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a50461312.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): November 2, 2012

HESS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

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 November 2, 2012, Hess Corporation issued a news release reporting estimated results for the third quarter of 2012. 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 November 2, 2012. Copies of these remarks are attached as Exhibit 99(2) and are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

99(1)

News release dated November 2, 2012 reporting estimated results for the third quarter of 2012.

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: November 2, 2012

	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 November 2, 2012 reporting estimated results for the third quarter of 2012.

99(2)

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

a50461312_ex991.htm

Exhibit 99(1)

HESS CORPORATION

Investor Contact: Jay Wilson

(212) 536-8940

Media Contact: Jon Pepper

(212) 536-8550

HESS REPORTS ESTIMATED RESULTS FOR THE THIRD QUARTER OF 2012

Third Quarter Highlights:

·	Net income was $557 million, compared with $298 million in the third quarter of 2011

·	Net income excluding items affecting comparability between periods was $495 million compared with $379 million in the third quarter of 2011

·	Oil and gas production increased to 402,000 barrels of oil equivalent per day, up from 344,000 in the third quarter of 2011

·	Production from the Bakken oil shale play in North Dakota increased to 62,000 barrels of oil equivalent per day, up from 32,000 in the third quarter of 2011

·	Net cash provided by operating activities was $1,862 million, compared with $1,022 million in the third quarter of 2011

NEW YORK, November 2, 2012 -- Hess Corporation (NYSE: HES) reported net income of $557 million for the third quarter of 2012, compared with $298 million for the third quarter of 2011. The after-tax income (loss) by major operating activity was as follows:

		Three Months Ended						Nine Months Ended
		September 30, (unaudited)						September 30, (unaudited)
		2012			2011			2012			2011
	(In millions, except per share amounts)
Exploration and Production		$	608		$	422		$	1,887		$	2,148
Marketing and Refining			53			(23	)		72			(23	)
Corporate			(38	)		(44	)		(115	)		(114	)
Interest expense			(66	)		(57	)		(193	)		(177	)
Net income attributable to Hess Corporation		$	557		$	298		$	1,651		$	1,834

Net income per share (diluted)		$	1.64		$	.88		$	4.85		$	5.40

Weighted average number of shares (diluted)			340.0			340.2			340.3			339.8

Note: See the following page for a table of items affecting comparability of earnings between periods.

Exploration and Production earnings were $608 million in the third quarter of 2012, compared with $422 million in the third quarter of 2011. The Corporation’s average worldwide crude oil

selling price, including the effect of hedging, was $86.69 per barrel, up from $85.81 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $5.88 per mcf in the third quarter of 2012, up from $5.74 per mcf in the third quarter of 2011. Third quarter oil and gas production was 402,000 barrels of oil equivalent per day, up from 344,000 barrels of oil equivalent per day in the third quarter of 2011, primarily reflecting an increase in production from the Bakken oil shale play and the resumption of operations in Libya. Net production from the Bakken averaged 62,000 barrels of oil equivalent per day in the third quarter of 2012 compared to 32,000 barrels of oil equivalent per day in the same period last year. At the Waha concessions in Libya, net production averaged 23,000 barrels of oil equivalent per day in the third quarter of 2012. Due to civil unrest in the country, there was no production in Libya in the same period last year.

Marketing and Refining generated income of $53 million in the third quarter of 2012, compared with a loss of $23 million in the same period in 2011. Marketing earnings were $17 million in the third quarter of 2012, down from $41 million in the third quarter of 2011 as a result of lower margins. Port Reading refining operations generated income of $18 million in the third quarter of 2012, compared with break even in the same quarter last year. Refining operations generated a loss of $38 million in the third quarter a year ago, almost entirely related to our share of HOVENSA's results. The HOVENSA refinery was shut down in the first quarter of 2012. Trading activities generated income of $18 million in the third quarter of 2012 and a loss of $26 million in the same quarter of last year.

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

	Three Months Ended				Nine Months Ended
	September 30, (unaudited)				September 30, (unaudited)
	2012		2011		2012		2011
	(In millions)
Exploration and Production	$	62	$	(81)	$	62	$	244

Third quarter 2012 results included an after-tax gain of $349 million from the sale of the Corporation’s interests in the Schiehallion Field and associated assets in the United Kingdom North Sea for $524 million. The results also included after-tax impairment charges of $116 million that resulted from increases to the Corporation’s estimated abandonment liabilities related to non-producing properties. Additionally, the Corporation recorded a $56 million

after-tax charge to write off its assets in Peru following a decision to cease future appraisal and development activities in the country. A one-time charge of $115 million was also recorded to reflect the third quarter change in the United Kingdom’s supplementary income tax rate to 20 percent from 32 percent applicable to deductions for dismantlement expenditures.

Net cash provided by operating activities was $1,862 million in the third quarter of 2012, compared with $1,022 million in the same quarter of 2011. Capital and exploratory expenditures were $2,287 million, of which $2,260 million related to Exploration and Production operations. Capital and exploratory expenditures for the third quarter of 2011 were $2,550 million, of which $2,517 million related to Exploration and Production operations.

At September 30, 2012, cash and cash equivalents totaled $528 million, compared with $351 million at December 31, 2011. Total debt was $7,841 million at September 30, 2012 and $6,057 million at December 31, 2011. The Corporation’s debt to capitalization ratio at September 30, 2012 was 27.5 percent, compared with 24.6 percent at the end of 2011.

Hess Corporation will review third 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 leading global independent energy company engaged in the exploration for and production of crude oil and natural gas, as well as in refining and in marketing refined petroleum products, natural gas and electricity. More information on Hess Corporation is available at www.hess.com.

____________________________________________________

Forward-looking Statements

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

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

	Third		Third			Second
	Quarter		Quarter			Quarter
	2012		2011			2012
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues	$	9,194	$	8,665		$	9,304
Income (loss) from equity investment in HOVENSA L.L.C.		-		(36	)		-
Gains on asset sales		376		103			-
Other, net		49		(6	)		5
Total revenues and non-operating income		9,619		8,726			9,309

Costs and Expenses
Cost of products sold (excluding items shown separately below)		6,019		6,181			5,969
Production expenses		712		609			677
Marketing expenses		259		266			265
Exploration expenses, including dry holes and lease impairment		259		199			196
Other operating expenses		41		43			41
General and administrative expenses		167		177			172
Interest expense		104		94			105
Depreciation, depletion and amortization		748		586			769
Asset impairments		208		358			59
Total costs and expenses		8,517		8,513			8,253
Income (loss) before income taxes		1,102		213			1,056
Provision (benefit) for income taxes		510		(54	)		521
Net income (loss)		592		267			535
Less: Net income (loss) attributable to noncontrolling interests		35		(31	)		(14	)
Net income (loss) attributable to Hess Corporation	$	557	$	298		$	549

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax	$	7	$	(2	)	$	(5	)
Capitalized interest		8		4			5

Cash Flow Information
Net cash provided by operating activities (a)	$	1,862	$	1,022		$	1,240

Capital and Exploratory Expenditures
Exploration and Production
United States	$	1,210	$	1,600		$	1,243
International		1,050		917			793
Total Exploration and Production		2,260		2,517			2,036
Marketing, Refining and Corporate		27		33			42
Total Capital and Exploratory Expenditures	$	2,287	$	2,550		$	2,078

Exploration expenses charged to income included above
United States	$	39	$	48		$	33
International		88		68			67
	$	127	$	116		$	100


(a) Includes changes in working capital.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

	Nine Months
	2012			2011
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues	$	28,180		$	28,733
Income (loss) from equity investment in HOVENSA L.L.C.		-			(133	)
Gains on asset sales		412			446
Other, net		83			1
Total revenues and non-operating income		28,675			29,047

Costs and Expenses
Cost of products sold (excluding items shown separately below)		18,667			20,062
Production expenses		2,062			1,739
Marketing expenses		775			796
Exploration expenses, including dry holes and lease impairment		708			769
Other operating expenses		123			127
General and administrative expenses		506			515
Interest expense		313			290
Depreciation, depletion and amortization		2,198			1,732
Asset impairments		267			358
Total costs and expenses		25,619			26,388
Income (loss) before income taxes		3,056			2,659
Provision (benefit) for income taxes		1,369			849
Net income (loss)		1,687			1,810
Less: Net income (loss) attributable to noncontrolling interests		36			(24	)
Net income (loss) attributable to Hess Corporation	$	1,651		$	1,834

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax	$	11		$	(7	)
Capitalized interest		18			8

Cash Flow Information
Net cash provided by operating activities (a)	$	4,090	(b)	$	3,846

Capital and Exploratory Expenditures
Exploration and Production
United States	$	3,694		$	2,933
International		2,565			2,226
Total Exploration and Production		6,259			5,159
Marketing, Refining and Corporate		92			67
Total Capital and Exploratory Expenditures	$	6,351		$	5,226

Exploration expenses charged to income included above
United States	$	109		$	146
International		226			189
	$	335		$	335


(a) Includes changes in working capital.
(b) Net of payments to HOVENSA L.L.C. totaling $487 million to fully fund our share of previously accrued refining shutdown costs.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

	September 30,			December 31,
	2012			2011
Balance Sheet Information

Cash and cash equivalents	$	528		$	351
Other current assets		7,629			7,988
Investments		401			384
Property, plant and equipment – net		28,144			24,712
Other long-term assets		5,510			5,701
Total assets	$	42,212		$	39,136

Short-term debt and current maturities of long-term debt	$	621		$	52
Other current liabilities		7,227			8,048
Long-term debt		7,220			6,005
Other long-term liabilities		6,492			6,439
Total equity excluding other comprehensive income (loss)		21,327			19,659
Accumulated other comprehensive income (loss)		(675	)		(1,067	)
Total liabilities and equity	$	42,212		$	39,136

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

	Third Quarter 2012
	United States			International				Total
Sales and other operating revenues	$	1,022		$	1,685			$	2,707
Gains on asset sales		-			376				376
Other, net		18			26				44
Total revenues and non-operating income		1,040			2,087				3,127
Costs and expenses
Production expenses, including related taxes		241			471				712
Exploration expenses, including dry holes and lease impairment		68			191				259
General, administrative and other expenses		49			30				79
Depreciation, depletion and amortization		393			332				725
Asset impairments		58			150				208
Total costs and expenses		809			1,174				1,983
Results of operations before income taxes		231			913				1,144
Provision (benefit) for income taxes		91			445				536
Results of operations attributable to Hess Corporation	$	140	(a)	$	468		(b)	$	608

	Third Quarter 2011
	United States			International				Total
Sales and other operating revenues	$	830		$	1,307			$	2,137
Gains on asset sales		-			103				103
Other, net		4			(10	)			(6	)
Total revenues and non-operating income		834			1,400				2,234
Costs and expenses
Production expenses, including related taxes		174			435				609
Exploration expenses, including dry holes and lease impairment		120			79				199
General, administrative and other expenses		44			27				71
Depreciation, depletion and amortization		209			355				564
Asset impairments		16			342				358
Total costs and expenses		563			1,238				1,801
Results of operations before income taxes		271			162				433
Provision (benefit) for income taxes		108			(97	)			11
Results of operations attributable to Hess Corporation	$	163		$	259		(b)	$	422

	Second Quarter 2012
	United States			International				Total
Sales and other operating revenues	$	1,043		$	1,946			$	2,989
Gains on asset sales		-			-				-
Other, net		1			-				1
Total revenues and non-operating income		1,044			1,946				2,990
Costs and expenses
Production expenses, including related taxes		253			424				677
Exploration expenses, including dry holes and lease impairment		75			121				196
General, administrative and other expenses		50			29				79
Depreciation, depletion and amortization		335			408				743
Asset impairments		59			-				59
Total costs and expenses		772			982				1,754
Results of operations before income taxes		272			964				1,236
Provision (benefit) for income taxes		112			480				592
Results of operations attributable to Hess Corporation	$	160	(a)	$	484		(b)	$	644

(a)	The after-tax losses from crude oil hedging activities were $5 million in the third quarter of 2012 and $3 million in the second quarter of 2012.

(b)	The after-tax losses from crude oil hedging activities were $89 million in the third quarter of 2012, $82 million in the third quarter of 2011 and $86 million in the second quarter of 2012.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

	Nine Months 2012
		United States				International			Total
Sales and other operating revenues	$	2,988			$	5,328		$	8,316
Gains on asset sales		-				412			412
Other, net		19				53			72
Total revenues and non-operating income		3,007				5,793			8,800
Costs and expenses
Production expenses, including related taxes		725				1,337			2,062
Exploration expenses, including dry holes and lease impairment		221				487			708
General, administrative and other expenses		137				86			223
Depreciation, depletion and amortization		1,007				1,120			2,127
Asset impairments		117				150			267
Total costs and expenses		2,207				3,180			5,387
Results of operations before income taxes		800				2,613			3,413
Provision (benefit) for income taxes		313				1,213			1,526
Results of operations attributable to Hess Corporation	$	487		(a)	$	1,400	(b)	$	1,887

	Nine Months 2011
	United States				International				Total
Sales and other operating revenues	$	2,434			$	5,014		$	7,448
Gains on asset sales		-				446			446
Other, net		(10	)			-			(10	)
Total revenues and non-operating income		2,424				5,460			7,884
Costs and expenses
Production expenses, including related taxes		490				1,249			1,739
Exploration expenses, including dry holes and lease impairment		357				412			769
General, administrative and other expenses		141				90			231
Depreciation, depletion and amortization		527				1,127			1,654
Asset impairments		16				342			358
Total costs and expenses		1,531				3,220			4,751

Results of operations before income taxes		893				2,240			3,133
Provision (benefit) for income taxes		340				645			985
Results of operations attributable to Hess Corporation	$	553			$	1,595	(b)	$	2,148

(a)	The after-tax losses from crude oil hedging activities were $34 million in the first nine months of 2012.

(b)	The after-tax losses from crude oil hedging activities were $300 million in the first nine months of 2012 and $244 million in the first nine months of 2011.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

	Third		Third		Second
	Quarter		Quarter		Quarter
	2012		2011		2012
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States		109		82		109
Europe		80		68		98
Africa		75		59		79
Asia		17		15		18
Total		281		224		304

Natural gas liquids - barrels
United States		16		13		15
Europe		2		3		3
Asia		1		1		1
Total		19		17		19

Natural gas - mcf
United States		116		102		121
Europe		36		55		53
Asia and other		462		458		465
Total		614		615		639
Barrels of oil equivalent		402		344		429

Average Selling Price
Crude oil - per barrel (including hedging)
United States	$	90.17	$	95.12	$	91.97
Europe		75.08		65.92		76.20
Africa		90.78		89.41		89.01
Asia		102.85		112.31		105.89
Worldwide		86.69		85.81		86.86

Crude oil - per barrel (excluding hedging)
United States	$	90.87	$	95.12	$	92.48
Europe		75.36		65.92		76.58
Africa		110.33		113.03		105.72
Asia		103.20		112.31		106.17
Worldwide		92.35		92.33		91.83

Natural gas liquids - per barrel
United States	$	38.35	$	57.72	$	40.75
Europe		56.82		82.18		66.15
Asia		64.67		71.30		75.16
Worldwide		41.71		63.64		45.56

Natural gas - per mcf
United States	$	2.18	$	3.43	$	1.55
Europe		9.15		8.93		9.98
Asia and other		6.56		5.86		6.61
Worldwide		5.88		5.74		5.94

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

	Nine Months
	2012		2011
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States		104		78
Europe		91		86
Africa		75		70
Asia		17		14
Total		287		248

Natural gas liquids - barrels
United States		15		13
Europe		3		3
Asia		1		1
Total		19		17

Natural gas - mcf
United States		112		103
Europe		50		78
Asia and other		459		453
Total		621		634
Barrels of oil equivalent		409		371

Average Selling Price
Crude oil - per barrel (including hedging)
United States	$	92.53	$	97.71
Europe		77.13		81.19
Africa		89.56		89.85
Asia		107.88		112.03
Worldwide		87.71		90.22

Crude oil - per barrel (excluding hedging)
United States	$	94.46	$	97.71
Europe		78.18		81.19
Africa		111.28		111.20
Asia		109.92		112.03
Worldwide		94.58		95.89

Natural gas liquids - per barrel
United States	$	42.60	$	58.86
Europe		75.67		78.09
Asia		75.95		74.18
Worldwide		49.05		63.70

Natural gas - per mcf
United States	$	1.83	$	3.66
Europe		9.56		8.64
Asia and other		6.64		5.85
Worldwide		6.01		5.84

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)




	Third		Third			Second
	Quarter		Quarter			Quarter
	2012		2011			2012
Financial Information (in millions)

Marketing and Refining Results
Income (loss) before income taxes	$	84	$	(23	)	$	7
Provision (benefit) for income taxes		31		-			(1	)
Results of operations attributable to Hess Corporation	$	53	$	(23	)	$	8

Summary of Marketing and Refining Results
Marketing	$	17	$	41		$	18
Refining		18		(38	)		8
Trading		18		(26	)		(18	)
Results of operations attributable to Hess Corporation	$	53	$	(23	)	$	8


Operating Data

Sales Volumes
Refined petroleum products (thousands of barrels per day)
Gasoline		214		222			212
Distillates		102		100			108
Residuals		48		53			54
Other		10		14			17
Total		374		389			391

Natural gas (thousands of mcf per day)		1,900		1,800			1,860

Electricity (megawatts round the clock)		4,765		4,900			4,405

Retail Marketing
Number of retail stations (a)		1,361		1,358			1,361
Convenience store revenue (in millions) (b)	$	295	$	316		$	288
Average gasoline volume per station (thousands of gallons per month) (b)		196		201			194

Port Reading
Refinery throughput (thousands of barrels per day)		68		63			69
Refinery utilization (capacity - 70,000 barrels per day)		97.0%		90.0%			98.0%

(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)





	Nine Months
	2012			2011
Financial Information (in millions)

Marketing and Refining Results
Income (loss) before income taxes	$	111		$	28
Provision (benefit) for income taxes		39			51
Results of operations attributable to Hess Corporation	$	72		$	(23	)

Summary of Marketing and Refining Results
Marketing	$	57		$	137
Refining		20			(130	)
Trading		(5	)		(30	)
Results of operations attributable to Hess Corporation	$	72		$	(23	)


Operating Data

Sales Volumes
Refined petroleum products (thousands of barrels per day)
Gasoline		212			226
Distillates		109			116
Residuals		54			65
Other		15			20
Total		390			427

Natural gas (thousands of mcf per day)		2,105			2,200

Electricity (megawatts round the clock)		4,475			4,500

Retail Marketing
Number of retail stations (a)		1,361			1,358
Convenience store revenue (in millions) (b)	$	855		$	899
Average gasoline volume per station (thousands of gallons per month) (b)		192			195

Port Reading
Refinery throughput (thousands of barrels per day)		61			65
Refinery utilization (capacity - 70,000 barrels per day)		87.6%			92.5%

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

(b)	Company operated only.

a50461312_ex992.htm

Exhibit 99(2)

2012 Third Quarter Earnings Conference Call

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

First, I would like to express our deep concern for the people suffering from the devastation caused by Hurricane Sandy. Our company is doing all that we can to help meet the public’s energy needs in the wake of this storm. I want to thank the Hess employees who have worked around the clock to quickly open and supply 177 of our 186 Hess stations in New York City, Long Island and New Jersey. Hess has had a long history of doing whatever it takes to meet the demand for energy during times of crises. I also want to recognize and thank both New York City Mayor Michael Bloomberg and New Jersey Governor Chris Christie and their staffs for their outstanding leadership during this difficult period.

Now, I would like to provide an update on the progress we have made since our July call. As to future funding, we continue to believe that, at current oil prices, the gap between operating cash flow and capital expenditures should peak this year at about $3 billion, moderate in 2013 due to lower spending and approach a balance in 2014. We also expect that this deficit will be largely met through asset sales. Since July, we have announced the sale of our interests in Azerbaijan for $1 billion and the Beryl Field in the United Kingdom for $525 million, which together with previously announced asset sales, bring the year to date total to $2.4 billion. We have significant additional divestitures either underway or in the early planning stages. We expect these sales will be completed by the end of 2013. As a consequence of our strategic portfolio reshaping, our reserves and production base will be lower than 2012 levels; however our exploration and production assets will be more focused and lower risk, and offer higher growth and financial returns.

Next I would like to discuss our financial and operating performance. Net income for the third quarter of 2012 was $557 million. Excluding non-recurring items, earnings were $495 million versus $379 million for the third quarter of 2011. Our earnings were positively impacted by higher crude oil sales volumes and improved Marketing and Refining results and negatively impacted by higher operating costs in Exploration and Production.

Exploration and Production reported net income of $608 million. Crude oil and natural gas production averaged 402 thousand barrels of oil equivalent per day, a 17 percent increase over the year ago quarter. This increase was primarily the result of higher production from the Bakken in North Dakota and Libya.

Net production from the Bakken averaged 62 thousand barrels of oil equivalent per day in the third quarter, an increase of 94 percent over the year ago quarter, and we shipped approximately 37 thousand barrels per day of crude oil from our Tioga rail loading facility to higher value markets, improving our price realizations.

In addition, we are currently evaluating the feasibility of building a rail unloading facility at our Port Reading, New Jersey complex to market Bakken crude oil on the East Coast.

At the Waha Fields in Libya, production averaged 23 thousand barrels of oil equivalent per day in the third quarter. The fields were shut-in during the third quarter of 2011 due to civil unrest in the country.

At the Valhall Field in Norway, net production averaged 6,500 barrels of oil equivalent per day in the third quarter. The field was shut-in July 29th to complete major field redevelopment work. This work is now expected to be completed in mid-December after which production will resume.

With regard to exploration, Hess concluded drilling operations on the Almond prospect in Ghana. The well resulted in a discovery, encountering approximately 50 net feet of oil pay. We are currently taking a drilling break to incorporate results of the 2012 drilling

program into our subsurface models and we plan to drill two additional wells, the first of which should spud later in the fourth quarter.

In the deepwater Gulf of Mexico, we spud the Ness Deep well on Green Canyon 507 on June 12th. Ness Deep is a Miocene prospect in which Hess has a 50 percent working interest. BHP holds the remaining 50 percent and is the operator. This well is anticipated to reach total depth during the fourth quarter.

Turning to Marketing and Refining, we reported net income of $53 million for the third quarter of 2012. Refining generated earnings of $18 million compared to a loss of $38 million in last year’s third quarter. Marketing earnings were $17 million compared to $41 million in the year ago quarter. Gasoline volumes on a per site basis were down approximately 2 percent and total convenience store sales were down nearly 7 percent versus last year’s third quarter, reflecting the continued weak economy. In Energy Marketing,

electricity and oil volumes were lower versus last year, while natural gas volumes were higher.

In summary, we are confident that our strategic portfolio reshaping – unlocking value from asset sales and redeploying the proceeds into lower risk, higher return investments – will deliver improved financial performance and create value for our shareholders.

I will now turn the call over to John Rielly.