iQprofile’ Hess Corp

iQprofile’ Hess Corp. Company Sector iQnethod ™ - Bus Performance* Oils (US$ Millions) 2015A 2016A 2017E 2018E 2019E ar Return on Capital Employed 85% -21.0% -3.6% 0.9% 0.1% Company Description Return on Equity -5A% -9.0% 8.6% 3.1% 2.1% ; , ; Operating Margin A1973% 247.2% © -25.4% 50% 05% Hess Corp (HES) is a mid-sized oil and gas Free Cash Flow (2,061) (1,359) (592) (50) 574 company with 1.0bn boe of proved reserves at the end of 2015. E&P operations are focused in the US onshore, deepwater GOM, North Sea, West Africa #@method™—QualityofEarningss oil, and Asian natural gas. (US$ Millions) 2015A 2016A 2017E 2018E 2019E Cash Realization Ratio NM NM NM NM NM Asset Replacement Ratio 1.0x 0.6x 0.9x 0.9x 0.9x Investment Rationale Tax Rate 18.8% 41.0% 16.2% 21.9% 8.4% Net Debt-to-Equity Ratio 19.2% 26.1% 34.9% 40.7% 40.5% Our house view is that oil should rebound long Interest Cover -10.1x -31.1x -3.8x -1.0x 0.1x term to $75 WTI / $80 Brent. Investment case anchored by exploration prospects led by Guyana. Added to this, it has a strong balance sheet, low Income Statement Data (Dec) (US$ Millions) 2015A 2016A 2017E 2018E 2019E risk production visibility in the Bakken and a stable ones 986 4192 4379 5704 6 359 international base. As such, we view HES' valuation % Change -98 1% 1,363.2% AT% 30 3% 41.5% as attractive and maintain our Buy rating. Gross Profit (2,606) 4182 4379 5,704 6,359 % Change NM NM 47% 30.3% 11.5% EBITDA 1,155 (5,482) 2,005 3,097 3,646 % Change -84.3% NM NM 54.5% 17.7% Net Interest & Other Income (340) (332) (289) (297) (304) Net Income (Adjusted) (1,113) (1,531) (1,174) (456) (246) Stock Data % Change NM -37.6% 23.3% 61.1% 46.0% Average Daily Volume 3,973,678 Free Cash Flow Data (Dec) Quarterly Earnings Estimates (US$ Millions) 2015A 2016A 2017E 2018E 2019E 2016 2017 Net Income from Cont Operations (GAAP) (3,056) (6,132) (1,126) (408) (246) Q -1.72A -1.21E Depreciation & Amortization 3,955 3,413 2,857 2,962 3,188 Q2 -1.11A -1.19E Change in Working Capital 80 (47) 0 0 0 Q3 -1.12A -0.72E Deferred Taxation Charge (1,319) 2,200 (228) (128) (13) Q4 -1.01A -0.63E Other Adjustments, Net 2,321 1,361 357 323 369 Capital Expenditure (4,042) (2,154) (2,453) (2,798) (2,725) Free Cash Flow -2,061 -1,359 -592 -50 574 % Change -98.0% 34.1% 56.4% 91.6% NM Balance Sheet Data (Dec) (US$ Millions) 2015A 2016A 2017E 2018E 2019E Cash & Equivalents 2,116 2,132 1,974 1,974 1,974 Trade Receivables 847 168 168 168 168 Other Current Assets 841 116 116 116 116 Property, Plant & Equipment 26,352 19,941 18,886 18,299 17,412 Other Non-Current Assets 3,439 4,404 4404 4404 4,404 Total Assets 34,195 28,621 26,807 26,220 25,334 Short-Term Debt 86 112 112 112 112 Other Current Liabilities 2,542 2,139 2,088 2,036 1,982 Long-Term Debt 6,544 6,694 6,694 7105 6,844 Other Non-Current Liabilities 4622 4,085 4.085 4,085 4,085 Total Liabilities 13,794 13,030 12,979 13,338 13,023 Total Equity 20,401 15,591 13,828 12,883 12,311 Total Equity & Liabilities 34,195 28,621 26,807 26,220 25,334 * For full definitions of sQnethod™ measures, see page 11. BankofAmerica <2” 2 Hess Corp. | 11 April 2017 Merrill Lynch HOUSE_OVERSIGHT_014874