0000950123-10-046391 | 10-Q | XBRL Viewer

Document and Entity Information - USD ($)	3 Months Ended
Document and Entity Information - USD ($)	Mar. 31, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	HESS CORP
Entity Central Index Key	0000004447
Document Type	10-Q
Document Period End Date	Mar. 31, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 17,579,000,000
Entity Common Stock, Shares Outstanding (actual number)	328,338,998

Statement of Consolidated Income (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2010	Mar. 31, 2009
REVENUES AND NON-OPERATING INCOME
Sales (excluding excise taxes) and other operating revenues	$ 9,259	$ 6,915
Equity in income (loss) of HOVENSA L.L.C.	(85)	(41)
Other, net	46	(2)
Total revenues and non-operating income	9,220	6,872
COSTS AND EXPENSES
Cost of products sold (excluding items shown separately below)	6,540	5,182
Production expenses	477	409
Marketing expenses	253	257
Exploration expenses, including dry holes and lease impairment	151	193
Other operating expenses	52	48
General and administrative expenses	155	160
Interest expense	84	77
Depreciation, depletion and amortization	542	486
Total costs and expenses	8,254	6,812
INCOME BEFORE INCOME TAXES	966	60
Provision for income taxes	398	77
NET INCOME (LOSS)	568	(17)
Less: Net income attributable to noncontrolling interests	30	42
NET INCOME (LOSS) ATTRIBUTABLE TO HESS CORPORATION	$ 538	$ (59)
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO HESS CORPORATION
BASIC	$ 1.66	$ (0.18)
DILUTED	$ 1.65	$ (0.18)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (DILUTED)	327.0	323.4
COMMON STOCK DIVIDENDS PER SHARE	$ 0.1	$ 0.1

Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions	Mar. 31, 2010	Dec. 31, 2009
CURRENT ASSETS
Cash and cash equivalents	$ 1,370	$ 1,362
Accounts receivable	4,503	3,924
Inventories	1,405	1,438
Other current assets	1,502	1,263
Total current assets	8,780	7,987
INVESTMENTS IN AFFILIATES
HOVENSA L.L.C.	597	681
Other	250	232
Total investments in affiliates	847	913
PROPERTY, PLANT AND EQUIPMENT
Total - at cost	29,099	29,871
Less reserves for depreciation, depletion, amortization and lease impairment	12,563	13,244
Property, plant and equipment - net	16,536	16,627
GOODWILL	1,218	1,225
DEFERRED INCOME TAXES	2,283	2,409
OTHER ASSETS	285	304
TOTAL ASSETS	29,949	29,465
CURRENT LIABILITIES
Accounts payable	4,501	4,223
Accrued liabilities	2,005	1,954
Taxes payable	627	525
Current maturities of long-term debt	32	148
Total current liabilities	7,165	6,850
LONG-TERM DEBT	4,303	4,319
DEFERRED INCOME TAXES	2,171	2,222
ASSET RETIREMENT OBLIGATIONS	1,015	1,234
OTHER LIABILITIES AND DEFERRED CREDITS	1,268	1,312
Total liabilities	15,922	15,937
Hess Corporation Stockholders' Equity
Common stock, par value $1.00, Authorized - 600,000 shares, Issued - 328,339 shares at March 31, 2010; 327,229 shares at December 31, 2009	328	327
Capital in excess of par value	2,515	2,481
Retained earnings	12,761	12,251
Accumulated other comprehensive income (loss)	(1,749)	(1,675)
Total Hess Corporation stockholders' equity	13,855	13,384
Noncontrolling interests	172	144
Total equity	14,027	13,528
TOTAL LIABILITIES AND EQUITY	$ 29,949	$ 29,465

Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) shares in Thousands	Mar. 31, 2010	Dec. 31, 2009
Hess Corporation Stockholders' Equity
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	600,000	600,000
Common stock, shares issued	328,339	327,229

Statement of Consolidated Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2010	Mar. 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 568	$ (17)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization	542	486
Exploratory dry hole costs and lease impairment	77	92
Provision (benefit) for deferred income taxes	19	(57)
Equity in income (loss) of HOVENSA L.L.C.	85	41
Pre-tax gain on asset sales	(58)
Stock compensation expense	24	40
Changes in operating assets and liabilities and other	(432)	40
Net cash provided by operating activities	825	625
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(788)	(704)
Proceeds from asset sales	183
Other, net	(17)	14
Net cash used in investing activities	(622)	(690)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments of debt with maturities of 90 days or less		(850)
Debt with maturities of greater than 90 days
Borrowings		1,246
Repayments	(142)	(23)
Cash dividends paid	(66)	(65)
Other, net	13	6
Net cash (used in) provided by financing activities	(195)	314
NET INCREASE IN CASH AND CASH EQUIVALENTS	8	249
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	1,362	908
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 1,370	$ 1,157

Basis of Presentation	3 Months Ended
Basis of Presentation	Mar. 31, 2010
Basis of Presentation [Abstract]
Basis of Presentation	1. Basis of Presentation The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of Hess Corporation’s (the Corporation) consolidated financial position at March 31, 2010 and December 31, 2009 and the consolidated results of operations and cash flows for the three month periods ended March 31, 2010 and 2009. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year. The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by U.S. generally accepted accounting principles (GAAP) have been condensed or omitted from these interim financial statements. These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Corporation’s Form 10-K for the year ended December 31, 2009. Effective January 1, 2010, the Corporation adopted the amended accounting standards that eliminated the consolidation exception for a qualifying special-purpose entity and changed the analysis necessary to determine whether consolidation of a variable interest entity is required. The adoption of these standards resulted in an increase of approximately $10 million to Property, plant and equipment and a corresponding increase to Long-term debt. The debt was subsequently repaid during the first quarter of 2010.

Inventories

3 Months Ended

Mar. 31, 2010

Inventories [Abstract]

Inventories

2. Inventories

Inventories consist of the following (in millions):


	March 31,			December 31,
	2010			2009
Crude oil and other charge stocks	$	512		$	424
Refined products and natural gas		1,352			1,429
Less: LIFO adjustment		(862	)		(815	)

		1,002			1,038
Merchandise, materials and supplies		403			400

Total inventories	$	1,405		$	1,438

Refining Joint Venture

3 Months Ended

Mar. 31, 2010

Refining Joint Venture [Abstract]

Refining Joint Venture

3. Refining Joint Venture

The Corporation accounts for its investment in HOVENSA L.L.C. (HOVENSA) using the equity method. Summarized financial information for HOVENSA follows (in millions):


	March 31,			December 31,
	2010			2009
Summarized balance sheet
Cash and short-term investments	$	42		$	78
Other current assets		761			580
Net fixed assets		2,083			2,080
Other assets		32			33
Current liabilities		(1,265	)		(953	)
Long-term debt		(356	)		(356	)
Deferred liabilities and credits		(140	)		(137	)

Members’ equity	$	1,157		$	1,325


	Three Months
	Ended March 31,
	2010			2009
Summarized income statement
Total revenues	$	2,766		$	2,023
Cost and expenses		(2,934	)		(2,104	)

Net income (loss)	$	(168	)	$	(81	)

Hess Corporation’s share, before income taxes	$	(85	)	$	(41	)

Property, Plant and Equipment

3 Months Ended

Mar. 31, 2010

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

4. Property, Plant and Equipment

In December 2009, the Corporation agreed to a strategic exchange of all of its interests in Gabon and the Clair Field in the United Kingdom for additional interests in the Valhall and Hod fields offshore Norway. In March 2010, the Corporation agreed to the sale of a package of mature, non-operated natural gas production and transportation assets in the United Kingdom North Sea. These transactions are subject to various regulatory and other approvals. The Corporation has classified all of the properties to be disposed of as held for sale. At March 31, 2010, the carrying amount of these assets totaling $855 million was reported in Other current assets. In addition, asset retirement obligations and deferred income taxes totaling $431 million were reported in Accrued liabilities.

The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves for the three months ended March 31, 2010 (in millions):


Balance at January 1	$	1,437
Additions to capitalized exploratory well costs pending the determination of proved reserves		226
Capitalized exploratory well costs charged to expense		(6	)

Balance at end of period	$	1,657

The preceding table excludes costs related to exploratory dry holes of $11 million which were incurred and subsequently expensed in 2010. Capitalized exploratory well costs greater than one year old after completion of drilling were $1,066 million at March 31, 2010. Approximately 57% of the capitalized well costs in excess of one year relate to the Pony and Tubular Bells projects in the deepwater Gulf of Mexico where development planning is progressing. In addition, the Corporation is currently drilling an appraisal well at Pony. Approximately 12% relates to Area 54 offshore Libya where commercial analysis and development planning activities are ongoing. Approximately 10% relates to Block WA-390-P offshore Western Australia where further drilling is in progress. Approximately 8% relates to Block BM-S-22 offshore Brazil where the operator plans to commence drilling a third exploration well in the second half of 2010. The remainder of the capitalized well costs in excess of one year relate to projects where further drilling is planned or development planning and other assessment activities are ongoing to determine the economic and operating viability of the projects.

Long-Term Debt	3 Months Ended
Long-Term Debt	Mar. 31, 2010
Long-Term Debt [Abstract]
Long-Term Debt	5. Long-Term Debt In December 2009, the Corporation issued $750 million of 30 year bonds and tendered for the $662 million of bonds due in August 2011. The Corporation completed the purchase of $546 million of the 2011 bonds in December 2009. The remaining $116 million of the 2011 bonds were redeemed in January 2010, resulting in a charge of approximately $11 million ($7 million after income taxes).

Foreign Currency Translation

3 Months Ended

Mar. 31, 2010

Foreign Currency Translation [Abstract]

Foreign Currency Translation

6. Foreign Currency Translation

Pre-tax foreign currency gains (losses) amounted to the following (in millions):


	Three Months
	Ended March 31,
	2010			2009
Pre-tax foreign currency gains (losses)	$	(6	)	$	(3	)

Retirement Plans

3 Months Ended

Mar. 31, 2010

Retirement Plans [Abstract]

Retirement Plans

7. Retirement Plans

Components of net periodic pension cost consisted of the following (in millions):


	Three Months
	Ended March 31,
	2010			2009
Service cost	$	12		$	10
Interest cost		22			20
Expected return on plan assets		(21	)		(15	)
Amortization of net loss		12			14

Pension expense	$	25		$	29

In 2010, the Corporation expects to contribute approximately $190 million to its pension plans. The Corporation contributed $58 million to its pension plans in the first quarter of 2010.

Risk Management and Trading Activities

3 Months Ended

Mar. 31, 2010

Risk Management and Trading Activities [Abstract]

Risk Management and Trading Activities

8. Risk Management and Trading Activities

In the normal course of its business, the Corporation is exposed to commodity risks related to changes in the prices of crude oil, natural gas, refined products and electricity, as well as to changes in interest rates and foreign currency values. In the disclosures that follow these activities are referred to as energy marketing and risk management activities. The Corporation also has trading operations, principally through a 50% voting interest in a consolidated partnership, that are exposed to commodity price risks primarily related to the prices of crude oil, natural gas and refined products.

Following is a description of the Corporation’s activities that use derivatives as part of their operations and strategies. Derivatives include both financial instruments and forward purchase and sale contracts. Gross notional amounts of both long and short positions are presented in the volume tables below. These amounts include long and short positions that offset in a closed position and have not reached contractual maturity. Gross notional amounts do not quantify risk or represent assets or liabilities of the Corporation, but are used in the calculation of cash settlements under the contracts.

Energy Marketing Activities: In its energy marketing activities the Corporation sells refined petroleum products, natural gas and electricity principally to commercial and industrial businesses at fixed and floating prices for varying periods of time. Commodity contracts such as futures, forwards, swaps and options together with physical assets, such as storage, are used to obtain supply and reduce margin volatility or lower costs related to sales contracts with customers.

The table below shows the gross volume of the Corporation’s energy marketing commodity contracts outstanding:


	March 31,		December 31,
	2010		2009
Commodity Contracts
Crude oil and refined products (millions of barrels)		23		34
Natural gas (millions of mcf)		1,847		1,876
Electricity (millions of megawatt hours)		183		166

The changes in fair value of certain energy marketing commodity contracts that are not designated as hedges are recognized currently in earnings. Revenues from the sales contracts are recognized in Sales and other operating revenues, supply contract purchases are recognized in Cost of products sold and net settlements from financial derivatives related to these energy marketing activities are recognized in Cost of products sold. Net realized and unrealized pre-tax gains on derivative contracts not designated as hedges amounted to $74 million and $77 million for the quarters ended March 31, 2010 and 2009, respectively.

At March 31, 2010, a portion of energy marketing commodity contracts are designated as cash flow hedges to hedge variability of expected future cash flows of forecasted supply transactions. The length of time over which the Corporation hedges exposure to variability in future cash flows is predominantly two years or less. For contracts outstanding at March 31, 2010, the maximum duration was four years. The Corporation records the effective portion of changes in the fair value of cash flow hedges as a component of Other comprehensive income. Amounts recorded in Accumulated other comprehensive income are reclassified into Cost of products sold in the same period that the hedged item is recognized in earnings. The ineffective portion of changes in fair value of cash flow hedges is recognized immediately in Cost of products sold.

At March 31, 2010, the after-tax deferred losses relating to energy marketing activities recorded in Accumulated other comprehensive income were $438 million ($303 million at December 31, 2009). The Corporation estimates that approximately $317 million of this amount will be reclassified into earnings over the next twelve months. During the three months ended March 31, 2010 and 2009, the Corporation reclassified losses from Accumulated other comprehensive income of $91 million and $69 million respectively. The amount of loss from hedge ineffectiveness reflected in earnings was $1 million during each of the three month periods ended March 31, 2010 and 2009. The decrease in the fair value of energy marketing cash flow hedges was $226 million for the three months ended March 31, 2010 and $308 million for the three months ended March 31, 2009.

Corporate Risk Management: Corporate risk management activities include transactions designed to reduce risk in the selling prices of crude oil or natural gas produced by the Corporation or to reduce exposure to foreign currency or interest rate movements. Generally, futures, swaps or option strategies may be used to fix the forward selling price of a portion of the Corporation’s crude oil or natural gas production. Forward contracts may also be used to purchase certain currencies in which the Corporation does business with the intent of reducing exposure to foreign currency fluctuations. These forward contracts comprise various currencies including the British pound and Thai baht. In the first quarter of 2010, the Corporation executed interest rate swaps to convert interest payments on certain long term debt from fixed to floating rates.

The table below shows the gross volume of the Corporate risk management derivative instruments outstanding:


	March 31,		December 31,
	2010		2009
Commodity contracts, primarily crude oil (millions of barrels)		50		54
Foreign exchange (millions of U.S. dollars)		1,374		872
Interest rate swaps (millions of U.S. dollars)		250		—

During 2008, the Corporation closed Brent crude oil cash flow hedges covering 24,000 barrels per day through 2012, by entering into offsetting contracts with the same counterparty. As a result, the valuation of those contracts is no longer subject to change due to price fluctuations. There were no other open hedges of crude oil or natural gas production at March 31, 2010. Hedging activities decreased Exploration and Production Sales and other operating revenue by $131 million for both the first quarter of 2010 and the first quarter of 2009. There was no hedge ineffectiveness for the first quarter of 2010 and 2009.

At March 31, 2010, the after-tax deferred losses in Accumulated other comprehensive income relating to Corporate risk management cash flow hedges were $874 million ($941 million at December 31, 2009). These deferred losses result from the closed Brent crude oil hedges referred to above. The Corporation estimates that approximately $335 million of this amount will be reclassified into earnings over the next twelve months. The pre-tax amount of deferred hedge losses is reflected in Accounts payable and the related income tax benefits are recorded as Deferred income tax assets on the balance sheet.

The Corporation designates interest rate swaps as fair value hedges. Changes in fair value of interest rate swaps and the hedged fixed rate debt are recorded in Interest expense. For the three months ended March 31, 2010, the Corporation recorded an increase of $1 million in the fair value of interest rate swaps and a corresponding increase in the fair value of the hedged fixed rate debt.

The change in fair value of foreign exchange contracts are not designated as hedges. Gains or losses on foreign exchange contracts are recognized immediately in Other, net in Revenues and non-operating income.

Net pre-tax gains (losses) on derivative contracts used for Corporate risk management and not designated as hedges amounted to the following (in millions):


	Three Months
	Ended March 31,
	2010			2009
Commodity	$	1		$	5
Foreign exchange		(37	)		(3	)

Total	$	(36	)	$	2

Trading Activities: Trading activities are conducted principally through a trading partnership in which the Corporation has a 50% voting interest. This consolidated entity intends to generate earnings through various strategies primarily using energy commodities, securities and derivatives. The Corporation also takes trading positions for its own account.

The table below summarizes the gross volume of the Corporation’s trading and derivative instruments outstanding:


	March 31,		December 31,
	2010		2009
Commodity Contracts
Crude oil and refined products (millions of barrels)		2,697		2,251
Natural gas (millions of mcf)		6,216		6,927
Electricity (millions of megawatt hours)		6		6
Other Contracts (millions of U.S. dollars)
Interest rate		384		495
Foreign exchange		216		335

Pre-tax gains (losses) recorded in Sales and other operating revenues from trading activities amounted to the following (in millions):


	Three Months
	Ended March 31,
	2010			2009
Commodity	$	105		$	111
Foreign exchange		(2	)		7
Interest rate and other		(8	)		7

Total	$	95		$	125

Fair Value Measurements: The Corporation determines fair value in accordance with the fair value measurements accounting standard (ASC 820 – Fair Value Measurements and Disclosures), which established a hierarchy that categorizes the sources of inputs, which generally range from quoted prices for identical instruments in a principal trading market (Level 1) to estimates determined using related market data (Level 3). Multiple inputs may be used to measure fair value, however, the level of fair value for each financial asset or liability presented below is based on the lowest significant input level within this fair value hierarchy.

When Level 1 inputs are available within a particular market, those inputs are selected for determination of fair value over Level 2 or 3 inputs in the same market. To value Level 2 and 3 derivatives the Corporation uses observable inputs for similar instruments that are available from exchanges, pricing services or broker quotes. These observable inputs may be supplemented with other methods, including internal extrapolation, that result in the most representative prices for instruments with similar characteristics. Instruments are classified as Level 2 or 3 based on the lowest significant input.

The following table provides the fair value of the Corporation’s financial assets and (liabilities) based on this hierarchy (in millions):


										Collateral and
										counterparty
	Level 1			Level 2			Level 3			netting			Balance
March 31, 2010

Assets
Derivative contracts
Commodity	$	208		$	1,118		$	404		$	(276	)	$	1,454
Other		—			3			—			—			3
Collateral and counterparty netting		—			(1	)		—			(23	)		(24	)

Total derivative contracts		208			1,120			404			(299	)		1,433
Other assets measured at fair value on a recurring basis		35			10			3			—			48

Total assets	$	243		$	1,130		$	407		$	(299	)	$	1,481


Liabilities
Derivative contracts
Commodity	$	(133	)	$	(2,985	)	$	(451	)	$	276		$	(3,293	)
Foreign exchange		—			(13	)		—			—			(13	)
Other		—			(11	)		—			—			(11	)
Collateral and counterparty netting		—			1			—			260			261

Total derivative contracts		(133	)		(3,008	)		(451	)		536			(3,056	)
Other liabilities measured at fair value on a recurring basis		—			(277	)		(2	)		—			(279	)

Total liabilities	$	(133	)	$	(3,285	)	$	(453	)	$	536		$	(3,335	)


										Collateral and
										counterparty
	Level 1			Level 2			Level 3			netting			Balance
December 31, 2009

Assets
Derivative contracts
Commodity	$	46		$	1,137		$	119		$	(40	)	$	1,262
Other		—			3			—			—			3
Collateral and counterparty netting		—			(1	)		—			(326	)		(327	)

Total derivative contracts		46			1,139			119			(366	)		938
Other assets measured at fair value on a recurring basis		37			21			5			—			63

Total assets	$	83		$	1,160		$	124		$	(366	)	$	1,001


Liabilities
Derivative contracts
Commodity	$	(151	)	$	(2,880	)	$	(36	)	$	40		$	(3,027	)
Foreign exchange		—			(23	)		—			—			(23	)
Other		—			(8	)		—			—			(8	)
Collateral and counterparty netting		—			1			—			280			281

Total derivative contracts		(151	)		(2,910	)		(36	)		320			(2,777	)
Other liabilities measured at fair value on a recurring basis		—			(66	)		(4	)		—			(70	)

Total liabilities	$	(151	)	$	(2,976	)	$	(40	)	$	320		$	(2,847	)

The following table provides changes in financial assets and liabilities that are measured at fair value based on Level 3 inputs (in millions):


	2010			2009
Balance at January 1	$	84		$	149
Unrealized gains (losses)
Included in earnings		103			221
Included in other comprehensive income		(14	)		(285	)
Purchases, sales or other settlements during the period		(42	)		16
Transfers into Level 3		(159	)		(21	)
Transfers out of Level 3		(18	)		(245	)

Balance at March 31	$	(46	)	$	165

Effective January 1, 2010, the Corporation’s policy is to recognize transfers in and transfers out as of the end of the reporting period. During the three months ended March 31, 2010, transfers into Level 1 and Level 2 were $25 million and zero respectively, and transfers out of Level 1 and Level 2 were $15 million and $137 million, respectively. The majority of transfers into Levels 1 and 2 resulted from instruments that became more actively traded as they moved closer to maturity. The majority of transfers into Levels 2 and 3 were due to the increased significance of the lower level inputs to the instrument’s fair value.

In addition to the financial assets and liabilities disclosed in the tables on pages 10 and 11, the Corporation had other short-term financial instruments, primarily cash equivalents and accounts receivable and payable, for which the carrying value approximated their fair value at March 31, 2010 and December 31, 2009. Long-term debt had a carrying value of $4,335 million compared with a fair value of $4,942 million at March 31, 2010, and a carrying value of $4,467 million compared with a fair value of $5,073 million at December 31, 2009.

The table below reflects the gross and net fair values of the Corporation’s risk management and trading derivative instruments (in millions):


	Accounts			Accounts
	Receivable			Payable
March 31, 2010
Derivative contracts designated as hedging instruments
Commodity	$	910		$	(1,564	)
Other		1			—

Total derivative contracts designated as hedging instruments		911			(1,564	)

Derivative contracts not designated as hedging instruments
Commodity		10,829			(12,013	)
Foreign exchange		9			(23	)
Other		11			(19	)

Total derivative contracts not designated as hedging instruments		10,849			(12,055	)

Gross fair value of derivative contracts		11,760			(13,619	)
Master netting arrangements		(10,130	)		10,130
Cash collateral (received) posted		(197	)		433

Net fair value of derivative contracts	$	1,433		$	(3,056	)


December 31, 2009
Derivative contracts designated as hedging instruments
Commodity	$	748		$	(1,166	)

Derivative contracts not designated as hedging instruments
Commodity		9,145			(10,493	)
Foreign exchange		3			(26	)
Other		12			(14	)

Total derivative contracts not designated as hedging instruments		9,160			(10,533	)

Gross fair value of derivative contracts		9,908			(11,699	)
Master netting arrangements		(8,653	)		8,653
Cash collateral (received) posted		(317	)		269

Net fair value of derivative contracts	$	938		$	(2,777	)

Credit Risk: The Corporation is exposed to credit risks that may at times be concentrated with certain counterparties or groups of counterparties. Accounts receivable are generated from a diverse domestic and international customer base. The Corporation’s net receivables at March 31, 2010 are concentrated with counterparties as follows: Integrated Oil Companies – 19%, Government Entities – 13%, Manufacturing – 13% and Services – 13%. The Corporation reduces its risk related to certain counterparties by using master netting arrangements and requiring collateral, generally cash or letters of credit. The Corporation records the cash collateral received or posted as an offset to the fair value of derivatives executed with the same counterparty. At March 31, 2010 and December 31, 2009, the Corporation is holding cash from counterparties of approximately $197 million and $317 million, respectively. The Corporation has posted cash to counterparties at March 31, 2010 and December 31, 2009 of approximately $433 million and $269 million, respectively.

At March 31, 2010, the Corporation had a total of $2,979 million of outstanding letters of credit, primarily issued to satisfy margin and collateral requirements. Certain of the Corporation’s agreements also contain contingent collateral provisions that could require the Corporation to post additional collateral if the Corporation’s credit rating declines. As of March 31, 2010, the net liability related to derivatives with contingent collateral provisions was approximately $2,265 million before cash collateral posted of approximately $411 million. At March 31, 2010, all three major credit rating agencies that rate the Corporation’s debt had assigned an investment grade rating. If two of the three agencies were to downgrade the Corporation’s rating to below investment grade, as of March 31, 2010, the Corporation would be required to post additional collateral of approximately $270 million.

Weighted Average Common Shares

3 Months Ended

Mar. 31, 2010

Weighted Average Common Shares [Abstract]

Weighted Average Common Shares

9. Weighted Average Common Shares

The weighted average numbers of common shares used in the basic and diluted earnings per share computations are as follows (in thousands):


	Three Months
	Ended March 31,
	2010		2009
Common shares – basic		324,768		323,431
Effect of dilutive securities
Restricted common stock		1,379		—
Stock options		809		—

Common shares – diluted		326,956		323,431

The Corporation issued 2,675,700 stock options and 891,900 shares of restricted stock in the first three months of 2010. The table above excludes the effect of 4,236,000 shares related to out-of-the money options for the quarter ended March 31, 2010.

Equity and Comprehensive Income

3 Months Ended

Mar. 31, 2010

Equity and Comprehensive Income [Abstract]

Equity and Comprehensive Income

10. Equity and Comprehensive Income

The table below summarizes changes in equity (amounts in millions):


	Hess			Non-
	Stockholders’			controlling
	Equity			Interests			Total Equity
Balance at January 1, 2010	$	13,384		$	144		$	13,528

Net Income		538			30			568
Deferred gains (losses) on cash flow hedges, after tax
Effect of hedge losses recognized in income		174			—			174
Net change in fair value of cash flow hedges		(242	)		—			(242	)
Change in post retirement plan liabilities, after tax		8			—			8
Change in foreign currency translation adjustment and other		(14	)		1			(13	)

Comprehensive income		464			31			495

Activity related to restricted common stock awards, net		13			—			13
Employee stock options, including income tax benefits		22			—			22
Cash dividends declared		(33	)		—			(33	)
Payments from (to) noncontrolling interests, net		5			(3	)		2

Balance at March 31, 2010	$	13,855		$	172		$	14,027


Balance at January 1, 2009	$	12,307		$	84		$	12,391

Net Income		(59	)		42			(17	)
Deferred gains (losses) on cash flow hedges, after tax
Effect of hedge losses recognized in income		151			—			151
Net change in fair value of cash flow hedges		(345	)		—			(345	)
Change in post retirement plan liabilities, after tax		7			—			7
Change in foreign currency translation adjustment and other		(44	)		(15	)		(59	)

Comprehensive income (loss)		(290	)		27			(263	)

Activity related to restricted common stock awards, net		12			—			12
Employee stock options, including income tax benefits		24			—			24
Cash dividends declared		(33	)		—			(33	)

Balance March 31, 2009	$	12,020		$	111		$	12,131

Segment Information

3 Months Ended

Mar. 31, 2010

Segment Information [Abstract]

Segment Information

11. Segment Information

The Corporation’s results by operating segment were as follows (in millions):


	Three Months
	Ended March 31,
	2010			2009
Operating revenues
Exploration and Production	$	2,141		$	1,203
Marketing and Refining		7,157			5,740
Less: Transfers between affiliates		(39	)		(28	)

Total (*)	$	9,259		$	6,915


Net income (loss) attributable to Hess Corporation
Exploration and Production	$	551		$	(64	)
Marketing and Refining		87			102
Corporate, including interest		(100	)		(97	)

Total	$	538		$	(59	)


()*		Operating revenues exclude excise and similar taxes of approximately $530 million and $500 million in the first quarter of 2010 and 2009, respectively.

Identifiable assets by operating segment were as follows (in millions):


	March 31,		December 31,
	2010		2009
Exploration and Production	$	22,092	$	21,810
Marketing and Refining		6,759		6,388
Corporate		1,098		1,267

Total	$	29,949	$	29,465