Hess Reports Estimated Results for the Fourth Quarter of 2012
Hess Reports Estimated Results for the Fourth Quarter of 2012
Fourth Quarter Highlights:
* 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
Business Wire
NEW YORK -- January 30, 2013
Hess Corporation (NYSE: HES) reported net income of $566 million for the
fourth quarter of 2012, compared with a net loss of $131 million for the
fourth quarter of 2011.
The after-tax income (loss) by major operating activity was as follows:
Three Months Ended Years Ended
December 31, (unaudited) December 31, (unaudited)
2012 2011 2012 2011
(In millions, except per share amounts)
Exploration and $ 517 $ 527 $ 2,404 $ 2,675
Production
Marketing and Refining 159 (561) 231 (584)
Corporate (43) (40) (158) (154)
Interest expense (67) (57) (260) (234)
Net income (loss)
attributable to Hess $ 566 $ (131) $ 2,217 $ 1,703
Corporation
Net income (loss) per $ 1.66 $ (.39) $ 6.52 $ 5.01
share (diluted)
Weighted average number 340.5 337.5 340.3 339.9
of shares (diluted)
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.
Oil and gas proved reserves were 1,553 million barrels of oil equivalent at
the end of 2012, compared with 1,573 million barrels at the end of 2011.
During 2012, the Corporation added 214 million barrels of oil equivalent to
proved reserves and sold 83 million barrels of oil equivalent of proved
reserves through asset dispositions. The additions, which are subject to final
review, replaced approximately 141 percent of the Corporation’s 2012
production, resulting in a reserve life of 10.3 years.
Marketing and Refining generated income of $159 million in the fourth quarter
of 2012, compared with a loss of $561 million in the same period in 2011.
Marketing earnings were $152 million, up from $48 million in the same quarter
of 2011 primarily as a result of income from the partial liquidation of LIFO
inventories, and higher margins. Operations at our Port Reading refining
facility in New Jersey generated income of $8 million in the fourth quarter of
2012, compared with a loss of $6 million in the fourth quarter of 2011,
principally due to higher margins. Trading activities generated a loss of $1
million in the fourth quarter of 2012 and a loss of $11 million in the fourth
quarter of last year.
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.
The following table reflects the total after-tax income (expense) of items
affecting comparability of earnings between periods:
Three Months Ended Years Ended
December 31, December 31,
(unaudited) (unaudited)
2012 2011 2012 2011
(In millions)
Exploration
and $ 86 $ - $ 148 $ 244
Production
Marketing 71 (525) 71 (525)
and Refining
$ 157 $ (525) $ 219 $ (281)
Fourth quarter 2012 Exploration and Production results included an after-tax
gain of $172 million relating to the sale of the Corporation’s interest in the
Bittern Field in the United Kingdom North Sea. The results also included an
income tax charge of $86 million for a disputed application of an
international tax treaty. Fourth quarter 2012 Marketing and Refining results
included after-tax income of $104 million from the partial liquidation of LIFO
inventories and after-tax charges totaling $33 million for asset impairments
and other charges. Fourth quarter 2011 results included an after-tax charge of
$525 million related to the shutdown of the HOVENSA refinery.
Net cash provided by operating activities was $1,570 million in the fourth
quarter of 2012, compared with $1,138 million in the same quarter of 2011.
Capital and exploratory expenditures were $1,914 million, of which $1,887
million related to Exploration and Production operations. Capital and
exploratory expenditures for the fourth quarter of 2011 were $2,236 million,
of which $2,185 million related to Exploration and Production operations.
At December 31, 2012, cash and cash equivalents totaled $642 million, compared
with $351 million at December 31, 2011. Total debt was $8,111 million at
December 31, 2012 and $6,057 million at December 31, 2011. The Corporation’s
debt to capitalization ratio at December 31, 2012 was 27.5 percent, compared
with 24.6 percent at the end of 2011.
Hess Corporation will review fourth 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 http://www.hess.com.
Hess Corporation is a leading global independent energy company primarily
engaged in the exploration and production of crude oil and natural gas, and
the marketing of refined petroleum products, natural gas and electricity. More
information on Hess Corporation is available at http://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)
Fourth Fourth Third
Quarter Quarter Quarter
2012 2011 2012
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and $ 9,511 $ 9,733 $ 9,194
other operating revenues
Income (loss) from equity investment - (940) -
in HOVENSA L.L.C.
Gains on asset sales 172 - 376
Other, net 15 31 49
Total revenues and non-operating 9,698 8,824 9,619
income
Costs and Expenses
Cost of products sold (excluding 6,250 6,712 6,019
items shown separately below)
Production expenses 690 613 712
Marketing expenses 282 273 259
Exploration expenses, including dry 362 426 259
holes and lease impairment
Other operating expenses 43 44 41
General and administrative expenses 201 187 167
Interest expense 106 93 104
Depreciation, depletion and 751 674 748
amortization
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 2 (3) 35
to noncontrolling interests
Net income (loss) attributable to $ 566 $ (131) $ 557
Hess Corporation
Supplemental Income Statement
Information
Foreign currency gains (losses), $ 7 $ (8) $ 7
after-tax
Capitalized interest 10 5 8
Cash Flow Information
Net cash provided by operating $ 1,570 $ 1,138 $ 1,862
activities (a)
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 $ 1,914 $ 2,236 $ 2,287
Expenditures
Exploration expenses charged to
income included above
United States $ 33 $ 51 $ 39
International 102 70 88
$ 135 $ 121 $ 127
(a) Includes changes in working capital.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Years Ended December 31,
2012 2011
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other $ 37,691 $ 38,466
operating revenues
Income (loss) from equity investment in - (1,073)
HOVENSA L.L.C.
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 24,917 26,774
separately below)
Production expenses 2,752 2,352
Marketing expenses 1,057 1,069
Exploration expenses, including dry holes and 1,070 1,195
lease impairment
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 38 (27)
noncontrolling interests
Net income (loss) attributable to Hess $ 2,217 $ 1,703
Corporation
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
(a) Includes changes in working capital.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
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 $ 787 $ 52
long-term debt
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 21,888 19,659
(loss)
Accumulated other comprehensive income (loss) (493) (1,067)
Total liabilities and equity $ 43,594 $ 39,136
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
Fourth Quarter 2012
United International Total
States
Sales and other $ 1,116 $ 1,461 $ 2,577
operating revenues
Gains on asset sales - 172 172
Other, net (1) 28 27
Total revenues and 1,115 1,661 2,776
non-operating income
Costs and expenses
Production expenses,
including related 232 458 690
taxes
Exploration expenses,
including dry holes 205 157 362
and lease impairment
General,
administrative and 59 32 91
other expenses
Depreciation,
depletion and 399 327 726
amortization
Asset impairments - - -
Total costs and 895 974 1,869
expenses
Results of operations 220 687 907
before income taxes
Provision (benefit) 77 313 390
for income taxes
Results of operations
attributable to Hess $ 143 (a) $ 374 (b) $ 517
Corporation
Fourth Quarter 2011
United International Total
States
Sales and other $ 937 $ 1,662 $ 2,599
operating revenues
Gains on asset sales - - -
Other, net 3 25 28
Total revenues and 940 1,687 2,627
non-operating income
Costs and expenses
Production expenses,
including related 170 443 613
taxes
Exploration expenses,
including dry holes 118 308 426
and lease impairment
General,
administrative and 49 33 82
other expenses
Depreciation,
depletion and 273 378 651
amortization
Asset impairments - - -
Total costs and 610 1,162 1,772
expenses
Results of operations 330 525 855
before income taxes
Provision (benefit) 130 198 328
for income taxes
Results of operations
attributable to Hess $ 200 $ 327 (b) $ 527
Corporation
Third Quarter 2012
United International Total
States
Sales and other $ 1,022 $ 1,685 $ 2,707
operating revenues
Gains on asset sales - 376 376
Other, net 18 26 44
Total revenues and 1,040 2,087 3,127
non-operating income
Costs and expenses
Production expenses,
including related 241 471 712
taxes
Exploration expenses,
including dry holes 68 191 259
and lease impairment
General,
administrative and 49 30 79
other expenses
Depreciation,
depletion and 393 332 725
amortization
Asset impairments 58 150 208
Total costs and 809 1,174 1,983
expenses
Results of operations 231 913 1,144
before income taxes
Provision (benefit) 91 445 536
for income taxes
Results of operations
attributable to Hess $ 140 (a) $ 468 (b) $ 608
Corporation
(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.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
Year Ended December 31, 2012
United States International Total
Sales and other operating $ 4,104 $ 6,789 $ 10,893
revenues
Gains on asset sales - 584 584
Other, net 18 81 99
Total revenues and 4,122 7,454 11,576
non-operating income
Costs and expenses
Production expenses, 957 1,795 2,752
including related taxes
Exploration expenses,
including dry holes and 426 644 1,070
lease impairment
General, administrative 196 118 314
and other expenses
Depreciation, depletion 1,406 1,447 2,853
and amortization
Asset impairments 117 150 267
Total costs and expenses 3,102 4,154 7,256
Results of operations 1,020 3,300 4,320
before income taxes
Provision (benefit) for 390 1,526 1,916
income taxes
Results of operations
attributable to Hess $ 630 (a) $ 1,774 (b) $ 2,404
Corporation
Year Ended December 31, 2011
United States International Total
Sales and other operating $ 3,371 $ 6,676 $ 10,047
revenues
Gains on asset sales - 446 446
Other, net (7) 25 18
Total revenues and 3,364 7,147 10,511
non-operating income
Costs and expenses
Production expenses, 660 1,692 2,352
including related taxes
Exploration expenses,
including dry holes and 475 720 1,195
lease impairment
General, administrative 190 123 313
and other expenses
Depreciation, depletion 800 1,505 2,305
and amortization
Asset impairments 16 342 358
Total costs and expenses 2,141 4,382 6,523
Results of operations 1,223 2,765 3,988
before income taxes
Provision (benefit) for 470 843 1,313
income taxes
Results of operations
attributable to Hess $ 753 $ 1,922 (b) $ 2,675
Corporation
(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.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
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
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
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
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)
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 $ 159 $ (561) $ 53
Hess Corporation
Summary of Marketing and Refining
Results
Marketing $ 152 $ 48 $ 17
Refining 8 (598) 18
Trading (1) (11) 18
Results of operations attributable to $ 159 $ (561) $ 53
Hess Corporation
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 4,400 4,100 4,800
clock)
Retail Marketing
Number of retail stations (a) 1,361 1,360 1,361
Convenience store revenue (in $ 268 $ 290 $ 295
millions) (b)
Average gasoline volume per station 194 195 196
(thousands of gallons per month) (b)
Port Reading
Refinery throughput (thousands of 50 58 68
barrels per day)
Refinery utilization (capacity - 72.0% 82.9% 97.0%
70,000 barrels per day)
(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)
Years Ended December 31,
2012 2011
Financial Information (in millions)
Marketing and Refining Results
Income (loss) before income taxes $ 376 $ (857)
Provision (benefit) for income taxes 145 (273)
Results of operations attributable to Hess $ 231 $ (584)
Corporation
Summary of Marketing and Refining Results
Marketing $ 209 $ 185
Refining 28 (728)
Trading (6) (41)
Results of operations attributable to Hess $ 231 $ (584)
Corporation
Operating Data
Sales Volumes
Refined petroleum products (thousands of
barrels per day)
Gasoline 209 222
Distillates 113 123
Residuals 53 65
Other 14 20
Total 389 430
Natural gas (thousands of mcf per day) 2,300 2,200
Electricity (megawatts round the clock) 4,500 4,400
Retail Marketing
Number of retail stations (a) 1,361 1,360
Convenience store revenue (in millions) (b) $ 1,123 $ 1,189
Average gasoline volume per station 192 195
(thousands of gallons per month) (b)
Port Reading
Refinery throughput (thousands of barrels per 59 63
day)
Refinery utilization (capacity - 70,000 83.6% 90.0%
barrels per day)
(a) Includes company operated, Wilco-Hess, dealer and branded retailer.
(b) Company operated only.
Contact:
Hess Corporation
Investor Contact:
Jay Wilson, 212-536-8940
or
Media Contact:
Jon Pepper, 212-536-8550
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