Bank of America Merrill Lynch valuation and earnings outlook for Hess Corp.

Under our base case, which assumes a rebound in oil prices towards $70 from 2020, we see fair value as reasonably around $80 per share. If non-producing asset value is included {around $3bn or ~$9/sh), we estimate this would be closer to $90. Table 3: At our base case, we see fair value closer to $80 based on a target multiple of 5.5x EV/DACF 2015 2016 2017e 2018e 2019e 2020e ©2021e Shares Outstanding 284 310 313 313 323 324 324 Market Cap 22,341 22,684 22,814 22,814 22,814 22,814 22,814 Non-producing Guyana NAV - - - - Net Debt 3,914 4074 4.832 5,243 4,983 4441 3,020 Pref 557 557 557 EV 26,255 27,315 28,203 28,614 27/97 27,295 25,834 DACF 2,321 1,127 2,150 3,045 3,602 4291 9,132 Forward EV / DACF 23.3x 12.7x 9.3x 79x 6.5x 5.3x Source: BofA Merrill Lynch Global Research BofAML US 1 list The BofAML US1 list is a collection of the firm’s best investment ideas managed with the goal of providing superior investment performance over the long term. Since the presidential election, the ’trump tax rally’ that has arguably lifted the broader S&P500 on the expectation of lower corporate taxes has left most US oils lagging given the absence of any benefit from lower taxes. For Hess, we believe the catalysts are still ahead while the relative performance hurdle associated with the election has passed. For this reason, Hess replaces DVN as our energy stock on the BofAML US1 list. Earnings updates Marking to market for 1Q17 we update earnings as follows: Table 4: HES Earnings Estimates Qi Q2 Q3 Q4 FY BBG Consensus 2015A (0.98) (0.52) (1.03) (1.40) (3.92) (3.92) 2016E (1.72) (1.11) (1.12) (1.01) (4.94) (4.98) Previous (1.72) (1.11) (1.12) (1.01) (4.94) nla 2017E (1.21) (1.19) (0.72) (0.63) (3.75) (3.03) Previous (1.37) (1.19) (0.72) (0.63) (3.91) nla 2018E (0.40) (0.40) (0.35) (0.30) (1.46) (2.09) Previous (0.40) (0.41) (0.35) (0.31) (1.47) nla Source: BofA Merrill Lynch Global Research Bankof America <> Merrill Lynch Hess Corp. | 11 April 2017 9 HOUSE_OVERSIGHT_014881