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Hess Reports Estimated Results for the Fourth Quarter of 2006
01/31/2007
NEW YORK, Jan 31, 2007 (BUSINESS WIRE) -- Hess Corporation (NYSE: HES)
Hess Corporation reported net income of $359 million for the fourth quarter of 2006 compared with net income of $452 million for the fourth quarter of 2005. For the full year, net income was $1,916 million compared with $1,242 million in 2005. See the following page for a table and description of items affecting the comparability of earnings between periods. The after-tax results by major operating activity were as follows:
Three months ended Year ended
December 31 December 31
---------------------- -----------------
2006* 2005* 2006* 2005
-------------- ------- -------- --------
(In millions, except per share amounts)
Exploration and Production $ 350 $ 298 $ 1,763 $ 1,058
Marketing and Refining 67 229 390 515
Corporate (27) (41) (110) (191)
Interest expense (31) (34) (127) (140)
-------------- ------- -------- --------
Net income $ 359 $ 452 $ 1,916 $ 1,242
============== ======= ======== ========
Net income per share
(diluted)** $ 1.13 $ 1.44 $ 6.07 $ 3.98
============== ======= ======== ========
Weighted average number of
shares (diluted)** 316.4 314.5 315.7 312.1
============== ======= ======== ========
* Unaudited
** Weighted average number of shares and per-share amounts in all
periods reflect the impact of the 3-for-1 stock split on May 31,
2006.
Exploration and Production earnings were $350 million in the fourth quarter of 2006 compared with $298 million in the fourth quarter of 2005. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 366,000 barrels per day in the fourth quarter of 2006 compared with 316,000 barrels per day in the fourth quarter of 2005.
In the fourth quarter of 2006, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $50.76 per barrel, an increase of $16.67 per barrel from the fourth quarter of 2005. The increase primarily reflects reduced hedge positions in 2006. The Corporation's average worldwide natural gas selling price was $5.25 per Mcf in the fourth quarter of 2006, compared to $7.14 per Mcf in the fourth quarter of 2005.
Marketing and Refining earnings were $67 million in the fourth quarter of 2006 compared with $229 million in the fourth quarter of 2005. Refining earnings were $45 million in the fourth quarter of 2006 compared with $83 million in the fourth quarter of 2005 principally reflecting lower refined product margins. Marketing earnings were $17 million in the fourth quarter of 2006 compared with $131 million in the same period of 2005, primarily reflecting lower margins. Earnings from trading operations were $5 million in the fourth quarter of 2006 compared to $15 million in the fourth quarter of 2005.
The following items, on an after-tax basis, are included in net income (in millions):
Three months ended Year ended
December 31 December 31
------------------ ---------------
2006 2005 2006 2005
--------- -------- ------- -------
Exploration and Production
-----------------------------------
Gains from asset sales $ - $ 30 $ 236 $ 41
Income tax adjustments - - (45) 11
Accrued office closing costs - - (18) -
Hurricane related costs - (12) - (26)
Legal settlement - - - 11
Marketing and Refining
-----------------------------------
LIFO inventory liquidation - 25 - 32
Charge related to customer
bankruptcy - (8) - (8)
Corporate
-----------------------------------
Tax on repatriated earnings - - - (72)
Premiums on bond repurchases - (19) - (26)
--------- -------- ------- -------
$ - $ 16 $ 173 $ (37)
========= ======== ======= =======
The gains from asset sales for the year 2006 relate to the sale of certain United States producing properties. During 2006 the United Kingdom increased the supplementary tax on petroleum operations from 10% to 20%. As a result, the Corporation recorded a $45 million adjustment to its United Kingdom deferred tax liability. The year 2006 results also include a charge for vacated leased office space.
Net cash provided by operating activities was $3,491 million in 2006 compared with $1,840 million in 2005. Proceeds from asset sales in 2006 totaled $444 million. Capital and exploratory expenditures for the year 2006 amounted to $4,056 million of which $3,887 million related to Exploration and Production activities. Capital and exploratory expenditures for the year 2005 amounted to $2,490 million, including $2,384 million for Exploration and Production.
At December 31, 2006, cash and cash equivalents totaled $383 million compared with $315 million at December 31, 2005. Total debt was $3,772 million at December 31, 2006 and $3,785 million at December 31, 2005. The Corporation's debt to capitalization ratio at December 31, 2006 was 31.7% compared with 37.6% at the end of 2005.
Hess Corporation will review fourth quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details on the event, refer to the Investor Relations section of our website at www.hess.com.
Hess Corporation, with headquarters in New York, is a global integrated energy company engaged in the exploration for and the development, production, purchase, transportation and sale of crude oil and natural gas. The Corporation also manufactures, purchases, trades and markets refined petroleum and other energy products.
Forward Looking Statements
Certain statements in this release may constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, uncertainties inherent in the measurement and interpretation of geological, geophysical and other technical data.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Fourth Fourth Third
Quarter Quarter Quarter
2006 2005 2006
-------- -------- --------
Income Statement
--------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other
operating revenues $ 7,155 $ 7,059 $ 7,035
Non-operating income
Equity in income of HOVENSA L.L.C. 32 67 70
Gain on asset sales -- 30 --
Other, net 22 (10) 25
-------- -------- --------
Total revenues and non-operating income 7,209 7,146 7,130
-------- -------- --------
Costs and Expenses
Cost of products sold (excluding items
shown separately below) 5,058 5,367 4,899
Production expenses 358 284 323
Marketing expenses 254 238 230
Exploration expenses, including dry holes
and lease impairment 140 86 221
Other operating expenses 35 37 34
General and administrative expenses 117 103 115
Interest expense 51 55 49
Depreciation, depletion and amortization 353 258 323
-------- -------- --------
Total costs and expenses 6,366 6,428 6,194
-------- -------- --------
Income before income taxes 843 718 936
Provision for income taxes 484 266 639
-------- -------- --------
Net income $ 359 $ 452 $ 297
======== ======== ========
Preferred stock dividends 8 12 12
-------- -------- --------
Net income applicable to common
stockholders $ 351 $ 440 $ 285
======== ======== ========
Supplemental Income Statement Information
--------------------------------------------
Foreign currency gains (losses) net, after-
tax $ 5 $ 2 $ --
Capitalized interest 25 23 25
Cash Flow Information
--------------------------------------------
Net cash provided by operating activities
(*) $ 779 $ 289 $ 828
Capital and Exploratory Expenditures
--------------------------------------------
Exploration and Production
United States $ 269 $ 95 $ 252
International 715 654 531
-------- -------- --------
Total Exploration and Production 984 749 783
Marketing, Refining and Corporate 47 32 47
-------- -------- --------
Total Capital and Exploratory
Expenditures $ 1,031 $ 781 $ 830
======== ======== ========
Exploration expenses charged to income
included above
United States $ 42 $ 28 $ 19
International 28 29 23
-------- -------- --------
$ 70 $ 57 $ 42
======== ======== ========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Year
-----------------
2006 2005
-------- --------
Income Statement
----------------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating
revenues $28,067 $22,747
Non-operating income
Equity in income of HOVENSA L.L.C. 203 376
Gain on asset sales 369 48
Other, net 81 84
-------- --------
Total revenues and non-operating income 28,720 23,255
-------- --------
Costs and Expenses
Cost of products sold (excluding items shown
separately below) 19,912 17,041
Production expenses 1,250 1,007
Marketing expenses 940 842
Exploration expenses, including dry holes
and lease impairment 552 397
Other operating expenses 130 136
General and administrative expenses 471 357
Interest expense 201 224
Depreciation, depletion and amortization 1,224 1,025
-------- --------
Total costs and expenses 24,680 21,029
-------- --------
Income before income taxes 4,040 2,226
Provision for income taxes 2,124 984
-------- --------
Net income $ 1,916 $ 1,242
======== ========
Preferred stock dividends 44 48
-------- --------
Net income applicable to common stockholders $ 1,872 $ 1,194
======== ========
Supplemental Income Statement Information
----------------------------------------------------
Foreign currency gains (losses) net, after-tax $ 10 $ 18
Capitalized interest 100 80
Cash Flow Information
----------------------------------------------------
Net cash provided by operating activities (*) $ 3,491 $ 1,840
Capital and Exploratory Expenditures
----------------------------------------------------
Exploration and Production
United States $ 908 $ 353
International 2,979 2,031
-------- --------
Total Exploration and Production 3,887 2,384
Marketing, Refining and Corporate 169 106
-------- --------
Total Capital and Exploratory Expenditures $ 4,056 $ 2,490
======== ========
Exploration expenses charged to income included above
United States $ 110 $ 89
International 102 60
-------- --------
$ 212 $ 149
======== ========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
December 31 December 31
2006 2005
------------- -------------
Balance Sheet Information
------------------------------------------
Cash and cash equivalents $ 383 $ 315
Other current assets 5,347 4,975
Investments 1,200 1,389
Property, plant and equipment - net 12,310 9,512
Other long-term assets 3,082 2,924
------------- -------------
Total assets $ 22,322 $ 19,115
============= =============
Current maturities of long-term debt $ 27 $ 26
Other current liabilities 6,579 6,421
Long-term debt 3,745 3,759
Other long-term liabilities 3,860 2,623
Stockholders' equity excluding other
comprehensive income (loss) 9,675 7,812
Accumulated other comprehensive income
(loss) (1,564) (1,526)
------------- -------------
Total liabilities and stockholders'
equity $ 22,322 $ 19,115
============= =============
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Fourth Quarter 2006
------------------------------
United
States International Total
------- -------------- -------
Sales and other operating revenues $244 $1,438 $1,682
Non-operating income 3 18 21
------- -------------- -------
Total revenues 247 1,456 1,703
------- -------------- -------
Costs and expenses
Production expenses, including
related taxes 59 299 358
Exploration expenses, including dry
holes and lease impairment 94 46 140
General, administrative and other
expenses 30 16 46
Depreciation, depletion and
amortization 31 305 336
------- -------------- -------
Total costs and expenses 214 666 880
------- -------------- -------
Results of operations before income
taxes 33 790 823
Provision for income taxes 12 461 473
------- -------------- -------
Results of operations $21 $329 $350
======= ============== =======
Fourth Quarter 2005
------------------------------
United
States International Total
------- -------------- -------
Sales and other operating revenues $274 $826 $1,100
Non-operating income 3 28 31
------- -------------- -------
Total revenues 277 854 1,131
------- -------------- -------
Costs and expenses
Production expenses, including
related taxes 70 214 284
Exploration expenses, including dry
holes and lease impairment 34 52 86
General, administrative and other
expenses 21 22 43
Depreciation, depletion and
amortization 24 216 240
------- -------------- -------
Total costs and expenses 149 504 653
------- -------------- -------
Results of operations before income
taxes 128 350 478
Provision for income taxes 43 137 180
------- -------------- -------
Results of operations $85 $213 $298
======= ============== =======
Third Quarter 2006
------------------------------
United
States International Total
------- -------------- -------
Sales and other operating revenues $314 $1,351 $1,665
Non-operating income 14 1 15
------- -------------- -------
Total revenues 328 1,352 1,680
------- -------------- -------
Costs and expenses
Production expenses, including
related taxes 55 268 323
Exploration expenses, including dry
holes and lease impairment 164 57 221
General, administrative and other
expenses 21 25 46
Depreciation, depletion and
amortization 35 271 306
------- -------------- -------
Total costs and expenses 275 621 896
------- -------------- -------
Results of operations before income
taxes 53 731 784
Provision for income taxes 20 558 578
------- -------------- -------
Results of operations $33 $173 $206
======= ============== =======
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Year 2006
-------------------------------
United
States International Total
-------- ------------- --------
Sales and other operating revenues $ 1,232 $ 5,292 $ 6,524
Non-operating income 385 43 428
-------- ------------- --------
Total revenues 1,617 5,335 6,952
-------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 221 1,029 1,250
Exploration expenses, including dry
holes and lease impairment 353 199 552
General, administrative and other
expenses 95 114 209
Depreciation, depletion and
amortization 127 1,032 1,159
-------- ------------- --------
Total costs and expenses 796 2,374 3,170
-------- ------------- --------
Results of operations before income
taxes 821 2,961 3,782
Provision for income taxes 296 1,723 2,019
-------- ------------- --------
Results of operations $ 525 $ 1,238 $ 1,763
======== ============= ========
Year 2005
-------------------------------
United
States International Total
-------- ------------- --------
Sales and other operating revenues $ 1,097 $ 3,113 $ 4,210
Non-operating income (expenses) (1) 95 94
-------- ------------- --------
Total revenues 1,096 3,208 4,304
-------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 253 754 1,007
Exploration expenses, including dry
holes and lease impairment 233 164 397
General, administrative and other
expenses 74 66 140
Depreciation, depletion and
amortization 145 820 965
-------- ------------- --------
Total costs and expenses 705 1,804 2,509
-------- ------------- --------
Results of operations before income
taxes 391 1,404 1,795
Provision for income taxes 141 596 737
-------- ------------- --------
Results of operations $ 250 $ 808 $ 1,058
======== ============= ========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Fourth Fourth Third
Quarter Quarter Quarter
2006 2005 2006
-------- ------- --------
Operating Data
--------------------------------------------
Net Production Per Day
-------------------------------------------
Crude oil - barrels
United States 29 37 34
Europe 111 105 102
Africa 89 66 86
Asia and other 13 10 13
-------- ------- --------
Total 242 218 235
======== ======= ========
Natural gas liquids - barrels
United States 9 9 11
Europe 7 4 5
-------- ------- --------
Total 16 13 16
======== ======= ========
Natural gas - mcf
United States 91 112 109
Europe 336 254 274
Asia and other 223 147 226
-------- ------- --------
Total 650 513 609
======== ======= ========
Barrels of oil equivalent 366 316 352
======== ======= ========
Average Selling Price
-------------------------------------------
Crude oil - per barrel (including hedging)
United States $ 53.64 $30.95 $ 65.41
Europe 50.01 33.50 59.97
Africa 49.77 34.08 54.52
Asia and other 57.09 55.30 67.24
Worldwide 50.76 34.09 58.81
Crude oil - per barrel (excluding hedging)
United States $ 53.64 $54.85 $ 65.41
Europe 51.79 53.10 62.79
Africa 57.11 54.72 66.43
Asia and other 57.09 55.30 67.24
Worldwide 54.46 53.99 64.73
Natural gas liquids - per barrel
United States $ 43.68 $48.67 $ 49.17
Europe 45.19 44.60 50.30
Worldwide 44.33 47.17 49.54
Natural gas - per mcf
United States $ 6.27 $11.75 $ 5.99
Europe 5.55 6.91 5.37
Asia and other 4.39 4.04 3.91
Worldwide 5.25 7.14 4.94
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Year
-----------------
2006 2005
-------- --------
Operating Data
----------------------------------------------------
Net Production Per Day
---------------------------------------------------
Crude oil - barrels
United States 36 44
Europe 109 110
Africa 85 67
Asia and other 12 7
-------- --------
Total 242 228
======== ========
Natural gas liquids - barrels
United States 10 12
Europe 5 4
-------- --------
Total 15 16
======== ========
Natural gas - mcf
United States 110 137
Europe 283 274
Asia and other 219 133
-------- --------
Total 612 544
======== ========
Barrels of oil equivalent 359 335
======== ========
Average Selling Price
---------------------------------------------------
Crude oil - per barrel (including hedging)
United States $60.45 $ 32.64
Europe 56.19 33.13
Africa 51.18 32.10
Asia and other 61.52 54.71
Worldwide 55.31 33.38
Crude oil - per barrel (excluding hedging)
United States $60.45 $ 51.16
Europe 58.46 52.22
Africa 62.80 51.70
Asia and other 61.52 54.71
Worldwide 60.41 51.94
Natural gas liquids - per barrel
United States $46.22 $ 38.50
Europe 47.30 37.13
Worldwide 46.59 38.08
Natural gas - per mcf
United States $ 6.59 $ 7.93
Europe 6.20 5.29
Asia and other 4.05 4.02
Worldwide 5.50 5.65
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL HEDGING INFORMATION
(UNAUDITED)
The following is a summary of the Corporation's outstanding crude
oil hedges at December 31, 2006:
Brent Crude Oil*
---------------------------------
Maturity Average Selling Thousands of
Price barrels per day
--------------------- --------------- -----------------
2007 $ 25.85 24
2008 25.56 24
2009 25.54 24
2010 25.78 24
2011 26.37 24
2012 26.90 24
* There were no WTI crude oil or natural gas hedges outstanding at
December 31, 2006.
The after-tax losses from crude oil hedges were $57 million in
the fourth quarter of 2006, $269 million in fourth quarter of
2005, and $81 million in the third quarter of 2006. Hedge
losses totaled $285 million and $989 million for the years ended
December 31, 2006 and 2005, respectively. The after-tax
deferred hedge loss included in accumulated other comprehensive
income at December 31, 2006 amounted to $1.3 billion.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Fourth Fourth Third
Quarter Quarter Quarter
2006 2005 2006
-------- -------- --------
Financial Information (in millions of dollars)
----------------------------------------------------
Marketing and Refining Earnings
--------------------------------
Income before income taxes $ 105 $ 358 $ 245
Provision for income taxes 38 129 92
-------- -------- --------
Marketing and Refining
Earnings $ 67 $ 229 $ 153
======== ======== ========
Summary of Marketing and Refining Earnings
--------------------------------------------------
Refining $ 45 $ 83 $ 64
Marketing 17 131 63
Trading 5 15 26
-------- -------- --------
Total Marketing and Refining
Earnings $ 67 $ 229 $ 153
======== ======== ========
---------------------------------- -----------------------------------
Operating Data (in thousands unless noted)
----------------------------------------------------
Refined Product Sales (barrels per day)
--------------------------------------------------
Gasoline 210 218 212
Distillates 169 170 130
Residuals 57 78 54
Other 33 53 37
-------- -------- --------
Total 469 519 433
======== ======== ========
Refinery Throughput (barrels per day)
--------------------------------------------------
HOVENSA - Crude runs 469 482 475
HOVENSA - Hess 50% share 234 241 237
Port Reading 64 64 62
---------
Refinery Utilization Refinery
Capacity
-------------------------------- ---------
HOVENSA (barrels
per day)
Crude 500 93.7% 96.3% 94.9%
FCC 150 91.2% 87.1% 92.0%
Coker 58 89.8% 85.3% 88.3%
Port Reading 65 98.1% 98.5% 95.8%
---------
Retail Marketing
--------------------------------
Number of retail stations (a) 1,350 1,354 1,347
Convenience store revenue (in millions of
dollars) (b) $ 253 $ 241 $ 271
Average gasoline volume per station
(gallons per month) (b) 202 199 216
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Year
-----------------
2006 2005
-------- --------
Financial Information (in millions of dollars)
-----------------------------------------------------
Marketing and Refining Earnings
---------------------------------------
Income before income taxes $ 614 $ 813
Provision for income taxes 224 298
-------- --------
Marketing and Refining Earnings $ 390 $ 515
======== ========
Summary of Marketing and Refining Earnings
---------------------------------------------------
Refining $ 236 $ 346
Marketing 108 136
Trading 46 33
-------- --------
Total Marketing and Refining Earnings $ 390 $ 515
======== ========
----------------------------------------------------------------------
Operating Data (in thousands unless noted)
-----------------------------------------------------
Refined Product Sales (barrels per day)
---------------------------------------
Gasoline 218 213
Distillates 144 136
Residuals 60 64
Other 37 43
-------- --------
Total 459 456
======== ========
Refinery Throughput (barrels per day)
---------------------------------------------------
HOVENSA - Crude runs 448 461
HOVENSA - Hess 50% share 224 231
Port Reading 63 55
-----------
Refinery Utilization Refinery
Capacity
--------------------------------------- -----------
HOVENSA (barrels
per day)
Crude 500 89.7% 92.2%
FCC 150 84.3% 81.9%
Coker 58 84.3% 92.8%
Port Reading 65 97.4% 85.3%
-----------
Retail Marketing
---------------------------------------------------
Number of retail stations (a) 1,350 1,354
Convenience store revenue (in millions of dollars)
(b) $1,015 $ 973
Average gasoline volume per station (gallons per
month) (b) 208 204
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
SOURCE: Hess Corporation
Hess Corporation Investor:
Jay Wilson, 212-536-8940
or
Media:
James Allen, 212-536-8550