Impairment and other, after tax

PART I - FINANCIAL INFORMATION (CONT’D.)HESS CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)There have been no significant changes to contracts with customers or the composition thereof during the nine months ended September 30, 2022.  Generally, we receive payments from customers on a monthly basis, shortly after the physical delivery of the crude oil, natural gas liquids, or natural gas. At September 30, 2022, contract liabilities of $24 million (December 31, 2021: $24 million) resulted from a take-or-pay deficiency payment received in the fourth quarter of 2021 that is subject to a make-up period expiring in December 2023. At September 30, 2022 and December 31, 2021, there were no contract assets.8. Impairment and OtherIn the third quarter of 2022, we recorded a pre-tax charge of $28 million ($28 million after income taxes) that resulted from updates to our estimated abandonment liabilities for non-producing properties in the Gulf of Mexico and $26 million ($26 million after income taxes) to fully impair the net book value of our interests in the Penn State Field in the Gulf of Mexico due to a mechanical issue on the remaining production well in the field encountered during the third quarter of 2022.In June 2021, the U.S. Bankruptcy Court approved the bankruptcy plan for Fieldwood Energy LLC (Fieldwood) which includes transferring abandonment obligations of Fieldwood to predecessors in title of certain of its assets, who are jointly and severally liable for the obligations. Results for the nine months ended September 30, 2021 included a charge of $147 million ($147 million after income taxes) in connection with estimated abandonment obligations in the West Delta 79/86 Field (West Delta Field), which we sold to a Fieldwood predecessor in 2004.9. Retirement PlansComponents of net periodic benefit cost consisted of the following:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |
|   | 2022 |  | 2021 |  | 2022 |  | 2021 |
|  | (In millions) |
|   |
| Service cost | $ | 11  |  |  | $ | 13  |  |  | $ | 36  |  |  | $ | 40  |  |
| Interest cost (a) | 19  |  |  | 14  |  |  | 52  |  |  | 42  |  |
| Expected return on plan assets (a) | (47) |  |  | (49) |  |  | (152) |  |  | (148) |  |
| Amortization of unrecognized net actuarial losses (a) | 2  |  |  | 15  |  |  | 8  |  |  | 43  |  |
| Settlement loss (a) | —  |  |  | 1  |  |  | 2  |  |  | 5  |  |
| Net periodic benefit cost (income) (a) | $ | (15) |  |  | $ | (6) |  |  | $ | (54) |  |  | $ | (18) |  |

(a)  Net non-service cost included in Other, net in the Statement of Consolidated Income for the three and nine months ended September 30, 2022 was income of $26 million and $90 million, respectively, compared with income of $19 million and $58 million for the three and nine months ended September 30, 2021, respectively.In the second quarter of 2022, the Hess Corporation Employees’ Pension Plan purchased a single premium annuity contract at a cost of approximately $170 million using assets of the plan to settle and transfer certain of its obligations to a third party. This partial settlement resulted in a noncash charge of $13 million to recognize unamortized actuarial losses. In connection with this settlement transaction, as required under U.S. accounting standards, we remeasured the funded status of the plan, which increased by $154 million primarily due to a change in the weighted average discount rate used to value the projected benefit obligation, and an update to the fair value of plan assets. The change in the funded status is reflected in Post-retirement benefit assets in the Consolidated Balance Sheet.In the second quarter of 2022, the HOVENSA Legacy Employees' Pension Plan paid lump sums of approximately $20 million to certain participants, and purchased a single premium annuity contract at a cost of approximately $80 million, to settle the plan's projected benefit obligation. The settlement transactions resulted in a noncash gain of $11 million to recognize unamortized actuarial gains. In connection with these settlement transactions, as required under U.S. accounting standards, we remeasured the funded status of the plan, which increased by $6 million. The change in the funded status is reflected in Post-retirement benefit assets in the Consolidated Balance Sheet.For the full year 2022, we forecast service cost for our pension and postretirement medical plans to be approximately $45 million and net non-service cost to be approximately $118 million of income, which is comprised of expected return on plan assets of approximately $200 million, interest cost of approximately $70 million, amortization of unrecognized net actuarial losses of approximately $10 million, and net settlement losses of $2 million. In 2022, we do not expect to contribute to our funded pension plans.11
