Hess Business Model Canvas

Hess Corporation's relationships with government and regulatory bodies are foundational to its operations, particularly in key regions like Guyana and North Dakota. These engagements are vital for obtaining and retaining essential licenses and permits, ensuring a stable operating landscape. In 2024, Hess continued to navigate complex regulatory frameworks, emphasizing compliance with environmental standards and local economic contribution policies.

These partnerships are not merely transactional; they are about fostering trust and demonstrating responsible corporate citizenship. Adherence to local laws, environmental protection mandates, and community investment initiatives are central to maintaining Hess's social license to operate. This proactive approach is crucial for securing future growth and development opportunities, especially as the company expands its presence in areas like the Stabroek Block offshore Guyana.

• License to Operate: Maintaining strong governmental relations ensures Hess can continue its exploration and production activities without interruption.
• Regulatory Compliance: Adherence to environmental and safety regulations, such as those mandated by the EPA in the US or the Ministry of Natural Resources in Guyana, is paramount.
• Economic Contributions: Hess's commitment to local content and job creation in operating regions, like North Dakota where it has significant Bakken Shale operations, strengthens these partnerships.
• Future Development: Positive government relations facilitate approvals for new projects and infrastructure, crucial for long-term value creation.

Hess actively collaborates with environmental and sustainability organizations, recognizing their crucial role in advancing responsible energy production. These partnerships are instrumental in driving Hess's commitment to reducing its environmental footprint, particularly concerning greenhouse gas emissions and methane intensity. For instance, in 2023, Hess reported a Scope 1 and 2 greenhouse gas emission intensity of 30.8 kg CO2e/boe, a figure they are actively working to lower through various initiatives supported by these collaborations.

These alliances extend to supporting biodiversity initiatives, ensuring that Hess's operations minimize impact on local ecosystems. By engaging with industry initiatives focused on sustainability, Hess aims to foster best practices and contribute to a more sustainable energy future. This strategic approach not only aligns with Hess's Environmental, Social, and Governance (ESG) objectives but also significantly bolsters its reputation as a conscientious energy producer in the global market.

• Collaboration with environmental groups to implement and improve sustainability practices across operations.
• Participation in industry-wide initiatives aimed at reducing methane emissions, a key focus for Hess.
• Support for biodiversity projects to protect and enhance natural habitats in areas of operation.
• Alignment with ESG goals, reinforcing Hess's commitment to responsible resource development.

Hess Corporation's proprietary technology and data are crucial intellectual assets. This includes advanced exploration, drilling, and production technologies, alongside unique geological and seismic data. These resources are fundamental to optimizing resource recovery, lowering operational expenses, and improving safety standards.

Continuous investment in technological advancement and data refinement is a cornerstone of Hess's strategy. For instance, in 2024, Hess continued to leverage its advanced seismic imaging capabilities, particularly in the Stabroek Block offshore Guyana, to identify and de-risk new prospects. This technological edge directly contributes to their ability to efficiently appraise and develop significant oil discoveries, enhancing their competitive position in the industry.

• Advanced Exploration and Production Technologies: Hess utilizes cutting-edge techniques for seismic data acquisition and processing, enabling more precise identification of hydrocarbon reserves.
• Proprietary Geological and Seismic Data: The company possesses extensive, unique datasets for key operating regions, particularly the Stabroek Block, which are invaluable for resource assessment and development planning.
• Optimization and Cost Reduction: These technologies and data allow Hess to optimize drilling trajectories, improve recovery rates from existing wells, and reduce overall project costs.
• Enhanced Safety and Efficiency: Innovations in drilling and production technology contribute to safer operations and increased operational efficiency.

Hess Corporation's financial capital is a cornerstone of its business model, enabling significant investments in exploration and production. This includes substantial cash reserves, access to robust credit facilities, and the capacity to raise funds via debt and equity markets.

This financial strength is crucial for funding their large-scale, long-term projects, particularly in the competitive energy sector. Hess consistently emphasizes maintaining a strong balance sheet to ensure it can meet its capital expenditure requirements and pursue strategic growth opportunities.

• Cash and Cash Equivalents: As of the first quarter of 2024, Hess reported cash and cash equivalents of $1.5 billion.
• Debt Financing: The company utilizes debt markets to finance its operations and capital projects, maintaining various credit facilities.
• Equity Financing: Hess has the ability to issue equity to raise capital, though it prioritizes a balanced approach to its capital structure.
• Capital Expenditures: In 2024, Hess projected capital and exploratory expenditures of approximately $3.0 billion, underscoring the need for significant financial resources.

Hess actively cultivates strong relationships with its suppliers and contractors, ensuring a consistent flow of critical equipment, services, and technologies. These collaborations are fundamental to maintaining operational efficiency and building a resilient supply chain.

These partnerships are characterized by mutual trust and aligned strategic goals, which are vital for Hess's upstream and midstream operations. For instance, in 2024, Hess continued to emphasize long-term agreements with key service providers to secure drilling rigs and offshore support vessels, crucial for its Guyana offshore developments.

• Reliable Access to Resources: Partnerships ensure timely availability of essential drilling equipment and offshore support services.
• Operational Efficiency: Collaborative efforts with suppliers streamline logistics and reduce downtime.
• Supply Chain Resilience: Strong supplier relationships mitigate risks associated with material shortages or service interruptions.
• Technological Advancement: Joint initiatives with technology providers facilitate the adoption of innovative solutions for exploration and production.

Hess actively engages in comprehensive Environmental, Social, and Governance (ESG) reporting and dialogue with its stakeholders. This commitment is showcased through their annual sustainability reports, which detail their performance and initiatives across key ESG areas. For instance, in their 2023 Sustainability Report, Hess highlighted progress in reducing greenhouse gas emissions intensity, aiming for a 50% reduction by 2030 compared to a 2017 baseline.

The company participates in various industry initiatives and forums, fostering transparency and addressing critical concerns. These dialogues often focus on tangible actions related to climate change mitigation, operational safety, and positive social impact within the communities where they operate. Hess's approach emphasizes building trust and accountability through open communication about their sustainability journey.

• ESG Reporting: Publishing detailed sustainability reports, such as their 2023 report, which outlines progress on emission reduction targets.
• Stakeholder Dialogue: Actively participating in industry initiatives and forums to discuss and address ESG concerns.
• Key Focus Areas: Addressing climate change, enhancing operational safety, and contributing positively to social impact.
• Transparency: Demonstrating commitment to accountability through open communication about sustainability performance and goals.

Governments in Hess's operating regions, such as Guyana and the United States, are crucial stakeholders. These entities benefit significantly from Hess's activities through substantial tax revenues and royalty payments. For instance, in 2023, Hess's operations contributed to government coffers, supporting public services and infrastructure development.

Maintaining strong relationships with these governmental bodies is essential for securing and retaining operating licenses and ensuring social license to operate. Hess's commitment to local content and employment also fosters positive government relations, as seen in its workforce development programs in North Dakota.

• Governmental Revenue: Hess's operations generate significant tax and royalty income for host countries.
• Regulatory Compliance: Adherence to local laws and regulations is paramount for continued operations.
• Social License: Community engagement and economic contributions are vital for governmental acceptance.
• Licensing and Permitting: Governments grant and manage the licenses necessary for exploration and production.

Hess's midstream operations, now under Chevron's indirect ownership following the acquisition, function as a crucial internal customer for the company's upstream production. This segment is responsible for the vital gathering, processing, and transportation of crude oil, natural gas, and produced water. In 2024, Hess Midstream LP reported significant throughput volumes, underscoring its operational capacity and importance to the overall Hess value chain.

This internal customer dynamic is key to Hess's strategy, ensuring seamless logistics and maximizing the value extracted from its exploration and production activities. By having its own midstream infrastructure, Hess can better control costs and operational efficiency, directly benefiting its upstream segment's profitability. For instance, Hess Midstream's infrastructure is designed to handle increasing production from the Bakken and Stabio plays, areas where Hess has substantial upstream interests.

• Internal Customer: Hess Midstream LP acts as a captive customer for Hess's upstream oil and gas production.
• Services Provided: Offers critical gathering, processing, and transportation for crude oil, natural gas, and produced water.
• Strategic Importance: Facilitates efficient logistics and value realization for Hess's upstream assets.
• Operational Integration: Ensures smooth flow of hydrocarbons from wellhead to market, enhancing overall operational synergy.

Hess Corporation is exploring the sale of carbon credits, particularly through agreements like the one with the government of Guyana for REDD+ (Reducing Emissions from Deforestation and Forest Degradation) credits. This initiative, while not a core revenue driver from its primary oil and gas operations, signifies a strategic move towards environmental sustainability and achieving Environmental, Social, and Governance (ESG) objectives. In 2023, the voluntary carbon market saw significant activity, with prices for high-quality credits, especially those linked to nature-based solutions like REDD+, showing resilience and potential for growth.

These carbon credit sales can function as an ancillary revenue stream, offering a financial benefit while simultaneously supporting the company's commitment to offsetting its environmental impact. Such ventures are becoming increasingly important for energy companies looking to balance traditional energy production with climate action goals. For instance, the global carbon credit market is projected to grow substantially in the coming years, indicating a developing financial opportunity for companies actively participating in emissions reduction projects.

• Revenue Stream: Sale of Carbon Credits
• Mechanism: Agreements for independently verified REDD+ carbon credits.
• Strategic Importance: Supports sustainability commitments and ESG goals.
• Market Context: Growing voluntary carbon market with potential for increased value of nature-based credits.

Hess Corporation actively manages its asset portfolio, which can lead to significant revenue through strategic divestitures. This involves selling off assets that are no longer considered core to their long-term growth objectives, or those that may offer better returns elsewhere.

For instance, in 2023, Hess completed the sale of its interests in the North Malay Basin to Petronas Carigali for $1.0 billion. This move exemplified their strategy of optimizing capital allocation, allowing funds to be reinvested into more promising ventures.

• Asset Divestitures: Revenue generated from selling non-core assets.
• Portfolio Optimization: Strategy to reallocate capital to higher-return opportunities.
• Example: Sale of North Malay Basin interests in 2023 for $1.0 billion.