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Hess Corporation 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): January 31, 2007

HESS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

	DELAWARE	No. 1-1204	No. 13-4921002
	(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1185 Avenue of the Americas

New York, New York 10036

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (212) 997-8500

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On January 31, 2007, Hess Corporation issued a news release reporting its results for the fourth quarter of 2006. A copy of this news release is attached hereto as Exhibit 99(1) and is hereby incorporated by reference.

Item 7.01. Regulation FD Disclosure.

Furnished hereunder are the prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer of Hess Corporation, and John J. O’Connor, Executive Vice President and President, Worldwide Exploration and Production at a public conference call held on January 31, 2007. Copies of these remarks are attached as Exhibit 99(2) and as Exhibit 99(3) and are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(c)

Exhibits

99(1)

News release dated January 31, 2007 reporting results for the fourth quarter of 2006.

99(2)

Prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer.

99(3)

Prepared remarks of John J. O’Connor, Executive Vice President and President, Worldwide Exploration and Production.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 31, 2007
	HESS CORPORATION

	By:	/s/ John P. Rielly
		Name: John P. Rielly
		Title: Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description

99(1)	News release dated January 31, 2007 reporting results for the fourth quarter of 2006.
99(2)	Prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer.
99(3)	Prepared remarks of John J. O’Connor, Executive Vice President and President, Worldwide Exploration and Production.

Hess Corporation Exhibit 99(1)

Exhibit 99(1)

HESS CORPORATION

		*Investor Contact:*	*Jay Wilson* *(212) 536-8940*
		*Media Contact:*	*James Allen* (*212) 536-8550*

HESS REPORTS ESTIMATED RESULTS FOR THE FOURTH QUARTER OF 2006

NEW YORK, January 31, 2007 -- 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 Quarter 2006		Fourth Quarter 2005			Third Quarter 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 Price		Thousands of 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.

Hess Corporation Exhibit 99(2)

Exhibit 99(2)

2006 Fourth Quarter Earnings Conference Call

Thank you Jay, and welcome to our fourth quarter conference call. I would like to make a few brief comments highlighting some key achievements of 2006 and provide some guidance for 2007. John O’Connor will then discuss our Exploration and Production business, after which John Rielly will review our financial results.

2006 was a year of record financial performance for our Company. Our results benefited from the strong commodity price environment which existed for much of the year. Corporate net income was $1.9 billion. Exploration and Production earned nearly $1.8 billion, and Marketing and Refining earned $390 million.

Capital and exploratory expenditures in 2006 amounted to just under $4.1 billion, of which about $ 3.9 billion was related to Exploration and Production activities. For 2007, our capital and exploratory expenditures are budgeted to be approximately $4.0 billion, of which about $3.9 billion relates to Exploration and Production, including our acquisition of a 28% working interest in the Genghis Khan Field in the Gulf of Mexico.

We enhanced the strength of our financial position during the year, with our debt to capitalization ratio improving to 31.7% at the end of 2006 versus 37.6% at the end of 2005.

During 2006, our operational achievements included:

·	growing our proved reserves to 1.24 billion barrels of oil equivalent;

·	replacing approximately 230% of production, at a FD&A cost of about $12.55 per barrel;

·	lengthening our reserve life to 9.3 years, marking the fourth consecutive year in which we have lengthened our reserve life;

·	increasing our crude oil and natural gas production by 7% versus the prior year;

·	bringing four field developments into production;

·	creating significant value from our high impact exploration program; and

·	continuing the selective expansion of our Retail and Energy Marketing businesses.

With regard to crude oil and natural gas production, in 2006 our production averaged 359 thousand barrels of oil equivalent per day. In 2007 we forecast that worldwide crude oil and natural gas production will average between 370 and 380 thousand barrels of oil equivalent per day, which is within our long term guidance of 3-5% production growth per year.

As to our major field developments, we made significant progress during 2006, including four field start-ups, ACG Phase 2, Atlantic / Cromarty, Phu Horm, and Okume. During the year we sanctioned the Shenzi deepwater development located in the Green Canyon area of the Gulf of Mexico and advanced the Pangkah oil development in Indonesia and the Seminole ROZ project in the Permian Basin, all of which are scheduled to begin production in 2009.

In terms of exploration, we continued to have good success in the deepwater Gulf of Mexico during 2006. We made a potentially significant discovery at our Pony prospect, on Green Canyon Block 468, and drilled a successful appraisal sidetrack which confirmed our pre-drill estimate of 100-600 million barrels of oil equivalent on our acreage. We have a 100% interest in the Pony prospect. In addition, successful appraisal drilling at our Tubular Bells prospect, on Mississippi Canyon Blocks 683 and 726, in which we have a 20% interest, has been very encouraging. Appraisal drilling at both these discoveries will continue in 2007.

With regard to Marketing and Refining, our businesses were negatively impacted by margin pressures and milder than normal weather. Our refineries operated reliably with the exception of some unplanned downtime at our HOVENSA joint venture early last year. We successfully completed low sulfur fuel projects at both HOVENSA and Port Reading during the year. In Retail Marketing, our annual convenience store revenues in 2006, excluding petroleum products, exceeded $1 billion for the first time. Energy Marketing achieved increased sales of both natural gas and electricity as a result of both organic growth and selective acquisitions, building a stronger and more profitable business for the future.

In summary, we are pleased with the performance of our assets and the strength of our organization. We remain confident that the investments we are making for the future will sustain profitable growth and create significant value for our shareholders.

I will now turn the call over to John O’Connor.

Forward Looking Statements

Hess Corporation Exhibit 99(3)

Exhibit 99(3)

2006 Fourth Quarter Earnings Conference Call

In the fourth quarter of 2006, production of 366 thousand barrels of oil equivalent per day was up 16% versus the fourth quarter of 2005. Two new Hess-operated fields, Okume Complex and Phu Horm, started up ahead of schedule and on budget. In the Gulf of Mexico we drilled and cored a successful appraisal well to our Pony discovery and we announced the acquisition of a 28% interest in the Genghis Khan Field, which is the western portion of the large Shenzi development in which we also have a 28% interest.

Overall, 2006 was a year of strong operational performance for Exploration & Production. We produced 359 thousand barrels of oil equivalent per day, up 7% from 2005. More importantly, we replaced about 230% of production with new proved reserves of 310 million barrels of oil equivalent. Reserves growth year-on-year was 14%, resulting in year-end 2006 proved reserves of 1.24 billion barrels of oil equivalent and a reserve life of 9.3 years. Over the past three years we have replaced 162% of production at an average FD&A cost of about $12.50 per barrel of oil equivalent.

During 2006 we continued to actively high grade our asset portfolio by selling non-core properties in the Permian and US Gulf Coast, and by entering the West Med block offshore Egypt and re-entering Libya.

In 2007 we expect production to be in the range of 370-380 thousand barrels of oil equivalent per day net of planned asset sales, within our 3-5% per annum growth initiative. Okume Complex production will step up through the year with the addition of some five new wells per quarter, achieving plateau production in early 2008. In the second quarter of 2007 we will start gas production from Ujung Pangkah in Indonesia and in the third quarter we expect to start production from Genghis Khan. Gas production from the JDA fields will also increase in the second half of 2007 with the addition of some 200 million cubic feet per day gross of early Phase 2 gas to the current Phase 1 volumes of 350 million cubic feet per day. Full production from Phase II is scheduled for first quarter 2008.

In 2007 our drilling activity in the Gulf of Mexico will focus on the development and appraisal of our three Miocene discoveries in the Green Canyon & Mississippi Canyon areas. Development drilling will continue on Shenzi and on Genghis Khan while appraisal drilling is underway at both Pony and Tubular Bells.

2006 was certainly a year of high activity and significant execution. 2007 promises to be just as active.

Now I will hand the call over to John Rielly.

Forward Looking Statements