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Fourth Quarter Highlights:
-- Net Income was $510 million compared with $359 million in fourth quarter 2006
-- Cash flows from operations were $806 million compared with $779 million in fourth quarter 2006
-- Oil and gas production was 390,000 barrels per day, up from 366,000 in fourth quarter 2006
-- Reserve replacement was 167 percent in 2007; reserve life increased to 9.5 years
NEW YORK, Jan 30, 2008 (BUSINESS WIRE) -- Hess Corporation (NYSE: HES) reported net income of $510 million for the fourth quarter of 2007 compared with net income of $359 million for the fourth quarter of 2006. The after-tax results by major operating activity were as follows:
Three months ended Year ended
December 31 (unaudited) December 31 (unaudited)
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(In millions, except per share amounts)
Exploration and
Production $ 583 $ 350 $ 1,842 $ 1,763
Marketing and Refining 31 67 300 394
Corporate (59) (27) (150) (110)
Interest expense (45) (31) (160) (127)
----------- ----------- ----------- -----------
Net income $ 510 $ 359 $ 1,832 $ 1,920
=========== =========== =========== ===========
Net income per share
(diluted) $ 1.59 $ 1.13 $ 5.74 $ 6.08
=========== =========== =========== ===========
Weighted average
number of shares
(diluted) 321.6 316.4 319.3 315.7
=========== =========== =========== ===========
Note: See the following page for a table of items affecting the comparability of earnings between periods.
Exploration and Production earnings were $583 million in the fourth quarter of 2007 compared with $350 million in the fourth quarter of 2006. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 390,000 barrels per day in the fourth quarter of 2007, an increase of 24,000 from the fourth quarter of 2006. In the fourth quarter of 2007, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $76.11 per barrel, an increase of $25.35 per barrel from the fourth quarter of 2006. The Corporation's average worldwide natural gas selling price was $6.93 per Mcf in the fourth quarter of 2007, an increase of $1.68 from the fourth quarter of 2006.
Oil and gas proved reserves increased to 1,330 million barrels of oil equivalent at the end of 2007 from 1,243 million barrels at the end of 2006. During 2007, the Corporation added 234 million new barrels of oil equivalent to proved reserves. These additions, which are subject to final review, replaced approximately 167 percent of the Corporation's 2007 production and increased its reserve life to 9.5 years.
Marketing and Refining earnings were $31 million in the fourth quarter of 2007 compared with $67 million in the fourth quarter of 2006 reflecting reduced margins and trading results. Refining earnings were $27 million in the fourth quarter of 2007 compared with $45 million in the fourth quarter of 2006. Marketing earnings were $19 million in the fourth quarter of 2007 compared with $17 million in the fourth quarter of 2006. Trading activities generated a loss of $15 million in the fourth quarter of 2007 compared with income of $5 million in the fourth quarter of 2006.
The following items, on an after-tax basis, are included in net income (in millions):
Three months ended Year ended
December 31 December 31
------------------ -----------------
2007 2006 2007 2006
--------- -------- ------- -------
Exploration and Production
--------------------------------
Gains from asset sales $ - $ - $ 15 $ 236
Asset impairments (56) - (56) -
Estimated production
imbalance settlements - - (33) -
Income tax adjustments - - - (45)
Accrued office closing costs - - - (18)
Marketing and Refining
--------------------------------
LIFO inventory liquidation 24 - 24 -
Corporate
--------------------------------
Legal matters (25) - (25) -
--------- ------- ------- -------
$ (57) $ - $ (75) $ 173
========= ======= ======= =======
In the fourth quarter of 2007, the Corporation recorded an after-tax charge of $56 million related to asset impairments at two mature fields in the U.K. North Sea, income of $24 million due to the partial liquidation of prior year LIFO inventories and a charge of $25 million related to MTBE litigation.
Net cash provided by operating activities was $3,507 million for the year 2007 compared with $3,491 million for the year 2006. Capital and exploratory expenditures for 2007 were $3,926 million, of which $3,786 million related to Exploration and Production operations. Capital and exploratory expenditures for 2006 were $4,056 million.
At December 31, 2007, cash and cash equivalents totaled $607 million compared with $383 million at December 31, 2006. Total debt was $3,980 million at December 31, 2007 and $3,772 million at December 31, 2006. The Corporation's debt to capitalization ratio at December 31, 2007 was 28.9 percent compared with 31.6 percent at the end of 2006.
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, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. More information on Hess Corporation is available at www.hess.com.
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
2007 2006 2007
-------- -------- ---------
Income Statement
-----------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and
other operating revenues $ 9,456 $ 7,155 $ 7,451
Equity in income of HOVENSA L.L.C. 20 29 19
Other, net 24 22 34
-------- -------- ---------
Total revenues and non-operating
income 9,500 7,206 7,504
-------- -------- ---------
Costs and Expenses
Cost of products sold (excluding items
shown separately below) 6,651 5,058 5,322
Production expenses 463 358 394
Marketing expenses 243 254 238
Exploration expenses, including dry
holes and lease impairment 201 140 131
Other operating expenses 46 33 45
General and administrative expenses 208 117 133
Interest expense 71 51 59
Depreciation, depletion and
amortization 530 353 365
-------- -------- ---------
Total costs and expenses 8,413 6,364 6,687
-------- -------- ---------
Income before income taxes 1,087 842 817
Provision for income taxes 577 483 422
-------- -------- ---------
Net income $ 510 $ 359 $ 395
======== ======== =========
Preferred stock dividends - 8 -
-------- -------- ---------
Net income applicable to common
stockholders $ 510 $ 351 $ 395
======== ======== =========
Supplemental Income Statement Information
-----------------------------------------
Foreign currency gains (losses),
after-tax $ 1 $ 5 $ 1
Capitalized interest 1 25 18
Cash Flow Information
-----------------------------------------
Net cash provided by operating
activities (*) $ 806 $ 779 $ 863
Capital and Exploratory Expenditures
-----------------------------------------
Exploration and Production
United States $ 291 $ 269 $ 270
International 577 715 530
-------- -------- ---------
Total Exploration and Production 868 984 800
Marketing, Refining and Corporate 46 47 38
-------- -------- ---------
Total Capital and Exploratory
Expenditures $ 914 $ 1,031 $ 838
======== ======== =========
Exploration expenses charged to income
included above
United States $ 43 $ 42 $ 67
International 66 28 36
-------- -------- ---------
$ 109 $ 70 $ 103
======== ======== =========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Year Ended
December 31,
----------------
2007 2006
-------- -------
Income Statement
-----------------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating
revenues $31,647 $28,067
Equity in income of HOVENSA L.L.C. 176 201
Gain on asset sales 21 369
Other, net 80 81
-------- -------
Total revenues and non-operating income 31,924 28,718
-------- -------
Costs and Expenses
Cost of products sold (excluding items shown
separately below) 22,573 19,912
Production expenses 1,581 1,250
Marketing expenses 944 940
Exploration expenses, including dry holes and
lease impairment 515 552
Other operating expenses 161 122
General and administrative expenses 614 471
Interest expense 256 201
Depreciation, depletion and amortization 1,576 1,224
-------- -------
Total costs and expenses 28,220 24,672
-------- -------
Income before income taxes 3,704 4,046
Provision for income taxes 1,872 2,126
-------- -------
Net income $ 1,832 $ 1,920
======== =======
Preferred stock dividends - 44
-------- -------
Net income applicable to common stockholders $ 1,832 $ 1,876
======== =======
Supplemental Income Statement Information
-----------------------------------------------------
Foreign currency gains (losses), after-tax $ (9) $ 10
Capitalized interest 50 100
Cash Flow Information
-----------------------------------------------------
Net cash provided by operating
activities (*) $ 3,507 $ 3,491
Capital and Exploratory Expenditures
-----------------------------------------------------
Exploration and Production
United States $ 1,603 $ 908
International 2,183 2,979
-------- -------
Total Exploration and Production 3,786 3,887
Marketing, Refining and Corporate 140 169
-------- -------
Total Capital and Exploratory Expenditures $ 3,926 $ 4,056
======== =======
Exploration expenses charged to income included above
United States $ 192 $ 110
International 156 102
-------- -------
$ 348 $ 212
======== =======
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
December 31,
-----------------
2007 2006
-------- --------
Balance Sheet Information
Cash and cash equivalents $ 607 $ 383
Other current assets 6,319 5,465
Investments 1,117 1,243
Property, plant and equipment - net 14,634 12,308
Other long-term assets 3,454 3,043
-------- --------
Total assets $26,131 $22,442
======== ========
Current maturities of long-term debt $ 62 $ 27
Other current liabilities 7,962 6,712
Long-term debt 3,918 3,745
Other long-term liabilities 4,415 3,811
Stockholders' equity excluding other
comprehensive income (loss) 11,615 9,711
Accumulated other comprehensive income (loss) (1,841) (1,564)
-------- --------
Total liabilities and stockholders' equity $26,131 $22,442
======== ========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Fourth Quarter 2007
---------------------------------
United
States International Total
------- -------------- ---------
Sales and other operating revenues $ 401 $ 2,037 $ 2,438
Non-operating income (loss) (1) 14 13
------- -------------- ---------
Total revenues and non-
operating income 400 2,051 2,451
------- -------------- ---------
Costs and expenses
Production expenses, including
related taxes 71 392 463
Exploration expenses, including
dry holes and lease impairment 122 79 201
General, administrative and other
expenses 36 38 74
Depreciation, depletion and
amortization 58 454 512
------- -------------- ---------
Total costs and expenses 287 963 1,250
------- -------------- ---------
Results of operations before
income taxes 113 1,088 1,201
Provision for income taxes 44 574 618
------- -------------- ---------
Results of operations $ 69 $ 514 $ 583
======= ============== =========
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 and non-
operating income 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
======= ============== =========
Third Quarter 2007
---------------------------------
United
States International Total
------- -------------- ---------
Sales and other operating revenues $ 296 $ 1,451 $ 1,747
Non-operating income 1 29 30
------- -------------- ---------
Total revenues and non-
operating income 297 1,480 1,777
------- -------------- ---------
Costs and expenses
Production expenses, including
related taxes 80 314 394
Exploration expenses, including
dry holes and lease impairment 79 52 131
General, administrative and other
expenses 27 37 64
Depreciation, depletion and
amortization 48 297 345
------- -------------- ---------
Total costs and expenses 234 700 934
------- -------------- ---------
Results of operations before
income taxes 63 780 843
Provision for income taxes 25 404 429
------- -------------- ---------
Results of operations $ 38 $ 376 $ 414
======= ============== =========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Year Ended December 31, 2007
-----------------------------
United
States International Total
------- -------------- ------
Sales and other operating revenues $1,211 $ 6,287 $7,498
Non-operating income 8 57 65
------- -------------- ------
Total revenues and non-operating
income 1,219 6,344 7,563
------- -------------- ------
Costs and expenses
Production expenses, including
related taxes 280 1,301 1,581
Exploration expenses, including dry
holes and lease impairment 302 213 515
General, administrative and other
expenses 130 127 257
Depreciation, depletion and
amortization 187 1,316 1,503
------- -------------- ------
Total costs and expenses 899 2,957 3,856
------- -------------- ------
Results of operations before income
taxes 320 3,387 3,707
Provision for income taxes 125 1,740 1,865
------- -------------- ------
Results of operations $ 195 $ 1,647 $1,842
======= ============== ======
Year Ended December 31, 2006
-----------------------------
United
States International Total
------- -------------- ------
Sales and other operating revenues $1,232 $ 5,292 $6,524
Non-operating income 385 43 428
------- -------------- ------
Total revenues and non-operating
income 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
======= ============== ======
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Fourth Fourth Third
Quarter Quarter Quarter
2007 2006 2007
--------- --------- ---------
Operating Data
-------------------------------------
Net Production Per Day
----------------------------------
Crude oil - barrels
United States 34 29 31
Europe 83 111 83
Africa 121 89 123
Asia and other 22 13 20
--------- --------- ---------
Total 260 242 257
========= ========= =========
Natural gas liquids - barrels
United States 11 9 11
Europe 5 7 3
--------- --------- ---------
Total 16 16 14
========= ========= =========
Natural gas - mcf
United States 91 91 87
Europe 290 336 188
Asia and other 300 223 241
--------- --------- ---------
Total 681 650 516
========= ========= =========
Barrels of oil equivalent 390 366 357
========= ========= =========
Average Selling Price
----------------------------------
Crude oil - per barrel
(including hedging)
United States $ 86.22 $ 53.64 $ 73.20
Europe 74.00 50.01 62.06
Africa 72.85 49.77 64.38
Asia and other 86.30 57.09 70.69
Worldwide 76.11 50.76 65.26
Crude oil - per barrel
(excluding hedging)
United States $ 86.22 $ 53.64 $ 73.20
Europe 74.00 51.79 62.06
Africa 84.84 57.11 73.49
Asia and other 86.30 57.09 70.69
Worldwide 81.87 54.46 69.85
Natural gas liquids - per
barrel
United States $ 63.51 $ 43.68 $ 51.27
Europe 70.86 45.19 48.44
Worldwide 66.13 44.33 50.58
Natural gas - per mcf
United States $ 6.47 $ 6.27 $ 5.80
Europe 8.92 5.55 6.09
Asia and other 5.13 4.39 4.69
Worldwide 6.93 5.25 5.38
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Year Ended December 31,
-----------------------
2007 2006
----------- ----------
Operating Data
---------------------------------------------
Net Production Per Day
------------------------------------------
Crude oil - barrels
United States 31 36
Europe 93 109
Africa 115 85
Asia and other 21 12
----------- ----------
Total 260 242
=========== ==========
Natural gas liquids - barrels
United States 10 10
Europe 5 5
----------- ----------
Total 15 15
=========== ==========
Natural gas - mcf
United States 88 110
Europe 259 283
Asia and other 266 219
----------- ----------
Total 613 612
=========== ==========
Barrels of oil equivalent 377 359
=========== ==========
Average Selling Price
------------------------------------------
Crude oil - per barrel (including hedging)
United States $ 69.23 $ 60.45
Europe 60.99 56.19
Africa 62.04 51.18
Asia and other 72.17 61.52
Worldwide 63.44 55.31
Crude oil - per barrel (excluding hedging)
United States $ 69.23 $ 60.45
Europe 60.99 58.46
Africa 71.71 62.80
Asia and other 72.17 61.52
Worldwide 67.79 60.41
Natural gas liquids - per barrel
United States $ 51.89 $ 46.22
Europe 57.20 47.30
Worldwide 53.72 46.59
Natural gas - per mcf
United States $ 6.67 $ 6.59
Europe 6.13 6.20
Asia and other 4.71 4.05
Worldwide 5.60 5.50
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, 2007:
Brent Crude Oil*
-------------------------------------
Average Thousands of
Maturity Selling Price barrels per day
------------ -------------------- ---------------
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, 2007.
The after-tax losses from crude oil hedges were $89 million in the fourth quarter of 2007 and $57 million in the fourth quarter of 2006. After-tax hedge losses totaled $244 million and $285 million for the years ended December 31, 2007 and 2006, respectively. The after-tax deferred hedge loss included in accumulated other comprehensive income at December 31, 2007 amounted to $1.7 billion.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Fourth Fourth Third
Quarter Quarter Quarter
2007 2006 2007
------- ------- -------
Financial Information (in millions of dollars)
----------------------------------------------
Marketing and Refining Earnings
----------------------------------------------
Income before income taxes $ 51 $ 104 $ 75
Provision for income taxes 20 37 29
------- ------- -------
Marketing and Refining Earnings $ 31 $ 67 $ 46
======= ======= =======
Summary of Marketing and Refining Earnings
----------------------------------------------
Refining $ 27 $ 45 $ 25
Marketing 19 17 21
Trading (15) 5 -
------- ------- -------
Total Marketing and Refining Earnings $ 31 $ 67 $ 46
======= ======= =======
----------------------------------------------------------------------
Operating Data (in thousands unless noted)
----------------------------------------------
Refined Product Sales (barrels per day)
----------------------------------------------
Gasoline 205 210 216
Distillates 163 169 134
Residuals 57 57 45
Other 37 33 42
------- ------- -------
Total 462 469 437
======= ======= =======
Refinery Throughput (barrels per day)
----------------------------------------------
HOVENSA - Crude runs 488 469 459
HOVENSA - Hess 50% share 244 234 230
Port Reading 63 64 61
Refinery Refinery
Utilization Capacity
----------------- ----------------------------
HOVENSA (barrels per day)
Crude 500 97.6% 93.7% 91.9%
FCC 150 84.9% 91.2% 82.4%
Coker 58 99.3% 89.8% 92.6%
Port Reading 65 96.3% 98.1% 93.8%
----------------------------
Retail Marketing
----------------------------------------------
Number of retail stations (a) 1,371 1,350 1,362
Convenience store revenue (in millions
of dollars) (b) $ 255 $ 253 $ 279
Average gasoline volume per station
(gallons per month) (b) 209 202 232
(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 Ended December 31,
-----------------------
2007 2006
---------- -----------
Financial Information (in millions of dollars)
-----------------------------------------------
Marketing and Refining Earnings
-----------------------------------------------
Income before income taxes $ 481 $ 620
Provision for income taxes 181 226
---------- -----------
Marketing and Refining Earnings $ 300 $ 394
========== ===========
Summary of Marketing and Refining Earnings
-----------------------------------------------
Refining $ 193 $ 240
Marketing 83 108
Trading 24 46
---------- -----------
Total Marketing and Refining Earnings $ 300 $ 394
========== ===========
----------------------------------------------------------------------
Operating Data (in thousands unless noted)
-----------------------------------------------
Refined Product Sales (barrels per day)
-----------------------------------------------
Gasoline 210 218
Distillates 147 144
Residuals 62 60
Other 32 37
---------- -----------
Total 451 459
========== ===========
Refinery Throughput (barrels per day)
-----------------------------------------------
HOVENSA - Crude runs 454 448
HOVENSA - Hess 50%
share 227 224
Port Reading 61 63
Refinery Utilization Refinery Capacity
---------------------------- -----------------
HOVENSA (barrels per day)
Crude 500 90.8% 89.7%
FCC 150 87.1% 84.3%
Coker 58 83.4% 84.3%
Port Reading 65 93.2% 97.4%
-----------------
Retail Marketing
----------------------------
Number of retail stations (a) 1,371 1,350
Convenience store revenue (in millions of
dollars) (b) $ 1,051 $ 1,015
Average gasoline volume per station
(gallons per month) (b) 215 208
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
SOURCE: Hess Corporation
Hess Corporation
Investors:
Jay Wilson, 212-536-8940
or
Media:
Jon Pepper, 212-536-8550