Hess Delivers Consensus Beating Q1 2013 Earnings
Encourages Shareholders to Continue the Company’s Strong Momentum of
Recommends Voting the White Proxy Card for the Election of Hess’ Highly Qualified, Independent Nominees
The Board recommends that shareholders vote for the election of Hess’ highly qualified independent nominees on the WHITE proxy card.
For information about Hess’ transformation and the 2013 Annual Meeting, please visit: www.transforminghess.com.
Included below is the full text of the letter to Hess shareholders:
Dear Fellow Shareholder:
HESS DELIVERS EXCELLENT FIRST QUARTER RESULTS;
CONTINUES STRONG MOMENTUM OF TRANSFORMATION
TO PURE PLAY “E&P” COMPANY
VOTE THE WHITE PROXY CARD TODAY AND BENEFIT FROM CONTINUED VALUE CREATION AT HESS
As we approach the Hess 2013 Annual Meeting, to be held on
THE HESS PLAN IS WORKING; REJECT ELLIOTT’S DISRUPTIVE PLAN TO
DESTROY THE LONG TERM VALUE THAT RIGHTFULLY BELONGS TO YOU
Hess has the right plan and the right team to deliver real, lasting
value. New Hess shareholder Elliott Management, on the other hand,
has put forth a reckless plan that would halt this momentum. Just look
at what a few
In our view many of the criticisms leveled at management are either dated or have been addressed by management. If the activist end game is outright separation of Hess’ into two parts, we maintain our view that commensurate risks & challenges of two stand alone entities will blur the landscape for the investment case.
In short…we do not believe that [Elliott’s] plan provides the best path forward. In our view, Hess's own plan makes more sense…
We take management’s side in terms of the future course of the company.... we do not think breaking up the company into an onshore resource player (Hess Resources) and international, mostly offshore, entity (Hess Remainco) is the best way to generate value.
Simply put, while Elliott has continued to push their self-serving
agenda, the overwhelming majority of
Keep this in mind: ELLIOTT’S NOMINEES HAVE AGREED TO RECEIVE DIRECT AND SUBSTANTIAL SPECIAL PAYMENTS FROM ELLIOTT AND ARE STRUCTURALLY INCENTIVIZED TO SUPPORT A PLAN MOST WALL STREET ANALYSTS AGREE IS VALUE DESTRUCTIVE AND BAD FOR HESS AND ITS SHAREHOLDERS. Ask yourself: Do you really think Elliott’s conflicted nominees, if elected, would have your interests in mind?
Please vote the enclosed WHITE PROXY CARD today to ensure you have an independent, objective Board of Directors committed to pursuing the right strategy for all Hess shareholders.
STRONG FINANCIAL RESULTS REFLECT HESS’ BEST IN CLASS EXECUTION
Hess reported recurring EPS of
Yesterday, we reported first quarter results that soundly beat
In the Bakken oil shale play, net production increased 55% while
drilling and completion costs declined 36%. These results were driven by
our E&P team, led by
While Elliott would have you believe otherwise, Hess today is one of the leading low cost, high return producers in the Bakken:
It is this issue [Bakken drilling and completion costs] that underlines our view that as an operator Hess has consistently bettered well results of many of its peers, in stark contrast to the premise presented by Elliott.
Hess appears to be drilling one of the best portfolios of wells in the industry according to our analysis.
In addition to our success in the Bakken, we are executing a successful, focused, lower-risk exploration program designed to maximize growth across our portfolio. For example:
Development drilling is ongoing at the Hess operated Tubular Bells
field in the deepwater Gulf of
Mexico. The project is on schedule to start production around the middle of next year.
We continue to execute our appraisal program in the
Uticashale play – the second leg of our shale strategy – and remain encouraged by the results. During the first quarter we drilled four wells and completed seven across our position, and we believe that the Uticawill be an important contributor to our long-term production growth targets.
We announced earlier this quarter exploratory success in
Ghana, where we enjoyed a succession of seven discoveries, most recently at the Cob and Pecan North wells, and that we have begun pre-development studies on the block.
We anticipate that our focused portfolio of higher growth, lower risk, oil linked E&P assets will deliver a five year compound average annual production growth rate of 5 to 8%, based off of pro forma 2012 production, with aggregate mid-teens production growth between pro forma 2012 and 2014, while increasing returns to all shareholders.
HESS IS BEATING ITS ASSET SALE TARGETS AND HITTING ITS CAPITAL ALLOCATION PRIORITIES
Another element of our transformation is the divestiture of non-core E&P
assets, which will allow us to focus on our world class, higher growth,
lower risk portfolio. We have made tremendous progress on this front, announcing
The success of our asset sale program has put us ahead of schedule on
meeting the capital allocation priorities we set out on
HESS SHAREHOLDERS DESERVE A BOARD COMMITTED TO FACT, NOT FICTION
While Elliott has called for a “dry eyed” analysis of Hess and its strategy, it continues to mislead Hess shareholders by cherry picking data and using deceptive statistics to suit its purpose.
For example, Elliott compares our Bakken well costs to a single, smaller, low cost peer without taking into account publicly available well recovery rates. From a capital return perspective, isolating average well costs without factoring for production is an incomplete analysis. A closer look at the facts shows that Hess delivers more value than Elliott’s low cost Bakken peer and, as our results this quarter demonstrate, we believe our performance in the Bakken ranks among the best both as to cost and productivity.
Elliott’s aggressive and creative use of statistics – a continuing theme of their misguided proxy fight – is nothing more than an attempt to divert attention from a rejected business plan and a group of candidates who are tied to it. Is this the kind of misleading and self-serving analysis that Elliott proposes to bring into the Hess boardroom?
As Hess shareholders, we believe that you deserve new, independent directors who are committed to a market-endorsed transformation strategy that is delivering real value, not dissident directors who are tethered to a value-destructive, flawed plan. Please vote the enclosed WHITE PROXY CARD today for Hess’ highly qualified nominees to ensure you have an independent Board of Directors committed to pursuing the right strategy to create value for all Hess shareholders.
YOUR VOTE IS IMPORTANT – NO MATTER HOW MANY SHARES YOU OWN
MAKE YOUR VOICE HEARD
PLEASE VOTE THE WHITE PROXY CARD TODAY
Hess’ new, independent
Whether or not you plan to attend the Annual Meeting, you have the opportunity to protect your investment by promptly voting the WHITE PROXY CARD. We urge you to vote today by telephone, by Internet, or by signing, dating and returning the enclosed WHITE PROXY CARD in the postage-paid envelope provided. We urge you to reject Elliott’s short term, value destructive ideas by discarding any proxy materials sent to you by Elliott Management or its representatives.
On behalf of the Board of Directors, we thank you for your continued support, and we look forward to continuing to deliver outstanding value to you in the future.
Chairman and CEO
ABOUT HESS’ WORLD CLASS, NEW, INDEPENDENT DIRECTOR NOMINEES
Former Vice Chairman of GE; President and Chief Executive Officer of
Mr. Krenicki recently joined private equity firm
Former Senior Vice President of E&P for the
Dr. Meyers ran Exploration and Production in the
Former Executive Vice President and Chief Financial Officer,
Mr. Reynolds was Executive Vice President and Chief Financial Officer of
Former Chief Operating Officer, TNK-BP Russia
Mr. Schrader was a senior leader of many of BP's most important E&P businesses, including serving as President of
Former Executive Committee Member,
Dr. Williams worked for over 30 years at Shell, including more than 17 years in Shell’s E&P and upstream business, serving most recently as a member of the
This document contains projections and other forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These projections
and statements reflect the Company’s current views with respect to
future events and financial performance. No assurances can be given,
however, that these events will occur or that these projections will be
achieved, and actual results could differ materially from those
projected as a result of certain risk factors. A discussion of these
risk factors is included in the Company’s periodic reports filed with
This document contains quotes and excerpts from certain previously published material. Consent of the author and publication has not been obtained to use the material as proxy soliciting material.
Important Additional Information
Jay Wilson, 212-536-8940
MacKenzie Partners, Inc.
Dan Burch/Bob Marese, 212-929-5500
Jon Pepper, 212-536-8550
Sard Verbinnen & Co
Michael Henson/Patrick Scanlan, 212-687-8080