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 31, 2013
HESS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE
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No. 1-1204
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No. 13-4921002
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(State or Other
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(Commission
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(IRS Employer
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Jurisdiction of
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File Number)
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Identification No.)
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Incorporation)
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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 July 31, 2013, Hess Corporation issued a news release reporting estimated results for the second quarter of 2013. A copy of this news release is attached hereto as Exhibit 99(1) and is hereby incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
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(c)
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Exhibit
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99(1)
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News release dated July 31, 2013 reporting estimated results for the second quarter of 2013.
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2
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 31, 2013
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HESS CORPORATION
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By:
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/s/John P. Rielly
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Name:
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John P. Rielly
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Title:
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Senior Vice President and
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Chief Financial Officer
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3
EXHIBIT INDEX
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Exhibit No.
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Description
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99(1)
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News release dated July 31, 2013 reporting estimated results for the second quarter of 2013.
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4
Exhibit 99(1)
| HESS CORPORATION | ||
 News Release
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Investor Contact:
Media Contact:
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Jay Wilson
(212) 536-8940
Jon Pepper
(212) 536-8550
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HESS REPORTS ESTIMATED RESULTS FOR THE SECOND QUARTER OF 2013
Second Quarter Highlights:
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●
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Net income increased to $1,431 million from $549 million in the second quarter of 2012
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●
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Adjusted earnings were $520 million; adjusted EPS was $1.51 per share
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Corporation completed the sale of its Russian subsidiary, Samara-Nafta; proceeds to Hess were $1.9 billion
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Proceeds from year-to-date asset sales were used to reduce debt by $2.4 billion and add cash to the balance sheet
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●
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Capital and exploratory expenditures of $1,613 million in the second quarter of 2013 were down 22 percent from the same quarter last year
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NEW YORK, July 31, 2013 -- Hess Corporation (NYSE: HES) today reported net income of $1,431 million for the quarter ended June 30, 2013. Adjusted earnings, which excludes the gain on sale of our Russian subsidiary and other items affecting comparability, were $520 million or $1.51 per common share. Net cash provided by operating activities was $1,247 million in the second quarter.
After-tax income (loss) by major operating activity was as follows:
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Three Months Ended
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Six Months Ended
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|||||||||||||||
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June 30, (unaudited)
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June 30, (unaudited)
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|||||||||||||||
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2013
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2012
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2013
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2012
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|||||||||||||
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(In millions, except per share amounts)
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||||||||||||||||
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Exploration and Production
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$ | 1,533 | $ | 644 | $ | 2,819 | $ | 1,279 | ||||||||
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Corporate and Other
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(113 | ) | (107 | ) | (223 | ) | (209 | ) | ||||||||
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Net income from continuing operations
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1,420 | 537 | 2,596 | 1,070 | ||||||||||||
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Discontinued operations - Downstream businesses
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11 | 12 | 111 | 24 | ||||||||||||
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Net income attributable to Hess Corporation
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$ | 1,431 | $ | 549 | $ | 2,707 | $ | 1,094 | ||||||||
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Net income per share (diluted):
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||||||||||||||||
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Continuing operations
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$ | 4.13 | $ | 1.58 | $ | 7.56 | $ | 3.14 | ||||||||
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Discontinued operations
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0.03 | 0.03 | 0.32 | 0.07 | ||||||||||||
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Net income per share
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$ | 4.16 | $ | 1.61 | $ | 7.88 | $ | 3.21 | ||||||||
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Weighted average number of shares (diluted)
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344.0 | 340.4 | 343.4 | 340.4 | ||||||||||||
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Note: See page 5 for a table of items affecting comparability of earnings between periods.
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||||||||||||||||
1
E&P Performance On Track:
Exploration and Production earnings were $1,533 million in the second quarter of 2013, compared with $644 million in the second quarter of 2012. Second quarter 2013 results included $933 million of income and second quarter 2012 results included an after-tax charge of $36 million from items affecting comparability of earnings. Oil and gas production of 341,000 barrels of oil equivalent per day in the quarter was down from 429,000 barrels of oil equivalent per day in the second quarter a year ago. The decrease in production primarily reflects the impact of asset sales in Russia, the United Kingdom North Sea and Azerbaijan, partially offset by an increase in Bakken production. The Corporation’s full year guidance remains 340,000 to 355,000 barrels of oil equivalent per day. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $97.89 per barrel, up from $86.86 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.44 per mcf in the second quarter of 2013, up from $5.94 per mcf in the second quarter of 2012.
Operational Highlights:
Bakken: Net production from the Bakken oil shale play averaged 64,000 barrels of oil equivalent per day in the second quarter of 2013, an increase of 16 percent from the same period last year. Full year Bakken production guidance remains 64,000 to 70,000 barrels of oil equivalent per day. During the quarter, Hess brought 42 operated wells on production, bringing the year-to-date total to 72 wells. Drilling and completion costs per operated well averaged $8.4 million in the second quarter of 2013, an improvement of 28 percent versus last year’s second quarter.
Utica: Ten wells were drilled, three wells were completed and three wells were flow tested during the quarter. Two of the wells tested were operated by Hess; one on the Corporation’s 100 percent-owned acreage and one on our CONSOL joint venture acreage. On our 100 percent-owned acreage, the Richland B 1H-34 well, in Belmont County, tested at a rate of 2,985 barrels of oil equivalent per day including 29 percent liquids. On our CONSOL joint venture acreage, the Cadiz 1H-23 well, in Harrison County, tested at a rate of 2,250 barrels of oil equivalent per day including 57 percent liquids.
Tubular Bells: During the second quarter of 2013, the Corporation completed drilling the second production well, spud the third production well and continued facilities construction. First oil from this development in the deepwater Gulf of Mexico is anticipated in mid-2014.
2
Valhall: Net production averaged 13,000 barrels of oil equivalent per day in the second quarter of 2013, compared with 23,000 barrels of oil equivalent per day in the same period last year. After completing a planned maintenance shutdown in June, the Valhall field restarted on July 1 and production is expected to ramp up in the third quarter of 2013 as new wells are brought online. Full year 2013 net production guidance for Valhall is expected to be at the lower end of the range of 24,000 to 28,000 barrels of oil equivalent per day.
North Malay Basin: Development activities on the early production system are progressing and the project is on track to achieve first production in the fourth quarter of 2013. During the second quarter, the jacket and topsides were installed and the Floating, Production, Storage and Offloading vessel arrived on-location. The five well development drilling program commenced in June 2013 and is expected to be completed by the end of the year.
Ghana: In the second quarter, Hess submitted appraisal plans to the government for the Deepwater Tano Cape Three Points Block. The government is currently reviewing the plans and Hess is awaiting final approval.
Capital and Exploratory Expenditures:
Capital and exploratory expenditures in the second quarter of 2013 were $1,613 million, of which $1,571 million related to Exploration and Production operations including $546 million invested in the Bakken. Capital and exploratory expenditures for the second quarter of 2012 were $2,078 million, of which $2,036 million related to Exploration and Production operations including $826 million for the Bakken. Full year 2013 capital and exploratory expenditures guidance remains $6.8 billion, which is down approximately 18 percent from 2012 levels.
Asset Sales Program:
In 2013, the Corporation completed the sale of its subsidiary in Russia and its interests in the Beryl area fields in the United Kingdom North Sea, the Azeri-Chirag-Guneshli fields offshore Azerbaijan and the Eagle Ford assets in Texas. Total proceeds from these sales were $3.5 billion. In addition, the Corporation announced this week the sale of its Energy Marketing business to Direct Energy for $1.025 billion. The remaining divestiture processes for our upstream assets in Indonesia and Thailand, as well as our downstream terminals, retail, and trading businesses are well underway.
3
Enhancing Liquidity:
Net cash provided by operating activities was $1,247 million in the second quarter of 2013, compared with $1,240 million in the same quarter of 2012. At June 30, 2013, cash and cash equivalents totaled $725 million, compared with $642 million at December 31, 2012. Total debt of $5,800 million at June 30, 2013 is down 28 percent from $8,111 million at December 31, 2012. The Corporation’s debt to capitalization ratio at June 30, 2013 was 19.5 percent, compared with 27.7 percent at the end of 2012.
Returning Capital to Shareholders:
As previously announced, the Corporation plans to increase its returns to shareholders through a 150 percent increase in the annual dividend to $1 per common share commencing in the third quarter of 2013 and a share repurchase plan of up to $4 billion. The announcement this week that the Corporation will sell its Energy Marketing business for $1.025 billion now puts the company in a position to commence the share repurchase program. The Corporation also plans to monetize its Bakken infrastructure assets by 2015 and return additional cash to shareholders.
Discontinued Operations – Downstream Businesses:
The downstream businesses, comprised of retail, energy marketing, refining and energy trading, reported income of $11 million in the second quarter of 2013, compared with $12 million in the same period in 2012. Second quarter 2013 results included additional employee severance charges and Port Reading refinery shutdown costs. Excluding these expenses, downstream income increased primarily reflecting improved trading results and higher earnings in energy marketing.
4
Items Affecting Comparability of Earnings Between Periods:
The following table reflects the total after-tax income (expense) of items affecting comparability of earnings between periods:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, (unaudited) | June 30, (unaudited) | |||||||||||||||
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2013
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2012
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2013
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2012
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Exploration and Production
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$ | 933 | $ | (36 | ) | $ | 1,521 | $ | - | |||||||
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Corporate and Other
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(1 | ) | - | (12 | ) | - | ||||||||||
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Total items affecting comparability of earnings
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||||||||||||||||
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from continuing operations
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932 | (36 | ) | 1,509 | - | |||||||||||
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Discontinued operations - Downstream businesses
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(21 | ) | - | 9 | - | |||||||||||
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Total items affecting comparability of earnings
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||||||||||||||||
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between periods
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$ | 911 | $ | (36 | ) | $ | 1,518 | $ | - | |||||||
Second quarter 2013 Exploration and Production earnings included a nontaxable gain of $951 million related to the sale of the Corporation’s 90 percent interest in its Russian subsidiary, Samara-Nafta. In addition, second quarter income from continuing operations included after-tax charges totaling $19 million for employee severance and exit costs.
Second quarter 2013 results for the downstream businesses included after-tax charges totaling $21 million for employee severance related to the Corporation’s planned exit from its downstream businesses and costs to idle refinery equipment at the Port Reading refining facility.
Reconciliation of Reported Net Income to Adjusted Earnings:
The following table reconciles reported Net income attributable to Hess Corporation (U.S. GAAP) and adjusted earnings:
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Three Months Ended
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Six Months Ended
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June 30, (unaudited)
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June 30, (unaudited)
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2013
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2012
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2013
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2012
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Net income attributable to Hess Corporation
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$ | 1,431 | $ | 549 | $ | 2,707 | $ | 1,094 | ||||||||
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Less: Total items affecting comparability of earnings
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between periods
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911 | (36 | ) | 1,518 | - | |||||||||||
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Adjusted earnings
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$ | 520 | $ | 585 | $ | 1,189 | $ | 1,094 | ||||||||
5
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 is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information on Hess Corporation is available at www.hess.com.
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.
6
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
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Second
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Second
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First
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||||||||||
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Quarter
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Quarter
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Quarter
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||||||||||
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2013
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2012
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2013
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||||||||||
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Income Statement
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||||||||||||
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Revenues and Non-operating Income
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Sales and other operating revenues
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$ | 3,011 | $ | 3,324 | $ | 3,466 | ||||||
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Gains on asset sales
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1,111 | - | 688 | |||||||||
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Other, net
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(17 | ) | (3 | ) | (37 | ) | ||||||
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Total revenues and non-operating income
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4,105 | 3,321 | 4,117 | |||||||||
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Costs and Expenses
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||||||||||||
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Cost of products sold (excluding items shown separately below)
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421 | 332 | 596 | |||||||||
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Operating costs and expenses
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510 | 550 | 585 | |||||||||
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Production and severance taxes
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97 | 127 | 130 | |||||||||
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Exploration expenses, including dry holes and lease impairment
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200 | 196 | 219 | |||||||||
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General and administrative expenses
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167 | 144 | 149 | |||||||||
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Interest expense
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99 | 105 | 106 | |||||||||
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Depreciation, depletion and amortization
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613 | 746 | 679 | |||||||||
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Asset impairments
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- | 59 | - | |||||||||
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Total costs and expenses
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2,107 | 2,259 | 2,464 | |||||||||
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Income from continuing operations before income taxes
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1,998 | 1,062 | 1,653 | |||||||||
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Provision for income taxes
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409 | 522 | 470 | |||||||||
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Income from continuing operations
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1,589 | 540 | 1,183 | |||||||||
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Income (loss) from discontinued operations
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27 | (5 | ) | 90 | ||||||||
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Net income
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1,616 | 535 | 1,273 | |||||||||
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Less: Net income (loss) attributable to noncontrolling interests
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185 | (14 | ) | (3 | ) | |||||||
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Net income attributable to Hess Corporation
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$ | 1,431 | $ | 549 | $ | 1,276 | ||||||
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Cash Flow Information
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||||||||||||
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Cash provided by operating activities from continuing operations
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$ | 1,211 | $ | 1,210 | $ | 786 | ||||||
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Cash provided by operating activities from discontinued operations
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36 | 30 | 33 | |||||||||
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Net cash provided by operating activities (a)
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$ | 1,247 | $ | 1,240 | $ | 819 | ||||||
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Cash provided by (used in) investing activities from continuing operations
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$ | 962 | $ | (1,953 | ) | $ | (249 | ) | ||||
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Cash provided by (used in) investing activities from discontinued operations
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(26 | ) | (40 | ) | (12 | ) | ||||||
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Net cash provided by (used in) investing activities
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$ | 936 | $ | (1,993 | ) | $ | (261 | ) | ||||
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Cash provided by (used in) financing activities from continuing operations
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$ | (1,893 | ) | $ | 769 | $ | (756 | ) | ||||
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Cash provided by (used in) financing activities from discontinued operations
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(9 | ) | (3 | ) | - | |||||||
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Net cash provided by (used in) financing activities
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$ | (1,902 | ) | $ | 766 | $ | (756 | ) | ||||
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Net increase (decrease) in cash and cash equivalents
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$ | 281 | $ | 13 | $ | (198 | ) | |||||
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(a)
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Includes changes in working capital.
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7
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
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First Half
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||||||||
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2013
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2012
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|||||||
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Income Statement
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||||||||
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Revenues and Non-operating Income
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Sales and other operating revenues
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$ | 6,477 | $ | 6,220 | ||||
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Gains on asset sales
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1,799 | 36 | ||||||
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Other, net
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(54 | ) | 26 | |||||
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Total revenues and non-operating income
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8,222 | 6,282 | ||||||
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Costs and Expenses
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Cost of products sold (excluding items shown separately below)
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1,017 | 602 | ||||||
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Operating costs and expenses
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1,095 | 1,085 | ||||||
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Production and severance taxes
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227 | 265 | ||||||
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Exploration expenses, including dry holes and lease impairment
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419 | 449 | ||||||
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General and administrative expenses
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316 | 276 | ||||||
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Interest expense
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205 | 209 | ||||||
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Depreciation, depletion and amortization
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1,292 | 1,408 | ||||||
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Asset impairments
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- | 59 | ||||||
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Total costs and expenses
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4,571 | 4,353 | ||||||
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Income from continuing operations before income taxes
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3,651 | 1,929 | ||||||
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Provision for income taxes
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879 | 850 | ||||||
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Income from continuing operations
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2,772 | 1,079 | ||||||
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Income (loss) from discontinued operations
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117 | 16 | ||||||
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Net income
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2,889 | 1,095 | ||||||
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Less: Net income (loss) attributable to noncontrolling interests
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182 | 1 | ||||||
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Net income attributable to Hess Corporation
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$ | 2,707 | $ | 1,094 | ||||
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Cash Flow Information
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||||||||
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Cash provided by operating activities from continuing operations
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$ | 1,997 | $ | 2,177 | ||||
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Cash provided by operating activities from discontinued operations
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69 | 51 | ||||||
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Net cash provided by operating activities (a)
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$ | 2,066 | $ | 2,228 | ||||
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Cash provided by (used in) investing activities from continuing operations
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$ | 713 | $ | (3,703 | ) | |||
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Cash provided by (used in) investing activities from discontinued operations
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(38 | ) | (62 | ) | ||||
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Net cash provided by (used in) investing activities
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$ | 675 | $ | (3,765 | ) | |||
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Cash provided by (used in) financing activities from continuing operations
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$ | (2,649 | ) | $ | 1,598 | |||
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Cash provided by (used in) financing activities from discontinued operations
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(9 | ) | (3 | ) | ||||
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Net cash provided by (used in) financing activities
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$ | (2,658 | ) | $ | 1,595 | |||
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Net increase in cash and cash equivalents
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$ | 83 | $ | 58 | ||||
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(a)
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Includes changes in working capital.
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8
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
June 30,
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December 31,
|
|||||||
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2013
|
2012
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|||||||
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Balance Sheet Information
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||||||||
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Cash and cash equivalents
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$ | 725 | $ | 642 | ||||
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Assets held for sale
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5,880 | 1,092 | ||||||
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Other current assets
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3,387 | 6,653 | ||||||
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Investments
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380 | 443 | ||||||
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Property, plant and equipment – net
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26,170 | 28,807 | ||||||
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Other long-term assets
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4,886 | 5,804 | ||||||
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Total assets
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$ | 41,428 | $ | 43,441 | ||||
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Short-term debt and current maturities of long-term debt
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$ | 354 | $ | 787 | ||||
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Liabilities associated with assets held for sale
|
2,664 | 539 | ||||||
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Other current liabilities
|
3,715 | 7,056 | ||||||
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Long-term debt
|
5,446 | 7,324 | ||||||
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Other long-term liabilities
|
5,276 | 6,532 | ||||||
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Total equity excluding other comprehensive income (loss)
|
24,392 | 21,696 | ||||||
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Accumulated other comprehensive income (loss)
|
(419 | ) | (493 | ) | ||||
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Total liabilities and equity
|
$ | 41,428 | $ | 43,441 | ||||
9
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
Second
|
Second
|
First
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
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2013
|
2012
|
2013
|
||||||||||
|
Capital and Exploratory Expenditures
|
||||||||||||
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Exploration and Production
|
||||||||||||
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United States
|
||||||||||||
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Bakken
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$ | 546 | $ | 826 | $ | 535 | ||||||
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Other Onshore
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195 | 208 | 176 | |||||||||
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Total Onshore
|
741 | 1,034 | 711 | |||||||||
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Offshore
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217 | 209 | 228 | |||||||||
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Total United States
|
958 | 1,243 | 939 | |||||||||
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Europe
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172 | 307 | 219 | |||||||||
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Africa
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163 | 162 | 229 | |||||||||
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Asia and other
|
278 | 324 | 226 | |||||||||
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Total Exploration and Production
|
1,571 | 2,036 | 1,613 | |||||||||
|
Other
|
42 | 42 | 18 | |||||||||
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Total Capital and Exploratory Expenditures
|
$ | 1,613 | $ | 2,078 | $ | 1,631 | ||||||
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Total exploration expenses charged to income included above
|
$ | 113 | $ | 100 | $ | 110 | ||||||
|
First Half
|
||||||||
|
2013
|
2012
|
|||||||
|
Capital and Exploratory Expenditures
|
||||||||
|
Exploration and Production
|
||||||||
|
United States
|
||||||||
|
Bakken
|
$ | 1,081 | $ | 1,678 | ||||
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Other Onshore
|
371 | 425 | ||||||
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Total Onshore
|
1,452 | 2,103 | ||||||
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Offshore
|
445 | 381 | ||||||
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Total United States
|
1,897 | 2,484 | ||||||
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Europe
|
391 | 605 | ||||||
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Africa
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392 | 315 | ||||||
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Asia and other
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504 | 595 | ||||||
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Total Exploration and Production
|
3,184 | 3,999 | ||||||
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Other
|
60 | 65 | ||||||
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Total Capital and Exploratory Expenditures
|
$ | 3,244 | $ | 4,064 | ||||
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Total exploration expenses charged to income included above
|
$ | 223 | $ | 208 | ||||
10
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
Second Quarter 2013
|
||||||||||||
|
United States
|
International
|
Total
|
||||||||||
|
Sales and other operating revenues
|
$ | 1,517 | $ | 1,494 | $ | 3,011 | ||||||
|
Gains (losses) on asset sales
|
(17 | ) | 1,128 | 1,111 | ||||||||
|
Other, net
|
(4 | ) | (14 | ) | (18 | ) | ||||||
|
Total revenues and non-operating income
|
1,496 | 2,608 | 4,104 | |||||||||
|
Costs and Expenses
|
||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
371 | 50 | 421 | |||||||||
|
Operating costs and expenses
|
200 | 310 | 510 | |||||||||
|
Production and severance taxes
|
55 | 42 | 97 | |||||||||
|
Exploration expenses, including dry holes and lease impairment
|
63 | 137 | 200 | |||||||||
|
General and administrative expenses
|
47 | 40 | 87 | |||||||||
|
Depreciation, depletion and amortization
|
335 | 274 | 609 | |||||||||
|
Total costs and expenses
|
1,071 | 853 | 1,924 | |||||||||
|
Results of operations before income taxes
|
425 | 1,755 | 2,180 | |||||||||
|
Provision for income taxes
|
171 | 307 | 478 | |||||||||
|
Net income
|
254 | 1,448 | 1,702 | |||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 169 | 169 | |||||||||
|
Net income attributable to Hess Corporation
|
$ | 254 | (a) | $ | 1,279 | (b) | $ | 1,533 | ||||
|
Second Quarter 2012
|
||||||||||||
|
United States
|
International
|
Total
|
||||||||||
|
Sales and other operating revenues
|
$ | 1,335 | $ | 1,989 | $ | 3,324 | ||||||
|
Other, net
|
1 | - | 1 | |||||||||
|
Total revenues and non-operating income
|
1,336 | 1,989 | 3,325 | |||||||||
|
Costs and Expenses
|
||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
292 | 40 | 332 | |||||||||
|
Operating costs and expenses
|
206 | 344 | 550 | |||||||||
|
Production and severance taxes
|
47 | 80 | 127 | |||||||||
|
Exploration expenses, including dry holes and lease impairment
|
75 | 121 | 196 | |||||||||
|
General and administrative expenses
|
50 | 29 | 79 | |||||||||
|
Depreciation, depletion and amortization
|
335 | 408 | 743 | |||||||||
|
Asset impairments
|
59 | - | 59 | |||||||||
|
Total costs and expenses
|
1,064 | 1,022 | 2,086 | |||||||||
|
Results of operations before income taxes
|
272 | 967 | 1,239 | |||||||||
|
Provision for income taxes
|
112 | 480 | 592 | |||||||||
|
Net income
|
160 | 487 | 647 | |||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 3 | 3 | |||||||||
|
Net income attributable to Hess Corporation
|
$ | 160 | (a) | $ | 484 | (b) | $ | 644 | ||||
|
(a)
|
The after-tax realized gains from crude oil hedging activities were $13 million in the second quarter of 2013 and losses of $3 million in the second quarter of 2012.
|
|
(b)
|
The after-tax realized gains from crude oil hedging activities were $20 million in the second quarter of 2013 and losses of $86 million in the second quarter of 2012.
|
11
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
First Quarter 2013
|
||||||||||||
|
United States
|
International
|
Total
|
||||||||||
|
Sales and other operating revenues
|
$ | 1,691 | $ | 1,775 | $ | 3,466 | ||||||
|
Gains (losses) on asset sales
|
- | 688 | 688 | |||||||||
|
Other, net
|
(6 | ) | (29 | ) | (35 | ) | ||||||
|
Total revenues and non-operating income
|
1,685 | 2,434 | 4,119 | |||||||||
|
Costs and Expenses
|
||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
577 | 19 | 596 | |||||||||
|
Operating costs and expenses
|
191 | 394 | 585 | |||||||||
|
Production and severance taxes
|
57 | 73 | 130 | |||||||||
|
Exploration expenses, including dry holes and lease impairment
|
108 | 111 | 219 | |||||||||
|
General and administrative expenses
|
41 | 44 | 85 | |||||||||
|
Depreciation, depletion and amortization
|
365 | 311 | 676 | |||||||||
|
Total costs and expenses
|
1,339 | 952 | 2,291 | |||||||||
|
Results of operations before income taxes
|
346 | 1,482 | 1,828 | |||||||||
|
Provision for income taxes
|
145 | 390 | 535 | |||||||||
|
Net income
|
201 | 1,092 | 1,293 | |||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 7 | 7 | |||||||||
|
Net income attributable to Hess Corporation
|
$ | 201 | (a) | $ | 1,085 | (b) | $ | 1,286 | ||||
|
(a)
|
The after-tax realized losses from crude oil hedging activities were $4 million in the first quarter of 2013.
|
|
(b)
|
The after-tax realized losses from crude oil hedging activities were $7 million in the first quarter of 2013.
|
12
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
First Half 2013
|
||||||||||||
|
United States
|
International
|
Total
|
||||||||||
|
Sales and other operating revenues
|
$ | 3,208 | $ | 3,269 | $ | 6,477 | ||||||
|
Gains (losses) on asset sales
|
(17 | ) | 1,816 | 1,799 | ||||||||
|
Other, net
|
(10 | ) | (43 | ) | (53 | ) | ||||||
|
Total revenues and non-operating income
|
3,181 | 5,042 | 8,223 | |||||||||
|
Costs and Expenses
|
||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
948 | 69 | 1,017 | |||||||||
|
Operating costs and expenses
|
391 | 704 | 1,095 | |||||||||
|
Production and severance taxes
|
112 | 115 | 227 | |||||||||
|
Exploration expenses, including dry holes and lease impairment
|
171 | 248 | 419 | |||||||||
|
General and administrative expenses
|
88 | 84 | 172 | |||||||||
|
Depreciation, depletion and amortization
|
700 | 585 | 1,285 | |||||||||
|
Total costs and expenses
|
2,410 | 1,805 | 4,215 | |||||||||
|
Results of operations before income taxes
|
771 | 3,237 | 4,008 | |||||||||
|
Provision for income taxes
|
316 | 697 | 1,013 | |||||||||
|
Net income
|
455 | 2,540 | 2,995 | |||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 176 | 176 | |||||||||
|
Net income attributable to Hess Corporation
|
$ | 455 | (a) | $ | 2,364 | (b) | $ | 2,819 | ||||
|
First Half 2012
|
||||||||||||
|
United States
|
International
|
Total
|
||||||||||
|
Sales and other operating revenues
|
$ | 2,542 | $ | 3,678 | $ | 6,220 | ||||||
|
Gains (losses) on asset sales
|
- | 36 | 36 | |||||||||
|
Other, net
|
1 | 27 | 28 | |||||||||
|
Total revenues and non-operating income
|
2,543 | 3,741 | 6,284 | |||||||||
|
Costs and Expenses
|
||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
576 | 26 | 602 | |||||||||
|
Operating costs and expenses
|
394 | 691 | 1,085 | |||||||||
|
Production and severance taxes
|
90 | 175 | 265 | |||||||||
|
Exploration expenses, including dry holes and lease impairment
|
153 | 296 | 449 | |||||||||
|
General and administrative expenses
|
88 | 56 | 144 | |||||||||
|
Depreciation, depletion and amortization
|
614 | 788 | 1,402 | |||||||||
|
Asset impairments
|
59 | - | 59 | |||||||||
|
Total costs and expenses
|
1,974 | 2,032 | 4,006 | |||||||||
|
Results of operations before income taxes
|
569 | 1,709 | 2,278 | |||||||||
|
Provision for income taxes
|
222 | 768 | 990 | |||||||||
|
Net income
|
347 | 941 | 1,288 | |||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 9 | 9 | |||||||||
|
Net income attributable to Hess Corporation
|
$ | 347 | (a) | $ | 932 | (b) | $ | 1,279 | ||||
|
(a)
|
The after-tax realized gains from crude oil hedging activities were $9 million in the first half of 2013 and losses of $29 million in the first half of 2012.
|
|
(b)
|
The after-tax realized gains from crude oil hedging activities were $13 million in the first half of 2013 and losses of $211 million in the first half of 2012.
|
13
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Second
|
Second
|
First
|
|||||||
|
Quarter
|
Quarter
|
Quarter
|
|||||||
|
2013
|
2012
|
2013
|
|||||||
|
Operating Data
|
|||||||||
|
Net Production Per Day (in thousands)
|
|||||||||
|
Crude oil - barrels
|
|||||||||
|
United States
|
|||||||||
|
Bakken
|
52
|
47
|
53
|
||||||
|
Other Onshore
|
11
|
13
|
13
|
||||||
|
Total Onshore
|
63
|
60
|
66
|
||||||
|
Offshore
|
48
|
49
|
47
|
||||||
|
Total United States
|
111
|
109
|
113
|
||||||
|
Europe
|
33
|
98
|
65
|
||||||
|
Africa
|
73
|
79
|
78
|
||||||
|
Asia
|
9
|
18
|
16
|
||||||
|
Total
|
226
|
304
|
272
|
||||||
|
Natural gas liquids - barrels
|
|||||||||
|
United States
|
|||||||||
|
Bakken
|
6
|
4
|
6
|
||||||
|
Other Onshore
|
4
|
5
|
4
|
||||||
|
Total Onshore
|
10
|
9
|
10
|
||||||
|
Offshore
|
6
|
6
|
7
|
||||||
|
Total United States
|
16
|
15
|
17
|
||||||
|
Europe
|
1
|
3
|
-
|
||||||
|
Asia
|
1
|
1
|
1
|
||||||
|
Total
|
18
|
19
|
18
|
||||||
|
Natural gas - mcf
|
|||||||||
|
United States
|
|||||||||
|
Bakken
|
39
|
23
|
34
|
||||||
|
Other Onshore
|
27
|
26
|
27
|
||||||
|
Total Onshore
|
66
|
49
|
61
|
||||||
|
Offshore
|
75
|
72
|
72
|
||||||
|
Total United States
|
141
|
121
|
133
|
||||||
|
Europe
|
15
|
53
|
13
|
||||||
|
Asia and other
|
427
|
465
|
447
|
||||||
|
Total
|
583
|
639
|
593
|
||||||
|
Barrels of oil equivalent
|
341
|
429
|
389
|
||||||
14
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
First Half
|
||||||
|
2013
|
2012
|
|||||
|
Operating Data
|
||||||
|
Net Production Per Day (in thousands)
|
||||||
|
Crude oil - barrels
|
||||||
|
United States
|
||||||
|
Bakken
|
52
|
42
|
||||
|
Other Onshore
|
12
|
13
|
||||
|
Total Onshore
|
64
|
55
|
||||
|
Offshore
|
48
|
47
|
||||
|
Total United States
|
112
|
102
|
||||
|
Europe
|
49
|
96
|
||||
|
Africa
|
75
|
75
|
||||
|
Asia
|
13
|
17
|
||||
|
Total
|
249
|
290
|
||||
|
Natural gas liquids - barrels
|
||||||
|
United States
|
||||||
|
Bakken
|
6
|
3
|
||||
|
Other Onshore
|
4
|
6
|
||||
|
Total Onshore
|
10
|
9
|
||||
|
Offshore
|
7
|
6
|
||||
|
Total United States
|
17
|
15
|
||||
|
Europe
|
-
|
3
|
||||
|
Asia
|
1
|
1
|
||||
|
Total
|
18
|
19
|
||||
|
Natural gas - mcf
|
||||||
|
United States
|
||||||
|
Bakken
|
37
|
20
|
||||
|
Other Onshore
|
27
|
25
|
||||
|
Total Onshore
|
64
|
45
|
||||
|
Offshore
|
73
|
65
|
||||
|
Total United States
|
137
|
110
|
||||
|
Europe
|
14
|
57
|
||||
|
Asia and other
|
437
|
458
|
||||
|
Total
|
588
|
625
|
||||
|
Barrels of oil equivalent
|
365
|
413
|
||||
15
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Second
|
Second
|
First
|
|||||||
|
Quarter
|
Quarter
|
Quarter
|
|||||||
|
2013
|
2012
|
2013
|
|||||||
|
Sales Volumes Per Day (in thousands)
|
|||||||||
|
Crude oil - barrels
|
233
|
312
|
275
|
||||||
|
Natural gas liquids - barrels
|
18
|
18
|
18
|
||||||
|
Natural gas - mcf
|
582
|
641
|
596
|
||||||
|
Barrels of oil equivalent
|
347
|
437
|
393
|
||||||
|
Sales Volumes (in thousands)
|
|||||||||
|
Crude oil - barrels
|
21,180
|
28,373
|
24,767
|
||||||
|
Natural gas liquids - barrels
|
1,593
|
1,639
|
1,647
|
||||||
|
Natural gas - mcf
|
52,969
|
58,315
|
53,662
|
||||||
|
Barrels of oil equivalent
|
31,601
|
39,732
|
35,358
|
|
First Half
|
||||||
|
2013
|
2012
|
|||||
|
Sales Volumes Per Day (in thousands)
|
||||||
|
Crude oil - barrels
|
254
|
282
|
||||
|
Natural gas liquids - barrels
|
18
|
19
|
||||
|
Natural gas - mcf
|
589
|
625
|
||||
|
Barrels of oil equivalent
|
370
|
405
|
||||
|
Sales Volumes (in thousands)
|
||||||
|
Crude oil - barrels
|
45,947
|
51,425
|
||||
|
Natural gas liquids - barrels
|
3,240
|
3,394
|
||||
|
Natural gas - mcf
|
106,631
|
113,757
|
||||
|
Barrels of oil equivalent
|
66,959
|
73,779
|
16
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Second
|
Second
|
First
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Operating Data
|
||||||||||||
|
Average Selling Prices
|
||||||||||||
|
Crude oil - per barrel (including hedging)
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 89.97 | $ | 83.09 | $ | 89.46 | ||||||
|
Offshore
|
106.71 | 102.83 | 107.52 | |||||||||
|
Total United States
|
97.20 | 91.97 | 97.03 | |||||||||
|
Europe
|
77.14 | 76.20 | 63.51 | |||||||||
|
Africa
|
106.15 | 89.01 | 109.81 | |||||||||
|
Asia
|
105.27 | 105.89 | 110.70 | |||||||||
|
Worldwide
|
97.89 | 86.86 | 94.50 | |||||||||
|
Crude oil - per barrel (excluding hedging)
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 88.91 | $ | 83.28 | $ | 89.82 | ||||||
|
Offshore
|
103.43 | 103.72 | 108.70 | |||||||||
|
Total United States
|
95.18 | 92.48 | 97.74 | |||||||||
|
Europe
|
75.22 | 76.58 | 63.69 | |||||||||
|
Africa
|
102.78 | 105.72 | 111.18 | |||||||||
|
Asia
|
105.27 | 106.17 | 110.70 | |||||||||
|
Worldwide
|
95.45 | 91.83 | 95.24 | |||||||||
|
Natural gas liquids - per barrel
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 38.84 | $ | 43.80 | $ | 43.47 | ||||||
|
Offshore
|
27.81 | 36.43 | 27.79 | |||||||||
|
Total United States
|
34.57 | 40.75 | 37.29 | |||||||||
|
Europe
|
53.16 | 66.15 | 45.77 | |||||||||
|
Asia
|
66.90 | 75.16 | 79.44 | |||||||||
|
Worldwide
|
36.28 | 45.56 | 38.67 | |||||||||
|
Natural gas - per mcf
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 3.19 | $ | 1.50 | $ | 2.86 | ||||||
|
Offshore
|
3.17 | 1.59 | 2.54 | |||||||||
|
Total United States
|
3.18 | 1.55 | 2.69 | |||||||||
|
Europe
|
9.99 | 9.98 | 7.98 | |||||||||
|
Asia and other
|
7.39 | 6.61 | 7.75 | |||||||||
|
Worldwide
|
6.44 | 5.94 | 6.62 | |||||||||
17
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
First Half
|
||||||||
|
2013
|
2012
|
|||||||
|
Operating Data
|
||||||||
|
Average Selling Prices
|
||||||||
|
Crude oil - per barrel (including hedging)
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 89.71 | $ | 85.59 | ||||
|
Offshore
|
107.11 | 103.26 | ||||||
|
Total United States
|
97.12 | 93.81 | ||||||
|
Europe
|
68.37 | 78.05 | ||||||
|
Africa
|
107.94 | 88.91 | ||||||
|
Asia
|
109.30 | 110.70 | ||||||
|
Worldwide
|
96.08 | 88.23 | ||||||
|
Crude oil - per barrel (excluding hedging)
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 89.37 | $ | 86.99 | ||||
|
Offshore
|
106.03 | 107.20 | ||||||
|
Total United States
|
96.46 | 96.39 | ||||||
|
Europe
|
67.80 | 79.45 | ||||||
|
Africa
|
106.88 | 111.78 | ||||||
|
Asia
|
109.30 | 113.67 | ||||||
|
Worldwide
|
95.34 | 95.72 | ||||||
|
Natural gas liquids - per barrel
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 41.21 | $ | 48.06 | ||||
|
Offshore
|
27.80 | 40.16 | ||||||
|
Total United States
|
35.97 | 44.92 | ||||||
|
Europe
|
52.58 | 81.20 | ||||||
|
Asia
|
72.68 | 82.02 | ||||||
|
Worldwide
|
37.49 | 52.78 | ||||||
|
Natural gas - per mcf
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 3.03 | $ | 1.66 | ||||
|
Offshore
|
2.86 | 1.63 | ||||||
|
Total United States
|
2.94 | 1.64 | ||||||
|
Europe
|
9.08 | 9.69 | ||||||
|
Asia and other
|
7.57 | 6.69 | ||||||
|
Worldwide
|
6.53 | 6.08 | ||||||
18
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
DISCONTINUED OPERATIONS SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
Second
|
Second
|
First
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Discontinued Operations - Financial Information
|
||||||||||||
|
Downstream Businesses Results
|
||||||||||||
|
Income (loss) before income taxes
|
$ | 15 | $ | 11 | $ | 154 | ||||||
|
Provision (benefit) for income taxes
|
4 | (1 | ) | 54 | ||||||||
|
Results of operations attributable to Hess Corporation
|
$ | 11 | $ | 12 | $ | 100 | ||||||
|
Summary of Downstream Businesses Results
|
||||||||||||
|
Marketing
|
$ | 11 | $ | 22 | $ | 42 | ||||||
|
Refining
|
(10 | ) | 8 | 65 | ||||||||
|
Trading
|
10 | (18 | ) | (7 | ) | |||||||
|
Results of operations attributable to Hess Corporation
|
$ | 11 | $ | 12 | $ | 100 | ||||||
|
Items Affecting Comparability of Earnings Between Periods
|
||||||||||||
|
Gain on LIFO inventory liquidations
|
$ | - | $ | - | $ | 137 | ||||||
|
Port Reading refinery shutdown costs
|
(8 | ) | - | (64 | ) | |||||||
|
Employee severance
|
(13 | ) | - | (43 | ) | |||||||
|
Total items affecting comparability of earnings
|
$ | (21 | ) | $ | - | $ | 30 | |||||
|
First Half
|
||||||||
|
2013
|
2012
|
|||||||
|
Discontinued Operations - Financial Information
|
||||||||
|
Downstream Businesses Results
|
||||||||
|
Income (loss) before income taxes
|
$ | 169 | $ | 32 | ||||
|
Provision (benefit) for income taxes
|
58 | 8 | ||||||
|
Results of operations attributable to Hess Corporation
|
$ | 111 | $ | 24 | ||||
|
Summary of Downstream Businesses Results
|
||||||||
|
Marketing
|
$ | 53 | $ | 45 | ||||
|
Refining
|
55 | 2 | ||||||
|
Trading
|
3 | (23 | ) | |||||
|
Results of operations attributable to Hess Corporation
|
$ | 111 | $ | 24 | ||||
|
Items Affecting Comparability of Earnings Between Periods
|
||||||||
|
Gain on LIFO inventory liquidations
|
$ | 137 | $ | - | ||||
|
Port Reading refinery shutdown costs
|
(72 | ) | - | |||||
|
Employee severance
|
(56 | ) | - | |||||
|
Total items affecting comparability of earnings
|
$ | 9 | $ | - | ||||
19