News Release

HESS CORPORATION   Investor Contact:           Jay Wilson (212) 536-8940 Media Contact:           Jon Pepper (212) 536-8550

●	Net income was $566 million, compared with a net loss of $131 million in the fourth quarter of 2011

 

●	Net income excluding items affecting comparability between periods was $409 million compared with $394 million in the fourth quarter of 2011

 

●	Oil and gas production increased to 396,000 barrels of oil equivalent per day, up from 367,000 in the fourth quarter of 2011

 

●	Net cash provided by operating activities was $1,570 million, compared with $1,138 million in the fourth quarter of 2011

 

●	Year-end total proved reserves were 1,553 million barrels of oil equivalent; reserve replacement for 2012 was 141 percent

 

		Three Months Ended								Years Ended
		December 31, (unaudited)								December 31, (unaudited)
		2012				2011				2012				2011
		(In millions, except per share amounts)
Exploration and Production		$	517			$	527			$	2,404			$	2,675
Marketing and Refining			159				(561	)			231				(584	)
Corporate			(43	)			(40	)			(158	)			(154	)
Interest expense			(67	)			(57	)			(260	)			(234	)
Net income (loss) attributable to Hess Corporation		$	566			$	(131	)		$	2,217			$	1,703
Net income (loss) per share (diluted)		$	1.66			$	(.39	)		$	6.52			$	5.01
Weighted average number of shares (diluted)			340.5				337.5				340.3				339.9
Note: See page 3 for a table of items affecting comparability of earnings between periods.

 

Exploration and Production earnings were $517 million in the fourth quarter of 2012, compared with $527 million in the fourth quarter of 2011.  Fourth quarter oil and gas production was 396,000 barrels of oil equivalent per day, up from 367,000 barrels of oil equivalent per day in the fourth quarter a year ago, primarily reflecting an increase in production from the Bakken oil shale play and the resumption of operations in Libya, partly offset by the shut-in of the Valhall Field in Norway for the quarter due to the redevelopment project.  Net production from the Bakken oil shale play averaged 64,000 barrels of oil equivalent per day in the fourth quarter of 2012, an increase of 68% from 38,000 barrels of oil equivalent per day in the same period last year.  The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $84.46 per barrel, down from $89.70 per barrel in the same quarter a year ago.  The average worldwide natural gas selling price was $6.60 per mcf in the fourth quarter of 2012, up from $6.32 per mcf in the fourth quarter of 2011.  Fourth quarter 2012 exploration expenses included total dry hole expenses of $167 million ($102 million after-tax), primarily associated with two exploration wells, Ness Deep in the Gulf of Mexico and Ajek-1 offshore, Indonesia.

In 2012, the Corporation announced divestitures totaling $2.4 billion as part of the strategic reshaping of its Exploration and Production asset portfolio.  The sale of the Corporation's interest in the Bittern Field in the United Kingdom North Sea was completed in the fourth quarter of 2012 and follows the completion of the sales of the Schiehallion Field, offshore United Kingdom, and the Snohvit Field, offshore Norway, earlier in the year.  The sale of the Corporation's interest in the Beryl Field in the United Kingdom North Sea was completed in January 2013 and the divestiture of our assets in Azerbaijan is expected to be completed by the end of March 2013.  In addition, as previously announced, the Corporation has commenced a sales process for its Russian subsidiary, Samara-Nafta, and its Eagle Ford assets in Texas.

Earlier this week, the Corporation announced that the Port Reading refinery will be closed in February.  Upon closure of Port Reading, which follows the shutdown of the HOVENSA L.L.C. refinery in St. Croix, U.S. Virgin Islands in early 2012, the Corporation will have completely exited the refining business.  The Corporation also announced that it will commence a process to sell its terminal network.  Following these actions, over 90 percent of Hess’ capital employed will be in its Exploration and Production business.

 

 

 

 

		Fourth				Fourth				Third
		Quarter				Quarter				Quarter
		2012				2011				2012
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues		$	9,511			$	9,733			$	9,194
Income (loss) from equity investment in HOVENSA L.L.C.			-				(940	)			-
Gains on asset sales			172				-				376
Other, net			15				31				49
Total revenues and non-operating income			9,698				8,824				9,619
Costs and Expenses
Cost of products sold (excluding items shown separately below)			6,250				6,712				6,019
Production expenses			690				613				712
Marketing expenses			282				273				259
Exploration expenses, including dry holes and lease impairment			362				426				259
Other operating expenses			43				44				41
General and administrative expenses			201				187				167
Interest expense			106				93				104
Depreciation, depletion and amortization			751				674				748
Asset impairments			16				-				208
Total costs and expenses			8,701				9,022				8,517
Income (loss) before income taxes			997				(198	)			1,102
Provision (benefit) for income taxes			429				(64	)			510
Net income (loss)			568				(134	)			592
Less: Net income (loss) attributable to noncontrolling interests			2				(3	)			35
Net income (loss) attributable to Hess Corporation		$	566			$	(131	)		$	557
Supplemental Income Statement Information
Foreign currency gains (losses), after-tax		$	7			$	(8	)		$	7
Capitalized interest			10				5				8
Cash Flow Information
Net cash provided by operating activities (a)		$	1,570			$	1,138			$	1,862
Capital and Exploratory Expenditures
Exploration and Production
United States		$	1,069			$	1,372			$	1,210
International			818				813				1,050
Total Exploration and Production			1,887				2,185				2,260
Marketing, Refining and Corporate			27				51				27
Total Capital and Exploratory Expenditures		$	1,914			$	2,236			$	2,287
Exploration expenses charged to income included above
United States		$	33			$	51			$	39
International			102				70				88
		$	135			$	121			$	127

 

		Years Ended December 31,
		2012				2011
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues		$	37,691			$	38,466
Income (loss) from equity investment in HOVENSA L.L.C.			-				(1,073	)
Gains on asset sales			584				446
Other, net			98				32
Total revenues and non-operating income			38,373				37,871
Costs and Expenses
Cost of products sold (excluding items shown separately below)			24,917				26,774
Production expenses			2,752				2,352
Marketing expenses			1,057				1,069
Exploration expenses, including dry holes and lease impairment			1,070				1,195
Other operating expenses			166				171
General and administrative expenses			707				702
Interest expense			419				383
Depreciation, depletion and amortization			2,949				2,406
Asset impairments			283				358
Total costs and expenses			34,320				35,410
Income (loss) before income taxes			4,053				2,461
Provision (benefit) for income taxes			1,798				785
Net income (loss)			2,255				1,676
Less: Net income (loss) attributable to noncontrolling interests			38				(27	)
Net income (loss) attributable to Hess Corporation		$	2,217			$	1,703
Supplemental Income Statement Information
Foreign currency gains (losses), after-tax		$	18			$	(15	)
Capitalized interest			28				13
Cash Flow Information
Net cash provided by operating activities (a)		$	5,660			$	4,984
Capital and Exploratory Expenditures
Exploration and Production
United States		$	4,763			$	4,305
International			3,383				3,039
Total Exploration and Production			8,146				7,344
Marketing, Refining and Corporate			119				118
Total Capital and Exploratory Expenditures		$	8,265			$	7,462
Exploration expenses charged to income included above
United States		$	142			$	197
International			328				259
		$	470			$	456

 

		December 31,
		2012				2011
Balance Sheet Information
Cash and cash equivalents		$	642			$	351
Other current assets			7,667				7,988
Investments			443				384
Property, plant and equipment – net			29,122				24,712
Other long-term assets			5,720				5,701
Total assets		$	43,594			$	39,136
Short-term debt and current maturities of long-term debt		$	787			$	52
Other current liabilities			7,556				8,048
Long-term debt			7,324				6,005
Other long-term liabilities			6,532				6,439
Total equity excluding other comprehensive income (loss)			21,888				19,659
Accumulated other comprehensive income (loss)			(493	)			(1,067	)
Total liabilities and equity		$	43,594			$	39,136

 

 

 

		Fourth Quarter 2012
		United States				International				Total
Sales and other operating revenues		$	1,116			$	1,461			$	2,577
Gains on asset sales			-				172				172
Other, net			(1	)			28				27
Total revenues and non-operating income			1,115				1,661				2,776
Costs and expenses
Production expenses, including related taxes			232				458				690
Exploration expenses, including dry holes and lease impairment			205				157				362
General, administrative and other expenses			59				32				91
Depreciation, depletion and amortization			399				327				726
Asset impairments			-				-				-
Total costs and expenses			895				974				1,869
Results of operations before income taxes			220				687				907
Provision (benefit) for income taxes			77				313				390
Results of operations attributable to Hess Corporation		$	143		(a)	$	374		(b)	$	517
		Fourth Quarter 2011
		United States				International				Total
Sales and other operating revenues		$	937			$	1,662			$	2,599
Gains on asset sales			-				-				-
Other, net			3				25				28
Total revenues and non-operating income			940				1,687				2,627
Costs and expenses
Production expenses, including related taxes			170				443				613
Exploration expenses, including dry holes and lease impairment			118				308				426
General, administrative and other expenses			49				33				82
Depreciation, depletion and amortization			273				378				651
Asset impairments			-				-				-
Total costs and expenses			610				1,162				1,772
Results of operations before income taxes			330				525				855
Provision (benefit) for income taxes			130				198				328
Results of operations attributable to Hess Corporation		$	200			$	327		(b)	$	527
		Third Quarter 2012
		United States				International				Total
Sales and other operating revenues		$	1,022			$	1,685			$	2,707
Gains on asset sales			-				376				376
Other, net			18				26				44
Total revenues and non-operating income			1,040				2,087				3,127
Costs and expenses
Production expenses, including related taxes			241				471				712
Exploration expenses, including dry holes and lease impairment			68				191				259
General, administrative and other expenses			49				30				79
Depreciation, depletion and amortization			393				332				725
Asset impairments			58				150				208
Total costs and expenses			809				1,174				1,983
Results of operations before income taxes			231				913				1,144
Provision (benefit) for income taxes			91				445				536
Results of operations attributable to Hess Corporation		$	140		(a)	$	468		(b)	$	608

(a)	The after-tax losses from crude oil hedging activities were $5 million in both the third and fourth quarter of 2012.

(b)	The after-tax losses from crude oil hedging activities were $92 million in the fourth quarter of 2012, $83 million in the fourth quarter of 2011 and $89 million in the third quarter of 2012.

 

 

		Year Ended December 31, 2012
		United States				International				Total
Sales and other operating revenues		$	4,104			$	6,789			$	10,893
Gains on asset sales			-				584				584
Other, net			18				81				99
Total revenues and non-operating income			4,122				7,454				11,576
Costs and expenses
Production expenses, including related taxes			957				1,795				2,752
Exploration expenses, including dry holes and lease impairment			426				644				1,070
General, administrative and other expenses			196				118				314
Depreciation, depletion and amortization			1,406				1,447				2,853
Asset impairments			117				150				267
Total costs and expenses			3,102				4,154				7,256
Results of operations before income taxes			1,020				3,300				4,320
Provision (benefit) for income taxes			390				1,526				1,916
Results of operations attributable to Hess Corporation		$	630		(a)	$	1,774		(b)	$	2,404
		Year Ended December 31, 2011
		United States				International				Total
Sales and other operating revenues		$	3,371			$	6,676			$	10,047
Gains on asset sales			-				446				446
Other, net			(7	)			25				18
Total revenues and non-operating income			3,364				7,147				10,511
Costs and expenses
Production expenses, including related taxes			660				1,692				2,352
Exploration expenses, including dry holes and lease impairment			475				720				1,195
General, administrative and other expenses			190				123				313
Depreciation, depletion and amortization			800				1,505				2,305
Asset impairments			16				342				358
Total costs and expenses			2,141				4,382				6,523
Results of operations before income taxes			1,223				2,765				3,988
Provision (benefit) for income taxes			470				843				1,313
Results of operations attributable to Hess Corporation		$	753			$	1,922		(b)	$	2,675

(a)	The after-tax losses from crude oil hedging activities were $39 million for the year ended December 31, 2012.

(b)	The after-tax losses from crude oil hedging activities were $392 million for the year ended December 31, 2012 and $327 million for the corresponding period of 2011.

 

 

 

		Fourth				Fourth				Third
		Quarter				Quarter				Quarter
		2012				2011				2012
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States			118				89				109
Europe			64				95				80
Africa			77				54				75
Asia			16				13				17
Total			275				251				281
Natural gas liquids - barrels
United States			18				13				16
Europe			2				4				2
Asia			1				1				1
Total			21				18				19
Natural gas - mcf
United States			138				90				116
Europe			22				92				36
Asia and other			441				408				462
Total			601				590				614
Barrels of oil equivalent			396				367				402
Average Selling Price
Crude oil - per barrel (including hedging)
United States		$	91.74			$	100.76			$	90.17
Europe			61.01				77.18				75.08
Africa			87.27				85.49				90.78
Asia			106.28				111.08				102.85
Worldwide			84.46				89.70				86.69
Crude oil - per barrel (excluding hedging)
United States		$	92.63			$	100.76			$	90.87
Europe			61.29				77.18				75.36
Africa			109.76				109.28				110.33
Asia			107.86				111.08				103.20
Worldwide			90.86				95.16				92.35
Natural gas liquids - per barrel
United States		$	36.21			$	57.86			$	38.35
Europe			85.62				66.47				56.82
Asia			85.24				66.18				64.67
Worldwide			44.66				59.81				41.71
Natural gas - per mcf
United States		$	2.72			$	2.50			$	2.18
Europe			9.06				8.88				9.15
Asia and other			7.68				6.57				6.56
Worldwide			6.60				6.32				5.88

 

		Years Ended December 31,
		2012				2011
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States			108				81
Europe			84				89
Africa			75				66
Asia			17				13
Total			284				249
Natural gas liquids - barrels
United States			16				13
Europe			2				3
Asia			1				1
Total			19				17
Natural gas - mcf
United States			119				100
Europe			43				81
Asia and other			454				442
Total			616				623
Barrels of oil equivalent			406				370
Average Selling Price
Crude oil - per barrel (including hedging)
United States		$	92.32			$	98.56
Europe			74.14				80.18
Africa			89.02				88.46
Asia			107.45				111.71
Worldwide			86.94				89.99
Crude oil - per barrel (excluding hedging)
United States		$	93.96			$	98.56
Europe			75.06				80.18
Africa			110.92				110.28
Asia			109.35				111.71
Worldwide			93.70				95.60
Natural gas liquids - per barrel
United States		$	40.75			$	58.59
Europe			78.43				75.49
Asia			77.92				72.29
Worldwide			47.81				62.72
Natural gas - per mcf
United States		$	2.09			$	3.39
Europe			9.50				8.79
Asia and other			6.90				6.02
Worldwide			6.16				5.96

 

 

 

		Fourth				Fourth				Third
		Quarter				Quarter				Quarter
		2012				2011				2012
Financial Information (in millions)
Marketing and Refining Results
Income (loss) before income taxes		$	265			$	(885	)		$	84
Provision (benefit) for income taxes			106				(324	)			31
Results of operations attributable to Hess Corporation		$	159			$	(561	)		$	53
Summary of Marketing and Refining Results
Marketing		$	152			$	48			$	17
Refining			8				(598	)			18
Trading			(1	)			(11	)			18
Results of operations attributable to Hess Corporation		$	159			$	(561	)		$	53
Operating Data
Sales Volumes
Refined petroleum products (thousands of barrels per day)
Gasoline			201				214				214
Distillates			126				143				102
Residuals			49				65				48
Other			10				19				10
Total			386				441				374
Natural gas (thousands of mcf per day)			2,700				2,200				1,900
Electricity (megawatts round the clock)			4,400				4,100				4,800
Retail Marketing
Number of retail stations (a)			1,361				1,360				1,361
Convenience store revenue (in millions) (b)		$	268			$	290			$	295
Average gasoline volume per station (thousands of gallons per month) (b)			194				195				196
Port Reading
Refinery throughput (thousands of barrels per day)			50				58				68
Refinery utilization (capacity - 70,000 barrels per day)			72.0%				82.9%				97.0%