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Impact on cash flow While the impact on production is significant, we suggest the impact on cash flow is transformational for Hess. Referencing the charts below: ¢ Under our base case that assumes $70 oil from 2020, we estimate operating cash flow net to Hess would reach over $2.5bn; « Net free cash flow peaks at over $2bn with a net cash outflow at any point in the development of ~$300mm. Chart 2: Hess operating cash flow contribution: Guyana ($70 base case) Chart 3: Hess free cash flow contribution: Guyana ($70 base case) 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 - (500) 2017 2022 2027 2032 2017 2022 2027 2032 w Liza Early PS m Liza Phase’ w Liza Phase 2 wLiza Early PS m Liza Phase’ wLiza Phase 2 m Payara Early PS m Payara Phase m Payara Phase 2 mPayara Early PS m Payara Phase m Payara Phase 2 Source: BofA Merrill Lynch Global Research Source: BofA Merrill Lynch Global Research While first oil in 2019 is only the early stage of development, it is enough in our view to provide visibility on multiple compression perceived absent from Hess’ investment case given its focus on short cycle development. However, after the low point in production in 2Q17 we suggest Hess has both — short cycle, comprising not only the Bakken but tie back opportunities across established infrastructure in Norway and the US GoM — and long cycle in the shape of a transformational opportunity in Guyana, that becomes tangible with a likely FID in 2Q17. Impact on valuation In our view, an imminent inflexion point in free cash flow comes with a step change in value recognition for Hess. Momentum from a >20% jump in production in the six months of the second half of 2017 carries growth through 2018, with Guyana accelerating for a decade from 2019. At our base case we suggest this leaves Hess ‘discounting’ current strip oil prices at current levels of ~$50 / share. The table below sets our PO at our target mid cycle multiple of 5.5x EV/DACF; note this does not include any value for non-producing Guyana resource value that we estimate at ~$6/share. Table 2: At strip oil prices, Hess looks fairly valued based on a target multiple of 5.5x EV/DACF 2015 2016 2017e 2018 2019e¢ 2020e 2021e Shares Outstanding 284 310 313 313 323 324 324 Market Cap 13,119 13,334 13,415 13,415 13,415 13,415 13,415 Non-producing Guyana NAV - - - - Net Debt 3,914 4.074 5,136 6,224 6,985 7,198 7,866 Preference shares 557 557 557 EV 17,033 17,965 19,108 20,196 20,400 21,213 21,281 DACF 2,321 1,127 1,847 2,378 2,625 3,030 3,795 Forward EV / DACF 15.1x 9.7x 8.0x 71x 6.7x 5.5x Source: BofA Merrill Lynch Global Research ‘ Bankot America 8 Hess Corp. | 11 April 2017 Merrill Lynch HOUSE_OVERSIGHT_014880