The Midstream segment demonstrated consistent growth in top-line revenue and substantial expansion in profitability between 2018 and 2021, followed by a slight retraction in margins in 2022 despite continued revenue growth.
- Revenue Growth Trends
- Sales and other operating revenues exhibited a steady upward trajectory over the five-year period, increasing from US$ 713 million in 2018 to US$ 1,273 million by December 31, 2022. This reflects a consistent year-over-year increase in the segment's scale of operations.
- Profit Margin Evolution
- The segment profit margin experienced significant expansion, rising from 16.83% in 2018 to a peak of 23.75% in 2021. The most notable acceleration occurred between 2019 and 2020, where the margin increased by 4.08 percentage points, suggesting enhanced operational efficiency or more favorable market conditions during this interval.
- Net Income Correlation
- Net income attributable to Hess Corporation followed a similar growth pattern to revenues and margins, ascending from US$ 120 million in 2018 to a high of US$ 286 million in 2021. This alignment indicates that the increase in revenue was successfully converted into bottom-line growth for the majority of the analyzed period.
- Analysis of 2022 Performance
- A divergence is observed in 2022; while sales reached their highest level at US$ 1,273 million, the segment profit margin contracted to 21.13% and net income decreased slightly to US$ 269 million. This indicates that operating costs increased at a rate that outpaced revenue growth in the final year, leading to a reduction in overall margin efficiency.
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Segment Return on Assets (Segment ROA)
Hess Corp., ROA by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 15.95% | 5.43% | -20.76% | 0.32% | 0.32% |
| Midstream | 7.13% | 7.79% | 6.39% | 4.12% | 3.65% |
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 segment return on assets (ROA) demonstrates divergent performance profiles between the Exploration and Production and Midstream business lines over the five-year period ending December 31, 2022.
- Exploration and Production
- This segment exhibited extreme volatility. After maintaining a stagnant return of 0.32% in both 2018 and 2019, a severe contraction occurred in 2020, with ROA dropping to -20.76%. A subsequent and aggressive recovery followed, with returns rising to 5.43% in 2021 and accelerating to a peak of 15.95% by the end of 2022. This pattern indicates a high sensitivity to market volatility and a strong operational rebound in the final two years of the period.
- Midstream
- In contrast, the Midstream segment displayed a consistent and stable growth trajectory for most of the period. ROA climbed steadily from 3.65% in 2018 to a peak of 7.79% in 2021. A slight moderation was observed in 2022, with the return adjusting to 7.13%. The performance of this segment suggests a more resilient and predictable asset utilization model compared to the upstream operations.
Comparing the two segments, the Midstream unit acted as a stabilizing component during the sharp downturn experienced by the Exploration and Production unit in 2020. While the Exploration and Production segment eventually achieved a higher terminal ROA in 2022, its trajectory was characterized by substantial fluctuation, whereas the Midstream segment maintained positive and relatively steady returns throughout the entire analyzed timeframe.
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Segment ROA: Exploration and Production
Hess Corp.; Exploration and Production; segment ROA calculation
| 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 | 2,396) | 770) | (2,841) | 53) | 51) |
| Identifiable assets | 15,022) | 14,173) | 13,688) | 16,790) | 16,109) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 15.95% | 5.43% | -20.76% | 0.32% | 0.32% |
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
Segment ROA = 100 × Net income (loss) attributable to Hess Corporation ÷ Identifiable assets
= 100 × 2,396 ÷ 15,022 = 15.95%
The financial performance of the Exploration and Production segment between 2018 and 2022 is characterized by extreme volatility, featuring a severe downturn in 2020 followed by a robust recovery and a significant increase in asset productivity through 2022.
- Net Income Trends
- Profitability remained marginal and stable from 2018 to 2019, with net income recorded at 51 million and 53 million US dollars, respectively. A substantial collapse occurred in 2020, resulting in a net loss of 2,841 million US dollars. A strong recovery followed, with net income returning to positive territory at 770 million US dollars in 2021 and expanding further to 2,396 million US dollars by the end of 2022.
- Identifiable Asset Movements
- The asset base increased from 16,109 million US dollars in 2018 to a peak of 16,790 million US dollars in 2019. In 2020, identifiable assets contracted to 13,688 million US dollars. This was followed by a gradual upward trend, with assets increasing to 14,173 million US dollars in 2021 and reaching 15,022 million US dollars by December 31, 2022.
- Segment Return on Assets (ROA) Performance
- The Segment ROA was stagnant at 0.32% during the 2018-2019 period, reflecting low efficiency in converting assets into profit. The 2020 loss drove the ROA down to -20.76%. However, the segment demonstrated a rapid turnaround in efficiency, with the ROA climbing to 5.43% in 2021 and accelerating to 15.95% in 2022. This final increase indicates a significant improvement in operational leverage and asset utilization relative to the start of the analyzed period.
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Segment ROA: Midstream
Hess Corp.; Midstream; segment ROA calculation
| 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 | 269) | 286) | 230) | 144) | 120) |
| Identifiable assets | 3,775) | 3,671) | 3,599) | 3,499) | 3,285) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 7.13% | 7.79% | 6.39% | 4.12% | 3.65% |
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
Segment ROA = 100 × Net income (loss) attributable to Hess Corporation ÷ Identifiable assets
= 100 × 269 ÷ 3,775 = 7.13%
The Midstream segment exhibited a consistent upward trajectory in asset accumulation and profitability from 2018 through 2021, followed by a slight moderation in performance during 2022.
- Asset Base Expansion
- Identifiable assets grew monotonically over the five-year period, increasing from US$ 3,285 million in 2018 to US$ 3,775 million in 2022. This steady rise indicates a continuous investment in the segment's infrastructure and operational capacity.
- Profitability Performance
- Net income attributable to the segment showed strong growth, rising from US$ 120 million in 2018 to a peak of US$ 286 million in 2021. While a slight decrease to US$ 269 million was observed in 2022, the overall income levels remained significantly elevated compared to the 2018-2019 baseline.
- Return on Assets (ROA) Efficiency
- The Segment ROA more than doubled between 2018 and 2021, increasing from 3.65% to a peak of 7.79%. This trend reveals that earnings growth outpaced the expansion of the asset base for the majority of the period. A moderate contraction to 7.13% occurred in 2022, correlating with the slight decline in net income despite continued asset growth.
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Segment Asset Turnover
Hess Corp., asset turnover by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 0.75 | 0.53 | 0.34 | 0.39 | 0.39 |
| Midstream | 0.34 | 0.33 | 0.30 | 0.24 | 0.22 |
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).
Analysis of segment asset turnover reveals a general improvement in asset utilization across both reporting segments from 2018 to 2022, although the magnitude and trajectory of growth differ significantly between the two operations.
- Exploration and Production
- The asset turnover ratio for this segment remained stable at 0.39 during 2018 and 2019, followed by a contraction to 0.34 in 2020. Subsequently, a strong upward trajectory was established, with the ratio increasing to 0.53 in 2021 and reaching 0.75 by the end of 2022. This indicates a significant acceleration in the segment's ability to generate revenue from its asset base in the final two years of the analyzed period.
- Midstream
- A consistent and steady increase in asset turnover is observed within the Midstream segment. The ratio rose incrementally from 0.22 in 2018 to 0.34 in 2022. While the growth pattern is less aggressive than that of the Exploration and Production segment, it reflects a sustained and linear improvement in operational efficiency over the five-year period.
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Segment Asset Turnover: Exploration and Production
Hess Corp.; Exploration and Production; segment asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) |
| Identifiable assets | 15,022) | 14,173) | 13,688) | 16,790) | 16,109) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.75 | 0.53 | 0.34 | 0.39 | 0.39 |
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
Segment asset turnover = Sales and other operating revenues ÷ Identifiable assets
= 11,324 ÷ 15,022 = 0.75
The analysis of the Exploration and Production segment reveals a significant improvement in asset utilization and revenue generation efficiency between 2018 and 2022. After a period of relative stability and a subsequent decline in 2020, the segment experienced a sharp acceleration in its ability to derive revenue from its asset base.
- Revenue Trajectory
- Operating revenues exhibited volatility during the period, beginning at 6,323 million US$ in 2018 and peaking at 11,324 million US$ in 2022. A notable contraction occurred in 2020, where revenues fell to 4,667 million US$, representing a significant decrease from the previous year. However, this was followed by a robust recovery, with revenues increasing by approximately 60% in 2021 and further expanding by 51% in 2022.
- Asset Base Dynamics
- Identifiable assets remained relatively stable compared to the volatility seen in revenues. The asset base peaked in 2019 at 16,790 million US$ before declining to 13,688 million US$ in 2020. From 2021 through 2022, assets grew modestly to 15,022 million US$. The fact that asset growth remained constrained while revenues surged indicates high operating leverage.
- Segment Asset Turnover Efficiency
- The asset turnover ratio remained flat at 0.39 during 2018 and 2019, before dipping to 0.34 in 2020 due to the disproportionate decline in revenues relative to assets. A substantial upward trend is observed thereafter, with the ratio climbing to 0.53 in 2021 and reaching 0.75 by the end of 2022. This progression signifies a marked increase in capital efficiency, as the segment generated nearly double the revenue per unit of asset in 2022 compared to the 2020 low.
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Segment Asset Turnover: Midstream
Hess Corp.; Midstream; segment asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Sales and other operating revenues | 1,273) | 1,204) | 1,092) | 848) | 713) |
| Identifiable assets | 3,775) | 3,671) | 3,599) | 3,499) | 3,285) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.34 | 0.33 | 0.30 | 0.24 | 0.22 |
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
Segment asset turnover = Sales and other operating revenues ÷ Identifiable assets
= 1,273 ÷ 3,775 = 0.34
The Midstream segment demonstrates a consistent improvement in operational efficiency and revenue generation capabilities from 2018 through 2022. A sustained upward trajectory is observed across all key metrics, characterized by revenue growth that significantly outpaces the expansion of the asset base.
- Revenue Growth
- Sales and other operating revenues exhibited strong and continuous growth, increasing from 713 million US dollars in 2018 to 1,273 million US dollars in 2022. The most substantial year-over-year increase occurred between 2019 and 2020, where revenues rose from 848 million to 1,092 million US dollars.
- Asset Base Expansion
- Identifiable assets grew at a steady but moderate pace over the five-year period. The asset base expanded from 3,285 million US dollars in 2018 to 3,775 million US dollars in 2022. This represents a disciplined approach to capital allocation, as the growth in assets remained relatively stable compared to the more aggressive increase in revenue.
- Segment Asset Turnover Efficiency
- The segment asset turnover ratio improved every year, rising from 0.22 in 2018 to 0.34 in 2022. This steady climb indicates that the segment is generating increasingly more revenue for every dollar of assets employed. The acceleration of this ratio suggests an enhancement in the utilization of infrastructure and a higher productivity rate of the Midstream asset portfolio.
Overall, the data reflects a positive trend in asset productivity. The divergence between the rapid growth in operating revenues and the incremental growth in identifiable assets has resulted in a significant increase in the segment's ability to convert its investment base into top-line growth.
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Segment Capital Expenditures to Depreciation
Hess Corp., capital expenditures to depreciation by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 1.70 | 1.25 | 0.88 | 1.30 | 1.09 |
| Midstream | 1.28 | 1.10 | 1.61 | 2.93 | 2.13 |
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 capital expenditure to depreciation ratios for the Exploration and Production and Midstream segments demonstrate distinct investment cycles between 2018 and 2022. Throughout most of the period, both segments maintained ratios above 1.0, suggesting a general strategy of expanding or modernizing the asset base beyond the rate of depreciation.
- Exploration and Production
- The ratio in this segment exhibited volatility with a clear upward trajectory toward the end of the period. After increasing from 1.09 in 2018 to 1.30 in 2019, the ratio declined to a period low of 0.88 in 2020, indicating that capital expenditures fell below depreciation during that year. However, a strong recovery followed, with the ratio rising to 1.25 in 2021 and peaking at 1.70 in 2022, reflecting a significant acceleration in capital investment relative to asset wear.
- Midstream
- The Midstream segment showed a contrasting trend, characterized by high initial investment levels followed by a gradual deceleration. The ratio rose from 2.13 in 2018 to a peak of 2.93 in 2019, indicating aggressive asset growth. This was followed by a steady decline to 1.61 in 2020 and 1.10 in 2021. A slight uptick to 1.28 was observed in 2022, though the ratio remained substantially lower than its 2019 peak.
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Segment Capital Expenditures to Depreciation: Exploration and Production
Hess Corp.; Exploration and Production; segment capital expenditures to depreciation calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 2,589) | 1,698) | 1,678) | 2,576) | 1,909) |
| Depreciation, depletion and amortization | 1,520) | 1,361) | 1,915) | 1,977) | 1,748) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.70 | 1.25 | 0.88 | 1.30 | 1.09 |
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
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation, depletion and amortization
= 2,589 ÷ 1,520 = 1.70
The segment's capital expenditure relative to depreciation, depletion, and amortization (DD&A) exhibits significant volatility between 2018 and 2022. The ratio shifted from a position of moderate growth to a brief period of investment below the level of asset consumption, followed by a substantial acceleration in reinvestment by the end of the period.
- Capital Expenditure Trends
- Expenditures experienced a peak in 2019 at $2,576 million, followed by a sharp contraction to a five-year low of $1,678 million in 2020. Following a period of relative stability in 2021, spending increased significantly in 2022 to reach $2,589 million, the highest value in the analyzed timeframe.
- Depreciation, Depletion, and Amortization (DD&A) Trends
- DD&A costs remained relatively consistent from 2018 through 2020, peaking at $1,977 million in 2019. A notable decline occurred in 2021, with costs dropping to $1,361 million, before a moderate recovery to $1,520 million in 2022.
- Analysis of the Capital Expenditure to Depreciation Ratio
- The ratio fluctuated between a low of 0.88 and a high of 1.70. The dip to 0.88 in 2020 indicates a period where the rate of asset consumption exceeded new investment. This trend reversed sharply over the subsequent two years, culminating in a ratio of 1.70 in 2022. This upward trajectory suggests a strategic shift toward aggressive capacity expansion or a comprehensive asset replacement cycle, as the company invested at a rate 70% higher than its annual depreciation in the final year.
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Segment Capital Expenditures to Depreciation: Midstream
Hess Corp.; Midstream; segment capital expenditures to depreciation calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 232) | 183) | 253) | 416) | 271) |
| Depreciation, depletion and amortization | 181) | 166) | 157) | 142) | 127) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.28 | 1.10 | 1.61 | 2.93 | 2.13 |
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
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation, depletion and amortization
= 232 ÷ 181 = 1.28
The Midstream segment experienced a notable shift in its investment profile between 2018 and 2022, transitioning from a period of aggressive capital expansion to a more conservative, maintenance-oriented expenditure strategy.
- Capital Expenditures
- Investment levels exhibited significant volatility over the five-year period. Spending peaked in 2019 at 416 million US dollars before entering a period of contraction, reaching a low of 183 million US dollars in 2021. A modest recovery was observed in 2022, with expenditures increasing to 232 million US dollars.
- Depreciation, Depletion, and Amortization
- In contrast to the volatility of capital spending, depreciation and amortization costs followed a consistent and linear upward trend. Annual charges rose steadily from 127 million US dollars in 2018 to 181 million US dollars in 2022, reflecting the gradual aging and growth of the segment's depreciable asset base.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation serves as a key indicator of whether the segment is expanding or merely replacing assets. The ratio peaked at 2.93 in 2019, indicating an expansionary phase where investments nearly tripled the annual depreciation. This was followed by a sharp decline to 1.10 in 2021, signaling a shift toward maintaining current capacity. Although the ratio rose slightly to 1.28 in 2022, the overall trend indicates a substantial reduction in growth-oriented capital allocation compared to the 2018-2019 period.
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Sales and other operating revenues
Hess Corp., sales and other operating revenues by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) |
| Midstream | 1,273) | 1,204) | 1,092) | 848) | 713) |
| Eliminations | (1,273) | (1,204) | (1,092) | (848) | (713) |
| Total | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) |
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 overall revenue trajectory from 2018 to 2022 is characterized by significant volatility in the primary operating segment, followed by a period of aggressive growth. Total revenues experienced a notable contraction in 2020 before ascending to a five-year peak in 2022.
- Exploration and Production Performance
- This segment serves as the primary driver of total revenue. After maintaining stability between 2018 and 2019, revenues decreased by approximately 28% in 2020, falling to 4,667 million US$. This decline was followed by a rapid recovery, with revenues increasing to 7,473 million US$ in 2021 and further surging to 11,324 million US$ by the end of 2022. The growth from the 2020 trough to the 2022 peak represents an increase of approximately 142%.
- Midstream Segment Trends
- In contrast to the volatility observed in Exploration and Production, the Midstream segment demonstrated consistent year-over-year growth. Revenues rose steadily from 713 million US$ in 2018 to 1,273 million US$ in 2022. Notably, this segment continued to grow during 2020, the same period in which the primary production segment contracted, suggesting a more stable or diversified revenue stream within this specific operational area.
- Revenue Consolidation and Eliminations
- A consistent pattern of total elimination of Midstream revenues is observed. The eliminations exactly offset the Midstream segment's reported revenues in every fiscal year. Consequently, the total reported revenue for the organization is identical to the revenue generated by the Exploration and Production segment, indicating that Midstream operations function as internal services or are fully consolidated against the primary segment.
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Net income (loss) attributable to Hess Corporation
Hess Corp., net income (loss) attributable to hess corporation by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 2,396) | 770) | (2,841) | 53) | 51) |
| Midstream | 269) | 286) | 230) | 144) | 120) |
| Corporate, Interest and Other | (569) | (497) | (482) | (605) | (453) |
| Total | 2,096) | 559) | (3,093) | (408) | (282) |
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 overall net income attributable to the corporation exhibited significant volatility between 2018 and 2022, characterized by a period of deepening losses followed by a rapid transition to profitability. Total net income reached a nadir in 2020 with a loss of US$ 3,093 million, before recovering to a positive US$ 559 million in 2021 and reaching US$ 2,096 million by the end of 2022.
- Exploration and Production Segment Trends
- This segment served as the primary catalyst for the corporation's total financial volatility. Following marginal gains in 2018 and 2019, the segment suffered a substantial loss of US$ 2,841 million in 2020. A significant reversal occurred in 2021, with the segment returning to profitability at US$ 770 million, and subsequently expanding to US$ 2,396 million in 2022, indicating a strong recovery in operational earnings.
- Midstream Segment Stability
- The Midstream segment demonstrated consistent growth and acted as a stabilizing force throughout the analyzed period. Income grew steadily from US$ 120 million in 2018 to a peak of US$ 286 million in 2021, before slightly moderating to US$ 269 million in 2022. Unlike the Exploration and Production segment, this area maintained positive contributions regardless of the broader corporate financial swings.
- Corporate, Interest, and Other Expenses
- Corporate overhead and interest costs remained a consistent negative drag on net income. These losses fluctuated within a relatively stable range, from a low of US$ 453 million in 2018 to a high of US$ 605 million in 2019, ending the period at US$ 569 million in 2022. The relative stability of these costs suggests that the volatility in total net income was driven by operational segment performance rather than corporate administrative or financing fluctuations.
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Depreciation, depletion and amortization
Hess Corp., depreciation, depletion and amortization by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 1,520) | 1,361) | 1,915) | 1,977) | 1,748) |
| Midstream | 181) | 166) | 157) | 142) | 127) |
| Corporate, Interest and Other | 2) | 1) | 2) | 3) | 8) |
| Total | 1,703) | 1,528) | 2,074) | 2,122) | 1,883) |
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 depreciation, depletion, and amortization expenditures exhibited notable volatility between 2018 and 2022, primarily driven by the Exploration and Production segment. After an initial increase peaking in 2019 at $2,122 million, consolidated costs declined to a period low of $1,528 million in 2021 before recovering to $1,703 million by the end of 2022.
- Exploration and Production Analysis
- This segment represents the primary driver of total charges and mirrors the overall corporate trend. Expenditures increased from $1,748 million in 2018 to a peak of $1,977 million in 2019. A subsequent downward trend occurred, culminating in a significant drop to $1,361 million in 2021, followed by a moderate recovery to $1,520 million in 2022.
- Midstream Segment Performance
- In contrast to the volatility observed in production, the Midstream segment demonstrates a consistent and linear upward trend. Costs grew steadily each year, rising from $127 million in 2018 to $181 million in 2022, suggesting a sustained expansion of infrastructure or the incremental addition of depreciable assets.
- Corporate, Interest, and Other Expenses
- The Corporate, Interest and Other category contributes a marginal amount to the total expenditure profile. A general downward trajectory is observed, with costs decreasing from $8 million in 2018 to a stabilized range of $1 million to $2 million between 2020 and 2022.
- Aggregate Expenditure Distribution
- The concentration of costs is heavily skewed toward Exploration and Production. While the Midstream segment has seen steady growth, the consolidated fluctuations in depreciation, depletion, and amortization are almost exclusively dictated by the operational and accounting cycles of the upstream segment.
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Identifiable assets
Hess Corp., identifiable assets by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 15,022) | 14,173) | 13,688) | 16,790) | 16,109) |
| Midstream | 3,775) | 3,671) | 3,599) | 3,499) | 3,285) |
| Corporate, Interest and Other | 2,898) | 2,671) | 1,534) | 1,493) | 2,039) |
| Total | 21,695) | 20,515) | 18,821) | 21,782) | 21,433) |
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 identifiable assets exhibited a volatile trajectory between 2018 and 2022, characterized by a significant contraction in 2020 followed by a consistent recovery. Total assets began the period at 21,433 million US dollars, peaked in 2019, reached a five-year low of 18,821 million US dollars in 2020, and ultimately recovered to 21,695 million US dollars by the end of 2022.
- Exploration and Production Segment
- This segment represents the largest portion of the asset base. Assets increased from 16,109 million US dollars in 2018 to a peak of 16,790 million US dollars in 2019 before experiencing a sharp decline to 13,688 million US dollars in 2020. Since that low point, a steady recovery has been observed, with assets rising to 15,022 million US dollars by December 31, 2022, although they remain below 2019 levels.
- Midstream Segment
- In contrast to other segments, the Midstream division demonstrated consistent and uninterrupted growth throughout the analyzed period. Assets grew incrementally from 3,285 million US dollars in 2018 to 3,775 million US dollars in 2022, indicating a stable expansion of infrastructure or investment in this area regardless of broader market volatility.
- Corporate, Interest and Other
- This category showed significant fluctuations. A decrease was noted from 2,039 million US dollars in 2018 to a low of 1,493 million US dollars in 2019. However, a substantial increase occurred between 2020 and 2021, where assets rose from 1,534 million US dollars to 2,671 million US dollars, eventually reaching 2,898 million US dollars by 2022.
- Overall Asset Distribution and Composition
- The composition of identifiable assets is heavily weighted toward Exploration and Production, which consistently accounts for the majority of the total value. While the total asset figure in 2022 nearly returned to 2018 levels, the internal distribution shifted, with a higher relative concentration of assets in the Corporate and Midstream segments compared to the beginning of the period.
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Capital expenditures
Hess Corp., capital expenditures by reportable segment
US$ in millions
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Exploration and Production | 2,589) | 1,698) | 1,678) | 2,576) | 1,909) |
| Midstream | 232) | 183) | 253) | 416) | 271) |
| Total | 2,821) | 1,881) | 1,931) | 2,992) | 2,180) |
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 capital expenditures exhibited significant volatility between 2018 and 2022, characterized by a sharp peak in 2019, a pronounced contraction during 2020 and 2021, and a substantial recovery by the end of 2022.
- Exploration and Production Expenditure
- Investment in this segment served as the primary driver of overall capital spending. Expenditures rose from 1,909 million US$ in 2018 to a peak of 2,576 million US$ in 2019. A sharp decline followed, with spending dropping to 1,678 million US$ in 2020 and remaining relatively flat at 1,698 million US$ in 2021. By December 31, 2022, capital allocation in this segment rebounded strongly to 2,589 million US$, marking the highest expenditure level within the analyzed period.
- Midstream Expenditure
- Spending in the Midstream segment followed a similar trajectory to the Exploration and Production segment but on a smaller scale. After an increase from 271 million US$ in 2018 to 416 million US$ in 2019, a downward trend was observed over the next two years, reaching a period low of 183 million US$ in 2021. A slight recovery occurred in 2022, with spending increasing to 232 million US$.
- Aggregate Spending and Allocation Trends
- The total capital expenditure peaked in 2019 at 2,992 million US$ before falling to a low of 1,881 million US$ in 2021. The recovery in 2022 to 2,821 million US$ indicates a return to aggressive investment levels. Throughout the five-year period, the allocation of capital remained heavily skewed toward Exploration and Production, which consistently accounted for the vast majority of the total investment, while Midstream expenditures remained a secondary priority.
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