Hess: Updating Valuation Methodology for U.S. E&Ps

We have adjusted our valuation methodology for U.S. exploration and production companies. Our multistage DCF valuation incorporates five years of explicit projections for a fixed period, typically five years. Terminal values are derived by assuming firms eventually earn their cost of capital in perpetuity. This contrasts with our previous methodology, which modeled the harvesting of all existing company assets. The change brings our E&P valuations in line with Morningstar’s standard equity research methodology.