Hess Corporation (HES): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of Hess Corporation (HES) as the Chevron acquisition moves toward a close, and honestly, the entire picture is dominated by that deal and the massive Guyana asset. The near-term risks and opportunities are all mapped to these two factors. Politically, the US Federal Trade Commission (FTC) scrutiny is the main hurdle, while legally, the arbitration with ExxonMobil and CNOOC on the Guyana asset is a major overhang. Economically, the potential $53 billion valuation from the Chevron acquisition sets a floor for the stock price, with projected 2025 net production guidance of around 190,000 barrels of oil equivalent per day (boe/d) defining the upside. We need to look past the valuation to the real operational and environmental pressures-like the defintely critical flaring reduction targets and workforce retention-to see the full Political, Economic, Sociological, Technological, Legal, and Environmental (PESTLE) picture.

Hess Corporation (HES) - PESTLE Analysis: Political factors

US Federal Trade Commission (FTC) scrutiny on the Chevron merger remains the primary political hurdle.

The primary political risk for Hess Corporation, now integrated into Chevron, was definitively resolved with the completion of the $53 billion all-stock merger on July 18, 2025. The initial hurdle was the US Federal Trade Commission (FTC) scrutiny, which focused not on market concentration, but on the potential for coordination with OPEC (Organization of Petroleum Exporting Countries) if former Hess CEO John B. Hess joined the Chevron board.

The FTC's final consent order, which initially barred his appointment, was formally reopened and set aside by the Commission on July 17, 2025. This cleared the way for the merger and his potential board seat, as the FTC concluded the original complaint 'failed to plead any antitrust law violation'. This is a huge win for Chevron, removing a significant governance restriction. The combined entity immediately targets $1 billion in annual run-rate cost synergies by the end of the 2025 fiscal year.

Geopolitical stability in Guyana is crucial, especially regarding the border dispute with Venezuela.

The crown jewel of the acquisition, Hess's 30% non-operated stake in the Stabroek Block offshore Guyana, is a major geopolitical asset for Chevron. This block holds an estimated over 11 billion barrels of recoverable oil equivalent. The political stability of the region is paramount because of the long-standing border dispute between Guyana and Venezuela, where Venezuela claims two-thirds of Guyana's territory and the adjacent offshore area.

The massive oil boom has made Guyana the world's fastest-growing economy, with its GDP expanding by more than 40% annually between 2022 and 2024. This rapid growth draws intense international attention, including from the US, which views Guyana as a key strategic ally.

The political complexity is amplified by the joint venture structure:

• ExxonMobil: 45% interest (Operator)
• Chevron (via Hess): 30% interest
• China National Offshore Oil Corp. (CNOOC): 25% interest

Having China's state-owned oil company, CNOOC, as a key partner adds a layer of US-China geopolitical competition directly into the operations of this critical Western oil supply chain. The Stabroek Block alone is expected to contribute between 450,000 to 500,000 barrels of oil equivalent per day to Chevron's production base.

US-China trade relations impact global oil demand and the strategic importance of Western oil supply chains.

The political relationship between the US and China, the world's two largest economies and oil consumers, directly impacts global oil demand and price volatility. China is the world's largest crude oil importer, consuming approximately 11 million barrels per day, or about 11% of global oil demand.

Escalating trade tensions, particularly the threat of new 100% tariffs on Chinese exports that began taking effect in late 2025, introduce significant market jitters. Here's the quick math on the risk: severe tariff escalation is projected to slash China's 2026 GDP growth to 4.1% and could spike US inflation to 5.8%. A global economic slowdown of that magnitude would immediately suppress oil demand, hurting prices and the profitability of high-cost deepwater projects.

The strategic importance of Western supply chains, like the Stabroek Block, rises politically as the US seeks to secure energy sources outside of volatile regions or those influenced by geopolitical rivals. The new US energy law, the One Big Beautiful Bill Act (OBBBA), passed in 2025, politically reorients the US energy focus toward fossil fuels and away from some clean energy incentives, while simultaneously sharpening trade tensions with China over critical mineral and clean energy supply chains.

Government support for deepwater exploration tax incentives in the US Gulf of Mexico.

The political environment for US deepwater exploration is highly supportive as of late 2025, driven by a policy push for 'energy dominance.' The Trump administration, in November 2025, announced a plan for a massive expansion of offshore drilling, including the US Gulf of Mexico (GoM). This plan proposes 34 lease sales covering 1.27 billion acres.

This political action is critical for long-term capital planning, as deepwater projects require decades of investment certainty. The Senate's passage of the OBBBA in July 2025 is also credited with restoring leasing stability in the GoM.

The financial viability of these projects is heavily supported by key tax provisions:

Incentive/Provision	Description and Relevance (2025)	Impact on Exploration Economics
Intangible Drilling Costs (IDCs) Deduction	Allows immediate expensing of most non-salvageable drilling costs (labor, fuel, repairs) rather than capitalization.	Significantly reduces upfront tax liability for deepwater wells, accelerating project returns.
45Q Credit for Carbon Capture and Storage (CCS)	Tax credit for capturing and storing carbon dioxide; relevant for deepwater facilities that integrate CCS technology.	Incentivizes the adoption of emissions-reducing technology, a growing political requirement for large-scale projects.
Leasing Stability (OBBBA)	Mandated Gulf of Mexico lease sales in the OBBBA passed in July 2025.	Provides the long-term regulatory predictability needed for multi-billion dollar deepwater capital commitments.

These policy signals defintely encourage Chevron to allocate capital to its GoM assets, which now include Hess's existing production of 31,000 barrels of oil equivalent daily in the Gulf.

Hess Corporation (HES) - PESTLE Analysis: Economic factors

The potential $53 billion valuation from the Chevron acquisition sets a floor for the stock price.

The single most important economic factor for Hess Corporation in 2025 is the completed acquisition by Chevron Corporation, which closed in July 2025. This all-stock transaction valued Hess at $53 billion, or $171 per share based on the initial terms, with a total enterprise value, including debt, of approximately $60 billion.

This massive valuation, one of the largest upstream mergers in recent years, essentially creates a valuation floor for the stock, removing much of the standalone price volatility. It also immediately integrates Hess's assets, particularly the prized 30% stake in the Stabroek Block in Guyana, into a much larger, more resilient portfolio. The combined entity is targeting $1 billion in annual cost synergies by the end of 2025.

2025 net production guidance is projected to be around 190,000 barrels of oil equivalent per day (boe/d), driven by Guyana ramp-up.

Hess's economic performance in the first half of 2025 was heavily underpinned by production growth, especially from the Stabroek Block. For the first quarter of 2025, total Exploration & Production (E&P) net production was 476,000 barrels of oil equivalent per day (boepd). The second quarter 2025 guidance was even higher, projected to be in the range of 480,000 boepd to 490,000 boepd.

The Guyana asset is the primary growth engine. Net production from the Stabroek Block (Hess's 30% share) was 183,000 barrels of oil per day (bopd) in the first quarter of 2025 and was forecasted at approximately 180,000 bopd for the second quarter. The next major economic inflection point is the start-up of the Yellowtail development, the fourth and largest project on the block, which is on track to begin production in the third quarter of 2025 with an initial gross capacity of approximately 250,000 bopd.

• Q1 2025 Total E&P Net Production: 476,000 boepd
• Q1 2025 Guyana Net Production: 183,000 bopd
• Yellowtail Start-up: On track for Q3 2025, adding ~250,000 bopd gross capacity

Capital expenditure (CAPEX) for 2025 is high, estimated at over $2 billion, primarily focused on the Stabroek Block in Guyana.

The company's commitment to future growth required a substantial capital outlay in 2025. Full year 2025 E&P capital and exploratory expenditures are expected to be approximately $4.5 billion. This spending is significantly concentrated on the high-return, low-cost developments in Guyana, which are the core strategic value in the Chevron deal.

In the first quarter of 2025 alone, E&P CAPEX totaled $1.085 billion, up from $927 million in the prior-year quarter, specifically due to the increased development activities in Guyana. This high CAPEX is a necessary investment to bring the Yellowtail and future projects online, which have breakeven Brent crude oil prices in the low range of $25-$30 per barrel. That's a phenomenal return profile.

Global crude oil price volatility remains a key risk to unhedged production revenue.

Despite the merger, the combined entity's cash flow remains sensitive to global crude oil prices, particularly Brent crude. While the low breakeven costs in Guyana provide a strong buffer against price drops, the unhedged portion of production revenue is directly exposed to volatility. The average realized crude oil selling price for the company in the first quarter of 2025 was $71.22 per barrel, down from $80.06 per barrel in the prior-year quarter, illustrating the immediate impact of market fluctuations on revenue.

The pre-merger company had essentially no open crude oil hedging contracts at the end of 2024, meaning its production was largely unhedged and fully exposed to the market price. This exposure is a double-edged sword: it captures the full upside of rising prices, but also the full downside of a market correction.

Here's the quick math: Every $10 change in the price of Brent crude significantly impacts cash flow until the merger closes.

To put a number on that volatility, here is a historical proxy for the impact of a price swing on the pre-merger company's cash flow. While the merger is complete, this sensitivity is crucial for understanding the underlying asset's leverage to oil prices.

Based on historical pre-merger sensitivity data, a $1 change in the benchmark oil price was estimated to impact quarterly cash flow by approximately $13 million. So, a $10 change in the price of Brent crude significantly impacts the quarterly cash flow by roughly $130 million. This is a powerful, defintely real-world number that shows how much a sustained price move can move the needle on the business's working capital and overall financial health.

Financial Metric	2025 Value/Guidance	Key Context
Chevron Acquisition Value	$53 billion	All-stock transaction, closed July 2025.
Total Enterprise Value (incl. debt)	$60 billion	Final valuation of the combined entity.
Full Year 2025 E&P CAPEX (Est.)	Approximately $4.5 billion	Higher spend driven by Guyana development activities.
Q1 2025 E&P Net Production	476,000 boepd	Total production before Yellowtail start-up.
Q1 2025 Guyana Net Production	183,000 bopd	Hess's 30% share of the Stabroek Block.
Guyana Breakeven Brent Price	$25-$30 per barrel	Low-cost structure provides a strong economic buffer.
Estimated Cash Flow Sensitivity	~$130 million per $10 Brent change	Extrapolated impact on quarterly cash flow from unhedged production.

Hess Corporation (HES) - PESTLE Analysis: Social factors

Public and investor pressure for energy transition and clear decarbonization roadmaps remains intense

You are defintely seeing institutional investors and the public push for oil and gas companies to move faster on climate, and Hess Corporation is no exception. This pressure directly impacts the company's valuation and cost of capital, so they have responded with clear, near-term targets.

The core of their social commitment in this area is their aggressive 2025 goals. Hess plans to reduce operated Scope 1 and 2 Greenhouse Gas (GHG) and methane emissions intensities by approximately 50% from their 2017 baseline. Plus, they are targeting zero routine flaring from operations by the end of 2025. Looking further out, the commitment is to achieve net zero Scope 1 and 2 GHG emissions on an equity basis by 2050.

Here's the quick math on their climate-related financial commitment in Guyana:

• Decarbonization Target: Reduce Scope 1 & 2 GHG intensity by approx. 50% by 2025 (from 2017).
• Flaring Target: Achieve zero routine flaring by end of 2025.
• Guyana Carbon Credit Investment: Minimum of $750 million for independently verified REDD+ carbon credits from the Government of Guyana (2022-2032).

Community relations in Guyana are critical; local content requirements and job creation are high-priority issues

The massive Stabroek Block development in Guyana is Hess's primary growth engine, but it comes with intense social scrutiny. The Guyanese government's Local Content Act is a critical framework, mandating that the consortium prioritize Guyanese nationals and companies for goods and services. This isn't a suggestion; it's a legal requirement that directly ties to their license to operate.

The successful launch of major projects is a key social metric. For instance, the Yellowtail development, which is one of the largest so far, is on track to start up in the third quarter of 2025. This project uses the ONE GUYANA floating production, storage and offloading vessel (FPSO), a name that highlights the focus on local benefit. The consortium submitted the Field Development Plan (FDP) for the seventh development, Hammerhead, in March 2025. Continued job creation and local capacity building are non-negotiable social deliverables in this region.

Workforce retention is a near-term risk due to uncertainty surrounding the post-merger integration with Chevron

The successful completion of the $55 billion acquisition by Chevron Corporation on July 18, 2025, immediately shifted the social risk profile for Hess's global workforce. During the pendency of the merger, Hess's own filings acknowledged that employee retention would be challenging due to uncertainty about future roles.

Post-merger integration is always disruptive. Chevron announced a planned workforce reduction as part of the effort to streamline operations and achieve run-rate cost synergies of $1 billion by the end of 2025. These reductions directly impact the legacy Hess team.

Here are the concrete workforce changes announced in Q3 2025:

Location	Anticipated Job Reduction (Effective Sept 26, 2025)	Context
Downtown Houston	Approximately 575 employees	Part of the consolidation following the merger.
North Dakota	Approximately 70 employees	Consolidation in the Bakken operations area.
Hess Global Workforce (End of 2024)	1,797 employees	Baseline for Hess's total global workforce prior to the merger completion.

The reduction of 645 positions in the US alone is a significant portion of the former Hess workforce, creating a retention risk for the remaining high-value employees who are now integrating into the Chevron structure.

Shifting consumer preference away from fossil fuels impacts long-term demand projections and asset valuation

The societal trend away from fossil fuels is a long-term headwind, but the near-term reality is that global energy demand is still growing, and a just energy transition (a gradual, equitable shift) requires affordable, reliable energy. Hess's strategy is to focus on low-cost, high-return assets like Guyana to remain competitive even in a lower-carbon future. The Guyana assets, with an estimated 11 billion barrels of oil equivalent discovered, are positioned at the low end of the global cost curve, which helps protect their valuation against long-term demand erosion.

In the midstream sector, which processes and transports the product, the projections still show healthy growth:

• 2025 Throughput Volume: Expected to increase by approximately 10% across oil and gas systems compared with 2024.
• 2026 Throughput Volume Growth: Approximately 10% for gas and 5% for oil.
• 2027 Throughput Volume Growth: Approximately 5% for both gas and oil.

This near-term growth in volume, especially in natural gas, indicates that while the social preference for renewables is strong, the economic and practical demand for their product remains robust through the 2025-2027 window. The risk is less about immediate demand collapse and more about the long-term price and regulatory environment that will eventually be shaped by these shifting social preferences.

Hess Corporation (HES) - PESTLE Analysis: Technological factors

You need to look at Hess Corporation's technology not just as a cost, but as the engine for their massive Stabroek Block developments. The core technological advantage is the speed and scale of their deepwater execution, which directly maps to cash flow. The key risks now center on maintaining uptime and proving out the next generation of recovery tools.

Deepwater drilling and subsea tie-back technology in the Stabroek Block must maintain high efficiency and reliability.

The Stabroek Block, where Hess holds a 30% interest, relies on world-class deepwater technology to access an estimated gross recoverable resource of over 11.6 billion barrels of oil equivalent. This is not conventional drilling; it demands highly reliable subsea infrastructure. The sheer pace of development is the best indicator of this efficiency: the fourth and largest project, Yellowtail, is on track to start up in the third quarter of 2025.

The Yellowtail development utilizes the ONE GUYANA Floating Production Storage and Offloading (FPSO) vessel, which has an initial gross production capacity of approximately 250,000 barrels of oil per day (bopd). The co-venturers plan to have six FPSOs online by 2027, targeting a gross production capacity of 1.3 million b/d, demonstrating the efficiency of their standardized subsea tie-back architecture. We've already seen the success of this tie-back model in the Gulf of America, where the Pickerel well tieback to the Tubular Bells facility contributed to a Q1 2025 net production of 41,000 boepd, up from 31,000 boepd in Q1 2024.

Use of advanced seismic imaging (4D seismic) is key to maximizing recovery rates in complex reservoirs.

Advanced seismic imaging is critical for optimizing the recovery factor-the percentage of oil in place that can actually be produced-in these deepwater reservoirs. The co-venturers are actively deploying four-dimensional (4D) seismic surveys, which is time-lapse 3D seismic data used to monitor fluid movement, pressure changes, and temperature within the reservoir over time.

In the first half of 2025, a six-month 4D ocean bottom node (OBN) survey was contracted for the Stabroek Block to capture these time-lapse changes. This reservoir surveillance is not just for finding new oil; it's a direct tool for maximizing ultimate recovery by informing the placement of new production and water/gas injection wells. They are using this technology to enhance the understanding of the complex hydrocarbon reservoirs to support development drilling.

Digitalization efforts are defintely focused on optimizing field operations and predictive maintenance on Floating Production Storage and Offloading (FPSO) vessels.

The massive scale of the FPSO fleet makes predictive maintenance a necessity, not a luxury. Unplanned downtime can cost millions in lost production. For context, hurricane-related downtime alone reduced the company's net production by 4,000 boepd in 2024.

Hess uses predictive analytics, machine learning, and digital twin concepts across its fields. This shift from reactive to proactive maintenance is designed to:

• Detect equipment issues early using real-time sensor data.
• Reduce unplanned downtime on critical assets like the Liza Destiny, Liza Unity, Prosperity, and ONE GUYANA FPSOs.
• Optimize field operations to deliver efficiency gains and cost savings.

This data-driven approach is essential for achieving the high uptime required to maintain the Q1 2025 net production rate of 183,000 bopd from the Stabroek Block.

Carbon capture and storage (CCS) technology development is necessary to meet future emissions targets, especially for associated gas.

Meeting environmental, social, and governance (ESG) targets requires a clear technological plan for associated gas, which is gas produced alongside oil. Hess has set aggressive, near-term targets for 2025 that rely on technological solutions and carbon management strategies.

The most critical target is to achieve zero routine flaring from operated assets by the end of 2025. This requires technological solutions to re-inject, use, or export the associated gas. Additionally, the company is targeting a reduction in operated Scope 1 and 2 greenhouse gas (GHG) and methane emissions intensities by approximately 50% from 2017 levels by 2025.

While direct, large-scale CCS projects on their own assets are still developing, Hess is pursuing a two-pronged carbon mitigation strategy:

Strategy Component	Technological/Financial Commitment (2025 Focus)	Impact
Emissions Reduction Technology	Achieve zero routine flaring by end of 2025.	Directly addresses the environmental risk of associated gas and reduces GHG intensity by 50% (from 2017 baseline).
Natural Climate Solutions (NCS)	Minimum of $750 million committed to purchase 37.5 million REDD+ carbon credits from the Government of Guyana (2022-2032).	Offsets residual Scope 1 and 2 emissions as part of the commitment to achieve net zero by 2050.

Hess Corporation (HES) - PESTLE Analysis: Legal factors

The arbitration process concerning the pre-emptive rights of ExxonMobil and CNOOC on the Guyana asset is a major legal overhang.

The biggest legal risk for Hess Corporation in 2025 was the arbitration case filed by ExxonMobil and CNOOC, its partners in the Stabroek Block (Joint Operating Agreement or JOA) offshore Guyana. They claimed a Right of First Refusal (ROFR) over Hess's 30% stake, essentially arguing the $53 billion merger with Chevron was an asset sale in disguise.

This dispute, heard by a three-judge panel at the International Chamber of Commerce (ICC), was the single most critical legal hurdle to the merger closing. The arbitration merits hearing took place in May 2025. A ruling was expected in the third quarter, and the decision came through on July 18, 2025, when the ICC Tribunal ruled in favor of Hess, confirming the ROFR did not apply to the corporate merger. This cleared the way for Chevron to complete the acquisition immediately, securing Hess's share of the Stabroek Block, which holds over 11 billion barrels of oil equivalent discovered recoverable resource.

The legal resolution unlocked the transaction's value, which was an all-stock deal valued at $53 billion.

Legal Dispute Milestone	Date (2025)	Impact on Merger
ICC Arbitration Merits Hearing	May 2025	Determined the applicability of the Stabroek Block ROFR.
ICC Arbitration Ruling	July 18, 2025	Ruled in favor of Hess, confirming the ROFR was inapplicable.
Chevron-Hess Merger Completion	July 18, 2025	Merger closed immediately after the ruling, securing the 30% Stabroek Block stake.

Regulatory approval from the FTC and other international bodies is mandatory for the Chevron merger to close.

While the ICC arbitration was the contractual risk, the US Federal Trade Commission (FTC) review was the primary antitrust hurdle. The FTC initially approved a final consent order on January 20, 2025, which was a conditional clearance. The key condition was a restriction on former Hess CEO John Hess from joining the Chevron board or serving as an advisor, stemming from concerns about his communications with OPEC representatives.

Honestly, that restriction was a strange regulatory move for a merger clearance. The situation changed in July 2025 when the FTC reopened and set aside the final consent order, removing the restrictions on John Hess. The FTC concluded that the initial complaint failed to plead an antitrust law violation under Section 7 of the Clayton Act, and the restrictions were damaging to the FTC's credibility.

This removal of the FTC's initial, somewhat unusual, restriction just before the merger closed was a final, significant regulatory clearance, proving the deal was not anticompetitive in the eyes of the new commission majority. The merger successfully closed on July 18, 2025, after all mandatory approvals were secured.

Compliance with the US Foreign Corrupt Practices Act (FCPA) is paramount in international operations like Guyana.

Operating in a rapidly developing oil region like Guyana, where government interaction is constant and the stakes are enormous, makes strict adherence to the US Foreign Corrupt Practices Act (FCPA) (which prohibits bribing foreign government officials) a top-tier legal priority. The sheer scale of the investment-Guyana's Yellowtail development alone is on track to start up in Q3 2025 with an initial gross production capacity of approximately 250,000 barrels of oil per day (bopd)-magnifies the compliance exposure.

The legal environment in 2025 also saw a broader shift in US FCPA enforcement, with the Department of Justice (DOJ) issuing new guidelines and a temporary 'pause' on most FCPA enforcement following a February 2025 Executive Order. Still, the risk remains high, especially for a company engaged in a high-profile, high-value joint venture with a sovereign state.

For Hess, ensuring compliance is not just about avoiding fines, which can be in the hundreds of millions for major corporations, but about protecting the integrity of the $750 million agreement with the Government of Guyana to purchase REDD+ carbon credits through 2032.

• FCPA risk is concentrated in interactions with Guyanese government officials, especially concerning permits and contracts.
• The DOJ's February 2025 Executive Order temporarily paused most FCPA enforcement, signaling a potential shift in US anti-corruption policy.
• Compliance programs must be defintely robust to protect the $53 billion transaction from post-merger liability.

New methane emissions regulations from the US Environmental Protection Agency (EPA) require updated operational permits.

The US Environmental Protection Agency (EPA) has been tightening regulations on methane, a potent greenhouse gas, under the Clean Air Act. The new rules (NSPS OOOOb/EG OOOOc) finalized in 2024 set new standards for Volatile Organic Compounds (VOCs) and methane from new and existing oil and gas sources. This means a constant need for updated operational permits and significant capital spending on compliance technology.

However, the regulatory landscape saw some relief in 2025. In March 2025, Congress prohibited the EPA from collecting the Waste Emissions Charge (Methane Tax) until 2034. Also, in July 2025, the EPA issued an interim final rule extending certain compliance deadlines for the 2024 rules, giving operators more realistic timelines.

Hess is actually ahead of the curve on this. The company's operated methane emissions intensity was 0.10% at year-end 2024, which is significantly better than its voluntary 2025 target of 0.19%. Plus, they have a commitment to achieve zero routine flaring from their operated assets by the end of 2025. The compliance risk here is less about meeting the standard and more about the administrative burden of permit updates and demonstrating compliance with the evolving measurement, reporting, and verification (MRV) frameworks.

Hess Corporation (HES) - PESTLE Analysis: Environmental factors

The environmental landscape for Hess Corporation in 2025 is defined by aggressive, near-term emissions targets and heightened regulatory scrutiny, especially around the massive Stabroek Block in Guyana. You need to focus on two core areas: meeting self-imposed intensity goals and managing the outsized deepwater spill risk. Fail on either, and the financial impact-from carbon taxes to operational shutdowns-will be swift and significant.

Flaring Reduction Targets in Guyana Under Intense Scrutiny

The commitment to eliminate routine flaring is a major pressure point, particularly as the Guyana operations scale up dramatically. Hess, as a 30% partner in the ExxonMobil-led Stabroek Block consortium, is tied to the operator's performance. The overall company target is to achieve zero routine flaring from its operations by the end of 2025. This is a non-negotiable goal for maintaining an industry-leading ESG profile.

The sheer volume of new production increases the risk profile. The Yellowtail project, a key 2025 startup, is set to add a gross production capacity of approximately 250,000 barrels of oil per day (bpd), pushing the consortium's total capacity past 900,000 bbl/d. That's a huge operation. Any flaring incidents in this highly visible deepwater region draw immediate, intense fire from environmental non-profits and the Guyanese government, which is defintely watching closely.

Hess's Goal to Reduce Greenhouse Gas Emissions Intensity by 50% by 2025

One of Hess Corporation's most concrete and measurable environmental goals is the reduction of its operated Scope 1 and 2 greenhouse gas (GHG) emissions intensity. The target is to reduce this intensity by approximately 50% from the 2017 baseline by the end of 2025. This translates to reducing the intensity from the 2017 baseline of 34 kilograms (kg) of CO2e per BOE (barrel of oil equivalent) down to 17 kg CO2e per BOE.

Here's the quick math on their progress: Hess is actually ahead of schedule. Through 2024, the company's cumulative GHG emissions intensity was already down to 14.9 kg CO2e per BOE, which is a 56% reduction compared with the 2017 baseline. That outperformance gives them a buffer, but maintaining that low intensity as new, large-scale projects like Yellowtail come online in 2025 will be the real test. They are using a market-based approach, which includes the use of Renewable Energy Certificates (RECs) to mitigate the environmental impact of their Scope 2 emissions.

GHG Emissions Intensity Target	2017 Baseline	2025 Target	2024 Performance (Ahead of Target)
Operated Scope 1 & 2 GHG Intensity (kg CO2e / BOE)	34 kg CO2e / BOE	17 kg CO2e / BOE	14.9 kg CO2e / BOE
Reduction from 2017 Baseline	-	Approx. 50%	56%

Deepwater Oil Spill Prevention and Response Capabilities

Given the sheer scale of the deepwater operations in the Stabroek Block, the risk of a catastrophic oil spill is the single largest environmental liability. The potential for a spill is a shared risk with ExxonMobil and CNOOC Petroleum Guyana Limited, but Hess's 30% stake means it carries a significant portion of the financial and reputational exposure.

The regulatory environment is hardening. Guyana's National Assembly debated and passed the Oil Pollution Prevention, Preparedness, Response and Responsibility Bill 2025 in May 2025. This new legislation is designed to:

• Greatly enhance national preparedness.
• Ensure responsible parties are held accountable for environmental damage.
• Align the country's legal framework with international best practices.

This means the financial liability for any spill has become much more explicit and potentially unlimited, moving beyond the current insurance and guarantee mechanisms. Robust response capabilities, including access to capping stacks and containment equipment, are no longer just best practice; they are a critical financial backstop against a multi-billion dollar liability event.

Increased Frequency of Severe Weather Events in the Gulf of Mexico

The physical risks of climate change are already impacting Hess's Gulf of Mexico (GoM) operations. The 2025 Atlantic hurricane season is projected to be above-average, with the National Oceanic and Atmospheric Administration (NOAA) forecasting a 60% chance of a more active season. This means a higher probability of:

• 13 to 19 named storms.
• 6 to 10 hurricanes.
• 3 to 5 major hurricanes (Category 3 or higher).

Hess's GoM net production was 41,000 boepd in the first quarter of 2025, which is a material part of their portfolio. Severe weather forces mandatory evacuations and production shut-ins, leading to operational downtime and lost revenue. For context, a high-impact storm like Hurricane Francine in 2024 caused offshore crude production to drop by as much as 723,000 b/d across the US Gulf. This increased frequency of severe storms also drives up insurance premiums and capital expenditure for hardening offshore infrastructure.

Action: Review the cost of the new Guyana oil spill financial guarantee requirements against the projected $1.085 billion in E&P capital and exploratory expenditures for Q1 2025 to ensure adequate capital is allocated to risk mitigation. Finance: draft 13-week cash view by Friday, including a high-impact hurricane scenario for GoM assets.