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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Hess Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	3,165)	1,404)	(2,506)	77)	159)
Cost of capital²	17.22%	16.04%	14.69%	15.11%	15.44%
Invested capital³	18,062)	16,885)	16,448)	18,672)	19,028)

Economic profit⁴	56)	(1,304)	(4,922)	(2,745)	(2,780)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,165 – 17.22% × 18,062 = 56

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Hess Corp. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Hess Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income (loss) attributable to Hess Corporation	2,096)	559)	(3,093)	(408)	(282)
Deferred income tax expense (benefit)¹	305)	119)	(54)	(1)	(76)
Increase (decrease) in equity equivalents²	305)	119)	(54)	(1)	(76)
Interest expense	493)	481)	468)	380)	399)
Interest expense, operating lease liability³	30)	19)	22)	23)	44)
Adjusted interest expense	523)	500)	490)	403)	443)
Tax benefit of interest expense⁴	(110)	(105)	(103)	(85)	(93)
Adjusted interest expense, after taxes⁵	413)	395)	387)	318)	350)
Net income (loss) attributable to noncontrolling interest	351)	331)	254)	168)	167)
Net operating profit after taxes (NOPAT)	3,165)	1,404)	(2,506)	77)	159)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Hess Corporation.

³ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 669 × 4.50% = 30

⁴ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 523 × 21.00% = 110

⁵ Addition of after taxes interest expense to net income (loss) attributable to Hess Corporation.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Hess Corp. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Hess Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Provision (benefit) for income taxes	1,099)	600)	(11)	461)	335)
Less: Deferred income tax expense (benefit)	305)	119)	(54)	(1)	(76)
Add: Tax savings from interest expense	110)	105)	103)	85)	93)
Cash operating taxes	904)	586)	146)	547)	504)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Hess Corp. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

Hess Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Current portion of long-term debt	3)	517)	10)	—)	67)
Current portion of finance lease obligations	21)	19)	18)	17)	—)
Long-term debt, excluding current portion	8,278)	7,941)	8,286)	7,142)	6,605)
Long-term finance lease obligations	179)	200)	220)	238)	—)
Operating lease liability¹	669)	464)	541)	535)	762)
Total reported debt & leases	9,150)	9,141)	9,075)	7,932)	7,434)
Total Hess Corporation stockholders’ equity	7,855)	6,300)	5,366)	8,732)	9,629)
Net deferred tax (assets) liabilities²	285)	312)	283)	335)	400)
Equity equivalents³	285)	312)	283)	335)	400)
Accumulated other comprehensive (income) loss, net of tax⁴	131)	406)	755)	699)	306)
Noncontrolling interests	641)	726)	969)	974)	1,259)
Adjusted total Hess Corporation stockholders’ equity	8,912)	7,744)	7,373)	10,740)	11,594)
Invested capital	18,062)	16,885)	16,448)	18,672)	19,028)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of equity equivalents to total Hess Corporation stockholders’ equity.

⁴ Removal of accumulated other comprehensive income.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Hess Corp. invested capital increased from 2020 to 2021 and from 2021 to 2022.

Hess Corp., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	42,544)	42,544)	÷	51,605)	=	0.82	0.82	×	19.94%	=	16.44%
Debt and finance lease obligations³	8,392)	8,392)	÷	51,605)	=	0.16	0.16	×	5.67% × (1 – 21.00%)	=	0.73%
Operating lease liability⁴	669)	669)	÷	51,605)	=	0.01	0.01	×	4.50% × (1 – 21.00%)	=	0.05%
Total:	51,605)					1.00					17.22%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	31,408)	31,408)	÷	41,988)	=	0.75	0.75	×	19.94%	=	14.92%
Debt and finance lease obligations³	10,116)	10,116)	÷	41,988)	=	0.24	0.24	×	5.69% × (1 – 21.00%)	=	1.08%
Operating lease liability⁴	464)	464)	÷	41,988)	=	0.01	0.01	×	4.10% × (1 – 21.00%)	=	0.04%
Total:	41,988)					1.00					16.04%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	20,117)	20,117)	÷	30,543)	=	0.66	0.66	×	19.94%	=	13.14%
Debt and finance lease obligations³	9,885)	9,885)	÷	30,543)	=	0.32	0.32	×	5.85% × (1 – 21.00%)	=	1.50%
Operating lease liability⁴	541)	541)	÷	30,543)	=	0.02	0.02	×	4.00% × (1 – 21.00%)	=	0.06%
Total:	30,543)					1.00					14.69%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	19,753)	19,753)	÷	28,785)	=	0.69	0.69	×	19.94%	=	13.69%
Debt and finance lease obligations³	8,497)	8,497)	÷	28,785)	=	0.30	0.30	×	5.85% × (1 – 21.00%)	=	1.36%
Operating lease liability⁴	535)	535)	÷	28,785)	=	0.02	0.02	×	4.30% × (1 – 21.00%)	=	0.06%
Total:	28,785)					1.00					15.11%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,479)	17,479)	÷	24,735)	=	0.71	0.71	×	19.94%	=	14.09%
Debt and finance lease obligations³	6,494)	6,494)	÷	24,735)	=	0.26	0.26	×	5.83% × (1 – 21.00%)	=	1.21%
Operating lease liability⁴	762)	762)	÷	24,735)	=	0.03	0.03	×	5.83% × (1 – 21.00%)	=	0.14%
Total:	24,735)					1.00					15.44%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Hess Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	56)	(1,304)	(4,922)	(2,745)	(2,780)
Invested capital²	18,062)	16,885)	16,448)	18,672)	19,028)
Performance Ratio
Economic spread ratio³	0.31%	-7.72%	-29.92%	-14.70%	-14.61%
Benchmarks
Economic Spread Ratio, Competitors⁴
Chevron Corp.	4.96%	-4.07%	-18.16%	-13.50%	—
ConocoPhillips	12.62%	-1.28%	-19.86%	-1.22%	—
Exxon Mobil Corp.	7.98%	-0.39%	-23.56%	-6.43%	—
Occidental Petroleum Corp.	6.72%	-5.17%	-34.05%	-11.15%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 56 ÷ 18,062 = 0.31%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Hess Corp. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

Hess Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	56)	(1,304)	(4,922)	(2,745)	(2,780)
Sales and other operating revenues	11,324)	7,473)	4,667)	6,495)	6,323)
Performance Ratio
Economic profit margin²	0.49%	-17.45%	-105.47%	-42.26%	-43.96%
Benchmarks
Economic Profit Margin, Competitors³
Chevron Corp.	4.47%	-5.06%	-37.92%	-18.89%	—
ConocoPhillips	12.14%	-2.13%	-53.79%	-2.16%	—
Exxon Mobil Corp.	5.95%	-0.39%	-36.14%	-7.64%	—
Occidental Petroleum Corp.	10.33%	-11.56%	-120.98%	-46.04%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × 56 ÷ 11,324 = 0.49%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Hess Corp. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.

Hess Corp. (NYSE:HES)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin