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a6805850.htm

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): July 27, 2011

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:

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

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

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

o 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 July 27, 2011, Hess Corporation issued a news release reporting estimated results for the second quarter of 2011. 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 at a public conference call held on July 27, 2011. A copy of his remarks is attached as Exhibit 99(2) and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(c)	Exhibits

	99(1)	News release dated July 27, 2011 reporting estimated results for the second quarter of 2011.

	99(2)	Prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer.

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:	July 27, 2011

		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 July 27, 2011 reporting estimated results for the second quarter of 2011.

99(2)	Prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer.

a6805850ex99_1.htm

Exhibit 99(1)

HESS REPORTS ESTIMATED RESULTS FOR THE SECOND QUARTER OF 2011

Second Quarter Highlights:

·	Net income was $607 million, up from $375 million in the second quarter of 2010

·	Net cash provided by operating activities was $1,689 million, up from $981 million in the second quarter of 2010

·	Oil and gas production was 372,000 barrels of oil equivalent per day, compared with 415,000 in the second quarter of 2010

·	Capital and exploratory expenditures were $1,490 million, up from $963 million in the second quarter of 2010

NEW YORK, July 27, 2011 -- Hess Corporation (NYSE: HES) reported net income of $607 million for the second quarter of 2011 up from $375 million for the second quarter of 2010. The after-tax income (loss) by major operating activity was as follows:

	Three Months Ended						Six Months Ended
	June 30, (unaudited)						June 30, (unaudited)
	2011			2010			2011			2010
	(In millions, except per share amounts)
Exploration and Production	$	747		$	488		$	1,726		$	1,039
Marketing and Refining		(39	)		(19	)		-			68
Corporate		(42	)		(42	)		(70	)		(90	)
Interest expense		(59	)		(52	)		(120	)		(104	)
Net income attributable to Hess Corporation	$	607		$	375		$	1,536		$	913

Net income per share (diluted)	$	1.78		$	1.15		$	4.52		$	2.79

Weighted average number of shares (diluted)		340.4			327.5			339.7			327.2

Exploration and Production earnings were $747 million in the second quarter of 2011 up from $488 million in the second quarter of 2010. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $97.20 per barrel, up from $64.81 per barrel in the second quarter of 2010. The average worldwide natural gas selling

price was $5.93 per Mcf in the second quarter of 2011 compared with $5.57 per Mcf in the same quarter a year ago. The Corporation’s second quarter oil and gas production was 372,000 barrels of oil equivalent per day, compared with 415,000 barrels of oil equivalent per day in the second quarter a year ago, due to lower production from Africa, primarily reflecting the suspension of production in Libya due to civil unrest, and the sale of certain natural gas producing assets in the United Kingdom North Sea in February 2011.

Marketing and Refining generated a loss of $39 million in the second quarter of 2011 compared with a loss of $19 million in the same period in 2010. Refining operations incurred a loss of $44 million in the second quarter of 2011 compared with a loss of $31 million in the second quarter a year ago. Marketing earnings were $28 million, up from $17 million in the second quarter of 2010. Trading activities generated a loss of $23 million in the second quarter of 2011 compared with a loss of $5 million in the second quarter of last year.

The following table reflects the total after-tax income (expense) of items affecting the comparability of earnings between periods:

	Three Months Ended				Six Months Ended
	June 30, (unaudited)				June 30, (unaudited)
	2011		2010		2011		2010
	(Millions of dollars)
Exploration and Production	$	-	$	-	$	310	$	58
Corporate		-		-		-		(7	)
	$	-	$	-	$	310	$	51

Net cash provided by operating activities was $1,689 million in the second quarter of 2011, up from $981 million in the same quarter of 2010. Capital and exploratory expenditures were $1,490 million, of which $1,469 million related to Exploration and Production operations. Capital and exploratory expenditures for the second quarter of 2010 were $963 million, of which $930 million related to Exploration and Production operations.

At June 30, 2011, cash and cash equivalents totaled $2,194 million up from $1,608 million at December 31, 2010. Total debt was $5,541 million at June 30, 2011 and $5,583 million at December 31, 2010. The Corporation’s debt to capitalization ratio at June 30, 2011 improved to 22.7 percent compared with 24.9 percent at the end of 2010.

Hess Corporation will review second quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details about the event, refer to the Investor Relations section of our website at www.hess.com.

Hess Corporation, with headquarters in New York, is a global integrated energy company engaged in the exploration, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. More information on Hess Corporation is available at www.hess.com.

Forward-looking Statements

Certain statements in this release may constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, uncertainties inherent in the measurement and interpretation of geological, geophysical and other technical data.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS OF DOLLARS)

	Second			Second			First
	Quarter			Quarter			Quarter
	2011			2010			2011
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues	$	9,853		$	7,732		$	10,215
Income (loss) from equity investment in HOVENSA L.L.C.		(49	)		(6	)		(48	)
Other, net		2			24			348

Total revenues and non-operating income		9,806			7,750			10,515

Costs and Expenses
Cost of products sold (excluding items shown separately below)		6,841			5,316			7,040
Production expenses		599			440			531
Marketing expenses		247			245			283
Exploration expenses, including dry holes
and lease impairment		257			172			313
Other operating expenses		42			80			42
General and administrative expenses		174			159			164
Interest expense		97			83			99
Depreciation, depletion and amortization		588			558			558

Total costs and expenses		8,845			7,053			9,030

Income before income taxes		961			697			1,485
Provision for income taxes		392			301			511

Net income		569			396			974
Less: Net income (loss) attributable to noncontrolling interests		(38	)		21			45
Net income attributable to Hess Corporation	$	607		$	375		$	929

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax	$	(2	)	$	(4	)	$	(3	)
Capitalized interest		2			1			2

Cash Flow Information
Net cash provided by operating activities (*)	$	1,689		$	981		$	1,135

Capital and Exploratory Expenditures
Exploration and Production
United States	$	793		$	399		$	540
International		676			531			633

Total Exploration and Production		1,469			930			1,173
Marketing, Refining and Corporate		21			33			13

Total Capital and Exploratory Expenditures	$	1,490		$	963		$	1,186

Exploration expenses charged to income included above
United States	$	56		$	21		$	42
International		59			41			62

	$	115		$	62		$	104

(*)Includes changes in working capital

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS OF DOLLARS)


	First Half
	2011			2010
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues	$	20,068		$	16,991
Income (loss) from equity investment in HOVENSA L.L.C.		(97	)		(91	)
Other, net		350			70

Total revenues and non-operating income		20,321			16,970

Costs and Expenses
Cost of products sold (excluding items shown separately below)		13,881			11,856
Production expenses		1,130			917
Marketing expenses		530			498
Exploration expenses, including dry holes
and lease impairment		570			323
Other operating expenses		84			132
General and administrative expenses		338			314
Interest expense		196			167
Depreciation, depletion and amortization		1,146			1,100

Total costs and expenses		17,875			15,307

Income before income taxes		2,446			1,663
Provision for income taxes		903			699

Net income		1,543			964
Less: Net income (loss) attributable to noncontrolling interests		7			51
Net income attributable to Hess Corporation	$	1,536		$	913

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax	$	(5	)	$	(5	)
Capitalized interest		4			2

Cash Flow Information
Net cash provided by operating activities (*)	$	2,824		$	1,806

Capital and Exploratory Expenditures
Exploration and Production
United States	$	1,333		$	736
International		1,309			1,035

Total Exploration and Production		2,642			1,771
Marketing, Refining and Corporate		34			53

Total Capital and Exploratory Expenditures	$	2,676		$	1,824

Exploration expenses charged to income included above
United States	$	98		$	62
International		121			73

	$	219		$	135

(*)Includes changes in working capital

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS OF DOLLARS)

	June 30,			December 31,
	2011			2010
Balance Sheet Information

Cash and cash equivalents	$	2,194		$	1,608
Other current assets		6,692			7,172
Investments		417			443
Property, plant and equipment – net		22,528			21,127
Other long-term assets		5,160			5,046
Total assets	$	36,991		$	35,396

Short-term debt and current maturities of long-term debt	$	35		$	46
Other current liabilities		6,761			7,567
Long-term debt		5,506			5,537
Other long-term liabilities		5,785			5,437
Total equity excluding other comprehensive income (loss)		19,566			17,968
Accumulated other comprehensive income (loss)		(662	)		(1,159	)
Total liabilities and equity	$	36,991		$	35,396

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS OF DOLLARS)

	Second Quarter 2011
	United
	States			International		Total
Sales and other operating revenues	$	858		$	1,840	$	2,698
Other, net		(13	)		8		(5	)

Total revenues and non-operating income		845			1,848		2,693
Costs and expenses
Production expenses, including related taxes		179			420		599
Exploration expenses, including dry holes
and lease impairment		128			129		257
General, administrative and other expenses		49			27		76
Depreciation, depletion and amortization		166			387		553

Total costs and expenses		522			963		1,485

Results of operations before income taxes		323			885		1,208
Provision for income taxes		120			341		461

Results of operations attributable to Hess Corporation	$	203		$	544	$	747

	Second Quarter 2010
	United
	States			International		Total
Sales and other operating revenues	$	570		$	1,489	$	2,059
Other, net		5			9		14

Total revenues and non-operating income		575			1,498		2,073
Costs and expenses
Production expenses, including related taxes		113			327		440
Exploration expenses, including dry holes
and lease impairment		60			112		172
General, administrative and other expenses		32			33		65
Depreciation, depletion and amortization		157			377		534

Total costs and expenses		362			849		1,211

Results of operations before income taxes		213			649		862
Provision for income taxes		84			290		374

Results of operations attributable to Hess Corporation	$	129		$	359	$	488

	First Quarter 2011
	United
	States			International		Total
Sales and other operating revenues	$	746		$	1,867	$	2,613
Other, net		(1	)		345		344

Total revenues and non-operating income		745			2,212		2,957
Costs and expenses
Production expenses, including related taxes		137			394		531
Exploration expenses, including dry holes
and lease impairment		109			204		313
General, administrative and other expenses		48			36		84
Depreciation, depletion and amortization		152			385		537

Total costs and expenses		446			1,019		1,465

Results of operations before income taxes		299			1,193		1,492
Provision for income taxes		112			401		513

Results of operations attributable to Hess Corporation	$	187		$	792	$	979

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS OF DOLLARS)

	First Half 2011
	United
	States			International		Total
Sales and other operating revenues	$	1,604		$	3,707	$	5,311
Other, net		(14	)		353		339

Total revenues and non-operating income		1,590			4,060		5,650
Costs and expenses
Production expenses, including related taxes		316			814		1,130
Exploration expenses, including dry holes
and lease impairment		237			333		570
General, administrative and other expenses		97			63		160
Depreciation, depletion and amortization		318			772		1,090

Total costs and expenses		968			1,982		2,950

Results of operations before income taxes		622			2,078		2,700
Provision for income taxes		232			742		974

Results of operations attributable to Hess Corporation	$	390		$	1,336	$	1,726

	First Half 2010
	United
	States			International		Total
Sales and other operating revenues	$	1,152		$	3,021	$	4,173
Other, net		4			64		68

Total revenues and non-operating income		1,156			3,085		4,241
Costs and expenses
Production expenses, including related taxes		229			688		917
Exploration expenses, including dry holes
and lease impairment		138			185		323
General, administrative and other expenses		68			64		132
Depreciation, depletion and amortization		293			760		1,053

Total costs and expenses		728			1,697		2,425

Results of operations before income taxes		428			1,388		1,816
Provision for income taxes		161			616		777

Results of operations attributable to Hess Corporation	$	267		$	772	$	1,039

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

	Second		Second		First
	Quarter		Quarter		Quarter
	2011		2010		2011
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States		77		73		77
Europe		93		81		99
Africa		66		118		84
Asia		12		14		14
Total		248		286		274

Natural gas liquids - barrels
United States		13		12		13
Europe		3		3		4
Asia		1		1		1
Total		17		16		18

Natural gas - mcf
United States		100		102		106
Europe		72		140		107
Asia and other		471		437		430
Total		643		679		643
Barrels of oil equivalent		372		415		399

Average Selling Price
Crude oil - per barrel (including hedging)*
United States	$	106.62	$	72.99	$	91.56
Europe		87.75		56.21		84.17
Africa		97.74		63.54		82.32
Asia		113.44		78.01		110.80
Worldwide		97.20		64.81		87.22

Crude oil - per barrel (excluding hedging)
United States	$	106.62	$	72.99	$	91.56
Europe		87.75		56.21		84.17
Africa		118.19		77.03		102.58
Asia		113.44		78.01		110.80
Worldwide		102.73		70.15		92.35

Natural gas liquids - per barrel
United States	$	61.57	$	45.84	$	57.31
Europe		69.99		54.61		80.29
Asia		79.63		60.89		73.35
Worldwide		64.05		48.10		63.45

Natural gas - per mcf
United States	$	3.71	$	3.65	$	3.82
Europe		8.97		5.35		8.25
Asia and other		5.94		6.09		5.75
Worldwide		5.93		5.57		5.84

* The after-tax losses from crude oil hedging activities were $81 million in the second quarter of 2011, $84 million in the second quarter of 2010 and $81 million in the first quarter of 2011.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

	First Half
	2011		2010
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States		77		72
Europe		96		83
Africa		75		118
Asia		13		14
Total		261		287

Natural gas liquids - barrels
United States		13		12
Europe		3		3
Asia		1		1
Total		17		16

Natural gas - mcf
United States		103		100
Europe		89		148
Asia and other		451		445
Total		643		693
Barrels of oil equivalent		385		419

Average Selling Price
Crude oil - per barrel (including hedging)*
United States	$	99.12	$	73.68
Europe		85.84		55.72
Africa		90.04		62.96
Asia		111.91		75.99
Worldwide		92.05		64.22

Crude oil - per barrel (excluding hedging)
United States	$	99.12	$	73.68
Europe		85.84		55.72
Africa		110.39		76.50
Asia		111.91		75.99
Worldwide		97.37		69.61

Natural gas liquids - per barrel
United States	$	59.43	$	48.50
Europe		76.01		57.00
Asia		76.23		62.11
Worldwide		63.74		50.51

Natural gas - per mcf
United States	$	3.77	$	4.12
Europe		8.55		5.38
Asia and other		5.85		6.23
Worldwide		5.89		5.75

* The after-tax losses from crude oil hedging activities were $162 million for the six months ended June 30, 2011 and $167 million for the six months ended June 30, 2010.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)

			Second			Second			First
			Quarter			Quarter			Quarter
			2011			2010			2011
Financial Information (in millions of dollars)

Marketing and Refining Results
Income (loss) before income taxes			$	(45	)	$	(37	)	$	96
Provision (benefit) for income taxes				(6	)		(18	)		57
Results of operations attributable to Hess Corporation			$	(39	)	$	(19	)	$	39

Summary of Marketing and Refining Results
Refining			$	(44	)	$	(31	)	$	(48	)
Marketing				28			17			68
Trading				(23	)		(5	)		19
Results of operations attributable to Hess Corporation			$	(39	)	$	(19	)	$	39


Operating Data (barrels and gallons in thousands)

Refined Product Sales (barrels per day)
Gasoline				228			238			226
Distillates				114			112			134
Residuals				56			57			87
Other				28			28			20
Total				426			435			467

Refinery Throughput (barrels per day)
HOVENSA - Crude runs				303			392			263
HOVENSA - Hess 50% share				152			196			132
Port Reading				66			35			66

Refinery Utilization	Refinery Capacity
HOVENSA	(barrels per day)
Crude	350	(a)		86.7	%		78.5	%		75.2	%
FCC	150			77.8	%		91.0	%		65.6	%
Coker	58			96.0	%		81.9	%		41.6	%
Port Reading	70			93.6	%		49.7	%		94.0	%

Retail Marketing
Number of retail stations (b)				1,356			1,358			1,350
Convenience store revenue (in millions of dollars) (c)			$	305		$	317		$	278
Average gasoline volume per station (gallons per month) (c)				199			203			185

(a)	HOVENSA’s refining crude capacity was reduced to 350,000 from 500,000 barrels per day in the first quarter of 2011.

(b)	Includes company operated, Wilco-Hess, dealer and branded retailer.

(c)	Company operated only.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)

			First Half
			2011			2010
Financial Information (in millions of dollars)

Marketing and Refining Results
Income (loss) before income taxes			$	51		$	102
Provision (benefit) for income taxes				51			34
Results of operations attributable to Hess Corporation			$	-		$	68

Summary of Marketing and Refining Results
Refining			$	(92	)	$	(87	)
Marketing				96			138
Trading				(4	)		17
Results of operations attributable to Hess Corporation			$	-		$	68


Operating Data (barrels and gallons in thousands)
Refined Product Sales (barrels per day)
Gasoline				227			245
Distillates				124			119
Residuals				71			71
Other				24			39
Total				446			474

Refinery Throughput (barrels per day)
HOVENSA - Crude runs				283			384
HOVENSA - Hess 50% share				142			192
Port Reading				66			48

Refinery Utilization	Refinery Capacity
HOVENSA	(barrels per day)
Crude	350	(a)		81.0	%		76.8	%
FCC	150			71.7	%		66.3	%
Coker	58			69.0	%		83.4	%
Port Reading	70			93.8	%		69.1	%

Retail Marketing
Number of retail stations (b)				1,356			1,358
Convenience store revenue (in millions of dollars) (c)			$	583		$	593
Average gasoline volume per station (gallons per month) (c)				192			195

(a)	HOVENSA’s refining crude capacity was reduced to 350,000 from 500,000 barrels per day in the first quarter of 2011.

(b)	Includes company operated, Wilco-Hess, dealer and branded retailer.

(c)	Company operated only.

CONTACT:

Hess Corporation

Investor Contact:

Jay Wilson, 212-536-8940

Media Contact:

Jon Pepper, 212-536-8550

a6805850ex99_2.htm

Exhibit 99(2)

2011 Second Quarter Earnings Conference Call

Thank you Jay and welcome to our second quarter conference call. I will make a few brief comments after which John Rielly will review our financial results.

Net income for the second quarter of 2011 was $607 million, versus $375 million a year ago. Our earnings were positively impacted by higher crude oil selling prices, which more than offset the impact of lower production volumes and weaker downstream results.

Exploration and Production earned $747 million. Crude oil and natural gas production averaged 372 thousand barrels of oil equivalent per day, which was 10 percent below the year ago quarter.

Over the past six months, we have experienced several setbacks, most of which are short term, that have resulted in production below the year ago period and our forecast for this year.

- 1 -

With regard to the Bakken, harsh winter weather and severe flooding this spring in North Dakota resulted in a backlog of well completions. Net production from the Bakken averaged 25 thousand barrels of oil equivalent per day in the second quarter, which was flat with the first quarter. With improved weather conditions and our recent change to a 38 stage frac design, we expect to close the gap against our production plan over the next six to nine months. As of yesterday, our net Bakken production was 34 thousand barrels of oil equivalent per day.

In terms of the shut in Llano #3 well in the deepwater Gulf of Mexico, the operator plans to perform a workover and restore production in the first quarter of 2012.

Regarding Libya, no estimate as to the timing of the resumption of production can be made until the civil war is resolved and stability returns to the country.

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Lastly, a recent fire at the Valhall field, offshore Norway, has shut in a net 30 thousand barrels of oil equivalent per day. The government and operator of the field are both conducting an investigation so that lessons can be learned and a recovery plan can be put in place to restore production.

As a consequence of these various factors, we now forecast 2011 production for our company to average between 375 and 385 thousand barrels of oil equivalent per day versus our previous forecast of between 385 and 395 thousand barrels of oil equivalent per day.

With regard to deepwater exploration, we confirmed in May a discovery at our Paradise prospect in Ghana. The well, drilled on our 90 percent owned Deepwater Tano Cape Three Points Block, encountered 490 feet of net pay. Preliminary reservoir formation testing confirms that the fluid types comprise oil and gas condensate. We plan to begin appraisal drilling in early 2012, subject to government approvals and rig availability.

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In Indonesia, we spud the Andalan well on the Semai V block on July 12th. Hess has a 100 percent working interest in the block.

In Brunei, the operator of Block CA-1, in which Hess has a 13.5 percent interest, intends to commence exploration drilling later in the third quarter.

This morning we announced that we, along with our partner, Petroceltic International, signed production sharing contracts with the Kurdistan Regional Government of Iraq for the Dinarta and Shakrok exploration blocks. Hess will have an 80 percent paying interest and be the operator of the blocks, which have a combined area of more than 670 square miles. Under the terms of the contract we will acquire 2D seismic and drill at least one well on each of the blocks over the three year license period. Based on the anticipated work programs, Hess’ total financial commitment is expected to be approximately $288 million.

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Turning to Marketing and Refining, we reported a loss of $39 million for the second quarter of 2011. Financial results at our Hovensa joint venture refinery were below the year ago quarter. While the new refinery configuration has started to make a positive contribution to financial performance, it was more than offset by higher fuel costs.

Marketing earnings were above the second quarter last year. Retail marketing benefited from improved margins in May and June. Gasoline volumes on a per site basis were down approximately 2 percent and total convenience store sales were down by about 4 percent - both reflecting the weak economy. Our Energy Marketing business delivered strong results, helped by higher year over year natural gas and electricity sales volumes.

Capital and exploratory expenditures in the first half of 2011 were approximately $2.7 billion, substantially all of which were related to Exploration and Production. For the full year 2011, our capital and exploratory expenditures forecast has been

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increased to $6.2 billion from $5.6 billion. Additional investments in the Bakken and Eagle Ford as well as the recently announced Kurdistan exploration agreement account for the increase.

We remain committed to sustaining the profitable growth of our reserves and production and ensuring we have the financial strength to fund our future investment opportunities.

I will now turn the call over to John Rielly.

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