Hess Corporation (NYSE:HES) Q2 2016 Earnings Conference Call - Final Transcript
Jul 27, 2016 • 10:00 am ET
Good day ladies and gentlemen, and welcome to the second quarter 2016 Hess Corporation conference all. My name is Chanelle and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference call is being recorded for replay purposes.
I would now like to turn the conference over to Jay Wilson, Vice President of Investor Relations. Please proceed.
Thank you, Chanelle. Good morning, everyone, and thank you for participating in our second quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hess.com. (Forward-looking Statements) Also, on today's conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website.
With me today are John Hess, Chief Executive Officer, Greg Hill, the Chief Operating Officer, and John Rielly, Chief Financial Officer. I'll now turn the call over to John Hess.
Thank you Jay. Welcome to our second quarter conference call. I will provide an update on the progress we continue to make in managing in the low oil prices environment while preserving our long-term growth options. Greg Hill will then discuss our operating performance from the quarter, and John Rielly will review our financial results. Our Company is well-positioned for the current price environment and for the eventual recovery in oil prices.
We have one of the strongest balance sheet and liquidity positions among our peers, a resilient portfolio and an exceptional long-term growth outlook. In terms of our balance sheet, we started 2016 by reducing our E&P capital and exploratory budget to $2.4 billion, 40% below our 2015 spend, and cut activity across our producing portfolio, both onshore and offshore. Since then, we have continued to pursue further capital reductions. In the second quarter of 2016, we reduced E&P capital and exploratory expenditures by 52% from the second quarter of last year to $485 million.
We now project our full-year 2016 capital and exploratory expenditures to be $2.1 billion, about 48% below 2015 levels and $300 million lower than our previous forecast. Efforts are underway to make further reductions as well. We have the balance sheet and liquidity necessary to invest in our future growth. Our three growth projects will make us a much stronger company in the next few years in terms of visible production and cash flow growth as well as improving returns.
As you know, we are investing about $700 million in 2016 in two offshore developers, North Malay Basin in the Gulf of Thailand, and Stampede in the Deepwater Gulf of Mexico. These two projects, which will come online in 2017 and 2018 respectively, will add a combined 35,000 barrels of oil equivalent per day, and go from being sizable cash users to significant long-term cash generators for the Company.
In terms of our third