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): October 30, 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 October 30, 2013, Hess Corporation issued a news release reporting estimated results for the third 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) |
News release dated October 30, 2013 reporting estimated results for the third 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: October 30, 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 October 30, 2013 reporting estimated results for the third quarter of 2013.
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4
Exhibit 99(1)
 News Release
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HESS CORPORATION
Investor Contact: Jay Wilson
(212) 536-8940
Media Contact: Jon Pepper
(212) 536-8550
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HESS REPORTS ESTIMATED RESULTS FOR THE THIRD QUARTER OF 2013
Third Quarter Highlights:
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●
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Net income was $420 million compared to $557 million in the third quarter of 2012
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●
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Production from the Bakken oil shale play increased to 71,000 barrels of oil equivalent per day, up 14 percent; drilling and completion costs per well were $7.8 million, down 18 percent from the third quarter of 2012
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●
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Capital and exploratory expenditures of $1,527 million in the third quarter of 2013 were down 33 percent from the same quarter last year
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●
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Proceeds from completed and announced asset sales, including the release of working capital, amount to $6.3 billion
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●
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Share repurchase program commenced; $500 million of common stock purchased in the third quarter at an average price of $76.60 per share
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●
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Quarterly dividend increased 150 percent to 25 cents per common share
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NEW YORK, October 30, 2013 -- Hess Corporation (NYSE: HES) today reported net income of $420 million for the quarter ended September 30, 2013. Adjusted earnings, which exclude items affecting comparability, were $405 million or $1.18 per common share compared with $495 million in the third quarter of 2012.
After-tax income (loss) by major operating activity was as follows:
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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September 30,
(unaudited)
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September 30,
(unaudited)
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|||||||||||||||
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2013
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2012
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2013
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2012
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|||||||||||||
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(In millions, except per share amounts)
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||||||||||||||||
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Exploration and Production
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$ | 455 | $ | 608 | $ | 3,274 | $ | 1,887 | ||||||||
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Corporate and Other
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(89 | ) | (104 | ) | (312 | ) | (313 | ) | ||||||||
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Net income from continuing operations
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366 | 504 | 2,962 | 1,574 | ||||||||||||
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Discontinued operations - Downstream businesses
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54 | 53 | 165 | 77 | ||||||||||||
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Net income attributable to Hess Corporation
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$ | 420 | $ | 557 | $ | 3,127 | $ | 1,651 | ||||||||
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Net income per share (diluted):
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||||||||||||||||
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Continuing operations
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$ | 1.07 | $ | 1.48 | $ | 8.63 | $ | 4.63 | ||||||||
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Discontinued operations
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0.16 | 0.16 | 0.48 | 0.22 | ||||||||||||
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Net income per share
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$ | 1.23 | $ | 1.64 | $ | 9.11 | $ | 4.85 | ||||||||
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Weighted average number of shares (diluted)
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343.3 | 340.0 | 343.3 | 340.3 | ||||||||||||
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Note: See page 5 for the items affecting comparability of earnings between periods.
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||||||||||||||||
1
Exploration and Production:
Exploration and Production earnings were $455 million in the third quarter of 2013, compared with $608 million in the third quarter of 2012. Adjusted earnings were $458 million in the third quarter of 2013 and $546 million in the third quarter of 2012. Earnings in the third quarter were negatively impacted by an estimated $30 million resulting from sales volumes being underlifted compared to production by 1.2 million barrels. In addition, extended shutdowns for seasonal maintenance at non-operated fields in the Gulf of Mexico reduced earnings by an estimated $30 million compared to the prior year quarter and $75 million compared to the second quarter of 2013.
Oil and gas production of 310,000 barrels of oil equivalent per day (boepd) was down from 402,000 boepd in the third quarter a year ago. The decrease was due to asset sales in Russia, the United Kingdom North Sea and Azerbaijan (reduction of 83,000 boepd), extended shutdowns in the Gulf of Mexico and lower production in Libya (reduction of 23,000 boepd), as well as other maintenance and declines (reduction of 24,000 boepd). Partially offsetting these reductions, net production was up at Valhall by 30,000 boepd and at the Bakken by 8,000 boepd. Due to civil unrest in Libya, full year 2013 production is expected to be at the low end of the guidance range of 340,000 to 355,000 boepd. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $104.95 per barrel, up from $86.69 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.52 per mcf in the third quarter of 2013, up from $5.88 per mcf in the third quarter of 2012.
Operational Highlights for the Third Quarter of 2013:
Bakken (Onshore U.S.): Net production from the Bakken oil shale play averaged 71,000 barrels of oil equivalent per day, an increase of approximately 14 percent from the same period last year. Bakken production guidance remains 64,000 to 70,000 boepd for full year 2013. During the quarter, Hess brought 50 operated wells on production, bringing the year-to-date total to 122 wells. Drilling and completion costs per operated well averaged $7.8 million in the third quarter of 2013, an improvement of 18 percent versus last year’s third quarter.
2
Utica (Onshore U.S.): Seven wells were drilled, eight wells were completed and one well was flow tested during the quarter. On the Hess 100 percent-owned acreage, the Porterfield C 1H-17 well, in Belmont County, tested at a rate of 3,421 barrels of oil equivalent per day including 21 percent liquids. To date in 2013, 21 wells have been drilled, 18 wells were completed and nine wells have been tested across both the Corporation’s 100 percent-owned and CONSOL joint venture acreage.
Valhall (Offshore Norway): Net production averaged 37,000 boepd during the third quarter, compared with 7,000 boepd in the same period last year, and 13,000 boepd in the second quarter of 2013. The Field was shut down from July 2012 through January 2013 to install a new production, utilities and accommodation platform. Production resumed at reduced rates until the Field was shut down during June for planned maintenance at a third party processing facility. Full year 2013 production for Valhall is expected to be at the low end of the guidance range of 24,000 to 28,000 barrels of oil equivalent per day. The Corporation’s higher depreciation, depletion and amortization expense in the third quarter as compared to the second quarter of 2013, reflected this greater production contribution from the Valhall Field, which has a higher depreciation rate per barrel than the portfolio average due to a combination of the recently completed field redevelopment project and prior acquisition costs. While this higher depreciation rate and the high Norwegian statutory income tax rate lowers Valhall’s net income per barrel contribution to the portfolio, its cash margin per barrel is accretive to the portfolio average, since cash taxes are expected to be deferred for the next several years.
North Malay Basin (Offshore Malaysia): The five well development drilling program, which commenced in June 2013, was completed ahead of schedule and the rig has now been demobilized. The project achieved first production in October 2013. Progress continues on the full field development where first gas is anticipated by 2017.
Kurdistan Region of Iraq (Onshore): The Corporation spud its first exploration well on the Shakrok block. A second exploration well in Kurdistan, which will be on the Dinarta block, is due to be spud in November 2013.
3
Capital and Exploratory Expenditures:
Capital and exploratory expenditures in the third quarter of 2013 were $1,527 million, of which $1,491 million related to Exploration and Production operations, including $579 million invested in the Bakken. Capital and exploratory expenditures for the third quarter of 2012 were $2,287 million, of which $2,260 million related to Exploration and Production operations, including $766 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:
To date in 2013, the Corporation has sold 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 its Eagle Ford shale assets in Texas. In addition, the Corporation has announced the sale of its energy marketing business and its terminal network. Total proceeds from these completed and announced asset sales, including an expected release of working capital, amount to approximately $6.3 billion. During the quarter, the Corporation also advanced divestiture processes for its upstream assets in Indonesia and Thailand, as well as the retail and trading businesses.
Liquidity:
Net cash provided by operating activities was $1,254 million in the third quarter of 2013, compared with $1,862 million in the same quarter of 2012. At September 30, 2013, cash and cash equivalents totaled $321 million, compared with $642 million at December 31, 2012. Total debt of $6,209 million at September 30, 2013 is down 23 percent from $8,111 million at December 31, 2012. The Corporation’s debt to capitalization ratio at September 30, 2013 was 20.7 percent, compared with 27.7 percent at the end of 2012.
Returning Capital to Shareholders:
During the third quarter, the Corporation increased its returns to shareholders through a 150 percent increase in the quarterly dividend to 25 cents per common share, and the purchase of approximately 6,530,000 shares of common stock at a cost of approximately $500 million under the Corporation’s authorized $4 billion share repurchase program.
4
Items Affecting Comparability of Earnings Between Periods:
The following table reflects the total after-tax income (expense) of items affecting comparability of earnings between periods:
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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September 30,
(unaudited)
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September 30,
(unaudited)
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|||||||||||||||
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2013
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2012
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2013
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2012
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(In millions)
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Exploration and Production
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$ | (3 | ) | $ | 62 | $ | 1,518 | $ | 62 | |||||||
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Corporate and Other
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(5 | ) | - | (17 | ) | - | ||||||||||
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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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(8 | ) | 62 | 1,501 | 62 | |||||||||||
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Discontinued operations - Downstream businesses
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23 | - | 32 | - | ||||||||||||
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Total items affecting comparability of earnings
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||||||||||||||||
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between periods
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$ | 15 | $ | 62 | $ | 1,533 | $ | 62 | ||||||||
Third quarter 2013 net income from continuing operations included after-tax charges of $8 million for employee severance expenses associated with the Corporation’s transformation to a pure play E&P company.
Discontinued Operations – Downstream Businesses:
The downstream businesses, comprised of retail, energy marketing, refining and energy trading, reported income of $54 million in the third quarter of 2013, compared with $53 million in the same period in 2012. Third quarter 2013 results included after-tax income totaling $23 million resulting from the net impact of a gain on the liquidation of LIFO inventories, largely offset by non-cash mark-to-market adjustments in energy marketing, employee severance, Port Reading refinery shutdown costs and other charges.
5
Reconciliation of Reported Net Income to Adjusted Earnings:
The following table reconciles reported net income attributable to Hess Corporation (U.S. GAAP) and adjusted earnings:
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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September 30,
(unaudited)
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September 30,
(unaudited)
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2013
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2012
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2013
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2012
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(In millions)
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Net income attributable to Hess Corporation
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$ | 420 | $ | 557 | $ | 3,127 | $ | 1,651 | ||||||||
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Less: Total items affecting comparability of earnings
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||||||||||||||||
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between periods
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15 | 62 | 1,533 | 62 | ||||||||||||
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Adjusted earnings
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$ | 405 | $ | 495 | $ | 1,594 | $ | 1,589 | ||||||||
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 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.
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. Estimates and projections contained in this release are based on the Company’s current understanding and assessment based on reasonable assumptions. Actual results may differ materially from these estimates and projections due to certain risk factors discussed in the Corporation’s periodic filings with the Securities and Exchange Commission and other factors.
Adjusted Earnings:
The Corporation has used a non-GAAP financial measure in this earnings release. “Adjusted earnings” presented in this release is defined as reported net income attributable to Hess Corporation excluding items identified as affecting comparability of earnings between periods. We believe that investors' understanding of our performance is enhanced by disclosing this measure. This measure is not, and should not be viewed as, a substitute for U.S. GAAP net income. A reconciliation of reported net income attributable to Hess Corporation (U.S. GAAP) to adjusted earnings is provided in the release.
6
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
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Third
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Third
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Second
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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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||||||||||||
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Sales and other operating revenues
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$ | 2,706 | $ | 3,072 | $ | 3,011 | ||||||
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Gains (losses) on asset sales
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(5 | ) | 376 | 1,111 | ||||||||
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Other, net
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(3 | ) | 46 | (17 | ) | |||||||
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Total revenues and non-operating income
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2,698 | 3,494 | 4,105 | |||||||||
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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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374 | 359 | 421 | |||||||||
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Operating costs and expenses
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475 | 568 | 510 | |||||||||
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Production and severance taxes
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84 | 144 | 97 | |||||||||
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Exploration expenses, including dry holes and lease impairment
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154 | 259 | 200 | |||||||||
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General and administrative expenses
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153 | 134 | 167 | |||||||||
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Interest expense
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86 | 104 | 99 | |||||||||
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Depreciation, depletion and amortization
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681 | 728 | 613 | |||||||||
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Asset impairments
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- | 208 | - | |||||||||
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Total costs and expenses
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2,007 | 2,504 | 2,107 | |||||||||
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Income from continuing operations before income taxes
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691 | 990 | 1,998 | |||||||||
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Provision for income taxes
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325 | 480 | 409 | |||||||||
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Income from continuing operations
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366 | 510 | 1,589 | |||||||||
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Income (loss) from discontinued operations
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52 | 82 | 27 | |||||||||
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Net income
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418 | 592 | 1,616 | |||||||||
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Less: Net income (loss) attributable to noncontrolling interests
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(2 | ) | 35 | 185 | ||||||||
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Net income attributable to Hess Corporation
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$ | 420 | $ | 557 | $ | 1,431 | ||||||
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Cash Flow Information
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Cash provided by operating activities from continuing operations
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$ | 1,022 | $ | 1,818 | $ | 1,211 | ||||||
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Cash provided by operating activities from discontinued operations
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232 | 44 | 36 | |||||||||
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Net cash provided by operating activities (a)
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1,254 | 1,862 | 1,247 | |||||||||
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Cash provided by (used in) investing activities from continuing operations
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(1,463 | ) | (1,595 | ) | 962 | |||||||
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Cash provided by (used in) investing activities from discontinued operations
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(24 | ) | (22 | ) | (26 | ) | ||||||
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Net cash provided by (used in) investing activities
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(1,487 | ) | (1,617 | ) | 936 | |||||||
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Cash provided by (used in) financing activities from continuing operations
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(171 | ) | (126 | ) | (1,893 | ) | ||||||
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Cash provided by (used in) financing activities from discontinued operations
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- | - | (9 | ) | ||||||||
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Net cash provided by (used in) financing activities
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(171 | ) | (126 | ) | (1,902 | ) | ||||||
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Net increase (decrease) in cash and cash equivalents
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$ | (404 | ) | $ | 119 | $ | 281 | |||||
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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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Nine Months
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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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||||||||
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Sales and other operating revenues
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$ | 9,183 | $ | 9,292 | ||||
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Gains (losses) on asset sales
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1,794 | 412 | ||||||
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Other, net
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(57 | ) | 72 | |||||
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Total revenues and non-operating income
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10,920 | 9,776 | ||||||
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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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1,391 | 961 | ||||||
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Operating costs and expenses
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1,570 | 1,653 | ||||||
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Production and severance taxes
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311 | 409 | ||||||
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Exploration expenses, including dry holes and lease impairment
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573 | 708 | ||||||
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General and administrative expenses
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469 | 410 | ||||||
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Interest expense
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291 | 313 | ||||||
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Depreciation, depletion and amortization
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1,973 | 2,136 | ||||||
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Asset impairments
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- | 267 | ||||||
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Total costs and expenses
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6,578 | 6,857 | ||||||
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Income from continuing operations before income taxes
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4,342 | 2,919 | ||||||
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Provision for income taxes
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1,204 | 1,330 | ||||||
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Income from continuing operations
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3,138 | 1,589 | ||||||
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Income (loss) from discontinued operations
|
169 | 98 | ||||||
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Net income
|
3,307 | 1,687 | ||||||
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Less: Net income (loss) attributable to noncontrolling interests
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180 | 36 | ||||||
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Net income attributable to Hess Corporation
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$ | 3,127 | $ | 1,651 | ||||
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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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$ | 3,019 | $ | 3,995 | ||||
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Cash provided by operating activities from discontinued operations
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301 | 95 | ||||||
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Net cash provided by operating activities (a)
|
3,320 | 4,090 | ||||||
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Cash provided by (used in) investing activities from continuing operations
|
(750 | ) | (5,298 | ) | ||||
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Cash provided by (used in) investing activities from discontinued operations
|
(62 | ) | (84 | ) | ||||
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Net cash provided by (used in) investing activities
|
(812 | ) | (5,382 | ) | ||||
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Cash provided by (used in) financing activities from continuing operations
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(2,820 | ) | 1,472 | |||||
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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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(2,829 | ) | 1,469 | |||||
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Net increase (decrease) in cash and cash equivalents
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$ | (321 | ) | $ | 177 | |||
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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)
|
September 30,
|
December 31,
|
|||||||
|
2013
|
2012
|
|||||||
|
Balance Sheet Information
|
||||||||
|
Cash and cash equivalents
|
$ | 321 | $ | 642 | ||||
|
Assets held for sale
|
5,642 | 1,092 | ||||||
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Other current assets
|
3,294 | 6,653 | ||||||
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Investments
|
441 | 443 | ||||||
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Property, plant and equipment – net
|
27,414 | 28,807 | ||||||
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Other long-term assets
|
4,784 | 5,804 | ||||||
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Total assets
|
$ | 41,896 | $ | 43,441 | ||||
|
Short-term debt and current maturities of long-term debt
|
$ | 791 | $ | 787 | ||||
|
Liabilities associated with assets held for sale
|
2,511 | 539 | ||||||
|
Other current liabilities
|
3,621 | 7,056 | ||||||
|
Long-term debt
|
5,418 | 7,324 | ||||||
|
Other long-term liabilities
|
5,713 | 6,532 | ||||||
|
Total equity excluding other comprehensive income (loss)
|
24,289 | 21,696 | ||||||
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Accumulated other comprehensive income (loss)
|
(447 | ) | (493 | ) | ||||
|
Total liabilities and equity
|
$ | 41,896 | $ | 43,441 | ||||
9
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
Third
|
Third
|
Second
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Capital and Exploratory Expenditures
|
||||||||||||
|
Exploration and Production
|
||||||||||||
|
United States
|
||||||||||||
|
Bakken
|
$ | 579 | $ | 766 | $ | 546 | ||||||
|
Other Onshore
|
161 | 150 | 195 | |||||||||
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Total Onshore
|
740 | 916 | 741 | |||||||||
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Offshore
|
208 | 294 | 217 | |||||||||
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Total United States
|
948 | 1,210 | 958 | |||||||||
|
Europe
|
159 | 497 | 172 | |||||||||
|
Africa
|
106 | 232 | 163 | |||||||||
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Asia and other
|
278 | 321 | 278 | |||||||||
|
Total Exploration and Production
|
1,491 | 2,260 | 1,571 | |||||||||
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Other
|
36 | 27 | 42 | |||||||||
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Total Capital and Exploratory Expenditures
|
$ | 1,527 | $ | 2,287 | $ | 1,613 | ||||||
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Total exploration expenses charged to income included above
|
$ | 96 | $ | 127 | $ | 113 | ||||||
|
Nine Months
|
||||||||||||
| 2013 | 2012 | |||||||||||
|
Capital and Exploratory Expenditures
|
||||||||||||
|
Exploration and Production
|
||||||||||||
|
United States
|
||||||||||||
|
Bakken
|
$ | 1,660 | $ | 2,444 | ||||||||
|
Other Onshore
|
532 | 575 | ||||||||||
|
Total Onshore
|
2,192 | 3,019 | ||||||||||
|
Offshore
|
653 | 675 | ||||||||||
|
Total United States
|
2,845 | 3,694 | ||||||||||
|
Europe
|
550 | 1,102 | ||||||||||
|
Africa
|
498 | 547 | ||||||||||
|
Asia and other
|
782 | 916 | ||||||||||
|
Total Exploration and Production
|
4,675 | 6,259 | ||||||||||
|
Other
|
96 | 92 | ||||||||||
|
Total Capital and Exploratory Expenditures
|
$ | 4,771 | $ | 6,351 | ||||||||
|
Total exploration expenses charged to income included above
|
$ | 319 | $ | 335 | ||||||||
10
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
Third Quarter 2013
|
||||||||||||||
|
United States
|
International
|
Total
|
||||||||||||
|
Sales and other operating revenues
|
$ | 1,472 | $ | 1,234 | $ | 2,706 | ||||||||
|
Gains (losses) on asset sales
|
(1 | ) | (7 | ) | (8 | ) | ||||||||
|
Other, net
|
(1 | ) | (2 | ) | (3 | ) | ||||||||
|
Total revenues and non-operating income
|
1,470 | 1,225 | 2,695 | |||||||||||
|
Costs and Expenses
|
||||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
398 | (24 | ) | 374 | ||||||||||
|
Operating costs and expenses
|
191 | 284 | 475 | |||||||||||
|
Production and severance taxes
|
64 | 20 | 84 | |||||||||||
|
Exploration expenses, including dry holes and lease impairment
|
71 | 83 | 154 | |||||||||||
|
General and administrative expenses
|
58 | 38 | 96 | |||||||||||
|
Depreciation, depletion and amortization
|
346 | 330 | 676 | |||||||||||
|
Total costs and expenses
|
1,128 | 731 | 1,859 | |||||||||||
|
Results of operations before income taxes
|
342 | 494 | 836 | |||||||||||
|
Provision for income taxes
|
134 | 247 | 381 | |||||||||||
|
Net income
|
208 | 247 | 455 | |||||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | - | - | |||||||||||
|
Net income attributable to Hess Corporation
|
$ | 208 | (a) | $ | 247 | (b) | $ | 455 | ||||||
|
Third Quarter 2012
|
||||||||||||||
|
United States
|
International
|
Total
|
||||||||||||
|
Sales and other operating revenues
|
$ | 1,298 | $ | 1,774 | $ | 3,072 | ||||||||
|
Gains (losses) on asset sales
|
- | 376 | 376 | |||||||||||
|
Other, net
|
18 | 26 | 44 | |||||||||||
|
Total revenues and non-operating income
|
1,316 | 2,176 | 3,492 | |||||||||||
|
Costs and Expenses
|
||||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
276 | 83 | 359 | |||||||||||
|
Operating costs and expenses
|
188 | 380 | 568 | |||||||||||
|
Production and severance taxes
|
53 | 91 | 144 | |||||||||||
|
Exploration expenses, including dry holes and lease impairment
|
68 | 191 | 259 | |||||||||||
|
General and administrative expenses
|
49 | 30 | 79 | |||||||||||
|
Depreciation, depletion and amortization
|
393 | 332 | 725 | |||||||||||
|
Asset impairments
|
58 | 150 | 208 | |||||||||||
|
Total costs and expenses
|
1,085 | 1,257 | 2,342 | |||||||||||
|
Results of operations before income taxes
|
231 | 919 | 1,150 | |||||||||||
|
Provision for income taxes
|
91 | 445 | 536 | |||||||||||
|
Net income
|
140 | 474 | 614 | |||||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 6 | 6 | |||||||||||
|
Net income attributable to Hess Corporation
|
$ | 140 | (a) | $ | 468 | (b) | $ | 608 | ||||||
|
(a)
|
The results from crude oil hedging activities comprised after-tax realized income of $0.3 million in the third quarter of 2013, and losses of $5 million in the third quarter of 2012.
|
|
(b)
|
The results from crude oil hedging activities comprised after-tax realized income of $0.5 million in the third quarter of 2013, and losses of $89 million in the third quarter of 2012.
|
11
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 | ||||||
|
(a)
|
The after-tax realized gains from crude oil hedging activities were $13 million in the second quarter of 2013.
|
|
(b)
|
The after-tax realized gains from crude oil hedging activities were $20 million in the second quarter of 2013.
|
12
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
Nine Months 2013
|
||||||||||||||
|
United States
|
International
|
Total
|
||||||||||||
|
Sales and other operating revenues
|
$ | 4,680 | $ | 4,503 | $ | 9,183 | ||||||||
|
Gains (losses) on asset sales
|
(18 | ) | 1,809 | 1,791 | ||||||||||
|
Other, net
|
(11 | ) | (45 | ) | (56 | ) | ||||||||
|
Total revenues and non-operating income
|
4,651 | 6,267 | 10,918 | |||||||||||
|
Costs and Expenses
|
||||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
1,346 | 45 | 1,391 | |||||||||||
|
Operating costs and expenses
|
582 | 988 | 1,570 | |||||||||||
|
Production and severance taxes
|
176 | 135 | 311 | |||||||||||
|
Exploration expenses, including dry holes and lease impairment
|
242 | 331 | 573 | |||||||||||
|
General and administrative expenses
|
146 | 122 | 268 | |||||||||||
|
Depreciation, depletion and amortization
|
1,046 | 915 | 1,961 | |||||||||||
|
Total costs and expenses
|
3,538 | 2,536 | 6,074 | |||||||||||
|
Results of operations before income taxes
|
1,113 | 3,731 | 4,844 | |||||||||||
|
Provision for income taxes
|
450 | 944 | 1,394 | |||||||||||
|
Net income
|
663 | 2,787 | 3,450 | |||||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 176 | 176 | |||||||||||
|
Net income attributable to Hess Corporation
|
$ | 663 | (a) | $ | 2,611 | (b) | $ | 3,274 | ||||||
|
Nine Months 2012
|
||||||||||||||
|
United States
|
International
|
Total
|
||||||||||||
|
Sales and other operating revenues
|
$ | 3,840 | $ | 5,452 | $ | 9,292 | ||||||||
|
Gains (losses) on asset sales
|
- | 412 | 412 | |||||||||||
|
Other, net
|
19 | 53 | 72 | |||||||||||
|
Total revenues and non-operating income
|
3,859 | 5,917 | 9,776 | |||||||||||
|
Costs and Expenses
|
||||||||||||||
|
Cost of products sold (excluding items shown separately below)
|
852 | 109 | 961 | |||||||||||
|
Operating costs and expenses
|
582 | 1,071 | 1,653 | |||||||||||
|
Production and severance taxes
|
143 | 266 | 409 | |||||||||||
|
Exploration expenses, including dry holes and lease impairment
|
221 | 487 | 708 | |||||||||||
|
General and administrative expenses
|
137 | 86 | 223 | |||||||||||
|
Depreciation, depletion and amortization
|
1,007 | 1,120 | 2,127 | |||||||||||
|
Asset impairments
|
117 | 150 | 267 | |||||||||||
|
Total costs and expenses
|
3,059 | 3,289 | 6,348 | |||||||||||
|
Results of operations before income taxes
|
800 | 2,628 | 3,428 | |||||||||||
|
Provision for income taxes
|
313 | 1,213 | 1,526 | |||||||||||
|
Net income
|
487 | 1,415 | 1,902 | |||||||||||
|
Less: Net income attributable to noncontrolling interests
|
- | 15 | 15 | |||||||||||
|
Net income attributable to Hess Corporation
|
$ | 487 | (a) | $ | 1,400 | (b) | $ | 1,887 | ||||||
|
(a)
|
The results from crude oil hedging activities comprised after-tax realized income of $9 million in the first nine months of 2013, and losses of $34 million in the first nine months of 2012.
|
|
(b)
|
The results from crude oil hedging activities comprised after-tax realized income of $14 million in the first nine months of 2013, and losses of $300 million in the first nine months of 2012.
|
13
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Third
|
Third
|
Second
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Operating Data
|
||||||||||||
|
Net Production Per Day (in thousands)
|
||||||||||||
|
Crude oil - barrels
|
||||||||||||
|
United States
|
||||||||||||
|
Bakken
|
57 | 52 | 52 | |||||||||
|
Other Onshore
|
9 | 13 | 11 | |||||||||
|
Total Onshore
|
66 | 65 | 63 | |||||||||
|
Offshore
|
37 | 44 | 48 | |||||||||
|
Total United States
|
103 | 109 | 111 | |||||||||
|
Europe
|
38 | 80 | 33 | |||||||||
|
Africa
|
57 | 75 | 73 | |||||||||
|
Asia
|
9 | 17 | 9 | |||||||||
|
Total
|
207 | 281 | 226 | |||||||||
|
Natural gas liquids - barrels
|
||||||||||||
|
United States
|
||||||||||||
|
Bakken
|
7 | 5 | 6 | |||||||||
|
Other Onshore
|
4 | 6 | 4 | |||||||||
|
Total Onshore
|
11 | 11 | 10 | |||||||||
|
Offshore
|
4 | 5 | 6 | |||||||||
|
Total United States
|
15 | 16 | 16 | |||||||||
|
Europe
|
1 | 2 | 1 | |||||||||
|
Asia
|
1 | 1 | 1 | |||||||||
|
Total
|
17 | 19 | 18 | |||||||||
|
Natural gas - mcf
|
||||||||||||
|
United States
|
||||||||||||
|
Bakken
|
44 | 35 | 39 | |||||||||
|
Other Onshore
|
24 | 28 | 27 | |||||||||
|
Total Onshore
|
68 | 63 | 66 | |||||||||
|
Offshore
|
42 | 53 | 75 | |||||||||
|
Total United States
|
110 | 116 | 141 | |||||||||
|
Europe
|
29 | 36 | 15 | |||||||||
|
Asia and other
|
380 | 462 | 427 | |||||||||
|
Total
|
519 | 614 | 583 | |||||||||
|
Barrels of oil equivalent
|
310 | 402 | 341 | |||||||||
14
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Nine Months
|
||||||||
|
2013
|
2012
|
|||||||
|
Operating Data
|
||||||||
|
Net Production Per Day (in thousands)
|
||||||||
|
Crude oil - barrels
|
||||||||
|
United States
|
||||||||
|
Bakken
|
54 | 45 | ||||||
|
Other Onshore
|
11 | 13 | ||||||
|
Total Onshore
|
65 | 58 | ||||||
|
Offshore
|
44 | 46 | ||||||
|
Total United States
|
109 | 104 | ||||||
|
Europe
|
46 | 91 | ||||||
|
Africa
|
69 | 75 | ||||||
|
Asia
|
11 | 17 | ||||||
|
Total
|
235 | 287 | ||||||
|
Natural gas liquids - barrels
|
||||||||
|
United States
|
||||||||
|
Bakken
|
6 | 4 | ||||||
|
Other Onshore
|
4 | 5 | ||||||
|
Total Onshore
|
10 | 9 | ||||||
|
Offshore
|
6 | 6 | ||||||
|
Total United States
|
16 | 15 | ||||||
|
Europe
|
1 | 3 | ||||||
|
Asia
|
1 | 1 | ||||||
|
Total
|
18 | 19 | ||||||
|
Natural gas - mcf
|
||||||||
|
United States
|
||||||||
|
Bakken
|
39 | 25 | ||||||
|
Other Onshore
|
26 | 26 | ||||||
|
Total Onshore
|
65 | 51 | ||||||
|
Offshore
|
63 | 61 | ||||||
|
Total United States
|
128 | 112 | ||||||
|
Europe
|
19 | 50 | ||||||
|
Asia and other
|
418 | 459 | ||||||
|
Total
|
565 | 621 | ||||||
|
Barrels of oil equivalent
|
347 | 409 | ||||||
15
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Third
|
Third
|
Second
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Sales Volumes Per Day (in thousands)
|
||||||||||||
|
Crude oil - barrels
|
194 | 284 | 233 | |||||||||
|
Natural gas liquids - barrels
|
17 | 19 | 18 | |||||||||
|
Natural gas - mcf
|
515 | 616 | 582 | |||||||||
|
Barrels of oil equivalent
|
296 | 406 | 347 | |||||||||
|
Sales Volumes (in thousands)
|
||||||||||||
|
Crude oil - barrels
|
17,857 | 26,158 | 21,180 | |||||||||
|
Natural gas liquids - barrels
|
1,519 | 1,727 | 1,593 | |||||||||
|
Natural gas - mcf
|
47,406 | 56,628 | 52,969 | |||||||||
|
Barrels of oil equivalent
|
27,277 | 37,323 | 31,601 | |||||||||
|
Nine Months
|
||||||||||||
| 2013 | 2012 | |||||||||||
|
Sales Volumes Per Day (in thousands)
|
||||||||||||
|
Crude oil - barrels
|
234 | 283 | ||||||||||
|
Natural gas liquids - barrels
|
17 | 19 | ||||||||||
|
Natural gas - mcf
|
564 | 622 | ||||||||||
|
Barrels of oil equivalent
|
345 | 405 | ||||||||||
|
Sales Volumes (in thousands)
|
||||||||||||
|
Crude oil - barrels
|
63,804 | 77,583 | ||||||||||
|
Natural gas liquids - barrels
|
4,759 | 5,121 | ||||||||||
|
Natural gas - mcf
|
154,037 | 170,385 | ||||||||||
|
Barrels of oil equivalent
|
94,236 | 111,102 | ||||||||||
16
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Third
|
Third
|
Second
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Operating Data
|
||||||||||||
|
Average Selling Prices
|
||||||||||||
|
Crude oil - per barrel (including hedging)
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 96.01 | $ | 82.81 | $ | 89.97 | ||||||
|
Offshore
|
106.66 | 101.02 | 106.71 | |||||||||
|
Total United States
|
99.80 | 90.17 | 97.20 | |||||||||
|
Europe
|
113.18 | 75.08 | 77.14 | |||||||||
|
Africa
|
110.71 | 90.78 | 106.15 | |||||||||
|
Asia
|
104.27 | 102.85 | 105.27 | |||||||||
|
Worldwide
|
104.95 | 86.69 | 97.89 | |||||||||
|
Crude oil - per barrel (excluding hedging)
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 95.98 | $ | 83.34 | $ | 88.91 | ||||||
|
Offshore
|
106.56 | 101.99 | 103.43 | |||||||||
|
Total United States
|
99.75 | 90.87 | 95.18 | |||||||||
|
Europe
|
112.51 | 75.36 | 75.22 | |||||||||
|
Africa
|
110.95 | 110.33 | 102.78 | |||||||||
|
Asia
|
104.27 | 103.20 | 105.27 | |||||||||
|
Worldwide
|
104.88 | 92.35 | 95.45 | |||||||||
|
Natural gas liquids - per barrel
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 44.59 | $ | 41.34 | $ | 38.84 | ||||||
|
Offshore
|
32.14 | 32.51 | 27.81 | |||||||||
|
Total United States
|
41.03 | 38.35 | 34.57 | |||||||||
|
Europe
|
58.67 | 56.82 | 53.16 | |||||||||
|
Asia
|
70.05 | 64.67 | 66.90 | |||||||||
|
Worldwide
|
43.67 | 41.71 | 36.28 | |||||||||
|
Natural gas - per mcf
|
||||||||||||
|
United States
|
||||||||||||
|
Onshore
|
$ | 2.91 | $ | 2.06 | $ | 3.19 | ||||||
|
Offshore
|
2.56 | 2.31 | 3.17 | |||||||||
|
Total United States
|
2.78 | 2.18 | 3.18 | |||||||||
|
Europe
|
12.13 | 9.15 | 9.99 | |||||||||
|
Asia and other
|
7.19 | 6.56 | 7.39 | |||||||||
|
Worldwide
|
6.52 | 5.88 | 6.44 | |||||||||
17
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
|
Nine Months
|
||||||||
|
2013
|
2012
|
|||||||
|
Operating Data
|
||||||||
|
Average Selling Prices
|
||||||||
|
Crude oil - per barrel (including hedging)
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 91.87 | $ | 84.55 | ||||
|
Offshore
|
106.99 | 102.54 | ||||||
|
Total United States
|
97.97 | 92.53 | ||||||
|
Europe
|
79.60 | 77.13 | ||||||
|
Africa
|
108.57 | 89.56 | ||||||
|
Asia
|
107.77 | 107.88 | ||||||
|
Worldwide
|
98.55 | 87.71 | ||||||
|
Crude oil - per barrel (excluding hedging)
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 91.64 | $ | 85.62 | ||||
|
Offshore
|
106.18 | 105.53 | ||||||
|
Total United States
|
97.51 | 94.46 | ||||||
|
Europe
|
79.01 | 78.18 | ||||||
|
Africa
|
107.81 | 111.28 | ||||||
|
Asia
|
107.77 | 109.92 | ||||||
|
Worldwide
|
97.99 | 94.58 | ||||||
|
Natural gas liquids - per barrel
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 42.35 | $ | 45.53 | ||||
|
Offshore
|
28.84 | 37.72 | ||||||
|
Total United States
|
37.50 | 42.60 | ||||||
|
Europe
|
57.02 | 75.67 | ||||||
|
Asia
|
71.70 | 75.95 | ||||||
|
Worldwide
|
39.46 | 49.05 | ||||||
|
Natural gas - per mcf
|
||||||||
|
United States
|
||||||||
|
Onshore
|
$ | 2.99 | $ | 1.83 | ||||
|
Offshore
|
2.79 | 1.83 | ||||||
|
Total United States
|
2.89 | 1.83 | ||||||
|
Europe
|
10.62 | 9.56 | ||||||
|
Asia and other
|
7.46 | 6.64 | ||||||
|
Worldwide
|
6.53 | 6.01 | ||||||
18
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
DISCONTINUED OPERATIONS SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
Third
|
Third
|
Second
|
||||||||||
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Discontinued Operations - Financial Information
|
||||||||||||
|
Downstream Businesses Results
|
||||||||||||
|
Income (loss) before income taxes
|
$ | 86 | $ | 84 | $ | 15 | ||||||
|
Provision (benefit) for income taxes
|
32 | 31 | 4 | |||||||||
|
Results of operations attributable to Hess Corporation
|
$ | 54 | $ | 53 | $ | 11 | ||||||
|
Summary of Downstream Businesses Results
|
||||||||||||
|
Marketing
|
$ | 69 | $ | 17 | $ | 11 | ||||||
|
Refining
|
(11 | ) | 18 | (10 | ) | |||||||
|
Trading
|
(4 | ) | 18 | 10 | ||||||||
|
Results of operations attributable to Hess Corporation
|
$ | 54 | $ | 53 | $ | 11 | ||||||
|
Net Impact of Items Affecting Comparability of Earnings Between Periods
|
$ | 23 | $ | - | $ | (21 | ) | |||||
|
Nine Months
|
||||||||
|
2013
|
2012
|
|||||||
|
Downstream Businesses Results
|
||||||||
|
Income (loss) before income taxes
|
$ | 255 | $ | 116 | ||||
|
Provision (benefit) for income taxes
|
90 | 39 | ||||||
|
Results of operations attributable to Hess Corporation
|
$ | 165 | $ | 77 | ||||
|
Summary of Downstream Businesses Results
|
||||||||
|
Marketing
|
$ | 122 | $ | 62 | ||||
|
Refining
|
44 | 20 | ||||||
|
Trading
|
(1 | ) | (5 | ) | ||||
|
Results of operations attributable to Hess Corporation
|
$ | 165 | $ | 77 | ||||
|
Net Impact of Items Affecting Comparability of Earnings Between Periods
|
$ | 32 | $ | - | ||||
19