Hess Corporation (NYSE:HES) Q4 2016 Earnings Conference Call - Final Transcript
Jan 25, 2017 • 10:00 am ET
Good day ladies and gentlemen, and welcome to the Fourth Quarter 2016 Hess Corporation Conference Call. My name is Nicole and I'll I will be your operator for today.
I would now like to turn the conference over to Jay Wilson, Vice President Investor Relations. Please proceed.
Thank you, Nicole. Good morning, everyone, and thank you for participating in our fourth quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hess.com. Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the Risk Factors section of Hess's annual and quarterly reports filed with the SEC.
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, 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 fourth quarter conference call. I'll review highlights from 2016 and plans for 2017. Greg Hill, will then discuss our operating performance and John Rielly, will review our financial results. First, I would like to share our view of the oil market, particularly in light of the recent OPEC agreement.
We are entering a new chapter in oil prices. After two years of a lower for longer price environment global investment in exploration and production has been severely curtailed, nearly in half from approximately $700 billion in 2014 to $380 billion last year. While 2017 should see modestly higher investment than 2016, we believe this level of spend will not be enough to bring forward the necessary production over the next several years to meet future oil demand growth and offset production declines globally.
We see continued strong demand coupled with the anticipated reduced supply resulting from OPEC and non-OPEC supply cuts and natural field declines, more than offsetting increased US shale oil production, leading to higher oil prices this year and into 2018. Our Company is extremely well positioned for this improving price environment. We have a decade or more of visible reserve and production growth and our continued focus on operational excellence and financial discipline is driving improving returns and lower costs across our portfolio.
Our visible growth trajectory is underpinned by four key areas the Bakken, where we have a leadership position and we'll go from two rigs to six rigs over the course of 2017. Two offshore developments North Malay Basin and Stampede, which are expected to contribute significant production and cash flow when they come online in 2017 and 2018 respectively.
And the world-class Liza and recent