Systems and methods for hydroprocessing heavy oil feedstock is disclosed. The process employs a plurality of contacting zones and at least a separation zone to convert at least a portion of the heavy oil feedstock to lower boiling hydrocarbons, forming upgraded products. In one embodiment, water and/or steam being injected into at least a contacting zone. The contacting zones operate under hydrocracking conditions, employing at least a slurry catalyst. In one embodiment, at least a portion of the non-volatile fractions recovered from at least one of the separation zones is recycled back to at least a contacting zone (“recycled mode”). In one embodiment, the number of separation zones is less than the number of contacting zones in the system. In the separation zones, upgraded products are removed overhead and optionally treated in an in-line hydrotreater; and the bottom stream is optionally further treated in a fractionator.