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Third Quarter Highlights:
- Net Income was $775 million compared with $395 million in third quarter 2007
- Cash flows from operations were $1.2 billion compared with $863 million in third quarter 2007
- Oil and gas production was 361,000 barrels per day, up from 357,000 in third quarter 2007
- Debt to capitalization ratio decreased to 24.3 percent at September 30, 2008, from 28.9 percent at December 31, 2007
NEW YORK--(BUSINESS WIRE)--Oct. 29, 2008--Hess Corporation (NYSE: HES) reported net income of $775 million for the third quarter of 2008 compared with net income of $395 million for the third quarter of 2007. The after-tax results by major operating activity were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
(unaudited) (unaudited)
-------------------- -------------------
2008 2007 2008 2007
---------- --------- --------- ---------
(In millions, except per share amounts)
Exploration and Production $ 699 $ 414 $ 2,548 $ 1,259
Marketing and Refining 161 46 125 269
Corporate (42) (28) (114) (91)
Interest expense (43) (37) (125) (115)
---------- --------- --------- ---------
Net income $ 775 $ 395 $ 2,434 $ 1,322
========== ========= ========= =========
Net income per share
(diluted) $ 2.37 $ 1.23 $ 7.47 $ 4.15
========== ========= ========= =========
Weighted average number of
shares (diluted) 327.4 319.9 325.7 318.6
========== ========= ========= =========
Note: See the following page for a table of items affecting the comparability of earnings between periods.
Exploration and Production earnings were $699 million in the third quarter of 2008 compared with $414 million in the third quarter of 2007. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, increased to 361,000 barrels per day in the third quarter of 2008 from 357,000 barrels per day in the third quarter of the prior year. In the third quarter of 2008, the Corporation's average worldwide crude oil selling price, including the effect of hedging, improved to $93.36 per barrel from $65.26 per barrel in the third quarter of 2007. The Corporation's average worldwide natural gas selling price, including the effect of hedging, was $7.60 per Mcf in the third quarter of 2008 compared with $5.38 per Mcf in the third quarter of the prior year.
Marketing and Refining earnings were $161 million in the third quarter of 2008 compared with $46 million in the third quarter of 2007, primarily reflecting higher margins. Refining earnings increased to $46 million in the third quarter of 2008 compared with $25 million in the third quarter of the prior year. Marketing earnings were $110 million in the third quarter of 2008 up from $21 million in the third quarter of 2007. Trading operations generated income of $5 million in the third quarter of 2008 compared with breakeven results in the same quarter of 2007.
The following table reflects the total after-tax impact of items affecting comparability of earnings between periods (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Exploration and Production $ - $ (33) $ - $ (18)
Marketing and Refining - - - -
Corporate - - - -
--------- --------- --------- ---------
$ - $ (33) $ - $ (18)
========= ========= ========= =========
Net cash provided by operating activities was $1,205 million in the third quarter of 2008 compared with $863 million in the third quarter of 2007. Capital and exploratory expenditures for the third quarter of 2008 amounted to $1,368 million, of which $1,338 million related to Exploration and Production operations. Capital and exploratory expenditures for the third quarter of 2007 amounted to $838 million, of which $800 million related to Exploration and Production operations.
At September 30, 2008, cash and cash equivalents totaled $1,380 million compared with $607 million at December 31, 2007. Total debt was $3,932 million at September 30, 2008 and $3,980 million at December 31, 2007. The Corporation's debt to capitalization ratio at September 30, 2008 was 24.3 percent compared with 28.9 percent at the end of 2007.
Hess Corporation will review third quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details on the event, refer to the Investor Relations section of our website at www.hess.com.
Hess Corporation, with headquarters in New York, is a leading global independent energy company engaged in the exploration for and production of crude oil and natural gas, as well as in refining and marketing refined petroleum products, natural gas and electricity. More information on Hess Corporation is available at www.hess.com.
Forward Looking Statements
Certain statements in this release may constitute "forward-looking
statements" within the meaning of Section 21E of the United States
Securities Exchange Act of 1934, as amended, and Section 27A of the
United States Securities Act of 1933, as amended. Forward-looking
statements are subject to known and unknown risks and uncertainties
and other factors which may cause actual results to differ materially
from those expressed or implied by such statements, including,
without limitation, uncertainties inherent in the measurement and
interpretation of geological, geophysical and other technical data.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Third Third Second
Quarter Quarter Quarter
2008 2007 2008
-------- ------- --------
Income Statement
--------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other
operating revenues $11,398 $ 7,451 $11,717
Equity in income (loss) of HOVENSA L.L.C. 52 19 (19)
Other, net (62) 34 37
-------- ------- --------
Total revenues and non-operating income 11,388 7,504 11,735
-------- ------- --------
Costs and Expenses
Cost of products sold (excluding items
shown separately below) 8,165 5,322 8,354
Production expenses 503 394 494
Marketing expenses 266 238 267
Exploration expenses, including dry holes
and lease impairment 157 131 158
Other operating expenses 62 45 47
General and administrative expenses 170 133 156
Interest expense 68 59 65
Depreciation, depletion and amortization 497 365 482
-------- ------- --------
Total costs and expenses 9,888 6,687 10,023
-------- ------- --------
Income before income taxes 1,500 817 1,712
Provision for income taxes 725 422 812
-------- ------- --------
Net income $ 775 $ 395 $ 900
======== ======= ========
Supplemental Income Statement Information
--------------------------------------------
Foreign currency gains (losses), after-tax $ (10) $ 1 $ 1
Capitalized interest 2 18 1
Cash Flow Information
--------------------------------------------
Net cash provided by operating activities $ 1,205 $ 863 $ 1,691
(*)
Capital and Exploratory Expenditures
--------------------------------------------
Exploration and Production
United States $ 509 $ 270 $ 721
International 829 530 484
-------- ------- --------
Total Exploration and Production 1,338 800 1,205
Marketing, Refining and Corporate 30 38 35
-------- ------- --------
Total Capital and Exploratory
Expenditures $ 1,368 $ 838 $ 1,240
======== ======= ========
Exploration expenses charged to income
included above
United States $ 56 $ 67 $ 44
International 35 36 40
-------- ------- --------
$ 91 $ 103 $ 84
======== ======= ========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Nine Months
------------------
2008 2007
-------- ---------
Income Statement
---------------------------------------------------
Revenues and Non-operating Income
Sales (excluding excise taxes) and other
operating revenues $33,782 $22,191
Equity in income of HOVENSA L.L.C. 23 156
Gain on asset sales - 21
Other, net 38 56
-------- ---------
Total revenues and non-operating income 33,843 22,424
-------- ---------
Costs and Expenses
Cost of products sold (excluding items shown
separately below) 24,237 15,922
Production expenses 1,421 1,118
Marketing expenses 766 701
Exploration expenses, including dry holes and
lease impairment 467 314
Other operating expenses 154 115
General and administrative expenses 478 406
Interest expense 200 185
Depreciation, depletion and amortization 1,431 1,046
-------- ---------
Total costs and expenses 29,154 19,807
-------- ---------
Income before income taxes 4,689 2,617
Provision for income taxes 2,255 1,295
-------- ---------
Net income $ 2,434 $ 1,322
======== =========
Supplemental Income Statement Information
---------------------------------------------------
Foreign currency gains (losses), after-tax $ 2 $ (10)
Capitalized interest 4 49
Cash Flow Information
---------------------------------------------------
Net cash provided by operating activities (*) $ 4,072 $ 2,701
Capital and Exploratory Expenditures
---------------------------------------------------
Exploration and Production
United States $ 1,645 $ 1,312
International 1,836 1,606
-------- ---------
Total Exploration and Production 3,481 2,918
Marketing, Refining and Corporate 97 94
-------- ---------
Total Capital and Exploratory Expenditures $ 3,578 $ 3,012
======== =========
Exploration expenses charged to income included
above
United States $ 162 $ 149
International 134 90
-------- ---------
$ 296 $ 239
======== =========
(*) Includes changes in working capital
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
September 30, December 31,
2008 2007
------------- -------------
Balance Sheet Information
------------------------------------------
Cash and cash equivalents $ 1,380 $ 607
Other current assets 6,786 6,319
Investments 1,108 1,117
Property, plant and equipment - net 16,656 14,634
Other long-term assets 3,648 3,454
------------- -------------
Total assets $ 29,578 $ 26,131
============= =============
Current maturities of long-term debt $ 39 $ 62
Other current liabilities 8,721 7,962
Long-term debt 3,893 3,918
Other long-term liabilities 4,694 4,415
Stockholders' equity excluding other
comprehensive income (loss) 14,149 11,615
Accumulated other comprehensive income
(loss) (1,918) (1,841)
------------- -------------
Total liabilities and stockholders'
equity $ 29,578 $ 26,131
============= =============
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Third Quarter 2008
--------------------------------
United
States International Total
--------- ------------- --------
Sales and other operating revenues $ 460 $ 2,201 $ 2,661
Non-operating income (expenses) (1) (70) (71)
--------- ------------- --------
Total revenues and non-operating
income 459 2,131 2,590
--------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 96 407 503
Exploration expenses, including dry
holes and lease impairment 82 75 157
General, administrative and other
expenses 41 43 84
Depreciation, depletion and
amortization 59 420 479
--------- ------------- --------
Total costs and expenses 278 945 1,223
--------- ------------- --------
Results of operations before income
taxes 181 1,186 1,367
Provision for income taxes 71 597 668
--------- ------------- --------
Results of operations $ 110 $ 589 $ 699
========= ============= ========
Third Quarter 2007
--------------------------------
United
States International Total
--------- ------------- --------
Sales and other operating revenues $ 296 $ 1,451 $ 1,747
Non-operating income (expenses) 1 29 30
--------- ------------- --------
Total revenues and non-operating
income 297 1,480 1,777
--------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 80 314 394
Exploration expenses, including dry
holes and lease impairment 79 52 131
General, administrative and other
expenses 27 37 64
Depreciation, depletion and
amortization 48 297 345
--------- ------------- --------
Total costs and expenses 234 700 934
--------- ------------- --------
Results of operations before income
taxes 63 780 843
Provision for income taxes 25 404 429
--------- ------------- --------
Results of operations $ 38 $ 376 $ 414
========= ============= ========
Second Quarter 2008
--------------------------------
United
States International Total
--------- ------------- --------
Sales and other operating revenues $ 545 $ 2,530 $ 3,075
Non-operating income (expenses) - 22 22
--------- ------------- --------
Total revenues and non-operating
income 545 2,552 3,097
--------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 101 393 494
Exploration expenses, including dry
holes and lease impairment 62 96 158
General, administrative and other
expenses 36 37 73
Depreciation, depletion and
amortization 61 401 462
--------- ------------- --------
Total costs and expenses 260 927 1,187
--------- ------------- --------
Results of operations before income
taxes 285 1,625 1,910
Provision for income taxes 108 777 885
--------- ------------- --------
Results of operations $ 177 $ 848 $ 1,025
========= ============= ========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
Nine Months 2008
--------------------------------
United
States International Total
--------- ------------- --------
Sales and other operating revenues $ 1,453 $ 6,890 $ 8,343
Non-operating income (expenses) 9 (11) (2)
--------- ------------- --------
Total revenues and non-operating
income 1,462 6,879 8,341
--------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 267 1,154 1,421
Exploration expenses, including dry
holes and lease impairment 227 240 467
General, administrative and other
expenses 109 111 220
Depreciation, depletion and
amortization 175 1,200 1,375
--------- ------------- --------
Total costs and expenses 778 2,705 3,483
--------- ------------- --------
Results of operations before income
taxes 684 4,174 4,858
Provision for income taxes 263 2,047 2,310
--------- ------------- --------
Results of operations $ 421 $ 2,127 $ 2,548
========= ============= ========
Nine Months 2007
--------------------------------
United
States International Total
--------- ------------- --------
Sales and other operating revenues $ 810 $ 4,250 $ 5,060
Non-operating income (expenses) 9 43 52
--------- ------------- --------
Total revenues and non-operating
income 819 4,293 5,112
--------- ------------- --------
Costs and expenses
Production expenses, including
related taxes 209 909 1,118
Exploration expenses, including dry
holes and lease impairment 180 134 314
General, administrative and other
expenses 94 89 183
Depreciation, depletion and
amortization 129 862 991
--------- ------------- --------
Total costs and expenses 612 1,994 2,606
--------- ------------- --------
Results of operations before income
taxes 207 2,299 2,506
Provision for income taxes 81 1,166 1,247
--------- ------------- --------
Results of operations $ 126 $ 1,133 $ 1,259
========= ============= ========
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Third Third Second
Quarter Quarter Quarter
2008 2007 2008
------- ------- -------
Operating Data
----------------------------------------------
Net Production Per Day (in thousands)
----------------------------------------------
Crude oil - barrels
United States 31 31 36
Europe 80 83 83
Africa 121 123 128
Asia and other 12 20 12
------- ------- -------
Total 244 257 259
======= ======= =======
Natural gas liquids - barrels
United States 9 11 11
Europe 4 3 4
------- ------- -------
Total 13 14 15
======= ======= =======
Natural gas - mcf
United States 76 87 83
Europe 216 188 267
Asia and other 333 241 364
------- ------- -------
Total 625 516 714
======= ======= =======
Barrels of oil equivalent 361 357 393
======= ======= =======
Average Selling Price
----------------------------------------------
Crude oil - per barrel (including hedging)
United States $116.14 $73.20 $120.23
Europe 83.23 62.06 104.98
Africa 91.72 64.38 97.32
Asia and other 105.58 70.69 120.59
Worldwide 93.36 65.26 104.29
Crude oil - per barrel (excluding hedging)
United States $116.14 $73.20 $120.23
Europe 83.23 62.06 104.98
Africa 108.49 73.49 117.49
Asia and other 105.58 70.69 120.59
Worldwide 102.80 69.85 113.79
Natural gas liquids - per barrel
United States $ 77.50 $51.27 $ 76.60
Europe 81.84 48.44 92.67
Worldwide 78.50 50.58 81.52
Natural gas - per mcf (including hedging)
United States $ 8.57 $ 5.80 $ 11.00
Europe 10.12 6.09 10.33
Asia and other 5.77 4.69 5.23
Worldwide 7.60 5.38 7.81
Natural gas - per mcf (excluding hedging)
United States $ 8.57 $ 5.80 $ 11.00
Europe 10.84 6.09 10.84
Asia and other 5.77 4.69 5.23
Worldwide 7.85 5.38 8.01
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Nine Months
--------------
2008 2007
------- ------
Operating Data
-------------------------------------------------------
Net Production Per Day (in thousands)
-------------------------------------------------------
Crude oil - barrels
United States 34 31
Europe 82 96
Africa 123 112
Asia and other 14 20
------- ------
Total 253 259
======= ======
Natural gas liquids - barrels
United States 10 10
Europe 4 5
------- ------
Total 14 15
======= ======
Natural gas - mcf
United States 84 87
Europe 260 249
Asia and other 346 254
------- ------
Total 690 590
======= ======
Barrels of oil equivalent 382 372
======= ======
Average Selling Price
-------------------------------------------------------
Crude oil - per barrel (including hedging)
United States $109.39 $62.88
Europe 90.69 56.95
Africa 89.66 57.72
Asia and other 106.09 66.59
Worldwide 93.62 58.82
Crude oil - per barrel (excluding hedging)
United States $109.39 $62.88
Europe 90.69 56.95
Africa 106.91 66.47
Asia and other 106.09 66.59
Worldwide 102.03 62.66
Natural gas liquids - per barrel
United States $ 72.79 $47.43
Europe 84.77 51.55
Worldwide 75.96 48.83
Natural gas - per mcf (including hedging)
United States $ 9.35 $ 6.75
Europe 9.75 5.03
Asia and other 5.33 4.55
Worldwide 7.48 5.08
Natural gas - per mcf (excluding hedging)
United States $ 9.35 $ 6.75
Europe 10.16 5.03
Asia and other 5.33 4.55
Worldwide 7.64 5.08
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL HEDGING INFORMATION
(UNAUDITED)
The following is a summary of the Corporation's outstanding Brent
crude oil hedges at September 30, 2008:
Average Thousands
Selling of Barrels
Price per Day
-------------- -------------
Maturities
2008 $ 25.56 24
2009 25.54 24
2010 25.78 24
2011 26.37 24
2012 26.90 24
The after-tax losses from crude oil and natural gas hedges were $138 million in the third quarter of 2008 and $60 million in the third quarter of 2007. The after-tax losses from crude oil and natural gas hedges were $377 million for the nine months of 2008 compared with $155 million for the nine months of 2007. At September 30, 2008, the after-tax deferred losses related to crude oil and natural gas hedges that were included in accumulated other comprehensive income amounted to $1.7 billion.
In October 2008, the Corporation closed its Brent crude oil hedge positions by entering into offsetting contracts covering 24,000 barrels per day from 2009 through 2012 at a per barrel price of $86.95 each year. The fourth quarter 2008 hedges were not affected by these transactions and are still open. The deferred after-tax loss as of the date the positions were closed will be recorded in earnings as the contracts mature.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Third Third Second
Quarter Quarter Quarter
2008 2007 2008
------- ------- -------
Financial Information (in millions of dollars)
----------------------------------------------
Marketing and Refining Results
----------------------------------------------
Income (loss) before income taxes $ 262 $ 75 $ (85)
Provision (benefit) for income taxes 101 29 (33)
------- ------- -------
Marketing and Refining Earnings (Loss) $ 161 $ 46 $ (52)
======= ======= =======
Summary of Marketing and Refining Results
----------------------------------------------
Refining $ 46 $ 25 $ 3
Marketing 110 21 (40)
Trading 5 - (15)
------- ------- -------
Total Marketing and Refining Earnings
(Loss) $ 161 $ 46 $ (52)
======= ======= =======
----------------------------------------------------------------------
Operating Data (barrels and gallons in
thousands)
----------------------------------------------
Refined Product Sales (barrels per day)
----------------------------------------------
Gasoline 249 216 236
Distillates 122 134 129
Residuals 46 45 49
Other 43 42 40
------- ------- -------
Total 460 437 454
======= ======= =======
Refinery Throughput (barrels per day)
----------------------------------------------
HOVENSA - Crude runs 457 459 471
HOVENSA - Hess 50% share 228 230 235
Port Reading 65 61 64
Refinery Utilization Refinery Capacity
--------------------------- -----------------
HOVENSA (barrels per day)
Crude 500 91.3% 91.9% 94.2%
FCC 150 72.8% 82.4% 73.1%
Coker 58 105.4% 92.6% 99.5%
Port Reading 70(c) 92.4% 93.8% 91.3%
Retail Marketing
----------------------------------------------
Number of retail stations (a) 1,357 1,362 1,363
Convenience store revenue (in millions of
dollars) (b) $ 279 $ 279 $ 275
Average gasoline volume per station
(gallons per month) (b) 215 232 218
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
(c) Refinery utilization in 2007 is based on capacity of 65 thousand
barrels per day.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(UNAUDITED)
Nine Months
-------------------
2008 2007
--------- ---------
Financial Information (in millions of dollars)
--------------------------------------------------
Marketing and Refining Results
--------------------------------------------------
Income before income taxes $ 198 $ 430
Provision for income taxes 73 161
--------- ---------
Marketing and Refining Earnings (Loss) $ 125 $ 269
========= =========
Summary of Marketing and Refining Results
--------------------------------------------------
Refining $ 46 $ 166
Marketing 102 64
Trading (23) 39
--------- ---------
Total Marketing and Refining Earnings (Loss) $ 125 $ 269
========= =========
----------------------------------------------------------------------
Operating Data (barrels and gallons in thousands)
--------------------------------------------------
Refined Product Sales (barrels per day)
--------------------------------------------------
Gasoline 236 212
Distillates 140 142
Residuals 54 63
Other 40 30
--------- ---------
Total 470 447
========= =========
Refinery Throughput (barrels per day)
--------------------------------------------------
HOVENSA - Crude runs 458 442
HOVENSA - Hess 50% share 229 221
Port Reading 63 60
Refinery Utilization Refinery Capacity
--------------------------- --------------------
HOVENSA (barrels per day)
Crude 500 91.5% 88.4%
FCC 150 73.4% 87.8%
Coker 58 98.8% 78.1%
Port Reading 70(c) 90.3% 92.2%
Retail Marketing
--------------------------------------------------
Number of retail stations (a) 1,357 1,362
Convenience store revenue (in millions of dollars)
(b) $ 793 $ 796
Average gasoline volume per station (gallons per
month) (b) 210 217
(a) Includes company operated, Wilco-Hess, dealer and branded
retailer.
(b) Company operated only.
(c) Refinery utilization in 2007 is based on capacity of 65 thousand
barrels per day.
CONTACT: Hess Corporation
Investor:
Jay Wilson, 212-536-8940
or
Media:
Jon Pepper, 212-536-8550
SOURCE: Hess Corporation