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Hess Reports Estimated Results for the Second Quarter of 2007
07/25/2007
NEW YORK--(BUSINESS WIRE)--July 25, 2007--Hess Corporation (NYSE: HES) reported net income of $557 million for the second quarter of 2007 compared with net income of $566 million for the second quarter of 2006. The after-tax results by major operating activity were as follows:
Three months ended Six months ended
June 30 (unaudited) June 30 (unaudited)
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
(In millions, except per share amounts)
Exploration and Production $ 505 $ 501 $ 845 $ 1,207
Marketing and Refining 122 122 223 175
Corporate (32) (29) (63) (52)
Interest expense (38) (28) (78) (65)
---------- ---------- ---------- ----------
Net income $ 557 $ 566 $ 927 $ 1,265
========== ========== ========== ==========
Net income per share
(diluted) $ 1.75 $ 1.79 $ 2.92 $ 4.01
========== ========== ========== ==========
Weighted average number of
shares (diluted) 318.6 315.5 317.9 315.2
========== ========== ========== ==========
Note: See the following page for a table of items affecting the
comparability of earnings between periods.
Exploration and Production earnings were $505 million in the second quarter of 2007 compared with $501 million in the second quarter of 2006. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 378,000 barrels per day in the second quarter of 2007, a 7% increase from the second quarter of 2006. In the second quarter of 2007, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $60.05 per barrel, an increase of $1.05 per barrel from the second quarter of 2006. The Corporation's average worldwide natural gas selling price was $4.88 per Mcf in the second quarter of 2007, compared to $5.06 per Mcf in the second quarter of 2006.
Marketing and Refining earnings were $122 million in the second quarter of both 2007 and 2006. Refining earnings were $87 million in the second quarter of 2007 compared with $107 million in the second quarter of 2006. During the second quarter of 2007, the coker unit at HOVENSA was shutdown for approximately 30 days for a scheduled turnaround. The expensing of the turnaround costs reduced refining earnings by approximately $24 million for the quarter. Marketing results were breakeven in the second quarter of 2007, a decrease of $16 million compared with the second quarter of 2006. Earnings from trading operations were $35 million in the second quarter of 2007 compared with a loss of $1 million in the second quarter of 2006.
The following items, on an after-tax basis, are included in net income (in millions):
Three months ended Six months ended
June 30 June 30
------------------ ------------------
2007 2006 2007 2006
--------- -------- --------- --------
Exploration and Production
--------------------------------
Gains from asset sales $ 15 $ 50 $ 15 $ 236
Accrued office closing costs - (18) - (18)
--------- -------- --------- --------
$ 15 $ 32 $ 15 $ 218
========= ======== ========= ========
Second quarter 2007 results included a gain related to the sale of the Corporation's interests in the Scott and Telford fields located in the United Kingdom.
Net cash provided by operating activities was $1,199 million in the second quarter of 2007 compared with $686 million in the second quarter of 2006. Capital and exploratory expenditures for the second quarter of 2007 amounted to $993 million, of which $959 million related to Exploration and Production operations. Capital and exploratory expenditures for the second quarter of 2006 amounted to $808 million, of which $766 million related to Exploration and Production operations.
At June 30, 2007, cash and cash equivalents totaled $482 million compared with $383 million at December 31, 2006. Total debt was $3,991 million at June 30, 2007 and $3,772 million at December 31, 2006. The Corporation's debt to capitalization ratio at June 30, 2007 was 30.5% compared with 31.6% at the end of 2006.
Hess Corporation will review second 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 global integrated energy company engaged in the exploration for and the development, production, purchase, transportation and sale of crude oil and natural gas. The Corporation also manufactures, purchases, transports, trades and markets refined petroleum and other energy products.
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)
Second Second First
Quarter Quarter Quarter
2007 2006 2007
---------- ----------- ----------
Income Statement
------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes)
and other operating revenues $ 7,274 $ 6,718 $ 7,319
Non-operating income
Equity in income of HOVENSA
L.L.C. 81 102 56
Gain on asset sales 21 80 --
Other, net 23 19 (1)
---------- ----------- ----------
Total revenues and non-
operating income 7,399 6,919 7,374
---------- ----------- ----------
Costs and Expenses
Cost of products sold (excluding
items shown separately below) 5,043 4,724 5,410
Production expenses 377 303 347
Marketing expenses 241 225 222
Exploration expenses, including
dry holes and lease impairment 90 79 93
Other operating expenses 37 29 33
General and administrative
expenses 142 134 131
Interest expense 62 44 64
Depreciation, depletion and
amortization 354 283 327
---------- ----------- ----------
Total costs and expenses 6,346 5,821 6,627
---------- ----------- ----------
Income before income taxes 1,053 1,098 747
Provision for income taxes 496 532 377
---------- ----------- ----------
Net income $ 557 $ 566 $ 370
========== =========== ==========
Preferred stock dividends -- 12 --
---------- ----------- ----------
Net income applicable to common
stockholders $ 557 $ 554 $ 370
========== =========== ==========
Supplemental Income Statement
Information
------------------------------------
Foreign currency gains (losses),
after-tax $ (7) $ (2) $ (4)
Capitalized interest 16 26 15
Cash Flow Information
------------------------------------
Net cash provided by operating
activities (*) $ 1,199 $ 686 $ 639
Capital and Exploratory Expenditures
------------------------------------
Exploration and Production
United States $ 391 $ 226 $ 651
International 568 540 508
---------- ----------- ----------
Total Exploration and
Production 959 766 1,159
Marketing and Refining 34 42 22
---------- ----------- ----------
Total Capital and Exploratory
Expenditures $ 993 $ 808 $ 1,181
========== =========== ==========
Exploration expenses charged to
income included above
United States $ 42 $ 25 $ 40
International 19 24 35
---------- ----------- ----------
$ 61 $ 49 $ 75
========== =========== ==========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
First Half
---------------------
2007 2006
---------- ----------
Income Statement
-----------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other
operating revenues $ 14,593 $ 13,877
Non-operating income
Equity in income of HOVENSA L.L.C. 137 105
Gain on asset sales 21 369
Other, net 22 34
---------- ----------
Total revenues and non-operating
income 14,773 14,385
---------- ----------
Costs and Expenses
Cost of products sold (excluding items
shown separately below) 10,453 9,955
Production expenses 724 569
Marketing expenses 463 456
Exploration expenses, including dry holes
and lease impairment 183 191
Other operating expenses 70 57
General and administrative expenses 273 239
Interest expense 126 101
Depreciation, depletion and amortization 681 548
---------- ----------
Total costs and expenses 12,973 12,116
---------- ----------
Income before income taxes 1,800 2,269
Provision for income taxes 873 1,004
---------- ----------
Net income $ 927 $ 1,265
========== ==========
Preferred stock dividends - - 24
---------- ----------
Net income applicable to common
stockholders $ 927 $ 1,241
========== ==========
Supplemental Income Statement Information
-----------------------------------------------
Foreign currency gains (losses), after-tax $ (11) $ 5
Capitalized interest 31 50
Cash Flow Information
-----------------------------------------------
Net cash provided by operating activities (*) $ 1,838 $ 1,884
Capital and Exploratory Expenditures
-----------------------------------------------
Exploration and Production
United States $ 1,042 $ 387
International 1,076 1,733
---------- ----------
Total Exploration and Production 2,118 2,120
Marketing and Refining 56 75
---------- ----------
Total Capital and Exploratory
Expenditures $ 2,174 $ 2,195
========== ==========
Exploration expenses charged to income
included above
United States $ 82 $ 49
International 54 51
---------- ----------
$ 136 $ 100
========== ==========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
June 30 December 31
2007 2006
------------ ------------
Balance Sheet Information
--------------------------------------
Cash and cash equivalents $ 482 $ 383
Other current assets 4,531 5,465
Investments 1,244 1,243
Property, plant and equipment - net 13,754 12,308
Other long-term assets 3,226 3,043
------------ ------------
Total assets $ 23,237 $ 22,442
============ ============
Current maturities of long-term debt $ 30 $ 27
Other current liabilities 6,188 6,712
Long-term debt 3,961 3,745
Other long-term liabilities 3,971 3,811
Stockholders' equity excluding other
comprehensive income (loss) 10,702 9,711
Accumulated other comprehensive
income (loss) (1,615) (1,564)
------------ ------------
Total liabilities and
stockholders' equity $ 23,237 $ 22,442
============ ============
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Second Quarter 2007
-------------------------------------
United
States International Total
----------- ------------- -----------
Sales and other operating
revenues $ 273 $ 1,529 $ 1,802
Non-operating income -- 28 28
----------- ------------- -----------
Total revenues 273 1,557 1,830
----------- ------------- -----------
Costs and expenses
Production expenses, including
related taxes 70 307 377
Exploration expenses,
including dry holes and lease
impairment 51 39 90
General, administrative and
other expenses 34 28 62
Depreciation, depletion and
amortization 44 293 337
----------- ------------- -----------
Total costs and expenses 199 667 866
----------- ------------- -----------
Results of operations before
income taxes 74 890 964
Provision for income taxes 30 429 459
----------- ------------- -----------
Results of operations $ 44 $ 461 $ 505
=========== ============= ===========
Second Quarter 2006
-------------------------------------
United
States International Total
----------- ------------- -----------
Sales and other operating
revenues $ 330 $ 1,295 $ 1,625
Non-operating income 80 12 92
----------- ------------- -----------
Total revenues 410 1,307 1,717
----------- ------------- -----------
Costs and expenses
Production expenses, including
related taxes 56 247 303
Exploration expenses,
including dry holes and lease
impairment 34 45 79
General, administrative and
other expenses 22 50 72
Depreciation, depletion and
amortization 32 235 267
----------- ------------- -----------
Total costs and expenses 144 577 721
----------- ------------- -----------
Results of operations before
income taxes 266 730 996
Provision for income taxes 97 398 495
----------- ------------- -----------
Results of operations $ 169 $ 332 $ 501
=========== ============= ===========
First Quarter 2007
-------------------------------------
United
States International Total
----------- ------------- -----------
Sales and other operating
revenues $ 241 $ 1,270 $ 1,511
Non-operating income (expenses) 8 (14) (6)
----------- ------------- -----------
Total revenues 249 1,256 1,505
----------- ------------- -----------
Costs and expenses
Production expenses, including
related taxes 59 288 347
Exploration expenses,
including dry holes and lease
impairment 50 43 93
General, administrative and
other expenses 33 24 57
Depreciation, depletion and
amortization 37 272 309
----------- ------------- -----------
Total costs and expenses 179 627 806
----------- ------------- -----------
Results of operations before
income taxes 70 629 699
Provision for income taxes 26 333 359
----------- ------------- -----------
Results of operations $ 44 $ 296 $ 340
=========== ============= ===========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
First Half 2007
---------------------------------
United
States International Total
--------- -------------- --------
Sales and other operating revenues $ 514 $ 2,799 $ 3,313
Non-operating income 8 14 22
--------- -------------- --------
Total revenues 522 2,813 3,335
--------- -------------- --------
Costs and expenses
Production expenses, including
related taxes 129 595 724
Exploration expenses, including
dry holes and lease impairment 101 82 183
General, administrative and other
expenses 67 52 119
Depreciation, depletion and
amortization 81 565 646
--------- -------------- --------
Total costs and expenses 378 1,294 1,672
--------- -------------- --------
Results of operations before
income taxes 144 1,519 1,663
Provision for income taxes 56 762 818
--------- -------------- --------
Results of operations $ 88 $ 757 $ 845
========= ============== ========
First Half 2006
---------------------------------
United
States International Total
--------- -------------- --------
Sales and other operating revenues $ 674 $ 2,503 $ 3,177
Non-operating income 368 24 392
--------- -------------- --------
Total revenues 1,042 2,527 3,569
--------- -------------- --------
Costs and expenses
Production expenses, including
related taxes 107 462 569
Exploration expenses, including
dry holes and lease impairment 95 96 191
General, administrative and other
expenses 44 73 117
Depreciation, depletion and
amortization 61 456 517
--------- -------------- --------
Total costs and expenses 307 1,087 1,394
--------- -------------- --------
Results of operations before
income taxes 735 1,440 2,175
Provision for income taxes 264 704 968
--------- -------------- --------
Results of operations $ 471 $ 736 $ 1,207
========= ============== ========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
Second Second First
Quarter Quarter Quarter
2007 2006 2007
-------- -------- --------
Operating Data
-------------------------------------------
Net Production Per Day
-----------------------------------------
Crude oil - barrels
United States 31 38 29
Europe 96 110 110
Africa 115 84 99
Asia and other 26 12 15
-------- -------- --------
Total 268 244 253
======== ======== ========
Natural gas liquids - barrels
United States 10 10 9
Europe 4 4 7
-------- -------- --------
Total 14 14 16
======== ======== ========
Natural gas - mcf
United States 86 117 90
Europe 212 244 348
Asia and other 277 214 243
-------- -------- --------
Total 575 575 681
======== ======== ========
Barrels of oil equivalent 378 354 382
======== ======== ========
Average Selling Price
-----------------------------------------
Crude oil - per barrel (including
hedging)
United States $ 61.41 $ 64.53 $ 53.19
Europe 58.94 60.63 51.32
Africa 58.02 53.04 48.17
Asia and other 70.73 68.64 56.44
Worldwide 60.05 59.00 50.74
Crude oil - per barrel (excluding
hedging)
United States $ 61.41 $ 64.53 $ 53.19
Europe 58.94 63.27 51.32
Africa 67.04 67.18 56.09
Asia and other 70.73 68.64 56.44
Worldwide 63.94 65.03 53.75
Natural gas liquids - per barrel
United States $ 47.97 $ 47.35 $ 42.44
Europe 58.26 47.44 45.90
Worldwide 51.68 47.38 43.97
Natural gas - per mcf
United States $ 7.24 $ 6.23 $ 7.21
Europe 4.54 5.55 4.74
Asia and other 4.42 3.85 4.56
Worldwide 4.88 5.06 5.00
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL OPERATING DATA
(IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES)
First Half
--------------------------
2007 2006
------------ ------------
Operating Data
--------------------------------------
Net Production Per Day
-----------------------------------
Crude oil - barrels
United States 30 40
Europe 103 111
Africa 107 84
Asia and other 20 10
------------ ------------
Total 260 245
============ ============
Natural gas liquids - barrels
United States 10 9
Europe 5 4
------------ ------------
Total 15 13
============ ============
Natural gas - mcf
United States 88 120
Europe 280 262
Asia and other 260 211
------------ ------------
Total 628 593
============ ============
Barrels of oil equivalent 380 357
============ ============
Average Selling Price
-----------------------------------
Crude oil - per barrel
(including hedging)
United States $ 57.46 $ 60.81
Europe 54.98 57.69
Africa 53.68 50.01
Asia and other 65.08 63.54
Worldwide 55.66 56.21
Crude oil - per barrel
(excluding hedging)
United States $ 57.46 $ 60.81
Europe 54.98 59.95
Africa 62.22 64.89
Asia and other 65.08 63.54
Worldwide 59.13 61.72
Natural gas liquids - per barrel
United States $ 45.36 $ 45.87
Europe 52.44 47.33
Worldwide 48.06 46.30
Natural gas - per mcf
United States $ 7.22 $ 7.00
Europe 4.66 7.06
Asia and other 4.49 3.87
Worldwide 4.95 5.91
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION HEDGED PRICES AND VOLUMES (UNAUDITED)
The following is a summary of the Corporation's outstanding crude oil
hedges at June 30, 2007:
Brent Crude Oil*
----------------------------------
Maturity Average Selling Thousands of
Price barrels per day
---------------------- ---------------- ----------------
2007 $ 25.85 24
2008 25.56 24
2009 25.54 24
2010 25.78 24
2011 26.37 24
2012 26.90 24
-------------------------
* There were no WTI crude oil or natural gas hedges outstanding at
June 30, 2007.
The after-tax losses from crude oil hedges were $56 million in the
second quarter of 2007 and $83 million in the second quarter of
2006. After-tax hedge losses totaled $95 million and $147 million
for the first half of 2007 and 2006, respectively. The after-tax
deferred hedge loss included in accumulated other comprehensive
income at June 30, 2007 amounted to $1.4 billion.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Second Second First
Quarter Quarter Quarter
2007 2006 2007
---------- ---------- ---------
Financial Information (in millions
of dollars)
-----------------------------------
Marketing and Refining Earnings
---------------------------------
Income before income taxes $ 196 $ 189 $ 159
Provision for income taxes 74 67 58
---------- ---------- ---------
Marketing and Refining
Earnings $ 122 $ 122 $ 101
========== ========== =========
Summary of Marketing and Refining
Earnings
---------------------------------
Refining $ 87 $ 107 $ 54
Marketing - 16 43
Trading 35 (1) 4
---------- ---------- ---------
Total Marketing and Refining
Earnings $ 122 $ 122 $ 101
========== ========== =========
----------------------------------------------------------------------
Operating Data (in thousands unless
noted)
-----------------------------------
Refined Product Sales (barrels
per day)
---------------------------------
Gasoline 224 223 194
Distillates 119 112 174
Residuals 52 42 94
Other 19 35 29
---------- ---------- ---------
Total 414 412 491
========== ========== =========
Refinery Throughput (barrels per
day)
---------------------------------
HOVENSA - Crude runs 397 430 470
HOVENSA - Hess 50% share 199 215 235
Port Reading 64 63 55
---------
Refinery Utilization Refinery
Capacity
----------------------- ---------
HOVENSA (barrels
per day)
Crude 500 79.4%(a) 85.9% 94.1%
FCC 150 87.9% 87.3% 93.2%
Coker 58 53.3%(a) 73.2% 88.6%
Port Reading 65 97.9% 96.9% 84.7%
---------
Retail Marketing
-----------------------
Number of retail stations (b) 1,351 1,343 1,345
Convenience store revenue (in
millions of dollars) (c) $ 274 $ 258 $ 244
Average gasoline volume per
station (gallons per month) (c) 228 222 191
(a) The coker and related processing units were shutdown for a
scheduled turnaround.
(b) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(c) Company operated only.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
First Half
-----------------------
2007 2006
----------- ----------
Financial Information (in millions
of dollars)
------------------------------------
Marketing and Refining Earnings
--------------------------------
Income before income taxes $ 355 $ 272
Provision for income taxes 132 97
----------- ----------
Marketing and Refining
Earnings $ 223 $ 175
=========== ==========
Summary of Marketing and
Refining Earnings
--------------------------------
Refining $ 141 $ 132
Marketing 43 28
Trading 39 15
----------- ----------
Total Marketing and
Refining Earnings $ 223 $ 175
=========== ==========
------------------------------------ --------------------------------
Operating Data (in thousands unless
noted)
------------------------------------
Refined Product Sales (barrels
per day)
--------------------------------
Gasoline 209 225
Distillates 146 139
Residuals 73 63
Other 24 39
----------- ----------
Total 452 466
=========== ==========
Refinery Throughput (barrels per
day)
--------------------------------
HOVENSA - Crude runs 434 425
HOVENSA - Hess 50% share 217 212
Port Reading 59 64
---------
Refinery Utilization Refinery
Capacity
-------------------------------- ---------
HOVENSA (barrels
per day)
Crude 500 86.7% 85.0%
FCC 150 90.5% 76.9%
Coker 58 70.8% 79.4%
Port Reading 65 91.4% 97.8%
---------
Retail Marketing
--------------------------------
Number of retail stations (a) 1,351 1,343
Convenience store revenue (in millions
of dollars) (b) $ 518 $ 492
Average gasoline volume per station
(gallons per month) (b) 210 208
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
CONTACT: Hess Corporation
Investors:
Jay Wilson, 212-536-8940
or
Media:
Jon Pepper, 212-536-8550
SOURCE: Hess Corporation