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Three months ended Nine months ended
September 30 September 30
(unaudited) (unaudited)
2003 2002(a) 2003 2002(a)
Exploration and production $124 $(116) $331 $273
Refining and marketing 89 70 272 65
Corporate (25) (23) (73) (56)
Interest expense (42) (36) (132) (127)
Income (loss) from continuing
operations 146 (105) 398 155
Discontinued operations
Net gains from asset sales -- -- 116 --
Income (loss) from operations -- (31) 53 (2)
Income from cumulative effect of
accounting change -- -- 7 --
Net income (loss) $146 $(136) $574 $153
Income (loss) per share from
continuing operations (diluted) $1.64 $(1.19) $4.47 $1.73
Net income (loss) per share (diluted) $1.64 $(1.54) $6.45 $1.72
(a) Reclassified to conform with current period presentation.
The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 339,000 barrels per day in the third quarter of 2003 compared to 441,000 barrels per day in the third quarter of 2002. Approximately one-half of the decline in production resulted from asset sales in connection with the Corporation's initiatives to reshape its portfolio of producing properties. In the third quarter of 2003, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $24.65 per barrel, a decrease of $1.44 per barrel from the third quarter of 2002. The Corporation's average United States natural gas selling price, including the effect of hedging, was $3.53 per Mcf in the third quarter of 2003, an increase of $.06 per Mcf from the third quarter of 2002.
Refining and marketing earnings increased in the third quarter of 2003 compared with the third quarter of 2002 reflecting higher refining margins and increased earnings from retail gasoline station operations. Refining and marketing earnings in the third quarter of 2002 included an after-tax gain of $67 million ($102 million before income taxes) from the sale of six United States flag tankers.
Corporate expenses in the first nine months of 2003 include $15 million of after-tax expense ($27 million before income taxes) from early repayment of debt. The amount in the corresponding period of 2002 was $4 million ($10 million before income taxes).
The following items, on an after-tax basis, are included in net income in the third quarter and first nine months of 2003 and 2002 (in millions):
Three months ended Nine months ended
September 30 September 30
(unaudited) (unaudited)
2003 2002 2003 2002
United States income tax benefit $30 $-- $30 $--
Accrued severance and London
office lease costs -- -- (23) --
Asset impairment -- (207) -- (207)
Gains (losses) from asset sales
Exploration and production -- (22) 31 20
Refining and marketing -- 67 (20) 67
Charge for increase in United
Kingdom income tax rate -- (43) -- (43)
Reduction in carrying value of
refining and marketing intangible
assets and accrued severance -- -- -- (22)
$30 $(205) $18 $(185)
The third quarter 2003 income tax benefit of $30 million reflects the recognition for United States income tax purposes of certain prior year foreign exploration expenses.
Sales and other operating revenues in the third quarter of 2003 amounted to $3,230 million compared with $2,724 million in the third quarter of 2002. Capital expenditures in the third quarter of 2003 amounted to $307 million of which $298 million related to exploration and production activities. Capital expenditures in the third quarter of 2002 amounted to $345 million, including $323 million for exploration and production.
Consolidated Financial Information (unaudited)
Three months ended Nine months ended
September 30 September 30
2003 2002 2003 2002
(In millions, except per share amounts)
Sales and other operating
revenues $3,230 $2,724 $10,683 $8,345
Income (loss) from
continuing operations $146 $(105) $398 $155
Discontinued operations
Net gains from asset
sales -- -- 116 --
Income (loss) from
operations -- (31) 53 (2)
Cumulative effect of
accounting change -- -- 7 --
Net income (loss) $146 $(136) $574 $153
Income (loss) per share
from continuing
operations (diluted) $1.64 $(1.19) $4.47 $1.73
Net income (loss) per
share (diluted) $1.64 $(1.54) $6.45 $1.72
Weighted average number
of shares 89.1 88.3 (*) 89.1 89.3
(*) Represents basic shares.
In the preceding discussion, the financial effects of certain transactions are disclosed on an after-tax basis. Management reviews segment earnings on an after-tax basis and uses after-tax amounts in its review of variances in segment earnings. Such after-tax amounts may be considered to be non-GAAP financial measures. Management believes that they are a preferable method of explaining variances in earnings, since they show the entire effect of a transaction rather than only the pre-tax amount. After-tax amounts are determined by applying the appropriate income tax rate in each tax jurisdiction to pre-tax amounts.
The following table contains the pre-tax amounts of items included in net income which are shown on an after-tax basis above (in millions):
Three months ended Nine months ended
September 30 September 30
(unaudited) (unaudited)
2003 2002 2003 2002
United States income tax benefit $ -- $ -- $ -- $ --
Accrued severance and London office
lease costs -- -- (38) --
Asset impairment -- (318) -- (318)
Gains (losses) from asset sales
Exploration and production -- (35) 47 27
Refining and marketing -- 102 (9) 102
Charge for increase in United
Kingdom income tax rate -- -- -- --
Reduction in carrying value of
refining and marketing intangible
assets and accrued severance -- -- -- (35)
$ -- $ (251) $ -- $ (224)
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Third Third Second
Quarter Quarter Quarter
Line 2003 2002 (*) 2003
No. (A) (B) (C)
Income Statement
Revenues and Non-operating
Income
1 Sales and other operating
revenues $ 3,230 $2,724 $ 3,199
Non-operating income
2 Gain (loss) on asset sales -- 68 (9)
3 Equity in income (loss) of
HOVENSA L.L.C. 43 (6) 15
4 Other 23 12 8
5 Total revenues and
non-operating income 3,296 2,798 3,213
Costs and Expenses
6 Cost of products sold 2,194 1,650 2,140
7 Production expenses 207 197 191
8 Marketing expenses 171 144 167
9 Exploration expenses, including
dry holes and lease impairment 59 103 88
10 Other operating expenses 44 40 49
11 General and administrative
expenses 70 70 106
12 Interest expense 73 61 77
13 Depreciation, depletion and
amortization 253 274 270
14 Asset impairment -- 318 --
15 Total costs and expenses 3,071 2,857 3,088
16 Income (loss) from continuing
operations before income taxes 225 (59) 125
17 Provision for income taxes 79 46 62
18 Income (loss) from continuing
operations 146 (105) 63
Discontinued operations
19 Net gain from asset sales -- -- 175
20 Income (loss) from operations -- (31) 14
21 Net income (loss) $146 $(136) $252
Segment Earnings Analysis
22 Exploration and production $124 $(116) $88
23 Refining and marketing 89 70 46
24 Corporate (25) (23) (27)
25 Interest expense (42) (36) (44)
26 Income (loss) from continuing
operations 146 (105) 63
Discontinued operations
27 Net gain from asset sales -- -- 175
28 Income (loss) from operations -- (31) 14
29 Net income (loss) $146 $(136) $252
30 Net Cash Provided by Operating
Activities (**) $99 $433 $571
Capital Expenditures
31 Exploration and production $298 $323 $339
32 Refining and marketing 9 22 28
33 Total capital
expenditures $307 $345 $367
At End of Period
34 Total debt $4,490 $5,083 $4,642
35 Stockholders' equity $4,714 $4,683 $4,573
(*) Reclassified to conform with current period presentation.
(**) Includes changes in working capital.
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Nine Months
Line 2003 2002 (*)
No. Income Statement (A) (B)
Revenues and Non-operating Income
1 Sales and other operating revenues $10,683 $8,345
Non-operating income
2 Gain on asset sales 39 129
3 Equity in income (loss) of HOVENSA
L.L.C. 108 (50)
4 Other 42 62
5 Total revenues and
non-operating income 10,872 8,486
Costs and Expenses
6 Cost of products sold 7,423 5,175
7 Production expenses 589 522
8 Marketing expenses 508 500
9 Exploration expenses, including dry holes
and lease impairment 253 206
10 Other operating expenses 144 122
11 General and administrative expenses 252 192
12 Interest expense 224 194
13 Depreciation, depletion and amortization 799 853
14 Asset impairment -- 318
15 Total costs and expenses 10,192 8,082
16 Income from continuing operations before
income taxes 680 404
17 Provision for income taxes 282 249
18 Income from continuing operations 398 155
Discontinued operations
19 Net gain from asset sales 116 --
20 Income (loss) from operations 53 (2)
21 Cumulative effect of change in accounting
principle, net 7 --
22 Net income $574 $153
23 Net Cash Provided by Operating Activities $1,159 $1,427
Capital Expenditures
24 Exploration and production $958 $1,101
25 Refining and marketing 57 106
26 Total capital expenditures $1,015 $1,207
September 30 December 31
2003 2002
Balance Sheet Information
27 Current assets $2,538 $2,756
28 Investments 1,048 1,622
29 Property, plant and equipment - net 7,942 7,032
30 Other assets 1,683 1,852
31 Total assets $13,211 $13,262
32 Current portion of long-term debt $189 $16
33 Other current liabilities 1,986 2,537
34 Long-term debt 4,301 4,976
35 Deferred liabilities and credits 2,021 1,484
36 Stockholders' equity excluding other
comprehensive loss 4,998 4,503
37 Accumulated other comprehensive loss (284) (254)
38 Total liabilities and
stockholders' equity $13,211 $13,262
(*) Reclassified to conform with current period presentation.
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Third Third Second
Quarter Quarter Quarter
2003 2002 2003
Line (A) (B) (C)
No. Operating Data
Net Production Per Day
Crude oil - barrels
1 United States 41 53 45
2 United Kingdom 78 112 96
3 Equatorial Guinea 21 39 24
4 Norway 22 26 24
5 Denmark 24 20 23
6 Algeria 23 15 15
7 Gabon 11 8 10
8 Indonesia -- 4 1
9 Azerbaijan 2 4 2
10 Colombia -- 21 --
11 Total 222 302 240
Natural gas liquids - barrels
12 United States 12 12 9
13 United Kingdom 4 5 8
14 Norway 1 1 1
15 Indonesia and Thailand 2 3 2
16 Total 19 21 20
Natural gas - mcf
17 United States 216 355 264
18 United Kingdom 262 227 327
19 Denmark 30 30 28
20 Norway 24 28 28
21 Indonesia and Thailand 59 63 48
22 Total 591 703 695
23 Barrels of oil equivalent (*) 339 441 376
Average Selling Price
(including hedging)
Crude oil - per barrel
24 United States $24.33 $26.19 $23.12
25 Foreign 24.72 26.08 24.31
Natural gas liquids - per barrel
26 United States $22.00 $16.08 $21.84
27 Foreign 23.33 19.73 19.44
Natural gas - per mcf
28 United States $3.53 $3.47 $4.09
29 Foreign 2.54 2.17 2.58
Marketing and Refining -
Barrels Per Day
30 Refined products sold 390 355 399
31 Refinery runs (net) 241 174 215
(*) Includes production from properties classified as discontinued
operations of 51 and 14 thousand barrels of oil equivalent per
day in the third quarter of 2002 and the second quarter of 2003,
respectively.
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Nine Months
2003 2002
Line (A) (B)
No. Operating Data
Net Production Per Day
Crude oil - barrels
1 United States 45 56
2 United Kingdom 92 113
3 Equatorial
Guinea 24 39
4 Norway 23 24
5 Denmark 24 21
6 Algeria 19 14
7 Gabon 10 9
8 Indonesia 2 5
9 Azerbaijan 2 4
10 Colombia 4 22
11 Total 245 307
Natural gas liquids - barrels
12 United States 11 13
13 United Kingdom 6 5
14 Norway 1 1
15 Indonesia and Thailand 2 3
16 Total 20 22
Natural gas - mcf
17 United States 266 390
18 United Kingdom 303 275
19 Denmark 31 36
20 Norway 26 25
21 Indonesia and Thailand 54 42
22 Total 680 768
23 Barrels of oil equivalent (*) 378 456
Average Selling Price (including hedging)
Crude oil - per barrel
24 United States $23.97 $24.41
25 Foreign 24.79 24.66
Natural gas liquids - per barrel
26 United States $23.64 $14.73
27 Foreign 22.95 18.05
Natural gas - per mcf
28 United States $4.03 $3.54
29 Foreign 2.73 2.17
Marketing and Refining -
Barrels Per Day
30 Refined products sold 417 376
31 Refinery runs (net) 218 175
(*) Includes production from properties classified as
discontinued operations of 17 and 53 thousand barrels of
oil equivalent per day in the first nine months of 2003 and
2002, respectively.
Contact: Amerada Hess Corporation - J. Wilson (212) 536-8940