Hess Corp (NYSE:HES) has been slowly turning itself around over the past few years as it works to transform into a high-octane growth stock. It's not quite there yet, which was evident in its second-quarter results. However, while the company's production and profitability haven't turned higher, it has a clear roadmap that will soon get the oil producer to its destination, which puts it on the path to potentially deliver superior returns for investors in the coming years.

The Bakken shale: America's forgotten oil wonderland

Hess produced an average of 247,000 barrels of oil equivalent per day (BOE/D) during the recently completed second quarter, which was 16% less than its output in the year-ago period due to asset sales. However, the company put its overall production decline in the rearview mirror as it rose 6% from the first quarter, due, in part, to the ramp up of drilling activities in the Bakken Shale of North Dakota where production also increased 6% year over year, to an average of about 114,000 BOE/D.

A dirt road heading to a drilling rig in North Dakota.

Image source: Getty Images.

That growth rate, however, should accelerate in the coming quarters because Hess still is ramping up its drilling activity. The company just added a fifth rig in June and planned to add another one in the fourth quarter.

Those rigs position Hess to boost output up to an average of 175,000 BOE/D by 2021 "along with a meaningful increase in free cash flow generation over this period," according to comments by CEO John Hess on the accompanying conference call. That's a significant growth rate and shows that the Bakken can still be a needle mover for oil companies -- even though most of the industry's focus has been on the Permian Basin in recent years -- and why it's a key to Hess' strategy.

Guyana: The next frontier

The second key to Hess' growth strategy is offshore Guyana, where it's a 30% partner on the Stabroek Block operated by ExxonMobil. It's "a massive, world-class resource that's uniquely advantaged by its scale, reservoir quality, cost, rapid cash paybacks, and superior financial returns," according to comments by Hess' CEO on the second-quarter call. He further stated that, "Guyana is really a truly world-class investment opportunity, one of the best, if not the best, in the industry, with low breakeven oil prices and high financial returns across the industry."

He pointed out that the company and its partners recently increased their reserve estimate for this resource, which they now think holds more than 4 billion BOE, up 25% from the initial view, thanks to several additional discoveries, bringing the total to eight overall. That's a large enough resource to handle at least five production platforms, which the partners plan to build in phases.

The first one is already underway and expected to produce 120,000 barrels of oil per day (BPD) by early 2020. Two more are now in development and could start up in mid-2022 and early 2023, respectively. Overall, Exxon thinks the first five phases could produce 750,000 barrels of oil per day by 2025. Given Hess' 30% stake, it's share would be 225,000 BPD, which is enough to grow its production by more than 90% over that time frame.

An offshore drilling rig at sunset.

Image source: Getty Images.

A two-pronged attack

Hess has two powerful growth engines in the Bakken and offshore Guyana. When the company combined the near-term production expansion from North Dakota as it ramps up its drilling activities to the long-term potential of Guyana, it estimates that output can increase at a 10% compound annual growth rate (CAGR) through at least 2023. That would fuel a 20% CAGR in cash flow over that time frame assuming oil averages $50 a barrel, with even faster-paced growth at higher oil prices. In fact, with the recent upward revision in the reserve estimate, Hess now thinks it's in the position "for more than a decade of visible cash flow and production growth and improving returns and cost metrics," according to the comments by COO Gregory Hill on the conference call.

That fast-pace cash flow growth leads CEO John Hess to believe that the company also is in the position to "generate superior financial returns and cash flow generation for many years to come as Guyana comes to fruition and our Bakken plan does as well."

An oil stock for the long haul

Hess is a long-term oil growth story. It should deliver moderate increases in production and cash flow over the next couple of years until the first phase of Guyana comes online, which positions it to generate an even larger gusher of both, even if oil prices tumble all the way back to $50 a barrel. However, with higher crude prices likely in the forecast in the coming years, this oil stock could fuel even higher-octane returns for investors in the future, making it one they'll want to consider closely.