A process for catalytic multi-stage hydrogenation of heavy carbonaceous feedstocks using catalytic ebullated bed reactors is operated at selected flow and operating conditions so as to provide improved reactor operations and produce increased yield of lower boiling hydrocarbon liquid and gas products. The disclosed process advantageously takes advantage of an external gas/liquid separation unit associated with the first stage reactor to allow for a more efficient and effective catalytic hydrocracking process. The more efficient process is primarily a result of the increased catalyst loading and lower gas hold-up in the ebullated reactors.