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Hess Reports Estimated Results for the Second Quarter of 2008
07/30/2008
Second Quarter Highlights:
- Net Income was $900 million compared with $557 million in second quarter 2007
- Cash flows from operations were $1.7 billion compared with $1.2 billion in second quarter 2007
- Oil and gas production was 393,000 barrels per day, up from 378,000 in second quarter 2007
- Debt to capitalization ratio decreased to 26.2 percent at June 30, 2008, from 28.9 percent at December 31, 2007
NEW YORK, Jul 30, 2008 (BUSINESS WIRE) -- Hess Corporation (NYSE: HES) reported net income of $900 million for the second quarter of 2008 compared with net income of $557 million for the second quarter of 2007. The after-tax results by major operating activity were as follows:
Three Months Ended Six Months Ended
June 30, (unaudited) June 30, (unaudited)
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
(In millions, except per share amounts)
Exploration and Production $ 1,025 $ 505 $ 1,849 $ 845
Marketing and Refining (52) 122 (36) 223
Corporate (33) (32) (72) (63)
Interest expense (40) (38) (82) (78)
---------- ---------- ---------- ----------
Net income $ 900 $ 557 $ 1,659 $ 927
========== ========== ========== ==========
Net income per share
(diluted) $ 2.76 $ 1.75 $ 5.11 $ 2.92
========== ========== ========== ==========
Weighted average number of
shares (diluted) 326.2 318.6 325.0 317.9
========== ========== ========== ==========
Note: See the following page for a table of items affecting the comparability of earnings between periods.
Exploration and Production earnings were $1,025 million in the second quarter of 2008 compared with $505 million in the second quarter of 2007. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 393,000 barrels per day in the second quarter of 2008, an increase of 4% from the second quarter of 2007. In the second quarter of 2008, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $104.29 per barrel compared with $60.05 per barrel in the second quarter of 2007. The Corporation's average worldwide natural gas selling price, including the effect of hedging, was $7.81 per Mcf in the second quarter of 2008 compared with $4.88 per Mcf in the second quarter of 2007.
Marketing and Refining generated a loss of $52 million in the second quarter of 2008 compared with income of $122 million in the second quarter of 2007, primarily reflecting lower margins and trading results. Refining earnings were $3 million in the second quarter of 2008 compared with $87 million in the second quarter of 2007. Marketing results were a loss of $40 million in the second quarter of 2008 compared with breakeven results in the second quarter of 2007. Trading operations generated a loss of $15 million in the second quarter of 2008 compared with income of $35 million in the second quarter of 2007.
The following items, on an after-tax basis, are included in net income
(in millions):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Exploration and Production
------------------------------
Gains from asset sales $- $15 $- $15
Net cash provided by operating activities was $1,691 million in the second quarter of 2008 compared with $1,199 million in the second quarter of 2007. Capital and exploratory expenditures for the second quarter of 2008 amounted to $1,240 million, of which $1,205 million related to Exploration and Production operations. Capital and exploratory expenditures for the second quarter of 2007 amounted to $993 million, of which $959 million related to Exploration and Production operations.
At June 30, 2008, cash and cash equivalents totaled $1,479 million compared with $607 million at December 31, 2007. Total debt was $3,945 million at June 30, 2008 and $3,980 million at December 31, 2007. The Corporation's debt to capitalization ratio at June 30, 2008 was 26.2 percent compared with 28.9 percent at the end of 2007.
Hess Corporation will review second 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 leading global independent energy company engaged in the exploration for and production of crude oil and natural gas, as well as in refining and marketing refined petroleum products, natural gas and electricity. 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)
Second Second First
Quarter Quarter Quarter
2008 2007 2008
---------- ---------- ----------
Income Statement
-------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and
other operating revenues $ 11,717 $ 7,421 $ 10,667
Equity in income (loss) of HOVENSA
L.L.C. (19) 81 (10)
Gain on asset sales - 21 -
Other, net 37 23 63
---------- ---------- ----------
Total revenues and non-operating
income 11,735 7,546 10,720
---------- ---------- ----------
Costs and Expenses
Cost of products sold (excluding
items shown separately below) 8,354 5,190 7,718
Production expenses 494 377 424
Marketing expenses 267 241 233
Exploration expenses, including dry
holes and lease impairment 158 90 152
Other operating expenses 47 37 45
General and administrative expenses 156 142 152
Interest expense 65 62 67
Depreciation, depletion and
amortization 482 354 452
---------- ---------- ----------
Total costs and expenses 10,023 6,493 9,243
---------- ---------- ----------
Income before income taxes 1,712 1,053 1,477
Provision for income taxes 812 496 718
---------- ---------- ----------
Net income $ 900 $ 557 $ 759
========== ========== ==========
Supplemental Income Statement
Information
-------------------------------------
Foreign currency gains (losses),
after-tax $ 1 $ (7) $ 11
Capitalized interest 1 16 1
Cash Flow Information
-------------------------------------
Net cash provided by operating
activities (*) $ 1,691 $ 1,199 $ 1,176
Capital and Exploratory Expenditures
-------------------------------------
Exploration and Production
United States $ 721 $ 391 $ 415
International 484 568 523
---------- ---------- ----------
Total Exploration and Production 1,205 959 938
Marketing, Refining and Corporate 35 34 32
---------- ---------- ----------
Total Capital and Exploratory
Expenditures $ 1,240 $ 993 $ 970
========== ========== ==========
Exploration expenses charged to
income included above
United States $ 44 $ 42 $ 62
International 40 19 59
---------- ---------- ----------
$ 84 $ 61 $ 121
========== ========== ==========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
First Half
-----------------
2008 2007
-------- --------
Income Statement
----------------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating
revenues $22,384 $14,740
Equity in income (loss) of HOVENSA L.L.C. (29) 137
Gain on asset sales - 21
Other, net 100 22
-------- --------
Total revenues and non-operating income 22,455 14,920
-------- --------
Costs and Expenses
Cost of products sold (excluding items shown
separately below) 16,072 10,600
Production expenses 918 724
Marketing expenses 500 463
Exploration expenses, including dry holes and
lease impairment 310 183
Other operating expenses 92 70
General and administrative expenses 308 273
Interest expense 132 126
Depreciation, depletion and amortization 934 681
-------- --------
Total costs and expenses 19,266 13,120
-------- --------
Income before income taxes 3,189 1,800
Provision for income taxes 1,530 873
-------- --------
Net income $ 1,659 $ 927
======== ========
Supplemental Income Statement Information
----------------------------------------------------
Foreign currency gains (losses), after-tax $ 12 $ (11)
Capitalized interest 2 31
Cash Flow Information
----------------------------------------------------
Net cash provided by operating activities (*) $ 2,867 $ 1,838
Capital and Exploratory Expenditures
----------------------------------------------------
Exploration and Production
United States $ 1,136 $ 1,042
International 1,007 1,076
-------- --------
Total Exploration and Production 2,143 2,118
Marketing, Refining and Corporate 67 56
-------- --------
Total Capital and Exploratory Expenditures $ 2,210 $ 2,174
======== ========
Exploration expenses charged to income included
above
United States $ 106 $ 82
International 99 54
-------- --------
$ 205 $ 136
======== ========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
June 30, December 31,
2008 2007
---------------- --------------
Balance Sheet Information
--------------------------------------
Cash and cash equivalents $ 1,479 $ 607
Other current assets 8,213 6,319
Investments 1,038 1,117
Property, plant and equipment - net 15,754 14,634
Other long-term assets 4,255 3,454
---------------- --------------
Total assets $ 30,739 $ 26,131
================ ==============
Current maturities of long-term debt $ 68 $ 62
Other current liabilities 11,169 7,962
Long-term debt 3,877 3,918
Other long-term liabilities 4,523 4,415
Stockholders' equity excluding other
comprehensive income (loss) 13,370 11,615
Accumulated other comprehensive
income (loss) (2,268) (1,841)
---------------- --------------
Total liabilities and
stockholders' equity $ 30,739 $ 26,131
================ ==============
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Second Quarter 2008
----------------------------------
United States International Total
------------- ------------- ------
Sales and other operating revenues $ 545 $ 2,530 $3,075
Non-operating income - 22 22
------------- ------------- ------
Total revenues and non-operating
income 545 2,552 3,097
------------- ------------- ------
Costs and expenses
Production expenses, including
related taxes 101 393 494
Exploration expenses, including
dry holes and lease impairment 62 96 158
General, administrative and other
expenses 36 37 73
Depreciation, depletion and
amortization 61 401 462
------------- ------------- ------
Total costs and expenses 260 927 1,187
------------- ------------- ------
Results of operations before
income taxes 285 1,625 1,910
Provision for income taxes 108 777 885
------------- ------------- ------
Results of operations $ 177 $ 848 $1,025
============= ============= ======
Second Quarter 2007
----------------------------------
United States International Total
------------- ------------- ------
Sales and other operating revenues $ 273 $ 1,529 $1,802
Non-operating income - 28 28
------------- ------------- ------
Total revenues and non-operating
income 273 1,557 1,830
------------- ------------- ------
Costs and expenses
Production expenses, including
related taxes 70 307 377
Exploration expenses, including
dry holes and lease impairment 51 39 90
General, administrative and other
expenses 34 28 62
Depreciation, depletion and
amortization 44 293 337
------------- ------------- ------
Total costs and expenses 199 667 866
------------- ------------- ------
Results of operations before
income taxes 74 890 964
Provision for income taxes 30 429 459
------------- ------------- ------
Results of operations $ 44 $ 461 $ 505
============= ============= ======
First Quarter 2008
----------------------------------
United States International Total
------------- ------------- ------
Sales and other operating revenues $ 448 $ 2,159 $2,607
Non-operating income 10 37 47
------------- ------------- ------
Total revenues and non-operating
income 458 2,196 2,654
------------- ------------- ------
Costs and expenses
Production expenses, including
related taxes 70 354 424
Exploration expenses, including
dry holes and lease impairment 83 69 152
General, administrative and other
expenses 32 31 63
Depreciation, depletion and
amortization 55 379 434
------------- ------------- ------
Total costs and expenses 240 833 1,073
------------- ------------- ------
Results of operations before
income taxes 218 1,363 1,581
Provision for income taxes 84 673 757
------------- ------------- ------
Results of operations $ 134 $ 690 $ 824
============= ============= ======
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
First Half 2008
----------------------------------
United States International Total
------------- ------------- ------
Sales and other operating revenues $ 993 $ 4,689 $5,682
Non-operating income 10 59 69
------------- ------------- ------
Total revenues and non-operating
income 1,003 4,748 5,751
------------- ------------- ------
Costs and expenses
Production expenses, including
related taxes 171 747 918
Exploration expenses, including
dry holes and lease impairment 145 165 310
General, administrative and other
expenses 68 68 136
Depreciation, depletion and
amortization 116 780 896
------------- ------------- ------
Total costs and expenses 500 1,760 2,260
------------- ------------- ------
Results of operations before
income taxes 503 2,988 3,491
Provision for income taxes 192 1,450 1,642
------------- ------------- ------
Results of operations $ 311 $ 1,538 $1,849
============= ============= ======
First Half 2007
----------------------------------
United States International Total
------------- ------------- ------
Sales and other operating revenues $ 514 $ 2,799 $3,313
Non-operating income 8 14 22
------------- ------------- ------
Total revenues and non-operating
income 522 2,813 3,335
------------- ------------- ------
Costs and expenses
Production expenses, including
related taxes 129 595 724
Exploration expenses, including
dry holes and lease impairment 101 82 183
General, administrative and other
expenses 67 52 119
Depreciation, depletion and
amortization 81 565 646
------------- ------------- ------
Total costs and expenses 378 1,294 1,672
------------- ------------- ------
Results of operations before
income taxes 144 1,519 1,663
Provision for income taxes 56 762 818
------------- ------------- ------
Results of operations $ 88 $ 757 $ 845
============= ============= ======
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Second Second First
Quarter Quarter Quarter
2008 2007 2008
------- ------- -------
Operating Data
----------------------------------------------
Net Production Per Day (in thousands)
---------------------------------------------
Crude oil - barrels
United States 36 31 36
Europe 83 96 83
Africa 128 115 119
Asia and other 12 26 17
------- ------- -------
Total 259 268 255
======= ======= =======
Natural gas liquids - barrels
United States 11 10 11
Europe 4 4 4
------- ------- -------
Total 15 14 15
======= ======= =======
Natural gas - mcf
United States 83 86 93
Europe 267 212 296
Asia and other 364 277 342
------- ------- -------
Total 714 575 731
======= ======= =======
Barrels of oil equivalent 393 378 391
======= ======= =======
Average Selling Price
---------------------------------------------
Crude oil - per barrel (including hedging)
United States $120.23 $61.41 $92.59
Europe 104.98 58.94 82.29
Africa 97.32 58.02 78.83
Asia and other 120.59 70.73 96.53
Worldwide 104.29 60.05 83.28
Crude oil - per barrel (excluding hedging)
United States $120.23 $61.41 $92.59
Europe 104.98 58.94 82.29
Africa 117.49 67.04 93.52
Asia and other 120.59 70.73 96.53
Worldwide 113.79 63.94 89.62
Natural gas liquids - per barrel
United States $ 76.60 $47.97 $64.83
Europe 92.67 58.26 76.50
Worldwide 81.52 51.68 67.70
Natural gas - per mcf (including hedging)
United States $ 11.00 $ 7.24 $ 8.53
Europe 10.33 4.54 8.96
Asia and other 5.23 4.42 5.01
Worldwide 7.81 4.88 7.06
Natural gas - per mcf (excluding hedging)
United States $ 11.00 $ 7.24 $ 8.53
Europe 10.84 4.54 9.05
Asia and other 5.23 4.42 5.01
Worldwide 8.01 4.88 7.10
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
First Half
--------------
2008 2007
------- ------
Operating Data
-------------------------------------------------------
Net Production Per Day (in thousands)
------------------------------------------------------
Crude oil - barrels
United States 36 30
Europe 83 103
Africa 123 107
Asia and other 15 20
------- ------
Total 257 260
======= ======
Natural gas liquids - barrels
United States 11 10
Europe 4 5
------- ------
Total 15 15
======= ======
Natural gas - mcf
United States 88 88
Europe 282 280
Asia and other 353 260
------- ------
Total 723 628
======= ======
Barrels of oil equivalent 392 380
======= ======
Average Selling Price
------------------------------------------------------
Crude oil - per barrel (including hedging)
United States $106.42 $57.46
Europe 93.32 54.98
Africa 88.44 53.68
Asia and other 106.28 65.08
Worldwide 93.75 55.66
Crude oil - per barrel (excluding hedging)
United States $106.42 $57.46
Europe 93.32 54.98
Africa 105.98 62.22
Asia and other 106.28 65.08
Worldwide 101.66 59.13
Natural gas liquids - per barrel
United States $ 70.71 $45.36
Europe 85.78 52.44
Worldwide 74.90 48.06
Natural gas - per mcf (including hedging)
United States $ 9.69 $ 7.22
Europe 9.61 4.66
Asia and other 5.12 4.49
Worldwide 7.43 4.95
Natural gas - per mcf (excluding hedging)
United States $ 9.69 $ 7.22
Europe 9.90 4.66
Asia and other 5.12 4.49
Worldwide 7.55 4.95
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 June 30, 2008:
Brent Crude Oil(*)
---------------------------------------------------
Average Thousands
Selling of Barrels
Price per Day
------------------ --------------------------------
Maturities
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 hedges outstanding at June 30, 2008.
At June 30, 2008, the Corporation also had outstanding United Kingdom natural gas hedges of 50 thousand Mcf per day through October 2008 at an average selling price of approximately $11.05 per Mcf.
The after-tax losses from crude oil and natural gas hedges were $144 million in the second quarter of 2008 and $56 million in the second quarter of 2007. The after-tax losses from crude oil and natural gas hedges were $239 million in the first half of 2008 compared with $95 million in the first half of 2007. At June 30, 2008, the after-tax deferred losses related to crude oil and natural gas hedges that were included in accumulated other comprehensive income amounted to $2.5 billion.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Second Second First
Quarter Quarter Quarter
2008 2007 2008
------- ------- -------
Financial Information (in millions of dollars)
----------------------------------------------
Marketing and Refining Results
--------------------------------------------
Income (loss) before income taxes $ (85) $ 196 $ 21
Provision (benefit) for income taxes (33) 74 5
------- ------- -------
Marketing and Refining Earnings (Loss) $ (52) $ 122 $ 16
======= ======= =======
Summary of Marketing and Refining Results
--------------------------------------------
Refining $ 3 $ 87 $ (3)
Marketing (40) - 32
Trading (15) 35 (13)
------- ------- -------
Total Marketing and Refining Earnings
(Loss) $ (52) $ 122 $ 16
======= ======= =======
----------------------------------------------------------------------
Operating Data (barrels and gallons in
thousands)
----------------------------------------------
Refined Product Sales (barrels per day)
--------------------------------------------
Gasoline 236 224 223
Distillates 129 119 168
Residuals 49 52 67
Other 40 19 37
------- ------- -------
Total 454 414 495
======= ======= =======
Refinery Throughput (barrels per day)
--------------------------------------------
HOVENSA - Crude runs 471 397 446
HOVENSA - Hess 50% share 235 199 223
Port Reading 64 64 61
Refinery
Refinery Utilization Capacity
--------------------------------- ---------
(barrels
HOVENSA per day)
Crude 500 94.2% 79.4% 89.1%
FCC 150 73.1% 87.9% 74.3%
Coker 58 99.5% 53.3% 91.5%
Port Reading 70(c) 91.3% 97.9% 87.1%
Retail Marketing
--------------------------------------------
Number of retail stations (a) 1,363 1,351 1,367
Convenience store revenue (in millions of
dollars) (b) $ 275 $ 274 $ 239
Average gasoline volume per station
(gallons per month) (b) 218 228 195
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
(c) Refinery utilization in 2007 is based on capacity of 65 thousand
barrels per day.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
First Half
---------------
2008 2007
------- -------
Financial Information (in millions of dollars)
------------------------------------------------------
Marketing and Refining Results
----------------------------------------------------
Income (loss) before income taxes $ (64) $ 355
Provision (benefit) for income taxes (28) 132
------- -------
Marketing and Refining Earnings (Loss) $ (36) $ 223
======= =======
Summary of Marketing and Refining Results
----------------------------------------------------
Refining $ - $ 141
Marketing (8) 43
Trading (28) 39
------- -------
Total Marketing and Refining Earnings (Loss) $ (36) $ 223
======= =======
----------------------------------------------------------------------
Operating Data (barrels and gallons in thousands)
------------------------------------------------------
Refined Product Sales (barrels per day)
----------------------------------------------------
Gasoline 229 209
Distillates 149 146
Residuals 58 73
Other 39 24
------- -------
Total 475 452
======= =======
Refinery Throughput (barrels per day)
----------------------------------------------------
HOVENSA - Crude runs 458 434
HOVENSA - Hess 50% share 229 217
Port Reading 62 59
Refinery Utilization Refinery Capacity
--------------------------------- -----------------
HOVENSA (barrels per day)
Crude 500 91.6% 86.7%
FCC 150 73.7% 90.5%
Coker 58 95.5% 70.8%
Port Reading 70(c) 89.2% 91.4%
Retail Marketing
----------------------------------------------------
Number of retail stations (a) 1,363 1,351
Convenience store revenue (in millions of dollars)
(b) $ 514 $ 518
Average gasoline volume per station (gallons per
month) (b) 207 210
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
(c) Refinery utilization in 2007 is based on capacity of 65 thousand
barrels per day.
SOURCE: Hess Corporation
Hess Corporation
Investors:
Jay Wilson, 212-536-8940
or
Media:
Jon Pepper, 212-536-8550