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 25, 2017
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 Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
1185 Avenue of the Americas
New York, New York 10036
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 997-8500
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2017, Hess Corporation issued a news release reporting estimated results for the third quarter of 2017. 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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(d) |
Exhibit |
99(1)News release dated October 25, 2017 reporting estimated results for the third quarter of 2017.
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.
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Date: October 25, 2017 |
HESS CORPORATION |
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By: |
/s/John P. Rielly |
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Name: |
John P. Rielly |
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Title: |
Senior Vice President and |
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Chief Financial Officer |
Exhibit 99.1
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HESS CORPORATION
HESS REPORTS ESTIMATED RESULTS FOR THE THIRD QUARTER OF 2017
Asset Sales Announced in October:
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• |
Agreement to sell our interests in Norway for $2 billion |
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• |
Agreement to sell our interests in Equatorial Guinea for $650 million |
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• |
Commencement of a process to sell our interests in Denmark in 2018 |
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• |
Proceeds along with cash on balance sheet to prefund our world class investment opportunity offshore Guyana (Hess - 30 percent) |
Third Quarter Highlights:
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• |
Net loss was $624 million, or $2.02 per common share, compared with a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016; Third quarter 2017 results include a noncash charge for Norway of $550 million after-tax and a $280 million after-tax gain on an asset sale |
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• |
Adjusted net loss was $324 million, or $1.07 per common share, compared to an adjusted net loss of $340 million, or $1.12 per common share, in the third quarter of last year |
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• |
Total production was 299,000 barrels of oil equivalent per day (boepd), excluding Libya; Bakken production was 103,000 boepd |
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• |
Commenced production in July at North Malay Basin, offshore Malaysia (Hess operated - 50 percent) with current production of approximately 155 million cubic feet per day (mmcfd) |
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• |
A fifth oil discovery on the Stabroek block, offshore Guyana, was announced at the Turbot-1 prospect located approximately 30 miles to the southeast of the Liza phase one project |
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• |
Completed the sale of our interests in enhanced oil recovery assets in the Permian Basin for net proceeds of $597 million, after closing adjustments |
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• |
E&P capital and exploratory expenditures were $558 million for the quarter and $1,479 million for nine months ended September 30, 2017 |
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• |
Cash and cash equivalents were $2.5 billion at September 30, 2017 |
NEW YORK, October 25, 2017 — Hess Corporation (NYSE: HES) today reported a net loss of $624 million, or $2.02 per common share, in the third quarter of 2017 compared with a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016. On an adjusted basis, the Corporation reported a net loss of $324 million, or $1.07 per common share, in the third quarter of
1
2017 compared with an adjusted net loss of $340 million, or $1.12 per common share, in the prior- year quarter. The improved adjusted results reflect higher realized crude oil selling prices and lower operating costs, depreciation, depletion and amortization, and exploration expenses. Third quarter 2017 results were adversely impacted by lower tax benefits compared to the prior-year quarter following a required change in deferred tax accounting. On an adjusted pre-tax basis, the Corporation reported a loss of $307 million in the third quarter of 2017, down from $553 million in the year-ago quarter.
“We are successfully executing our strategic plan to focus our portfolio by investing in our highest return assets and divesting mature higher cost assets,” Chief Executive Officer John Hess said. “These actions in turn will lower our cash unit costs, bolster our balance sheet and prefund our world class investment opportunity in Guyana, which will position us to deliver a decade plus of returns-driven growth and increasing cash generation for our shareholders.”
After-tax income (loss) by major operating activity was as follows:
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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||||||||||
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(unaudited) |
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(unaudited) |
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||||||||||
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2017 |
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2016 |
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2017 |
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2016 |
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(In millions, except per share amounts) |
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|||||||||||||
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Net Income (Loss) Attributable to Hess Corporation |
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|
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Exploration and Production |
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$ |
(474 |
) |
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$ |
(234 |
) |
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$ |
(1,061 |
) |
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$ |
(1,015 |
) |
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Midstream |
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(12 |
) |
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13 |
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22 |
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40 |
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Corporate, Interest and Other |
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(138 |
) |
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(118 |
) |
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(358 |
) |
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(265 |
) |
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Net income (loss) attributable to Hess Corporation |
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$ |
(624 |
) |
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$ |
(339 |
) |
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$ |
(1,397 |
) |
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$ |
(1,240 |
) |
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Net income (loss) per common share (diluted) (a) |
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$ |
(2.02 |
) |
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$ |
(1.12 |
) |
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$ |
(4.55 |
) |
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$ |
(4.11 |
) |
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Adjusted Net Income (Loss) Attributable to Hess Corporation (b) |
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Exploration and Production |
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$ |
(238 |
) |
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$ |
(285 |
) |
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$ |
(825 |
) |
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$ |
(1,009 |
) |
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Midstream |
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22 |
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13 |
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56 |
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40 |
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Corporate, Interest and Other |
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(108 |
) |
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(68 |
) |
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(328 |
) |
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(215 |
) |
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Adjusted net income (loss) attributable to Hess Corporation |
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$ |
(324 |
) |
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$ |
(340 |
) |
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$ |
(1,097 |
) |
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$ |
(1,184 |
) |
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Adjusted net income (loss) per common share (diluted) (a) |
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$ |
(1.07 |
) |
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$ |
(1.12 |
) |
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$ |
(3.60 |
) |
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$ |
(3.93 |
) |
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Weighted average number of shares (diluted) |
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314.5 |
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313.2 |
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314.3 |
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308.7 |
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(a) |
Calculated as net income (loss) attributable to Hess Corporation less preferred stock dividends, divided by weighted average number of diluted shares. |
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(b) |
Adjusted net income (loss) attributable to Hess Corporation excludes items affecting comparability summarized on page 5. A reconciliation of net income (loss) attributable to Hess Corporation to adjusted net income (loss) attributable to Hess Corporation is provided on page 6. |
2
Exploration and Production (E&P) net loss in the third quarter of 2017 was $474 million, compared to a net loss of $234 million in the third quarter of 2016. On an adjusted basis, third quarter 2017 net loss was $238 million compared to a net loss of $285 million in the prior-year quarter. The Corporation’s average realized crude oil selling price, including the effect of hedging, was $46.97 per barrel in the third quarter of 2017, up from $41.50 per barrel in the year-ago quarter. The average realized natural gas liquids selling price in the third quarter of 2017 was $17.22 per barrel, versus $9.23 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.35 per mcf, compared with $3.20 per mcf in the third quarter of 2016.
Net production, excluding Libya, was 299,000 boepd in the third quarter of 2017, compared to 314,000 boepd in the prior-year quarter. Lower volumes were due to a reduced drilling program, natural field declines, the effect of hurricane-related downtime and an asset sale, partially offset by the start-up of production from the North Malay Basin and a temporary adjustment to entitlement and higher uptime at the JDA. Our Permian assets, which were sold in August 2017, had production of 3,000 boepd in the third quarter (7,000 boepd in the third quarter of 2016). Fourth quarter 2017 production will be negatively impacted by hurricane-related downtime and expected lower entitlement at the JDA as the temporary adjustment reverses.
Excluding items affecting comparability of earnings between periods, cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $13.67 per barrel of oil equivalent (boe) in the third quarter, down 13 percent from $15.72 per boe in the prior-year quarter. The E&P effective tax rate, excluding items affecting comparability and Libya, was a benefit of 18 percent in the third quarter of 2017, down from a benefit of 41 percent in the third quarter of 2016. Commencing in 2017, we do not recognize deferred tax benefit or expense in the U.S., Denmark (hydrocarbon tax only), and Malaysia until deferred tax assets are re-established in these jurisdictions. This financial reporting requirement has no cash flow or economic impact.
Operational Highlights for the Third Quarter of 2017:
Bakken (Onshore U.S.): Net production from the Bakken of 103,000 boepd was impacted by reduced field availability due to adverse weather and delays in completing new wells. The Corporation operated an average of four rigs in the third quarter, drilling 24 wells and bringing 13 new wells online.
3
Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 59,000 boepd, compared to 61,000 boepd in the prior-year quarter. At the Stampede development (Hess operated - 25 percent), the second and third production wells were completed. First production from the field is expected in the first quarter of 2018.
North Malay Basin (Offshore Malaysia): At North Malay Basin (Hess operated - 50 percent), first production of natural gas from the full-field development commenced in July and production averaged 86 mmcfd for the third quarter of 2017. The field is currently producing approximately 155 mmcfd.
Guyana (Offshore): At the Stabroek Block (Hess - 30 percent), operated by Esso Exploration and Production Guyana Limited, the Payara-2 well was successfully completed and confirmed a second giant oil field containing gross discovered recoverable resources of approximately 500 million barrels of oil equivalent. In addition, the Operator announced that the Turbot-1 exploration well resulted in a discovery encountering a reservoir of 75 feet of high-quality, oil-bearing sandstone in the primary objective. The well is located approximately 30 miles to the southeast of the Liza phase one project. An exploration well at the Ranger prospect is expected to spud at the end of October. The drilling of an additional well on the Turbot discovery is planned for 2018. Development activities associated with the Liza phase one project are on schedule and first production is expected by 2020.
Midstream:
The Midstream segment, which is comprised primarily of our 50/50 midstream joint venture, Hess Infrastructure Partners, had a net loss of $12 million in the third quarter of 2017, compared to net income of $13 million in the prior-year quarter. Excluding items affecting comparability of earnings between periods, third quarter 2017 net income was $22 million, compared to $13 million in the third quarter of 2016. Third quarter 2017 results attributable to Hess Corporation include a charge of $34 million after income taxes related to the sale of Permian Midstream assets that were wholly-owned by Hess Corporation.
Capital and Exploratory Expenditures:
Exploration and Production capital and exploratory expenditures were $558 million in the third quarter of 2017, up from $433 million in the prior-year quarter, which included increased activity at Bakken and Guyana.
4
Net cash provided by operating activities was $88 million in the third quarter of 2017, compared to $332 million in the third quarter of 2016. Net cash provided by operating activities before changes in working capital was $415 million in the third quarter of 2017, up from $309 million in the year-ago quarter. Changes in working capital during the third quarter of 2017 were net outflows of $327 million and primarily related to Norwegian abandonment expenditures, advances to operators, premiums on hedge contracts and the timing of interest payments.
At September 30, 2017, the Corporation had cash and cash equivalents of $2,526 million and total debt, excluding the Midstream segment, of $6,016 million. The Corporation’s debt to capitalization ratio was 31.8 percent at September 30, 2017 and 30.4 percent at December 31, 2016.
In the third quarter of 2017, the Corporation increased its West Texas Intermediate (WTI) crude oil hedging program by 50,000 barrels of oil per day (bopd) to a total of 110,000 bopd for the remainder of 2017. In addition, the Corporation added WTI crude oil collars covering 115,000 bopd for 2018. See hedging summary on page 20.
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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September 30, |
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September 30, |
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||||||||||
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(unaudited) |
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(unaudited) |
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||||||||||
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2017 |
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|
2016 |
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2017 |
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2016 |
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(In millions) |
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|||||||||||||
|
Exploration and Production |
|
$ |
(236 |
) |
|
$ |
51 |
|
|
$ |
(236 |
) |
|
$ |
(6 |
) |
|
Midstream |
|
|
(34 |
) |
|
|
— |
|
|
|
(34 |
) |
|
|
— |
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Corporate, Interest and Other |
|
|
(30 |
) |
|
|
(50 |
) |
|
|
(30 |
) |
|
|
(50 |
) |
|
Total items affecting comparability of earnings between periods |
|
$ |
(300 |
) |
|
$ |
1 |
|
|
$ |
(300 |
) |
|
$ |
(56 |
) |
Third quarter 2017: Results include an after-tax gain attributable to Hess Corporation stockholders of $280 million associated with the sale of our enhanced oil recovery assets in the Permian Basin. This transaction, which included upstream and midstream assets, was allocated to the E&P segment ($314 million after-tax gain) and to the Midstream segment ($34 million after-tax loss). E&P results also include a noncash after-tax charge of $550 million to impair the carrying value of our assets in Norway as a result of the expected sale. Corporate, Interest and Other results include an after-tax charge of $30 million in connection with vacated office space.
5
Third quarter 2016: Exploration and Production results included a tax benefit of $51 million related to the resolution of certain tax matters, while Corporate, Interest and Other results included an after-tax charge of $50 million related to debt refinancing.
Reconciliation of U.S. GAAP to Non-GAAP measures:
The following table reconciles reported income (loss) before income taxes and adjusted income (loss) before income taxes:
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Three Months Ended |
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Nine Months Ended |
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|
|
September 30, |
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September 30, |
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||||||||||
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(unaudited) |
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|
(unaudited) |
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||||||||||
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2017 |
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2016 |
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2017 |
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2016 |
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(In millions) |
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|||||||||||||
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Income (loss) before income taxes |
|
$ |
(2,567 |
) |
|
$ |
(633 |
) |
|
$ |
(3,301 |
) |
|
$ |
(2,145 |
) |
|
Less: Total items affecting comparability of earnings between periods |
|
|
(2,260 |
) |
|
|
(80 |
) |
|
|
(2,260 |
) |
|
|
(172 |
) |
|
Adjusted income (loss) before income taxes |
|
$ |
(307 |
) |
|
$ |
(553 |
) |
|
$ |
(1,041 |
) |
|
$ |
(1,973 |
) |
The following table reconciles reported net income (loss) attributable to Hess Corporation and adjusted net income (loss):
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|
|
Three Months Ended |
|
|
Nine Months Ended |
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||||||||||
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September 30, |
|
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September 30, |
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||||||||||
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(unaudited) |
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|
(unaudited) |
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||||||||||
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2017 |
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2016 |
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2017 |
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|
2016 |
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||||
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(In millions) |
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|||||||||||||
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Net income (loss) attributable to Hess Corporation |
|
$ |
(624 |
) |
|
$ |
(339 |
) |
|
$ |
(1,397 |
) |
|
$ |
(1,240 |
) |
|
Less: Total items affecting comparability of earnings between periods |
|
|
(300 |
) |
|
|
1 |
|
|
|
(300 |
) |
|
|
(56 |
) |
|
Adjusted net income (loss) attributable to Hess Corporation |
|
$ |
(324 |
) |
|
$ |
(340 |
) |
|
$ |
(1,097 |
) |
|
$ |
(1,184 |
) |
The following table reconciles reported net cash provided by (used in) operating activities from cash provided by operating activities before changes in operating assets and liabilities:
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|
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Three Months Ended |
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Nine Months Ended |
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||||||||||
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|
|
September 30, |
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September 30, |
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||||||||||
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(unaudited) |
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|
(unaudited) |
|
||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
|
|
|
(In millions) |
|
|||||||||||||
|
Cash provided by operating activities before changes in operating assets and liabilities |
|
$ |
415 |
|
|
$ |
309 |
|
|
$ |
1,190 |
|
|
$ |
714 |
|
|
Changes in operating assets and liabilities |
|
|
(327 |
) |
|
|
23 |
|
|
|
(588 |
) |
|
|
(245 |
) |
|
Net cash provided by (used in) operating activities |
|
$ |
88 |
|
|
$ |
332 |
|
|
$ |
602 |
|
|
$ |
469 |
|
6
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 Corporation’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.
Non-GAAP financial measure
The Corporation has used non-GAAP financial measures in this earnings release. “Adjusted net income (loss)” presented in this release is defined as reported net income (loss) attributable to Hess Corporation excluding items identified as affecting comparability of earnings between periods. “Adjusted income (loss) before income taxes” presented in this release is defined as income (loss) before income taxes excluding items identified as affecting comparability of earnings between periods. “Net cash provided by operating activities before changes in operating assets and liabilities” presented in this release is defined as Cash provided by operating activities excluding changes in operating assets and liabilities. Management uses adjusted net income (loss) and adjusted income (loss) before income taxes to evaluate the Corporation’s operating performance and believes that investors’ understanding of our performance is enhanced by disclosing these measures, which excludes certain items that management believes are not directly related to ongoing operations and are not indicative of future business trends and operations. Management believes that net cash provided by operating activities before changes in operating assets and liabilities demonstrates the Corporation’s ability to internally fund capital expenditures, pay dividends and service debt. These measures are not, and should not be viewed as, a substitute for U.S. GAAP net income (loss) or net cash provided by (used in) operating activities. A reconciliation of reported net income (loss) attributable to Hess Corporation (U.S. GAAP) to adjusted net income (loss), a reconciliation of reported income (loss) before income taxes (U.S. GAAP) to adjusted income (loss) before income taxes and a reconciliation of net cash provided by (used in) operating activities (U.S. GAAP) to net cash provided by operating activities before changes in operating assets and liabilities are provided in the release.
Cautionary Note to Investors
We use certain terms in this release relating to resources other than proved reserves, such as unproved reserves or resources. Investors are urged to consider closely the oil and gas disclosures in Hess’ Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system.
For Hess Corporation
Investor Contact:
Jay Wilson
(212) 536-8940
Media Contact:
Michael Henson/Patrick Scanlan
Sard Verbinnen & Co
(212) 687-8080
7
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
|
|
Third |
|
|
Third |
|
|
Second |
|
|||
|
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|||
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
1,370 |
|
|
$ |
1,177 |
|
|
$ |
1,216 |
|
|
Gains (losses) on asset sales, net |
|
|
274 |
|
|
|
— |
|
|
|
2 |
|
|
Other, net |
|
|
22 |
|
|
|
19 |
|
|
|
10 |
|
|
Total revenues and non-operating income |
|
|
1,666 |
|
|
|
1,196 |
|
|
|
1,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) |
|
|
360 |
|
|
|
222 |
|
|
|
272 |
|
|
Operating costs and expenses |
|
|
352 |
|
|
|
421 |
|
|
|
375 |
|
|
Production and severance taxes |
|
|
27 |
|
|
|
27 |
|
|
|
30 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
40 |
|
|
|
78 |
|
|
|
53 |
|
|
General and administrative expenses |
|
|
113 |
|
|
|
106 |
|
|
|
100 |
|
|
Interest expense |
|
|
79 |
|
|
|
84 |
|
|
|
82 |
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
80 |
|
|
|
— |
|
|
Depreciation, depletion and amortization |
|
|
759 |
|
|
|
811 |
|
|
|
741 |
|
|
Impairment |
|
|
2,503 |
|
|
|
— |
|
|
|
— |
|
|
Total costs and expenses |
|
|
4,233 |
|
|
|
1,829 |
|
|
|
1,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(2,567 |
) |
|
|
(633 |
) |
|
|
(425 |
) |
|
Provision (benefit) for income taxes |
|
|
(1,974 |
) |
|
|
(316 |
) |
|
|
(8 |
) |
|
Net income (loss) |
|
|
(593 |
) |
|
|
(317 |
) |
|
|
(417 |
) |
|
Less: Net income (loss) attributable to noncontrolling interests |
|
|
31 |
|
|
|
22 |
|
|
|
32 |
|
|
Net income (loss) attributable to Hess Corporation |
|
|
(624 |
) |
|
|
(339 |
) |
|
|
(449 |
) |
|
Less: Preferred stock dividends |
|
|
11 |
|
|
|
12 |
|
|
|
11 |
|
|
Net income (loss) applicable to Hess Corporation common stockholders |
|
$ |
(635 |
) |
|
$ |
(351 |
) |
|
$ |
(460 |
) |
8
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and non-operating income |
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
3,863 |
|
|
$ |
3,374 |
|
|
Gains (losses) on asset sales, net |
|
|
276 |
|
|
|
27 |
|
|
Other, net |
|
|
30 |
|
|
|
57 |
|
|
Total revenues and non-operating income |
|
|
4,169 |
|
|
|
3,458 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) |
|
|
851 |
|
|
|
688 |
|
|
Operating costs and expenses |
|
|
1,086 |
|
|
|
1,312 |
|
|
Production and severance taxes |
|
|
88 |
|
|
|
74 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
151 |
|
|
|
409 |
|
|
General and administrative expenses |
|
|
309 |
|
|
|
310 |
|
|
Interest expense |
|
|
245 |
|
|
|
254 |
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
80 |
|
|
Depreciation, depletion and amortization |
|
|
2,237 |
|
|
|
2,476 |
|
|
Impairment |
|
|
2,503 |
|
|
|
— |
|
|
Total costs and expenses |
|
|
7,470 |
|
|
|
5,603 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(3,301 |
) |
|
|
(2,145 |
) |
|
Provision (benefit) for income taxes |
|
|
(1,995 |
) |
|
|
(967 |
) |
|
Net income (loss) |
|
|
(1,306 |
) |
|
|
(1,178 |
) |
|
Less: Net income (loss) attributable to noncontrolling interests |
|
|
91 |
|
|
|
62 |
|
|
Net income (loss) attributable to Hess Corporation |
|
|
(1,397 |
) |
|
|
(1,240 |
) |
|
Less: Preferred stock dividends |
|
|
34 |
|
|
|
30 |
|
|
Net income (loss) applicable to Hess Corporation common stockholders |
|
$ |
(1,431 |
) |
|
$ |
(1,270 |
) |
9
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2017 |
|
|
2016 |
|
||
|
Balance Sheet Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,526 |
|
|
$ |
2,732 |
|
|
Other current assets |
|
|
1,557 |
|
|
|
1,544 |
|
|
Property, plant and equipment – net |
|
|
20,279 |
|
|
|
23,595 |
|
|
Other long-term assets |
|
|
2,238 |
|
|
|
750 |
|
|
Total assets |
|
$ |
26,600 |
|
|
$ |
28,621 |
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
122 |
|
|
$ |
112 |
|
|
Other current liabilities |
|
|
2,092 |
|
|
|
2,139 |
|
|
Long-term debt |
|
|
6,592 |
|
|
|
6,694 |
|
|
Other long-term liabilities |
|
|
3,366 |
|
|
|
4,085 |
|
|
Total equity excluding other comprehensive income (loss) |
|
|
14,604 |
|
|
|
16,238 |
|
|
Accumulated other comprehensive income (loss) |
|
|
(1,472 |
) |
|
|
(1,704 |
) |
|
Noncontrolling interests |
|
|
1,296 |
|
|
|
1,057 |
|
|
Total liabilities and equity |
|
$ |
26,600 |
|
|
$ |
28,621 |
|
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2017 |
|
|
2016 |
|
||
|
Total Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hess |
|
$ |
6,016 |
|
|
$ |
6,073 |
|
|
Midstream (a) |
|
|
698 |
|
|
|
733 |
|
|
Hess Consolidated |
|
$ |
6,714 |
|
|
$ |
6,806 |
|
(a) Midstream debt is non-recourse to Hess Corporation.
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2017 |
|
|
2016 |
|
||
|
Debt to Capitalization Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hess Consolidated |
|
|
31.8 |
% |
|
|
30.4 |
% |
10
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
|
|
Third |
|
|
Third |
|
|
Second |
|
|||
|
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|||
|
Cash Flow Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(593 |
) |
|
$ |
(317 |
) |
|
$ |
(417 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gains) losses on asset sales, net |
|
|
(274 |
) |
|
|
— |
|
|
|
(2 |
) |
|
Depreciation, depletion and amortization |
|
|
759 |
|
|
|
811 |
|
|
|
741 |
|
|
Impairment |
|
|
2,503 |
|
|
|
— |
|
|
|
— |
|
|
Exploratory dry hole costs |
|
|
— |
|
|
|
16 |
|
|
|
— |
|
|
Exploration lease and other impairment |
|
|
7 |
|
|
|
9 |
|
|
|
8 |
|
|
Stock compensation expense |
|
|
21 |
|
|
|
22 |
|
|
|
22 |
|
|
Provision (benefit) for deferred income taxes and other tax accruals |
|
|
(2,008 |
) |
|
|
(312 |
) |
|
|
(20 |
) |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
80 |
|
|
|
— |
|
|
Cash provided by operating activities before changes in operating assets and liabilities |
|
|
415 |
|
|
|
309 |
|
|
|
332 |
|
|
Changes in operating assets and liabilities |
|
|
(327 |
) |
|
|
23 |
|
|
|
(167 |
) |
|
Net cash provided by (used in) operating activities |
|
|
88 |
|
|
|
332 |
|
|
|
165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment - E&P |
|
|
(489 |
) |
|
|
(461 |
) |
|
|
(446 |
) |
|
Additions to property, plant and equipment - Midstream |
|
|
(24 |
) |
|
|
(68 |
) |
|
|
(34 |
) |
|
Proceeds from asset sales |
|
|
604 |
|
|
|
— |
|
|
|
79 |
|
|
Other, net |
|
|
(1 |
) |
|
|
3 |
|
|
|
— |
|
|
Net cash provided by (used in) investing activities |
|
|
90 |
|
|
|
(526 |
) |
|
|
(401 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) of debt with maturities of 90 days or less |
|
|
11 |
|
|
|
6 |
|
|
|
(1 |
) |
|
Debt with maturities of greater than 90 days |
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
— |
|
|
|
1,496 |
|
|
|
— |
|
|
Repayments |
|
|
(30 |
) |
|
|
(771 |
) |
|
|
(51 |
) |
|
Proceeds from issuance of Hess Midstream Partnership LP units |
|
|
— |
|
|
|
— |
|
|
|
366 |
|
|
Cash dividends paid |
|
|
(91 |
) |
|
|
(91 |
) |
|
|
(90 |
) |
|
Noncontrolling interests, net |
|
|
(33 |
) |
|
|
— |
|
|
|
(175 |
) |
|
Other, net |
|
|
(1 |
) |
|
|
(12 |
) |
|
|
(7 |
) |
|
Net cash provided by (used in) financing activities |
|
|
(144 |
) |
|
|
628 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
|
34 |
|
|
|
434 |
|
|
|
(194 |
) |
|
Cash and Cash Equivalents at Beginning of Period |
|
|
2,492 |
|
|
|
3,095 |
|
|
|
2,686 |
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
2,526 |
|
|
$ |
3,529 |
|
|
$ |
2,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to Property, Plant and Equipment included within Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures incurred |
|
$ |
(553 |
) |
|
$ |
(471 |
) |
|
$ |
(503 |
) |
|
Increase (decrease) in related liabilities |
|
|
40 |
|
|
|
(58 |
) |
|
|
23 |
|
|
Additions to property, plant and equipment |
|
$ |
(513 |
) |
|
$ |
(529 |
) |
|
$ |
(480 |
) |
11
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Cash Flow Information |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Cash flows From Operating Activities |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,306 |
) |
|
$ |
(1,178 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |
|
|
|
|
|
|
|
|
|
(Gains) losses on asset sales, net |
|
|
(276 |
) |
|
|
(27 |
) |
|
Depreciation, depletion and amortization |
|
|
2,237 |
|
|
|
2,476 |
|
|
Impairment |
|
|
2,503 |
|
|
|
— |
|
|
Exploratory dry hole costs |
|
|
— |
|
|
|
234 |
|
|
Exploration lease and other impairment |
|
|
22 |
|
|
|
33 |
|
|
Stock compensation expense |
|
|
65 |
|
|
|
69 |
|
|
Provision (benefit) for deferred income taxes and other tax accruals |
|
|
(2,055 |
) |
|
|
(973 |
) |
|
Loss on debt extinguishment |
|
|
— |
|
|
|
80 |
|
|
Cash provided by operating activities before changes in operating assets and liabilities |
|
|
1,190 |
|
|
|
714 |
|
|
Changes in operating assets and liabilities |
|
|
(588 |
) |
|
|
(245 |
) |
|
Net cash provided by (used in) operating activities |
|
|
602 |
|
|
|
469 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment - E&P |
|
|
(1,275 |
) |
|
|
(1,575 |
) |
|
Additions to property, plant and equipment - Midstream |
|
|
(108 |
) |
|
|
(189 |
) |
|
Proceeds from asset sales |
|
|
783 |
|
|
|
80 |
|
|
Other, net |
|
|
(1 |
) |
|
|
18 |
|
|
Net cash provided by (used in) investing activities |
|
|
(601 |
) |
|
|
(1,666 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) of debt with maturities of 90 days or less |
|
|
15 |
|
|
|
(14 |
) |
|
Debt with maturities of greater than 90 days |
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
— |
|
|
|
1,496 |
|
|
Repayments |
|
|
(107 |
) |
|
|
(806 |
) |
|
Proceeds from issuance of Hess Midstream Partnership LP units |
|
|
366 |
|
|
|
— |
|
|
Proceeds from issuance of preferred stock |
|
|
— |
|
|
|
557 |
|
|
Proceeds from issuance of common stock |
|
|
— |
|
|
|
1,087 |
|
|
Cash dividends paid |
|
|
(273 |
) |
|
|
(260 |
) |
|
Noncontrolling interests, net |
|
|
(208 |
) |
|
|
— |
|
|
Other, net |
|
|
— |
|
|
|
(50 |
) |
|
Net cash provided by (used in) financing activities |
|
|
(207 |
) |
|
|
2,010 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
|
(206 |
) |
|
|
813 |
|
|
Cash and Cash Equivalents at Beginning of Year |
|
|
2,732 |
|
|
|
2,716 |
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
2,526 |
|
|
$ |
3,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to Property, Plant and Equipment included within Investing Activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures incurred |
|
$ |
(1,426 |
) |
|
$ |
(1,512 |
) |
|
Increase (decrease) in related liabilities |
|
|
43 |
|
|
|
(252 |
) |
|
Additions to property, plant and equipment |
|
$ |
(1,383 |
) |
|
$ |
(1,764 |
) |
12
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
|
|
|
Third |
|
|
Third |
|
|
Second |
|
|||
|
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|||
|
Capital and Exploratory Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E&P Capital and exploratory expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bakken |
|
$ |
186 |
|
|
$ |
126 |
|
|
$ |
148 |
|
|
Other Onshore |
|
|
8 |
|
|
|
2 |
|
|
|
9 |
|
|
Total Onshore |
|
|
194 |
|
|
|
128 |
|
|
|
157 |
|
|
Offshore |
|
|
191 |
|
|
|
191 |
|
|
|
191 |
|
|
Total United States |
|
|
385 |
|
|
|
319 |
|
|
|
348 |
|
|
Europe |
|
|
34 |
|
|
|
1 |
|
|
|
42 |
|
|
Africa |
|
|
13 |
|
|
|
4 |
|
|
|
11 |
|
|
Asia and other |
|
|
126 |
|
|
|
109 |
|
|
|
127 |
|
|
E&P Capital and exploratory expenditures |
|
$ |
558 |
|
|
$ |
433 |
|
|
$ |
528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exploration expenses charged to income included above |
|
$ |
32 |
|
|
$ |
52 |
|
|
$ |
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Capital expenditures |
|
$ |
27 |
|
|
$ |
90 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Capital and Exploratory Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E&P Capital and exploratory expenditures |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Bakken |
|
$ |
424 |
|
|
$ |
330 |
|
|
Other Onshore |
|
|
25 |
|
|
|
44 |
|
|
Total Onshore |
|
|
449 |
|
|
|
374 |
|
|
Offshore |
|
|
540 |
|
|
|
564 |
|
|
Total United States |
|
|
989 |
|
|
|
938 |
|
|
Europe |
|
|
91 |
|
|
|
63 |
|
|
Africa |
|
|
30 |
|
|
|
7 |
|
|
Asia and other |
|
|
369 |
|
|
|
452 |
|
|
E&P Capital and exploratory expenditures |
|
$ |
1,479 |
|
|
$ |
1,460 |
|
|
|
|
|
|
|
|
|
|
|
|
Total exploration expenses charged to income included above |
|
$ |
128 |
|
|
$ |
142 |
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Capital expenditures |
|
$ |
75 |
|
|
$ |
194 |
|
13
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
|
|
Third Quarter 2017 |
|
|||||||||
|
Income Statement |
|
United States |
|
|
International |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
923 |
|
|
$ |
446 |
|
|
$ |
1,369 |
|
|
Gains (losses) on asset sales, net |
|
|
330 |
|
|
|
— |
|
|
|
330 |
|
|
Other, net |
|
|
(5 |
) |
|
|
20 |
|
|
|
15 |
|
|
Total revenues and non-operating income |
|
|
1,248 |
|
|
|
466 |
|
|
|
1,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) (a) |
|
|
359 |
|
|
|
14 |
|
|
|
373 |
|
|
Operating costs and expenses |
|
|
148 |
|
|
|
162 |
|
|
|
310 |
|
|
Production and severance taxes |
|
|
26 |
|
|
|
1 |
|
|
|
27 |
|
|
Midstream tariffs |
|
|
140 |
|
|
|
— |
|
|
|
140 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
16 |
|
|
|
24 |
|
|
|
40 |
|
|
General and administrative expenses |
|
|
55 |
|
|
|
— |
|
|
|
55 |
|
|
Depreciation, depletion and amortization |
|
|
437 |
|
|
|
272 |
|
|
|
709 |
|
|
Impairment |
|
|
— |
|
|
|
2,503 |
|
|
|
2,503 |
|
|
Total costs and expenses |
|
|
1,181 |
|
|
|
2,976 |
|
|
|
4,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of operations before income taxes |
|
|
67 |
|
|
|
(2,510 |
) |
|
|
(2,443 |
) |
|
Provision (benefit) for income taxes |
|
|
2 |
|
|
|
(1,971 |
) |
|
|
(1,969 |
) |
|
Net income (loss) attributable to Hess Corporation |
|
$ |
65 |
|
(b) |
$ |
(539 |
) |
(c) |
$ |
(474 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2016 |
|
|||||||||
|
Income Statement |
|
United States |
|
|
International |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
789 |
|
|
$ |
386 |
|
|
$ |
1,175 |
|
|
Other, net |
|
|
(5 |
) |
|
|
12 |
|
|
|
7 |
|
|
Total revenues and non-operating income |
|
|
784 |
|
|
|
398 |
|
|
|
1,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) (a) |
|
|
243 |
|
|
|
(5 |
) |
|
|
238 |
|
|
Operating costs and expenses |
|
|
170 |
|
|
|
198 |
|
|
|
368 |
|
|
Production and severance taxes |
|
|
24 |
|
|
|
3 |
|
|
|
27 |
|
|
Midstream tariffs |
|
|
118 |
|
|
|
— |
|
|
|
118 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
29 |
|
|
|
49 |
|
|
|
78 |
|
|
General and administrative expenses |
|
|
56 |
|
|
|
4 |
|
|
|
60 |
|
|
Depreciation, depletion and amortization |
|
|
517 |
|
|
|
262 |
|
|
|
779 |
|
|
Total costs and expenses |
|
|
1,157 |
|
|
|
511 |
|
|
|
1,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of operations before income taxes |
|
|
(373 |
) |
|
|
(113 |
) |
|
|
(486 |
) |
|
Provision (benefit) for income taxes |
|
|
(139 |
) |
|
|
(113 |
) |
|
|
(252 |
) |
|
Net income (loss) attributable to Hess Corporation |
|
$ |
(234 |
) |
|
$ |
— |
|
|
$ |
(234 |
) |
(a) Includes amounts charged from the Midstream.
|
(b) After-tax results from crude oil hedging activities amounted to realized losses of $7 million and unrealized gains of $8 million. (c) After-tax results from crude oil hedging activities amounted to realized gains of $1 million and unrealized gains of $4 million. |
|
|
|
14
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
|
|
Second Quarter 2017 |
|
|||||||||
|
Income Statement |
|
United States |
|
|
International |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
837 |
|
|
$ |
376 |
|
|
$ |
1,213 |
|
|
Other, net |
|
|
(5 |
) |
|
|
11 |
|
|
|
6 |
|
|
Total revenues and non-operating income |
|
|
832 |
|
|
|
387 |
|
|
|
1,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) (a) |
|
|
283 |
|
|
|
8 |
|
|
|
291 |
|
|
Operating costs and expenses |
|
|
171 |
|
|
|
146 |
|
|
|
317 |
|
|
Production and severance taxes |
|
|
29 |
|
|
|
1 |
|
|
|
30 |
|
|
Midstream tariffs |
|
|
135 |
|
|
|
— |
|
|
|
135 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
29 |
|
|
|
24 |
|
|
|
53 |
|
|
General and administrative expenses |
|
|
50 |
|
|
|
3 |
|
|
|
53 |
|
|
Depreciation, depletion and amortization |
|
|
484 |
|
|
|
224 |
|
|
|
708 |
|
|
Total costs and expenses |
|
|
1,181 |
|
|
|
406 |
|
|
|
1,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of operations before income taxes |
|
|
(349 |
) |
|
|
(19 |
) |
|
|
(368 |
) |
|
Provision (benefit) for income taxes |
|
|
(9 |
) |
|
|
(5 |
) |
|
|
(14 |
) |
|
Net income (loss) attributable to Hess Corporation |
|
$ |
(340 |
) |
(b) |
$ |
(14 |
) |
(c) |
$ |
(354 |
) |
(a) Includes amounts charged from the Midstream.
(b) After-tax results from crude oil hedging activities amounted to realized gains of $1 million and unrealized losses of $7 million.
(c) After-tax results from crude oil hedging activities amounted to realized gains of $3 million and unrealized losses of $8 million.
15
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
|
|
|
Nine Months Ended September 30, 2017 |
|
|||||||||
|
Income Statement |
|
United States |
|
|
International |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
2,682 |
|
|
$ |
1,175 |
|
|
$ |
3,857 |
|
|
Gains (losses) on asset sales, net |
|
|
330 |
|
|
|
— |
|
|
|
330 |
|
|
Other, net |
|
|
(15 |
) |
|
|
31 |
|
|
|
16 |
|
|
Total revenues and non-operating income |
|
|
2,997 |
|
|
|
1,206 |
|
|
|
4,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) (a) |
|
|
937 |
|
|
|
(31 |
) |
|
|
906 |
|
|
Operating costs and expenses |
|
|
493 |
|
|
|
443 |
|
|
|
936 |
|
|
Production and severance taxes |
|
|
86 |
|
|
|
2 |
|
|
|
88 |
|
|
Midstream tariffs |
|
|
399 |
|
|
|
— |
|
|
|
399 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
67 |
|
|
|
84 |
|
|
|
151 |
|
|
General and administrative expenses |
|
|
156 |
|
|
|
8 |
|
|
|
164 |
|
|
Depreciation, depletion and amortization |
|
|
1,366 |
|
|
|
754 |
|
|
|
2,120 |
|
|
Impairment |
|
|
— |
|
|
|
2,503 |
|
|
|
2,503 |
|
|
Total costs and expenses |
|
|
3,504 |
|
|
|
3,763 |
|
|
|
7,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of operations before income taxes |
|
|
(507 |
) |
|
|
(2,557 |
) |
|
|
(3,064 |
) |
|
Provision (benefit) for income taxes |
|
|
(21 |
) |
|
|
(1,982 |
) |
|
|
(2,003 |
) |
|
Net income (loss) attributable to Hess Corporation |
|
$ |
(486 |
) |
(b) |
$ |
(575 |
) |
(c) |
$ |
(1,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
|
|||||||||
|
Income Statement |
|
United States |
|
|
International |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
2,136 |
|
|
$ |
1,232 |
|
|
$ |
3,368 |
|
|
Gains (losses) on asset sales, net |
|
|
27 |
|
|
|
— |
|
|
|
27 |
|
|
Other, net |
|
|
(4 |
) |
|
|
31 |
|
|
|
27 |
|
|
Total revenues and non-operating income |
|
|
2,159 |
|
|
|
1,263 |
|
|
|
3,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) (a) |
|
|
673 |
|
|
|
64 |
|
|
|
737 |
|
|
Operating costs and expenses |
|
|
605 |
|
|
|
547 |
|
|
|
1,152 |
|
|
Production and severance taxes |
|
|
68 |
|
|
|
6 |
|
|
|
74 |
|
|
Midstream tariffs |
|
|
349 |
|
|
|
— |
|
|
|
349 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
301 |
|
|
|
108 |
|
|
|
409 |
|
|
General and administrative expenses |
|
|
160 |
|
|
|
15 |
|
|
|
175 |
|
|
Depreciation, depletion and amortization |
|
|
1,541 |
|
|
|
840 |
|
|
|
2,381 |
|
|
Total costs and expenses |
|
|
3,697 |
|
|
|
1,580 |
|
|
|
5,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of operations before income taxes |
|
|
(1,538 |
) |
|
|
(317 |
) |
|
|
(1,855 |
) |
|
Provision (benefit) for income taxes |
|
|
(584 |
) |
|
|
(256 |
) |
|
|
(840 |
) |
|
Net income (loss) attributable to Hess Corporation |
|
$ |
(954 |
) |
|
$ |
(61 |
) |
|
$ |
(1,015 |
) |
(a) Includes amounts charged from the Midstream.
|
(b) After-tax results from crude oil hedging activities amounted to realized losses of $6 million and unrealized gains of $1 million. (c) After-tax results from crude oil hedging activities amounted to realized gains of $3 million and unrealized losses of $3 million. |
16
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
|
|
|
Third |
|
|
Third |
|
|
Second |
|
|||
|
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|||
|
Net Production Per Day (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - barrels |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bakken |
|
|
63 |
|
|
|
67 |
|
|
|
68 |
|
|
Other Onshore (a) |
|
|
4 |
|
|
|
9 |
|
|
|
9 |
|
|
Total Onshore |
|
|
67 |
|
|
|
76 |
|
|
|
77 |
|
|
Offshore |
|
|
43 |
|
|
|
46 |
|
|
|
38 |
|
|
Total United States |
|
|
110 |
|
|
|
122 |
|
|
|
115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
25 |
|
|
|
34 |
|
|
|
28 |
|
|
Africa (b) |
|
|
39 |
|
|
|
33 |
|
|
|
32 |
|
|
Asia |
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
Total |
|
|
176 |
|
|
|
190 |
|
|
|
177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas liquids - barrels |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bakken |
|
|
29 |
|
|
|
29 |
|
|
|
29 |
|
|
Other Onshore (a) |
|
|
8 |
|
|
|
11 |
|
|
|
8 |
|
|
Total Onshore |
|
|
37 |
|
|
|
40 |
|
|
|
37 |
|
|
Offshore |
|
|
5 |
|
|
|
4 |
|
|
|
4 |
|
|
Total United States |
|
|
42 |
|
|
|
44 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Total |
|
|
43 |
|
|
|
45 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas - mcf |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bakken |
|
|
63 |
|
|
|
66 |
|
|
|
66 |
|
|
Other Onshore |
|
|
85 |
|
|
|
139 |
|
|
|
99 |
|
|
Total Onshore |
|
|
148 |
|
|
|
205 |
|
|
|
165 |
|
|
Offshore |
|
|
69 |
|
|
|
65 |
|
|
|
51 |
|
|
Total United States |
|
|
217 |
|
|
|
270 |
|
|
|
216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
29 |
|
|
|
41 |
|
|
|
33 |
|
|
Asia |
|
|
306 |
|
|
|
161 |
|
|
|
238 |
|
|
Total |
|
|
552 |
|
|
|
472 |
|
|
|
487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels of oil equivalent |
|
|
311 |
|
|
|
314 |
|
|
|
300 |
|
|
|
(a) |
The Corporation sold its Permian assets in August 2017. Production was 3,000 boepd in the third quarter of 2017, 7,000 boepd in the third quarter of 2016 and 7,000 boepd in the second quarter of 2017. |
|
|
(b) |
Production from Libya recommenced in the fourth quarter of 2016. Production was 12,000 bopd in the third quarter of 2017 and 6,000 bopd in the second quarter of 2017. |
17
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Net Production Per Day (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - barrels |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Bakken |
|
|
66 |
|
|
|
70 |
|
|
Other Onshore (a) |
|
|
7 |
|
|
|
9 |
|
|
Total Onshore |
|
|
73 |
|
|
|
79 |
|
|
Offshore |
|
|
43 |
|
|
|
46 |
|
|
Total United States |
|
|
116 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
28 |
|
|
|
32 |
|
|
Africa (b) |
|
|
35 |
|
|
|
34 |
|
|
Asia |
|
|
2 |
|
|
|
2 |
|
|
Total |
|
|
181 |
|
|
|
193 |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas liquids - barrels |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Bakken |
|
|
27 |
|
|
|
27 |
|
|
Other Onshore (a) |
|
|
9 |
|
|
|
12 |
|
|
Total Onshore |
|
|
36 |
|
|
|
39 |
|
|
Offshore |
|
|
4 |
|
|
|
5 |
|
|
Total United States |
|
|
40 |
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
1 |
|
|
|
1 |
|
|
Total |
|
|
41 |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas - mcf |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Bakken |
|
|
61 |
|
|
|
64 |
|
|
Other Onshore |
|
|
97 |
|
|
|
136 |
|
|
Total Onshore |
|
|
158 |
|
|
|
200 |
|
|
Offshore |
|
|
65 |
|
|
|
64 |
|
|
Total United States |
|
|
223 |
|
|
|
264 |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
33 |
|
|
|
42 |
|
|
Asia |
|
|
252 |
|
|
|
221 |
|
|
Total |
|
|
508 |
|
|
|
527 |
|
|
|
|
|
|
|
|
|
|
|
|
Barrels of oil equivalent |
|
|
307 |
|
|
|
326 |
|
|
|
(a) |
The Corporation sold its Permian assets in August 2017. Production was 6,000 boepd in the first nine months of 2017 and 8,000 boepd in the first nine months of 2016. |
|
|
(b) |
Production from Libya recommenced in the fourth quarter of 2016. Production was 7,000 bopd in the first nine months of 2017. |
18
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
|
|
|
Third |
|
|
Third |
|
|
Second |
|
|||
|
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|||
|
Sales Volumes Per Day (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - barrels |
|
|
172 |
|
|
|
190 |
|
|
|
174 |
|
|
Natural gas liquids - barrels |
|
|
43 |
|
|
|
45 |
|
|
|
42 |
|
|
Natural gas - mcf |
|
|
552 |
|
|
|
472 |
|
|
|
487 |
|
|
Barrels of oil equivalent |
|
|
307 |
|
|
|
314 |
|
|
|
297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volumes (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - barrels |
|
|
15,897 |
|
|
|
17,528 |
|
|
|
15,757 |
|
|
Natural gas liquids - barrels |
|
|
3,920 |
|
|
|
4,167 |
|
|
|
3,848 |
|
|
Natural gas - mcf |
|
|
50,808 |
|
|
|
43,413 |
|
|
|
44,390 |
|
|
Barrels of oil equivalent |
|
|
28,285 |
|
|
|
28,931 |
|
|
|
27,003 |
|
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Sales Volumes Per Day (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - barrels |
|
|
174 |
|
|
|
201 |
|
|
Natural gas liquids - barrels |
|
|
41 |
|
|
|
45 |
|
|
Natural gas - mcf |
|
|
508 |
|
|
|
527 |
|
|
Barrels of oil equivalent |
|
|
300 |
|
|
|
334 |
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volumes (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - barrels |
|
|
47,398 |
|
|
|
55,030 |
|
|
Natural gas liquids - barrels |
|
|
11,391 |
|
|
|
12,389 |
|
|
Natural gas - mcf |
|
|
138,742 |
|
|
|
144,381 |
|
|
Barrels of oil equivalent |
|
|
81,913 |
|
|
|
91,483 |
|
19
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
|
|
|
Third |
|
|
Third |
|
|
Second |
|
|||
|
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|||
|
Average Selling Prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - per barrel (including hedging) |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
42.14 |
|
|
$ |
39.19 |
|
|
$ |
43.83 |
|
|
Offshore |
|
|
46.11 |
|
|
|
39.55 |
|
|
|
44.60 |
|
|
Total United States |
|
|
43.66 |
|
|
|
39.33 |
|
|
|
44.09 |
|
|
Europe |
|
|
53.89 |
|
|
|
46.01 |
|
|
|
50.27 |
|
|
Africa |
|
|
51.62 |
|
|
|
44.22 |
|
|
|
48.81 |
|
|
Asia |
|
|
— |
|
|
|
47.36 |
|
|
|
41.95 |
|
|
Worldwide |
|
|
46.97 |
|
|
|
41.50 |
|
|
|
45.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - per barrel (excluding hedging) |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
42.85 |
|
|
$ |
39.19 |
|
|
$ |
43.72 |
|
|
Offshore |
|
|
46.72 |
|
|
|
39.55 |
|
|
|
44.60 |
|
|
Total United States |
|
|
44.33 |
|
|
|
39.33 |
|
|
|
44.01 |
|
|
Europe |
|
|
53.77 |
|
|
|
46.01 |
|
|
|
49.72 |
|
|
Africa |
|
|
51.51 |
|
|
|
44.22 |
|
|
|
48.40 |
|
|
Asia |
|
|
— |
|
|
|
47.36 |
|
|
|
41.95 |
|
|
Worldwide |
|
|
47.36 |
|
|
|
41.50 |
|
|
|
45.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas liquids - per barrel |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
16.56 |
|
|
$ |
8.48 |
|
|
$ |
14.25 |
|
|
Offshore |
|
|
20.41 |
|
|
|
13.94 |
|
|
|
18.47 |
|
|
Total United States |
|
|
17.04 |
|
|
|
9.00 |
|
|
|
14.64 |
|
|
Europe |
|
|
26.44 |
|
|
|
17.68 |
|
|
|
23.95 |
|
|
Worldwide |
|
|
17.22 |
|
|
|
9.23 |
|
|
|
14.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas - per mcf |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
1.58 |
|
|
$ |
1.49 |
|
|
$ |
2.20 |
|
|
Offshore |
|
|
2.26 |
|
|
|
2.24 |
|
|
|
2.29 |
|
|
Total United States |
|
|
1.80 |
|
|
|
1.67 |
|
|
|
2.22 |
|
|
Europe |
|
|
4.58 |
|
|
|
3.74 |
|
|
|
4.22 |
|
|
Asia |
|
|
4.34 |
|
|
|
5.66 |
|
|
|
3.93 |
|
|
Worldwide |
|
|
3.35 |
|
|
|
3.20 |
|
|
|
3.19 |
|
The following is a summary of the Corporation’s outstanding commodity hedging program by calendar year:
|
|
|
2017 |
|
|
2018 |
|
||||||||
|
|
|
Brent |
|
West Texas Intermediate |
|
|
Brent |
|
|
West Texas Intermediate |
|
|||
|
Outstanding average barrels of oil per day |
|
20,000 |
|
|
110,000 |
|
|
|
— |
|
|
|
115,000 |
|
|
Average ceiling price |
|
$75 |
|
$68 |
|
|
|
— |
|
|
$65 |
|
||
|
Average floor price |
|
$55 |
|
$50 |
|
|
|
— |
|
|
$50 |
|
||
20
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Average Selling Prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - per barrel (including hedging) |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
44.20 |
|
|
$ |
35.16 |
|
|
Offshore |
|
|
46.04 |
|
|
|
35.08 |
|
|
Total United States |
|
|
44.88 |
|
|
|
35.13 |
|
|
Europe |
|
|
52.68 |
|
|
|
40.66 |
|
|
Africa |
|
|
50.51 |
|
|
|
39.66 |
|
|
Asia |
|
|
52.83 |
|
|
|
43.11 |
|
|
Worldwide |
|
|
47.16 |
|
|
|
37.05 |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil - per barrel (excluding hedging) |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
44.38 |
|
|
$ |
35.16 |
|
|
Offshore |
|
|
46.24 |
|
|
|
35.08 |
|
|
Total United States |
|
|
45.06 |
|
|
|
35.13 |
|
|
Europe |
|
|
52.49 |
|
|
|
40.66 |
|
|
Africa |
|
|
50.36 |
|
|
|
39.66 |
|
|
Asia |
|
|
52.83 |
|
|
|
43.11 |
|
|
Worldwide |
|
|
47.22 |
|
|
|
37.05 |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas liquids - per barrel |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
16.22 |
|
|
$ |
7.89 |
|
|
Offshore |
|
|
19.95 |
|
|
|
12.14 |
|
|
Total United States |
|
|
16.67 |
|
|
|
8.33 |
|
|
Europe |
|
|
26.26 |
|
|
|
17.50 |
|
|
Worldwide |
|
|
16.89 |
|
|
|
8.55 |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas - per mcf |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Onshore |
|
$ |
2.04 |
|
|
$ |
1.33 |
|
|
Offshore |
|
|
2.32 |
|
|
|
1.74 |
|
|
Total United States |
|
|
2.12 |
|
|
|
1.43 |
|
|
Europe |
|
|
4.24 |
|
|
|
4.04 |
|
|
Asia |
|
|
4.12 |
|
|
|
5.65 |
|
|
Worldwide |
|
|
3.25 |
|
|
|
3.41 |
|
21