Hess Corporation (NYSE:HES) Q2 2020 Earnings Conference Call - Final Transcript

Jul 29, 2020 • 10:00 am ET

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Hess Corporation (NYSE:HES) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day ladies and gentlemen, and welcome to the Second Quarter 2020 Hess Corporation Conference Call. My name is Latif, and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to Jay Wilson, Vice President of Investor Relations. Please proceed.

Executive
Jay R. Wilson

Thank you, Latif. 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.

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 Factor 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 supplement information provided on our website. On the line with me today are John Hess, Chief Executive Officer; Greg Hill, Chief Operating Officer; and John Rielly, Chief Financial Officer.

As we did last quarter, in case there are any audio issues, we will be posting transcripts of each speaker's prepared remarks on www.hess.com following the presentations.

I'll now turn the call over to John Hess.

Executive
John B. Hess

Thank you, Jay. Good morning, everyone. Welcome to our second quarter conference call. We hope you and your families are all staying well during these challenging times. Today, I will discuss the steps we are taking to manage through a sustained period of low oil prices. Then, Greg Hill will discuss our operations, and John Rielly will review our financial results.

In response to the pandemic's severe impact on oil prices, our priorities are to preserve cash, preserve capability and preserve the long-term value of our assets.

In terms of preserving cash, we came into 2020 with approximately 80% of our oil production hedged with put options for 130,000 barrels per day at $55 per barrel West Texas Intermediate and 20,000 barrels per day at $60 per barrel Brent. To maximize the value of our production, in March and April, when US oil storage was at tank tops, we used our marketing capabilities, our Hess Midstream infrastructure, and our firm transportation arrangements to the US Gulf Coast to charter three very large crude carriers or VLCCs to store 2 million barrels each of May, June and July Bakken crude oil production. The first VLCC cargo of 2 million barrels has been sold at a premium to Brent for delivery in China in September. The other two VLCC cargos are expected to be sold in Asia in the fourth quarter.

We further strengthened the company's cash position and liquidity through a $1 billion three-year term loan underwritten by JP Morgan Chase. This loan was successfully syndicated during the