Hess Reports Estimated Results for the Third Quarter of 2009
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Third Quarter Highlights:
-- Net Income was $341 million compared with $775 million in third quarter
2008
-- Oil and gas production was 420,000 barrels per day, up from 361,000 in
third quarter 2008
-- Exploration and Production results included after-tax income of $89
million related to the resolution of a U.S. royalty dispute
-- Capital and exploratory expenditures were $668 million, down from $1,368
million in the third quarter 2008
NEW YORK--(BUSINESS WIRE)-- Hess Corporation (NYSE: HES) reported net income of $341 million for the third quarter of 2009 compared with net income of $775 million for the third quarter of 2008. The after-tax results by major operating activity were as follows:
Three Months Ended Nine Months Ended
September 30, (unaudited) September 30, (unaudited)
2009 2008 2009 2008
(In millions, except per share amounts)
Exploration and Production $ 397 $ 699 $ 548 $ 2,548
Marketing and Refining 38 161 110 125
Corporate (33 ) (42 ) (108 ) (114 )
Interest expense (61 ) (43 ) (168 ) (125 )
Net income attributable to $ 341 $ 775 $ 382 $ 2,434
Hess Corporation
Net income per share $ 1.05 $ 2.37 $ 1.17 $ 7.47
(diluted)
Weighted average number of 326.0 327.4 325.8 325.7
shares (diluted)
Exploration and Production earnings were $397 million in the third quarter of 2009 compared with $699 million in the third quarter of 2008. The Corporation's oil and gas production was 420,000 barrels of oil equivalent per day in the third quarter of 2009, an increase of 16% from the third quarter of 2008. The Corporation's average worldwide crude oil selling price, including the effect of hedging, was $56.07 per barrel in the third quarter of 2009 compared with $93.36 per barrel in the third quarter of 2008. The Corporation's average worldwide natural gas selling price was $4.60 per Mcf in the third quarter of 2009 compared with $7.60 per Mcf in the third quarter of 2008.
Marketing and Refining earnings were $38 million in the third quarter of 2009 compared with $161 million in the third quarter of 2008. Refining operations generated a loss of $3 million in the third quarter of 2009 compared with income of $46 million in the third quarter of 2008 as a result of lower refining margins. Marketing earnings were $35 million in the third quarter of 2009 compared with $110 million in the third quarter of 2008, primarily due to lower margins. Trading activities produced income of $6 million in the third quarter of 2009 and $5 million in the third quarter of 2008.
The following table reflects the total after-tax impact of items affecting comparability of earnings between periods (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Exploration and Production $ 89 $ - $ 45 $ -
Marketing and Refining 12 - 12 -
Corporate - - (16 ) -
$ 101 $ - $ 41 $ -
In the third quarter of 2009, the Corporation recorded after-tax income of $89 million related to the resolution of a royalty dispute on production from certain leases subject to the U.S. Deep Water Royalty Relief Act. The Corporation also recorded a benefit of $12 million due to an income tax adjustment relating to refining operations.
Net cash provided by operating activities was $534 million in the third quarter of 2009 compared with $1,205 million in the third quarter of 2008. Capital and exploratory expenditures for the third quarter of 2009 amounted to $668 million, of which $646 million related to Exploration and Production operations. Capital and exploratory expenditures for the third quarter of 2008 amounted to $1,368 million, of which $1,338 million related to Exploration and Production operations.
At September 30, 2009, cash and cash equivalents totaled $957 million compared with $908 million at December 31, 2008. Total debt was $4,379 million at September 30, 2009 and $3,955 million at December 31, 2008. The Corporation's debt to capitalization ratio at September 30, 2009 was 25.2 percent compared with 24.2 percent at the end of 2008.
Hess Corporation will review third quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details on the event, refer to the Investor Relations section of our website at www.hess.com.
Hess Corporation, with headquarters in New York, is a leading global independent energy company engaged in the exploration for and production of crude oil and natural gas, as well as in refining and marketing refined petroleum products, natural gas and electricity. More information on Hess Corporation is available at www.hess.com.
Forward Looking Statements
Certain statements in this release may constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, uncertainties inherent in the measurement and interpretation of geological, geophysical and other technical data.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Third Third Second
Quarter Quarter Quarter
2009 2008 2009
Income Statement (*)
Revenues and Non-operating Income
Sales (excluding excise taxes) and other $ 7,270 $ 11,396 $ 6,751
operating revenues
Equity in income (loss) of HOVENSA L.L.C. (49 ) 52 (75 )
Other, net 163 (62 ) 79
Total revenues and non-operating income 7,384 11,386 6,755
Costs and Expenses
Cost of products sold (excluding items shown 5,069 8,164 4,705
separately below)
Production expenses 460 503 444
Marketing expenses 240 266 245
Exploration expenses, including dry holes
and lease impairment 167 157 312
Other operating expenses 43 62 43
General and administrative expenses 148 170 136
Interest expense 97 68 95
Depreciation, depletion and amortization 626 497 558
Total costs and expenses 6,850 9,887 6,538
Income before income taxes 534 1,499 217
Provision for income taxes 182 725 115
Net income 352 774 102
Less: Net income (loss) attributable to 11 (1 ) 2
noncontrolling interests
Net Income attributable to Hess Corporation $ 341 $ 775 $ 100
Supplemental Income Statement Information
Foreign currency gains (losses), after-tax $ 3 $ (10 ) $ 6
Capitalized interest 1 2 2
Cash Flow Information (*)
Net cash provided by operating activities (**) $ 534 $ 1,205 $ 616
Capital and Exploratory Expenditures
Exploration and Production
United States $ 198 $ 509 $ 300
International 448 829 470
Total Exploration and Production 646 1,338 770
Marketing, Refining and Corporate 22 30 15
Total Capital and Exploratory Expenditures $ 668 $ 1,368 $ 785
Exploration expenses charged to income
included above
United States $ 22 $ 56 $ 52
International 42 35 48
$ 64 $ 91 $ 100
(*) Reflects the retrospective adoption of a new accounting standard for
noncontrolling interests in consolidated subsidiaries
(**) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Nine Months
2009 2008
Income Statement (*)
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating $ 20,936 $ 33,754
revenues
Equity in income (loss) of HOVENSA L.L.C. (165 ) 23
Other, net 240 38
Total revenues and non-operating income 21,011 33,815
Costs and Expenses
Cost of products sold (excluding items shown separately 14,956 24,206
below)
Production expenses 1,313 1,421
Marketing expenses 742 766
Exploration expenses, including dry holes
and lease impairment 672 467
Other operating expenses 134 154
General and administrative expenses 444 478
Interest expense 269 200
Depreciation, depletion and amortization 1,670 1,431
Total costs and expenses 20,200 29,123
Income before income taxes 811 4,692
Provision for income taxes 374 2,255
Net income 437 2,437
Less: Net income attributable to noncontrolling interests 55 3
Net Income attributable to Hess Corporation $ 382 $ 2,434
Supplemental Income Statement Information
Foreign currency gains (losses), after-tax $ (1 ) $ 2
Capitalized interest 4 4
Cash Flow Information (*)
Net cash provided by operating activities (**) $ 1,775 $ 4,120
Capital and Exploratory Expenditures
Exploration and Production
United States $ 813 $ 1,645
International 1,362 1,836
Total Exploration and Production 2,175 3,481
Marketing, Refining and Corporate 83 97
Total Capital and Exploratory Expenditures $ 2,258 $ 3,578
Exploration expenses charged to income included above
United States $ 127 $ 162
International 138 134
$ 265 $ 296
(*) Reflects the retrospective adoption of a new accounting standard for
noncontrolling interests in consolidated subsidiaries
(**) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
September 30, December 31,
2009 2008
Balance Sheet Information
Cash and cash equivalents $ 957 $ 908
Other current assets 5,969 6,424
Investments 975 1,127
Property, plant and equipment - net 16,646 16,271
Other long-term assets 3,890 3,859
Total assets $ 28,437 $ 28,589
Current maturities of long-term debt $ 136 $ 143
Other current liabilities 6,332 7,587
Long-term debt 4,243 3,812
Other long-term liabilities 4,719 4,656
Total equity excluding other comprehensive income 14,834 14,399
(loss)
Accumulated other comprehensive income (loss) (1,827 ) (2,008 )
Total liabilities and equity $ 28,437 $ 28,589
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Third Quarter 2009
United
States International Total
Sales and other operating revenues $ 499 $ 1,293 $ 1,792
Other, net 137 8 145
Total revenues and non-operating income 636 1,301 1,937
Costs and expenses
Production expenses, including related 106 354 460
taxes
Exploration expenses, including dry holes
and lease impairment 56 111 167
General, administrative and other expenses 37 28 65
Depreciation, depletion and amortization 176 426 602
Total costs and expenses 375 919 1,294
Results of operations before income taxes 261 382 643
Provision for income taxes 99 147 246
Results of operations attributable to Hess $ 162 $ 235 $ 397
Corporation
Third Quarter 2008
United
States International Total
Sales and other operating revenues $ 460 $ 2,201 $ 2,661
Other, net (1 ) (70 ) (71 )
Total revenues and non-operating income 459 2,131 2,590
Costs and expenses
Production expenses, including related 96 407 503
taxes
Exploration expenses, including dry holes
and lease impairment 82 75 157
General, administrative and other expenses 41 43 84
Depreciation, depletion and amortization 59 420 479
Total costs and expenses 278 945 1,223
Results of operations before income taxes 181 1,186 1,367
Provision for income taxes 71 597 668
Results of operations attributable to Hess $ 110 $ 589 $ 699
Corporation
Second Quarter 2009
United
States International Total
Sales and other operating revenues $ 358 $ 1,341 $ 1,699
Other, net (3 ) 60 57
Total revenues and non-operating income 355 1,401 1,756
Costs and expenses
Production expenses, including related 109 335 444
taxes
Exploration expenses, including dry holes
and lease impairment 139 173 312
General, administrative and other expenses 33 28 61
Depreciation, depletion and amortization 105 433 538
Total costs and expenses 386 969 1,355
Results of operations before income taxes (31 ) 432 401
Provision (benefit) for income taxes (11 ) 197 186
Results of operations attributable to Hess $ (20 ) $ 235 $ 215
Corporation
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Nine Months 2009
United
States International Total
Sales and other operating revenues $ 1,024 $ 3,598 $ 4,622
Other, net 132 78 210
Total revenues and non-operating income 1,156 3,676 4,832
Costs and expenses
Production expenses, including related taxes 327 986 1,313
Exploration expenses, including dry holes
and lease impairment 306 366 672
General, administrative and other expenses 97 85 182
Depreciation, depletion and amortization 338 1,267 1,605
Total costs and expenses 1,068 2,704 3,772
Results of operations before income taxes 88 972 1,060
Provision for income taxes 35 477 512
Results of operations attributable to Hess $ 53 $ 495 $ 548
Corporation
Nine Months 2008
United
States International Total
Sales and other operating revenues $ 1,453 $ 6,890 $ 8,343
Other, net 9 (11 ) (2 )
Total revenues and non-operating income 1,462 6,879 8,341
Costs and expenses
Production expenses, including related taxes 267 1,154 1,421
Exploration expenses, including dry holes
and lease impairment 227 240 467
General, administrative and other expenses 109 111 220
Depreciation, depletion and amortization 175 1,200 1,375
Total costs and expenses 778 2,705 3,483
Results of operations before income taxes 684 4,174 4,858
Provision for income taxes 263 2,047 2,310
Results of operations attributable to Hess $ 421 $ 2,127 $ 2,548
Corporation
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Third Third Second
Quarter Quarter Quarter
2009 2008 2009
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States 73 31 58
Europe 83 80 76
Africa 124 121 124
Asia and other 17 12 16
Total 297 244 274
Natural gas liquids - barrels
United States 12 9 10
Europe 2 4 3
Asia and other - - 1
Total 14 13 14
Natural gas - mcf
United States 105 76 92
Europe 120 216 160
Asia and other 429 333 459
Total 654 625 711
Barrels of oil equivalent 420 361 407
Average Selling Price
Crude oil - per barrel (including hedging)*
United States $ 63.79 $ 116.14 $ 55.53
Europe 47.34 83.23 47.41
Africa 54.97 91.72 47.16
Asia and other 67.49 105.58 55.84
Worldwide 56.07 93.36 49.27
Crude oil - per barrel (excluding hedging)
United States $ 63.79 $ 116.14 $ 55.53
Europe 47.34 83.23 47.41
Africa 67.27 108.49 57.13
Asia and other 67.49 105.58 55.84
Worldwide 61.42 102.80 54.03
Natural gas liquids - per barrel
United States $ 36.05 $ 77.50 $ 31.03
Europe 43.53 81.84 36.51
Asia and other 44.74 - 35.92
Worldwide 37.27 78.50 32.97
Natural gas - per mcf (including hedging)*
United States $ 2.65 $ 8.57 $ 3.26
Europe 4.38 10.12 4.53
Asia and other 5.12 5.77 4.82
Worldwide 4.60 7.60 4.56
Natural gas - per mcf (excluding hedging)
United States $ 2.65 $ 8.57 $ 3.26
Europe 4.38 10.84 4.53
Asia and other 5.12 5.77 4.82
Worldwide 4.60 7.85 4.56
* The after-tax losses from hedging activities were $84 million in the
third quarter of 2009, $138 million in the third quarter of 2008 and
$83 million in the second quarter of 2009.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Nine Months
2009 2008
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States 54 34
Europe 82 82
Africa 125 123
Asia and other 16 14
Total 277 253
Natural gas liquids - barrels
United States 10 10
Europe 3 4
Asia and other 1 -
Total 14 14
Natural gas - mcf
United States 92 84
Europe 153 260
Asia and other 442 346
Total 687 690
Barrels of oil equivalent 406 382
Average Selling Price
Crude oil - per barrel (including hedging)*
United States $ 56.02 $ 109.39
Europe 42.80 90.69
Africa 44.98 89.66
Asia and other 56.63 106.09
Worldwide 47.09 93.62
Crude oil - per barrel (excluding hedging)
United States $ 56.02 $ 109.39
Europe 42.80 90.69
Africa 56.59 106.91
Asia and other 56.63 106.09
Worldwide 52.35 102.03
Natural gas liquids - per barrel
United States $ 32.38 $ 72.79
Europe 37.86 84.77
Asia and other 38.49 -
Worldwide 33.90 75.96
Natural gas - per mcf (including hedging)*
United States $ 3.19 $ 9.35
Europe 5.25 9.75
Asia and other 4.88 5.33
Worldwide 4.74 7.48
Natural gas - per mcf (excluding hedging)
United States $ 3.19 $ 9.35
Europe 5.25 10.16
Asia and other 4.88 5.33
Worldwide 4.74 7.64
* The after-tax losses from hedging activities were $249 million for the
nine months ended September 30, 2009 and $377 million for the nine months
ended September 30, 2008.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)
Third Third Second
Quarter Quarter Quarter
2009 2008 2009
Financial Information (in millions of dollars)
Marketing and Refining Results
Income (loss) before income taxes $ 29 $ 262 $ (56)
Provision (benefit) for income taxes (9) 101 (26)
Results of operations attributable to Hess $ 38 $ 161 $ (30)
Corporation
Summary of Marketing and Refining Results
Refining $ (3) $ 46 $ (26)
Marketing 35 110 (13)
Trading 6 5 9
Results of operations attributable to Hess $ 38 $ 161 $ (30)
Corporation
Operating Data (barrels and gallons in thousands)
Refined Product Sales (barrels per day)
Gasoline 253 249 223
Distillates 113 122 126
Residuals 51 46 65
Other 26 43 41
Total 443 460 455
Refinery Throughput (barrels per day)
HOVENSA - Crude runs 384 457 442
HOVENSA - Hess 50% share 192 228 221
Port Reading 65 65 65
Refinery Refinery Capacity
Utilization
HOVENSA (barrels per day)
Crude 500 76.9% 91.3% 88.4%
FCC 150 82.9% 72.8% 71.2%
Coker 58 78.9% 105.4% 91.2%
Port Reading 70 92.2% 92.4% 93.0%
Retail Marketing
Number of retail stations (a) 1,353 1,357 1,355
Convenience store revenue (in millions of dollars) $ 313 $ 279 $ 300
(b)
Average gasoline volume per station (gallons per 202 215 209
month) (b)
(a) Includes company operated, Wilco-Hess, dealer and branded retailer.
(b) Company operated only.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)
Nine Months
2009 2008
Financial Information (in millions of dollars)
Marketing and Refining Results
Income before income taxes $ 135 $ 198
Provision for income taxes 25 73
Results of operations attributable to Hess Corporation $ 110 $ 125
Summary of Marketing and Refining Results
Refining $ (47) $ 46
Marketing 123 102
Trading 34 (23)
Results of operations attributable to Hess Corporation $ 110 $ 125
Operating Data (barrels and gallons in thousands)
Refined Product Sales (barrels per day)
Gasoline 234 236
Distillates 129 140
Residuals 67 54
Other 36 40
Total 466 470
Refinery Throughput (barrels per day)
HOVENSA - Crude runs 412 458
HOVENSA - Hess 50% share 206 229
Port Reading 64 63
Refinery Utilization Refinery Capacity
HOVENSA (barrels per day)
Crude 500 82.4% 91.5%
FCC 150 75.2% 73.4%
Coker 58 83.6% 98.8%
Port Reading 70 91.1% 90.3%
Retail Marketing
Number of retail stations (a) 1,353 1,357
Convenience store revenue (in millions of dollars) (b) $ 868 $ 793
Average gasoline volume per station (gallons per month) (b) 203 210
(a) Includes company operated, Wilco-Hess, dealer and branded retailer.
(b) Company operated only.
Source: Hess Corporation
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