Hess (NYSE:HES) is nearing a pivotal point in its long-term strategic growth plan. The company and its partners, ExxonMobil (NYSE:XOM) and China's CNNOC, expect to begin production from the first phase of their offshore Guyana development early next year. Once that project comes online, Hess' cash flow should start soaring. That leads the oil company to believe it can generate a gusher of free cash flow in the coming years, the bulk of which it will probably return to shareholders.

The company's management team is as optimistic as ever about its future. That was evident from comments on the recent second-quarter conference call. Here's why they believe Hess has a bright future.

An offshore jackup rig at dusk.

Image source: Getty Images.

About to start up the fourth engine

CEO John Hess stated on the call:

Our portfolio, which is balanced between our growth engines in Guyana and the Bakken and our cash engines in the deepwater Gulf of Mexico and the Gulf of Thailand, is on track to generate industry-leading cash flow growth. With a portfolio breakeven that is expected to decrease to less than $40 per barrel Brent by 2025. A key driver of our strategy is our position in Guyana. The 6.6 million-acre Stabroek Block, where Hess has a 30% interest and ExxonMobil is the operator, is a massive world-class resource that is uniquely advantaged by its scale, reservoir quality, cost, rapid cash paybacks, and strong financial returns.

As Hess notes, the company currently has four drivers that will fuel a growing stream of cash flow in the coming years. It's using its deepwater assets in the Gulf of Mexico and the Gulf of Thailand to generate free cash. That's giving it the funds to grow production in the Bakken while also helping finance the development of offshore Guyana. In Hess' estimation, its oil output will expand at a more than 10% compound annual rate through 2025, with cash flow increasing at an even faster 20% pace over that timeframe.

Driving that growth will be the company's shift from the Bakken to Guyana. Hess intends to idle its Bakken growth engine in 2021 so that it can turn it into a free cash flow machine that should produce $1 billion per year. Meanwhile, Guyana will drive production and cash flow growth as Hess and its partners complete five development phases by 2025.

Guyana keeps getting bigger

Exxon currently expects to start the first phase of the Guyana development by the first quarter of next year. The company and its partners have already begun working on the second stage, which should start pumping oil by the middle of 2022. Meanwhile, the partners are well under way with planning the third phase, which they aim to have online in 2023. They expect to continue staging development so that they'll have five production platforms pumping a combined 750,000 barrels of oil per day by 2025.

The companies probably won't end there, because they keep finding more oil. Hess's CEO stated on the call that "in April, we announced our 13th discovery on the Stabroek Block at Yellowtail." As a result of that discovery as well as the continued appraisal work on other recent finds, Hess and its partners are now even more confident in their resource potential. Hess stated that "we have increased the estimate of gross discovered recoverable resources for the Stabroek Block to more than 6 billion barrels of oil equivalent, up from the previous estimate of more than 5.5 billion barrels of oil equivalent." Furthermore, he said "we continue to see multibillion barrels of additional exploration potential."

Given that outlook, Hess and its partners should be able to continue developing additional phases beyond 2025. That would give the company more fuel to keep growing its production and cash flow.

An oil stock for the long term

Hess has a long-term plan to create value for its investors. The company's investments in places like the Bakken and offshore Guyana have it on track to deliver a growing gusher of cash flow in the coming years. That should give it the funds to increase its dividend and buyback a meaningful amount of its stock. The company's combination of growth and upcoming increase in shareholder returns makes it one of the more compelling oil stocks to consider buying for the long haul.