News Column

Hess Reports Estimated Results for the Second Quarter of 2014

July 30, 2014

Second Quarter Highlights:

  • Net income was $931 million compared to $1,431 million in the second quarter of 2013
  • Adjusted net income was $432 million or $1.38 per share
  • Oil and gas production was 319,000 barrels of oil equivalent per day (boepd) in the second quarter of 2014, compared with 341,000 boepd in the year-ago quarter. Pro forma production was 310,000 boepd in the second quarter of 2014, up 17 percent from 265,000 boepd in 2013
  • Cash flow from operations before working capital changes was $1.3 billion
  • Oil and gas production in the Bakken increased 25 percent from the year-ago quarter to 80,000 boepd, while well costs were reduced by 12 percent to an average of $7.4 million per operated well in the second quarter of 2014
  • The Corporation completed asset sales totaling $1.6 billion comprising approximately $805 million for its Thailand assets, $485 million for 30,000 net acres in the Utica dry gas shale play and $320 million for the Newark, New Jersey power plant
  • The Corporation announced the sale of its retail business for $2.9 billion and increased its authorized share repurchase program to $6.5 billion from $4 billion
  • The Corporation returned an additional $845 million to shareholders during the quarter through share repurchases and dividends. This included repurchasing 8.3 million common shares for approximately $768 million, bringing total shares repurchased under the program to 40.2 million for a total cost of approximately $3.3 billion


    NEW YORK--(BUSINESS WIRE)-- Hess Corporation (NYSE:HES) today reported net income of $931 million for the quarter ended June 30, 2014. Adjusted net income, which excludes items affecting comparability, was $432 million or $1.38 per common share, compared with $520 million or $1.51 per share in the prior year quarter. The decrease in adjusted net income was primarily due to the impact on operating earnings of divesting E&P assets and downstream businesses.

    After-tax income (loss) by major operating activity was as follows:

               
    Three Months Ended Six Months Ended
    June 30, June 30,
    (unaudited) (unaudited)
    2014   2013 2014   2013
    (In millions, except per share amounts)

    Net Income (Loss) Attributable to Hess Corporation

    Exploration and Production $ 1,057 $ 1,533 $ 1,565 $ 2,819
    Corporate and Interest (91) (128) (180) (237)
    Downstream Businesses   (35)   26   (68)   125
    Net income attributable to Hess Corporation $ 931 $ 1,431 $ 1,317 $

    2,707

     
    Net income per share (diluted) $ 2.96 $ 4.16 $ 4.13 $ 7.88
     
     

    Adjusted Net Income (Loss)

    Exploration and Production $ 483 $ 600 $ 997 $ 1,298
    Corporate and Interest (82) (127) (163) (225)
    Downstream Businesses   31   47   44   116
    Adjusted net income attributable to Hess Corporation $ 432 $ 520 $ 878 $ 1,189
     
    Adjusted net income per share (diluted) $ 1.38 $ 1.51 $ 2.75 $ 3.46
     
    Weighted average number of shares (diluted)   314.1   344.0   318.7   343.4



    Note: See page 6 for a table of items affecting comparability of earnings between periods.

     


    John Hess, chief executive officer of Hess, said: “This was another quarter of strong performance and execution of our strategic plan. We continued to grow production and reduce well costs in the Bakken, progressed development of Tubular Bells in the Gulf of Mexico and North Malay Basin in the Gulf of Thailand, and completed asset sales totaling $1.6 billion. We are excited by the potential of our portfolio and confident that we have the strategy, operational capabilities and financial flexibility to deliver 5 to 8 percent annual production growth and generate free cash flow and strong, sustainable returns for our shareholders.”

    Exploration and Production:

    Exploration and Production earnings were $1,057 million in the second quarter of 2014, compared with $1,533 million in the second quarter of 2013. Adjusted net income was $483 million in the second quarter of 2014 and $600 million in the second quarter of 2013.

    Oil and gas production of 319,000 boepd was down from 341,000 boepd in the second quarter a year ago. Asset sales lowered production by 43,000 boepd, while extended shutdowns caused by civil unrest in Libya reduced production by approximately 24,000 boepd versus the year-ago quarter. Production from the Valhall Field offshore Norway was up 18,000 boepd from the prior year quarter, following completion of the Valhall Redevelopment Project in 2013. Higher production in the Bakken contributed an additional 16,000 boepd versus the year-ago quarter, while the North Malay Basin Early Production System, which commenced production in October 2013, contributed 7,000 boepd. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $101.70 per barrel, up from $97.89 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.35 per mcf in the second quarter of 2014, down from $6.44 per mcf in the second quarter a year ago.

    Excluding production from assets sold and Libya, pro forma production was 310,000 boepd in the second quarter of 2014, an increase of 17 percent from 265,000 boepd in the second quarter of 2013. The Corporation expects pro forma production to average between 305,000 boepd and 315,000 boepd in 2014 driven by continued growth in the Bakken, higher production from the Valhall Field and the planned start-up of the Tubular Bells Field in the Gulf of Mexico in the third quarter of 2014.

    Operational Highlights for the Second Quarter of 2014:

      Bakken (Onshore U.S.): Production from the Bakken increased 25 percent from the prior year quarter to 80,000 boepd due to continued development activities and the completion of the Tioga gas plant expansion project. Hess brought 53 gross operated wells on production in the quarter, bringing the year-to-date total to 83 wells. Drilling and completion costs per operated well averaged $7.4 million in the second quarter of 2014, a reduction of 12 percent from the second quarter of 2013.

      Utica (Onshore U.S.): On the Corporation’s joint venture acreage, ten wells were drilled in the second quarter of 2014. In addition, during the quarter the Corporation completed the sale of 30,000 acres, including related wells and facilities in the dry gas area of the play, for cash proceeds of $485 million. This brings total year-to-date proceeds from asset sales in the Utica shale play to approximately $1.1 billion.

      Valhall (Offshore Norway): Net production averaged 31,000 boepd during the second quarter, compared with 13,000 boepd in the year-ago quarter. These results reflect completion of the Valhall Redevelopment Project in 2013, ongoing drilling and higher uptimes. Offshore work began in June on the Crestal Gas Lift Project (Phase 1) with hook-up and commissioning expected in the second quarter of 2015.

      North Malay Basin (Offshore Malaysia): Production averaged 7,000 boepd in the second quarter of 2014 from the Early Production System. Progress continued on the full field development project in the second quarter with the Corporation signing the gas sales agreement with the Malaysian government and awarding a contract for the construction and installation of a central processing platform, a bridge-linked wellhead platform and three remote wellhead platforms.

      Ghana (Offshore): The Corporation commenced drilling of a three well appraisal program in the second quarter of 2014. The first well in the program, Pecan #2A, was completed in June and the second well in the program, Pecan #3A, was also drilled and is currently undergoing production testing as planned. The third well in the program is expected to be drilled in the third quarter.

      Tubular Bells (Offshore U.S.): The offshore hook-up and final commissioning activities continued in the second quarter and first oil from the field is expected in September 2014. The drilling of a fourth production well also commenced in the second quarter.

      Stampede (Offshore U.S.): During the second quarter, the Corporation received U.S. government approval to unitize Blocks 468, 512, and the eastern half of 511. The Stampede development project continues to progress, and project sanction is expected later this year.

    Capital and Exploratory Expenditures:

    Capital and exploratory expenditures in the second quarter of 2014 were $1,256 million, down from $1,586 million in the prior year quarter.

    Asset Sales:

    During the second quarter, the Corporation completed the sale of its assets in Thailand for approximately $805 million after working capital and other adjustments, based on an effective date of July 1, 2013. In addition, the Corporation completed the sale of approximately 30,000 additional net acres of Utica dry gas acreage, including related wells and facilities, for total proceeds of $485 million and the sale of its 50 percent interest in a joint venture that is constructing an electric generating facility in Newark, New Jersey for cash proceeds of $320 million. Finally, in May, the Corporation announced that it had agreed to sell its retail business for a total of $2.874 billion, comprising $2.6 billion in cash plus $274 million for retail gasoline station leases. The Corporation’s divestiture process continues for its energy trading business.

    Liquidity:

    Net cash provided by operating activities was $946 million in the second quarter of 2014, down from $1,247 million in the same quarter of 2013, primarily reflecting the impact of the asset divestiture program. At June 30, 2014, cash and cash equivalents totaled $2,240 million, compared with $1,814 million at December 31, 2013. Total debt was $6,077 million at June 30, 2014 compared with $5,798 million at December 31, 2013. In June, the Corporation issued $600 million of fixed-rate notes comprising $300 million of 3-year bonds with a coupon of 1.3 percent and $300 million of 10-year bonds with a coupon of 3.5 percent. Proceeds from the debt offerings were primarily used to refinance $250 million of matured debt obligations and retire various lease obligations relating to retail gasoline stations. The Corporation’s debt to capitalization ratio at June 30, 2014 was 20.0 percent, up from 19.0 percent at the end of 2013.

    Returning Capital to Shareholders:

    In conjunction with the announcement of the Corporation’s sale of its retail business, the existing share repurchase program was increased to $6.5 billion from $4 billion. In the second quarter of 2014, the Corporation repurchased approximately 8.3 million shares of common stock at a cost of approximately $768 million for an average cost per share of $91.85. Since initiation of the buyback program in August 2013, total shares repurchased through June 30, 2014 were approximately 40.2 million shares at a total cost of approximately $3.3 billion for an average cost per share of $82.09. The total shares repurchased through June 30, 2014 represent approximately 12 percent of fully diluted shares at the commencement of the repurchase program.

    Dividends paid to shareholders amounted to $156 million in the first half of 2014 and $69 million in the first half of 2013.

    Downstream Businesses:

    The downstream businesses reported losses of $35 million in the second quarter of 2014, compared with income of $26 million in the same period in 2013. Adjusted net income was $31 million in the second quarter of 2014, down from $47 million in the second quarter of 2013 primarily due to the divestiture of the energy marketing and terminal businesses in the fourth quarter of 2013.

    The divested downstream businesses have been reported as discontinued operations in the consolidated financial statements. Effective as of the second quarter of 2014, retail marketing has been reported as discontinued operations for all periods presented in the consolidated financial statements due to the agreed sale of the business in May. The energy trading joint venture will be classified as discontinued operations when the business is divested.

    Items Affecting Comparability of Earnings Between Periods:

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

                                 
    Three Months Ended Six Months Ended
    June 30, June 30,
    (unaudited) (unaudited)
    2014   2013 2014   2013
    (In millions)
    Exploration and Production $

    574 

    $

    933 

    $

    568 

    $

    1,521 

    Corporate and Interest (9) (1) (17) (12)
    Downstream Businesses   (66)   (21)   (112)  



    Total items affecting comparability of earnings
    between periods $

    499 

    $

    911 

    $

    439 

    $

    1,518 

     


      Exploration and Production: Second quarter 2014 Exploration and Production results included an after-tax gain of $706 million ($706 million pre-tax) from the sale of the Corporation’s assets in Thailand. This nontaxable sale caused the Corporation’s effective income tax rate in the quarter to be substantially lower than normal. In addition, the Corporation recognized an after-tax gain of $35 million ($62 million pre-tax) from the sale of acreage and related wells in the Utica. These gains were partially offset by an after-tax charge of $105 million ($169 million pre-tax) to write-off a previously capitalized exploration well in the western half of Block 469 in the Gulf of Mexico, since the block will not be part of the unitized Stampede Development Project. In addition, the Corporation recorded net after-tax charges totaling $62 million ($132 million pre-tax) primarily to write-off leasehold acreage in the Paris Basin of France, the Shakrok Block in Kurdistan, and its interest in a natural gas exploration project, offshore Sabah, Malaysia.

      Corporate and Interest: Second quarter 2014 results included after-tax charges of $9 million ($15 million pre-tax) for severance, exit related costs and other charges.

      Downstream Businesses: Second quarter 2014 results included an after-tax charge of $72 million ($115 million pre-tax) related to the early buyout of leased retail gasoline stations acquired in the quarter in connection with the Corporation’s divestiture of its retail business. Severance, exit related costs and other charges totaled $18 million after-tax ($29 million pre-tax). These charges were partially offset by an after-tax gain of $24 million ($39 million pre-tax) resulting from the liquidation of last-in, first-out (LIFO) inventories.

    Reconciliation of U.S. GAAP to Non-GAAP measures:

    The following table reconciles reported net income attributable to Hess Corporation and adjusted net income:

           
    Three Months Ended Six Months Ended
    June 30, June 30,
    (unaudited) (unaudited)

      2014  

     

      2013  

      2014  

     

      2013  

    (In millions)
    Net income attributable to Hess Corporation $ 931 $ 1,431 $ 1,317 $ 2,707
    Less: Total items affecting comparability of earnings
    between periods   499   911   439   1,518
    Adjusted net income attributable to Hess Corporation $ 432 $ 520 $ 878 $ 1,189
     


    The following table reconciles reported net cash provided by operating activities to cash flows from operations before changes in working capital:

                                                       
    Three Months Ended Six Months Ended
    June 30, June 30,
    (unaudited) (unaudited)

      2014  

     

       2013   

      2014  

     

      2013  

    (In millions)
    Net cash provided by operating activities $ 946 $ 1,247 $ 2,104 $ 2,066
    Add back: Increases in working capital   368   70   616   927
    Cash flows from operations, excluding
    working capital changes $ 1,314 $ 1,317 $ 2,720 $ 2,993
     


    Hess Corporation will review second quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details about the event, refer to the Investor Relations section of our website at www.hess.com.

    HessCorporationis 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 atwww.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.
     

    Non-GAAP financial measures

    The Corporation has used two non-GAAP financial measures in this earnings release. “Adjusted net income” presented in this release is defined as reported net income attributable to Hess Corporation excluding items identified as affecting comparability of earnings between periods. “Cash flows from operations, excluding working capital changes” is defined as net cash provided by operating activities before adjustments for changes in working capital. We believe that investors’ understanding of our performance is enhanced by disclosing these measures. These measures are not, and should not be viewed as, a substitute for U.S. GAAP net income or cash flow. Reconciliations of both reported net income attributable to Hess Corporation (U.S. GAAP) to adjusted net income and a reconciliation of net cash provided by operating activities (U.S. GAAP) to cash flows from operations excluding working capital changes, are provided in the release.

     
                   

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

    (IN MILLIONS)

         
    Second Second First
    Quarter Quarter Quarter
    2014 2013 2014

    Income Statement

    Revenues and Non-operating Income
    Sales and other operating revenues $ 2,846 $ 3,069 $ 2,772
    Gains on asset sales, net 779 1,111 10
    Other, net   (25)   (18)   (90)
     
    Total revenues and non-operating income   3,600   4,162   2,692
     
    Costs and Expenses
    Cost of products sold (excluding items shown separately below) 444 421 393
    Operating costs and expenses 522 510 466
    Production and severance taxes 78 97 62
    Marketing expenses 25 28 40
    Exploration expenses, including dry holes and lease impairment 460 200 119
    General and administrative expenses 143 168 142
    Interest expense 85 117 81
    Depreciation, depletion and amortization   787   614   725
     
    Total costs and expenses   2,544   2,155   2,028
     
    Income from continuing operations before income taxes 1,056 2,007 664
    Provision (benefit) for income taxes   89   407   249
     
    Income from continuing operations 967 1,600 415

    Income (loss) from discontinued operations

      (37)   16   6
     
    Net income 930 1,616 421
    Less: Net income (loss) attributable to noncontrolling interests   (1)   185   35
    Net income attributable to Hess Corporation $ 931 $ 1,431 $ 386
     
     
    See "Downstream Businesses" on page 6 for basis of presentation.
     
     

    Cash Flow Information

    Net cash provided by operating activities (*) $ 946 $ 1,247 $ 1,158
    Net cash provided by (used in) investing activities 232 936 (262)
    Net cash provided by (used in) financing activities   (226)   (1,902)   (1,422)
    Net increase (decrease) in cash and cash equivalents $ 952 $ 281 $ (526)
     
    (*) Includes changes in working capital.
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

    (IN MILLIONS)

                             
    First Half

           2014       

     

           2013       

    Income Statement

    Revenues and Non-operating Income
    Sales and other operating revenues $ 5,618 $ 6,537
    Gains on asset sales, net 789 1,799
    Other, net   (115)   (55)
     

    Total revenues and non-operating income

      6,292   8,281
     
    Costs and Expenses
    Cost of products sold (excluding items shown separately below) 837 1,017
    Operating costs and expenses 988 1,095
    Production and severance taxes 140 227
    Marketing expenses 65 60
    Exploration expenses, including dry holes and lease impairment 579 419
    General and administrative expenses 285 317
    Interest expense 166 223
    Depreciation, depletion and amortization   1,512   1,293
     
    Total costs and expenses   4,572   4,651
     
    Income from continuing operations before income taxes 1,720 3,630
    Provision (benefit) for income taxes   338   868
     
    Income from continuing operations 1,382 2,762
    Income (loss) from discontinued operations   (31)   127
     
    Net income 1,351 2,889
    Less: Net income attributable to noncontrolling interests   34   182
    Net income attributable to Hess Corporation $ 1,317 $ 2,707
     
     
    See "Downstream Businesses" on page 6 for basis of presentation.
     
     

    Cash Flow Information

    Net cash provided by operating activities (*) $ 2,104 $ 2,066
    Net cash provided by (used in) investing activities (30) 675
    Net cash provided by (used in) financing activities   (1,648)   (2,658)
    Net increase (decrease) in cash and cash equivalents $ 426 $ 83
     
    (*) Includes changes in working capital.
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

    (IN MILLIONS)

                                                     

      June 30,  

    December 31,

           2014       

          2013      

    Balance Sheet Information

     
    Cash and cash equivalents $ 2,240 $ 1,814
    Assets held for sale 2,116 1,097
    Other current assets 4,411 5,688
    Investments 213 687
    Property, plant and equipment – net 27,236 28,771
    Other long-term assets   4,855   4,697
    Total assets $ 41,071 $ 42,754
     
    Short-term debt and current maturities of long-term debt $ 124 $ 378
    Liabilities associated with assets held for sale 343 286
    Other current liabilities 4,790 5,894
    Long-term debt 5,953 5,420
    Other long-term liabilities 5,507 5,992
    Total equity excluding other comprehensive income (loss) 24,738 25,122
    Accumulated other comprehensive income (loss)   (384)   (338)
    Total liabilities and equity $ 41,071 $ 42,754
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

    (IN MILLIONS)

                             
    Second Second First
    Quarter Quarter Quarter
    2014 2013 2014

    Capital and Exploratory Expenditures

    Exploration and Production
    United States
    Bakken $ 429 $ 546 $ 451
    Other Onshore   190   210   171
    Total Onshore 619 756 622
    Offshore   157   217   162
    Total United States   776   973   784
     
    Europe 162 172 145
    Africa 119 163 100
    Asia and other   199   278   195
     
    Total Capital and Exploratory Expenditures $ 1,256 $ 1,586 $ 1,224
     
    Total exploration expenses charged to income included above $ 54 $ 113 $ 78
     
     
     
    First Half
    2014 2013

    Capital and Exploratory Expenditures

    Exploration and Production
    United States
    Bakken $ 880 $ 1,081
    Other Onshore   361   392

    Total Onshore

    1,241 1,473
    Offshore   319   445
    Total United States   1,560   1,918
     
    Europe 307 391
    Africa 219 392
    Asia and other   394   504
     
    Total Capital and Exploratory Expenditures $ 2,480 $ 3,205
     
    Total exploration expenses charged to income included above $ 132 $ 223
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

    (IN MILLIONS)

                 
    Second Quarter 2014
    United States     International     Total
               
    Sales and other operating revenues $ 1,653 $ 1,176 $ 2,829
    Gains on asset sales, net 62 704 766
    Other, net   (12)   (16)               (28)
     
    Total revenues and non-operating income   1,703   1,864               3,567
     
    Costs and Expenses
    Cost of products sold (excluding items shown separately below) 412 32 444
    Operating costs and expenses 214 308 522
    Production and severance taxes 67 11 78
    Exploration expenses, including dry holes and lease impairment 208 252 460
    General and administrative expenses 70 9 79
    Depreciation, depletion and amortization   433   349               782
     
    Total costs and expenses   1,404   961               2,365
     
    Results of operations before income taxes 299 903 1,202
    Provision (benefit) for income taxes   118   27               145
     
    Net income 181 876 1,057
    Less: Net income attributable to noncontrolling interests   -   -               -
     
    Net income attributable to Hess Corporation $ 181 (a) $ 876 (b) $             1,057
     
    Second Quarter 2013
    United States International Total
     
    Sales and other operating revenues $ 1,517 $ 1,494 $ 3,011
    Gains on asset sales, net (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 (benefit) 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 results of crude oil hedging activities were after-tax realized losses of $2 million in the second quarter of 2014, and gains of $13 million in the second quarter of 2013.
    (b) The results of crude oil hedging activities were after-tax realized losses of $2 million in the second quarter of 2014, and gains of $20 million in the second quarter of 2013.
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

    (IN MILLIONS)

                 
    First Quarter 2014
    United States       International     Total
               
    Sales and other operating revenues $ 1,545 $ 1,128 $ 2,673
    Gains on asset sales, net - 10 10
    Other, net   (2)   (4)               (6)
     
    Total revenues and non-operating income   1,543   1,134               2,677
     
    Costs and Expenses
    Cost of products sold (excluding items shown separately below) 414 (21) 393
    Operating costs and expenses 209 257 466
    Production and severance taxes 58 4 62
    Exploration expenses, including dry holes and lease impairment 47 72 119
    General and administrative expenses 58 22 80
    Depreciation, depletion and amortization   360   361               721
     
    Total costs and expenses   1,146   695               1,841
     
    Results of operations before income taxes 397 439 836
    Provision (benefit) for income taxes   157   171               328
     
    Net income 240 268 508
    Less: Net income attributable to noncontrolling interests   -   -               -
     
    Net income attributable to Hess Corporation $ 240 $ 268 (a) $             508
     
    (a)   The after-tax realized gains from crude oil hedging activities were $2 million in the first quarter of 2014.
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

    (IN MILLIONS)

                 
    First Half 2014
    United States     International     Total
               
    Sales and other operating revenues $ 3,198 $ 2,304 $ 5,502
    Gains on asset sales, net 62 714 776
    Other, net   (14)   (20)               (34)
     
    Total revenues and non-operating income   3,246   2,998               6,244
     
    Costs and Expenses
    Cost of products sold (excluding items shown separately below) 826 11 837
    Operating costs and expenses 423 565 988
    Production and severance taxes 125 15 140
    Exploration expenses, including dry holes and lease impairment 255 324 579
    General and administrative expenses 128 31 159
    Depreciation, depletion and amortization   793   710               1,503
     
    Total costs and expenses   2,550   1,656               4,206
     
    Results of operations before income taxes 696 1,342 2,038
    Provision (benefit) for income taxes   275   198               473
     
    Net income 421 1,144 1,565
    Less: Net income attributable to noncontrolling interests   -   -               -
     
    Net income attributable to Hess Corporation $ 421 (a) $ 1,144 (b) $             1,565
     
    First Half 2013
    United States International Total
     
    Sales and other operating revenues $ 3,208 $ 3,269 $ 6,477
    Gains on asset sales, net (17) 1,816 1,799
    Other, net   (10)   (43)               (53)
     
    Total revenues and non-operating income   3,181   5,042               8,223
     
    Costs and Expenses
    Cost of products sold (excluding items shown separately below) 948 69 1,017
    Operating costs and expenses 391 704 1,095
    Production and severance taxes 112 115 227
    Exploration expenses, including dry holes and lease impairment 171 248 419
    General and administrative expenses 88 84 172
    Depreciation, depletion and amortization   700   585               1,285
     
    Total costs and expenses   2,410   1,805               4,215
     
    Results of operations before income taxes 771 3,237 4,008
    Provision (benefit) for income taxes   316   697               1,013
     
    Net income 455 2,540 2,995
    Less: Net income attributable to noncontrolling interests   -   176               176
     
    Net income attributable to Hess Corporation $ 455 (a) $ 2,364 (b) $             2,819
     
    (a)   The results of crude oil hedging activities were after-tax realized losses of $2 million in the first six months of 2014, and gains of $9 million in the first six months of 2013.
    (b) The results of crude oil hedging activities were after-tax realized gains of $0.3 million in the first six months of 2014, and gains of $13 million in the first six months of 2013.
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                                                                         

        Second    

        Second    

         First   

       Quarter   

        Quarter    

         Quarter   

    2014

       2013   

        2014   

    Operating Data

                                 

    Net Production Per Day (in thousands)               

    Crude oil - barrels
    United States
    Bakken 64 52 58
    Other Onshore           9           11           9
    Total Onshore 73 63 67
    Offshore           54           48           51
    Total United States           127           111           118
     
    Europe 36 33 39
    Africa 51 73 48
    Asia           2           9           5
    Total           216           226           210
     
    Natural gas liquids - barrels
    United States
    Bakken 8 6 2
    Other Onshore           5           4           2
    Total Onshore 13 10 4
    Offshore           7           6           7
    Total United States           20           16           11
     
    Europe 1 1 2
    Asia           -           1           -
    Total           21           18           13
     
    Natural gas - mcf
    United States
    Bakken 48 39 15
    Other Onshore           50           27           26
    Total Onshore 98 66 41
    Offshore           83           75           78
    Total United States           181           141           119
     
    Europe 35 15 37
    Asia and other           275           427           415
    Total           491           583           571
     
    Barrels of oil equivalent           319           341           318
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                 
    First Half
    2014   2013

    Operating Data

       

    Net Production Per Day (in thousands)

    Crude oil - barrels
    United States
    Bakken 61 52
    Other Onshore   9   12
    Total Onshore 70 64
    Offshore   53   48
    Total United States   123   112
     
    Europe 37 49
    Africa 49 75
    Asia   4   13
    Total   213   249
     
    Natural gas liquids - barrels
    United States
    Bakken 5 6
    Other Onshore   4   4
    Total Onshore 9 10
    Offshore   7   7
    Total United States   16   17
     
    Europe 1 -
    Asia   -   1
    Total   17   18
     
    Natural gas - mcf
    United States
    Bakken 31 37
    Other Onshore   38   27
    Total Onshore 69 64
    Offshore   81   73
    Total United States   150   137
     
    Europe 36 14
    Asia and other   345   437
    Total   531   588
     
    Barrels of oil equivalent   319   365
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                         

         Second     

         Second     

         First     

         Quarter     

         Quarter     

         Quarter     

    2014 2013

         2014     

     

    Sales Volumes Per Day (in thousands)

    Crude oil - barrels 222 233 197
    Natural gas liquids - barrels 21 18 12
    Natural gas - mcf 491 582 571
    Barrels of oil equivalent 325 347 305
     

    Sales Volumes (in thousands)

    Crude oil - barrels 20,193 21,180 17,750
    Natural gas liquids - barrels 1,942 1,593 1,122
    Natural gas - mcf 44,662 52,969 51,357
    Barrels of oil equivalent 29,578 31,601 27,432
     
     
    First Half
    2014 2013
     

    Sales Volumes Per Day (in thousands)

    Crude oil - barrels 210 254
    Natural gas liquids - barrels 17 18
    Natural gas - mcf 530 589
    Barrels of oil equivalent 315 370
     

    Sales Volumes (in thousands)

    Crude oil - barrels 37,943 45,947
    Natural gas liquids - barrels 3,064 3,240
    Natural gas - mcf 96,019 106,631
    Barrels of oil equivalent 57,010 66,959
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                         
    Second Second First
    Quarter Quarter Quarter
    2014 2013 2014

    Operating Data

    Average Selling Prices

    Crude oil - per barrel (including hedging)
    United States
    Onshore $ 92.44 $ 89.97 $ 88.04
    Offshore 100.42 106.71 99.34
    Total United States 95.82 97.20 92.94
     
    Europe 111.03 77.14 109.17
    Africa 108.83 106.15 108.40
    Asia 106.33 105.27 102.29
    Worldwide 101.70 97.89 99.17
     
    Crude oil - per barrel (excluding hedging)
    United States
    Onshore $ 92.44 $ 88.91 $ 88.04
    Offshore 101.09 103.43 99.34
    Total United States 96.10 95.18 92.94
     
    Europe 111.39 75.22 108.74
    Africa 109.10 102.78 107.92
    Asia 106.33 105.27 102.29
    Worldwide 101.99 95.45 99.00
     
    Natural gas liquids - per barrel
    United States
    Onshore $ 36.99 $ 38.84 $ 53.46
    Offshore 32.21 27.81 34.07
    Total United States 35.39 34.57 41.54
     
    Europe 55.77 53.16 63.83
    Asia - 66.90 -
    Worldwide 36.59 36.28 44.28
     
    Natural gas - per mcf
    United States
    Onshore $ 4.36 $ 3.19 $ 6.10
    Offshore 4.01 3.17 4.37
    Total United States 4.22 3.18 4.96
     
    Europe 10.51 9.99 11.48
    Asia and other 7.24 7.39 7.23
    Worldwide 6.35 6.44 7.03
     
     

    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

    EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                 
    First Half
    2014   2013

    Operating Data

    Average Selling Prices

    Crude oil - per barrel (including hedging)
    United States
    Onshore $ 90.35 $ 89.71
    Offshore 99.89 107.11
    Total United States 94.44 97.12
     
    Europe 110.10 68.37
    Africa 108.65 107.94
    Asia 104.66 109.30
    Worldwide 100.52 96.08
     
    Crude oil - per barrel (excluding hedging)
    United States
    Onshore $ 90.35 $ 89.37
    Offshore 100.24 106.03
    Total United States 94.58 96.46
     
    Europe 110.06 67.80
    Africa 108.62 106.88
    Asia 104.66 109.30
    Worldwide 100.59 95.34
     
    Natural gas liquids - per barrel
    United States
    Onshore $ 40.91 $ 41.21
    Offshore 33.14 27.80
    Total United States 37.54 35.97
     
    Europe 60.16 52.58
    Asia - 72.68
    Worldwide 39.41 37.49
     
    Natural gas - per mcf
    United States
    Onshore $ 4.87 $ 3.03
    Offshore 4.18 2.86
    Total United States 4.52 2.94
     
    Europe 11.01 9.08
    Asia and other 7.23 7.57
    Worldwide 6.72 6.53
     





    For Hess Corporation

    Investor:

    Jay Wilson, 212-536-8940

    or

    Media:

    Sard Verbinnen & Co

    Michael Henson/Patrick Scanlan, 212-687-8080

    Source: Hess Corporation


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