Hess Reports Estimated Results For The Second Quarter Of 2012

Hess Corporation (NYSE: HES) reported net income of $549 million for the second quarter of 2012, compared with $607 million for the second quarter of 2011. The after-tax income (loss) by major operating activity was as follows:
         
Three Months Ended Six Months Ended
June 30, (unaudited) June 30, (unaudited)
2012   2011 2012   2011
(In millions, except per share amounts)
Exploration and Production $   644 $   747 $   1,279 $   1,726
Marketing and Refining 8 (39) 19 -
Corporate (39) (42) (77) (70)
Interest expense     (64)     (59)     (127)     (120)
Net income attributable to Hess Corporation $   549 $   607 $   1,094 $   1,536
 
Net income per share (diluted) $   1.61 $   1.78 $   3.21 $   4.52
 
Weighted average number of shares (diluted)     340.4     340.4     340.4     339.7
 

 

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

Exploration and Production earnings were $644 million in the second quarter of 2012, compared with $747 million in the second quarter of 2011. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $86.86 per barrel, down from $97.20 per barrel in the same quarter a year ago. The average worldwide natural gas selling price of $5.94 per mcf in the second quarter of 2012 was comparable with the same quarter a year ago. Second quarter oil and gas production was 429,000 barrels of oil equivalent per day, up from 372,000 barrels of oil equivalent per day in the second quarter of 2011, primarily reflecting an increase in production from the Bakken oil shale play and the resumption of operations in Libya.

Marketing and Refining generated earnings of $8 million in the second quarter of 2012, compared with a loss of $39 million in the same period in 2011. Marketing earnings were $18 million in the second quarter of 2012 and $28 million in the second quarter of 2011. Refining operations generated income of $8 million in the second quarter of 2012, compared with a loss of $44 million in the second quarter a year ago. Trading activities generated a loss of $18 million in the second quarter of 2012 and a loss of $23 million in the second quarter of last year.

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, (unaudited) June 30, (unaudited)
2012   2011 2012   2011
(In millions of dollars)
Exploration and Production $   (36) $       -

$
      - $   310
               

Results for the second quarter of 2012 included an after-tax charge of $36 million for certain exploration properties in the Eagle Ford shale in the United States that are expected to be divested in an asset exchange with a joint venture partner.

Net cash provided by operating activities was $1,240 million in the second quarter of 2012, compared with $1,689 million in the same quarter of 2011. Capital and exploratory expenditures were $2,078 million, of which $2,036 million related to Exploration and Production operations. Capital and exploratory expenditures for the second quarter of 2011 were $1,490 million, of which $1,469 million related to Exploration and Production operations.

At June 30, 2012, cash and cash equivalents totaled $409 million, compared with $351 million at December 31, 2011. Total debt was $7,845 million at June 30, 2012 and $6,057 million at December 31, 2011. The Corporation’s debt to capitalization ratio at June 30, 2012 was 28.2 percent, compared with 24.6 percent at the end of 2011.

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.

Hess Corporation, with headquarters in New York, is a global integrated energy company engaged in the exploration, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. More information on Hess Corporation is available at www.hess.com.

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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
2012 2011 2012

Income Statement
     
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues $ 9,304 $ 9,853 $ 9,682
Income (loss) from equity investment in HOVENSA L.L.C. - (49) -
Gains on asset sales - - 36
Other, net     5     2     29
 
Total revenues and non-operating income     9,309     9,806     9,747
 
Costs and Expenses
Cost of products sold (excluding items shown separately below) 5,969 6,841 6,679
Production expenses 677 599 673
Marketing expenses 265 247 251
Exploration expenses, including dry holes and lease impairment 196 257 253
Other operating expenses 41 42 41
General and administrative expenses 172 174 167
Interest expense 105 97 104
Depreciation, depletion and amortization 769 588 681
Asset impairments     59     -     -
 
Total costs and expenses     8,253     8,845     8,849
 
Income (loss) before income taxes 1,056 961 898
Provision (benefit) for income taxes     521     392     338
 
Net income (loss) 535 569 560
Less: Net income (loss) attributable to noncontrolling interests     (14)     (38)     15
Net income (loss) attributable to Hess Corporation $   549 $   607 $   545
 

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax $ (5) $ (2) $ 9
Capitalized interest 5 2 5
 

Cash Flow Information
Net cash provided by operating activities (a) $ 1,240 $ 1,689 $ 988 (b)
 

Capital and Exploratory Expenditures
Exploration and Production
United States $ 1,243 $ 793 $ 1,241
International     793     676     722
 
Total Exploration and Production 2,036 1,469 1,963
Marketing, Refining and Corporate     42     21     23
 
Total Capital and Exploratory Expenditures $   2,078 $   1,490 $   1,986
 
Exploration expenses charged to income included above
United States $ 33 $ 56 $ 37
International     67     59     71
 
$   100 $   115 $   108
 
(a)   Includes changes in working capital.
(b) Net of payments to HOVENSA L.L.C. totaling $487 million to fully fund our share of previously accrued refining shutdown costs.

 
     

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS OF DOLLARS)
 
First Half
2012 2011

Income Statement
   
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues $ 18,986 $ 20,068
Income (loss) from equity investment in HOVENSA L.L.C. - (97)
Gains on asset sales 36 343
Other, net     34     7
 
Total revenues and non-operating income     19,056     20,321
 
Costs and Expenses
Cost of products sold (excluding items shown separately below) 12,648 13,881
Production expenses 1,350 1,130
Marketing expenses 516 530
Exploration expenses, including dry holes and lease impairment 449 570
Other operating expenses 82 84
General and administrative expenses 339 338
Interest expense 209 196
Depreciation, depletion and amortization 1,450 1,146
Asset impairments     59     -
 
Total costs and expenses     17,102     17,875
 
Income (loss) before income taxes 1,954 2,446
Provision (benefit) for income taxes     859     903
 
Net income (loss) 1,095 1,543
Less: Net income (loss) attributable to noncontrolling interests     1     7
Net income (loss) attributable to Hess Corporation $   1,094 $   1,536
 

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax $ 4 $ (5)
Capitalized interest 10 4
 

Cash Flow Information
Net cash provided by operating activities (a) $ 2,228 (b) $ 2,824
 

Capital and Exploratory Expenditures
Exploration and Production
United States $ 2,484 $ 1,333
International     1,515     1,309
 
Total Exploration and Production 3,999 2,642
Marketing, Refining and Corporate     65     34
 
Total Capital and Exploratory Expenditures $   4,064 $   2,676
 
Exploration expenses charged to income included above
United States $ 70 $ 98
International     138     121
 
$   208 $   219
 
(a)   Includes changes in working capital.
(b) Net of payments to HOVENSA L.L.C. totaling $487 million to fully fund our share of previously accrued refining shutdown costs.
       
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS OF DOLLARS)
 
June 30, December 31,
2012 2011

Balance Sheet Information
   
 
Cash and cash equivalents $ 409 $ 351
Other current assets 7,516 7,988
Investments 450 384
Property, plant and equipment – net 26,556 24,712
Other long-term assets     5,683     5,701
Total assets $   40,614 $   39,136
 
Short-term debt and current maturities of long-term debt $ 299 $ 52
Other current liabilities 6,785 8,048
Long-term debt 7,546 6,005
Other long-term liabilities 6,025 6,439
Total equity excluding other comprehensive income (loss) 20,738 19,659
Accumulated other comprehensive income (loss)     (779)     (1,067)
Total liabilities and equity $   40,614 $   39,136
 

 
     

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS OF DOLLARS)
 
Second Quarter 2012
United States     International     Total
Sales and other operating revenues $   1,043 $   1,946 $   2,989
Gains on asset sales - - -
Other, net     1     -     1
 
Total revenues and non-operating income     1,044     1,946     2,990
Costs and expenses
Production expenses, including related taxes 253 424 677
Exploration expenses, including dry holes and lease impairment 75 121 196
General, administrative and other expenses 50 29 79
Depreciation, depletion and amortization 335 408 743
Asset impairments     59     -     59
 
Total costs and expenses     772     982     1,754
 
Results of operations before income taxes 272 964 1,236
Provision (benefit) for income taxes     112     480     592
 
Results of operations attributable to Hess Corporation $   160 (a) $   484 (b) $   644
 
Second Quarter 2011
United States International Total
Sales and other operating revenues $ 858 $ 1,840 $ 2,698
Gains on asset sales - - -
Other, net     (13)     8     (5)
 
Total revenues and non-operating income     845     1,848     2,693
Costs and expenses
Production expenses, including related taxes 179 420 599
Exploration expenses, including dry holes and lease impairment 128 129 257
General, administrative and other expenses 49 27 76
Depreciation, depletion and amortization 166 387 553
Asset impairments     -     -     -
 
Total costs and expenses     522     963     1,485
 
Results of operations before income taxes 323 885 1,208
Provision (benefit) for income taxes     120     341     461
 
Results of operations attributable to Hess Corporation $   203 $   544 (b) $   747
 
First Quarter 2012
United States International Total
Sales and other operating revenues $ 923 $ 1,697 $ 2,620
Gains on asset sales - 36 36
Other, net     -     27     27
 
Total revenues and non-operating income     923     1,760     2,683
Costs and expenses
Production expenses, including related taxes 231 442 673
Exploration expenses, including dry holes and lease impairment 78 175 253
General, administrative and other expenses 38 27 65
Depreciation, depletion and amortization 279 380 659
Asset impairments     -     -     -
 
Total costs and expenses     626     1,024     1,650
 
Results of operations before income taxes 297 736 1,033
Provision (benefit) for income taxes     110     288     398
 
Results of operations attributable to Hess Corporation $   187 (a) $   448 (b) $   635
 

(a)
 

The after-tax losses from crude oil hedging activities were $3 million in the second quarter of 2012 and $26 million in the first quarter of 2012.

(b)

The after-tax losses from crude oil hedging activities were $86 million in the second quarter of 2012, $81 million in the second quarter of 2011 and $125 million in the first quarter of 2012.
     
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS OF DOLLARS)
 
First Half 2012
United States     International     Total
Sales and other operating revenues $   1,966 $   3,643 $   5,609
Gains on asset sales - 36 36
Other, net     1     27     28
 
Total revenues and non-operating income     1,967     3,706     5,673
Costs and expenses
Production expenses, including related taxes 484 866 1,350
Exploration expenses, including dry holes and lease impairment 153 296 449
General, administrative and other expenses 88 56 144
Depreciation, depletion and amortization 614 788 1,402
Asset impairments     59     -     59
 
Total costs and expenses     1,398     2,006     3,404
 
Results of operations before income taxes 569 1,700 2,269
Provision (benefit) for income taxes     222     768     990
 
Results of operations attributable to Hess Corporation $   347 (a) $   932 (b) $   1,279
 
First Half 2011
United States International Total
Sales and other operating revenues $ 1,604 $ 3,707 $ 5,311
Gains on asset sales - 343 343
Other, net     (14)     10     (4)
 
Total revenues and non-operating income     1,590     4,060     5,650
Costs and expenses
Production expenses, including related taxes 316 814 1,130
Exploration expenses, including dry holes and lease impairment 237 333 570
General, administrative and other expenses 97 63 160
Depreciation, depletion and amortization 318 772 1,090
Asset impairments     -     -     -
 
Total costs and expenses     968     1,982     2,950
 
Results of operations before income taxes 622 2,078 2,700
Provision (benefit) for income taxes     232     742     974
 
Results of operations attributable to Hess Corporation $   390 $   1,336 (b) $   1,726
 
(a)   The after-tax losses from crude oil hedging activities were $29 million in the first half of 2012.
(b) The after-tax losses from crude oil hedging activities were $211 million in the first half of 2012 and $162 million in the first half of 2011.
         
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
 
Second Second First
Quarter Quarter Quarter
2012 2011 2012

Operating Data
   

Net Production Per Day (in thousands)
Crude oil - barrels
United States 109 77 95
Europe 98 93 94
Africa 79 66 71
Asia     18     12   16
Total     304     248   276
 
Natural gas liquids - barrels
United States 15 13 14
Europe 3 3 3
Asia     1     1   2
Total     19     17   19
 
Natural gas - mcf
United States 121 100 100
Europe 53 72 61
Asia and other     465     471   449
Total     639     643   610
Barrels of oil equivalent     429     372   397
 

Average Selling Price
Crude oil - per barrel (including hedging)
United States $ 91.97 $ 106.62 $ 95.92
Europe 76.20 87.75 80.18
Africa 89.01 97.74 88.75
Asia 105.89 113.44 117.13
Worldwide 86.86 97.20 89.92
 
Crude oil - per barrel (excluding hedging)
United States $ 92.48 $ 106.62 $ 100.87
Europe 76.58 87.75 82.77
Africa 105.72 118.19 120.59
Asia 106.17 113.44 123.72
Worldwide 91.83 102.73 100.50
 
Natural gas liquids - per barrel
United States $ 40.75 $ 61.57 $ 49.26
Europe 66.15 69.99 90.43
Asia 75.16 79.63 86.50
Worldwide 45.56 64.05 59.53
 
Natural gas - per mcf
United States $ 1.55 $ 3.71 $ 1.75
Europe 9.98 8.97 9.44
Asia and other 6.61 5.94 6.77
Worldwide 5.94 5.93 6.23
 
     
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
 
First Half
2012   2011

Operating Data
   

Net Production Per Day (in thousands)
Crude oil - barrels
United States 102 77
Europe 96 96
Africa 75 75
Asia     17     13
Total     290     261
 
Natural gas liquids - barrels
United States 15 13
Europe 3 3
Asia     1     1
Total     19     17
 
Natural gas - mcf
United States 110 103
Europe 57 89
Asia and other     458     451
Total     625     643
Barrels of oil equivalent     413     385
 

Average Selling Price
Crude oil - per barrel (including hedging)
United States $ 93.81 $ 99.12
Europe 78.05 85.84
Africa 88.91 90.04
Asia 110.70 111.91
Worldwide 88.23 92.05
 
Crude oil - per barrel (excluding hedging)
United States $ 96.39 $ 99.12
Europe 79.45 85.84
Africa 111.78 110.39
Asia 113.67 111.91
Worldwide 95.72 97.37
 
Natural gas liquids - per barrel
United States $ 44.92 $ 59.43
Europe 81.20 76.01
Asia 82.02 76.23
Worldwide 52.78 63.74
 
Natural gas - per mcf
United States $ 1.64 $ 3.77
Europe 9.69 8.55
Asia and other 6.69 5.85
Worldwide 6.08 5.89
 
             
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)
 
Second Second First
Quarter Quarter Quarter
2012 2011 2012

Financial Information (in millions of dollars)
 

Marketing and Refining Results
Income (loss) before income taxes $ 7 $ (45) $ 20
Provision (benefit) for income taxes     (1)     (6)     9
Results of operations attributable to Hess Corporation $   8 $   (39) $   11
 

Summary of Marketing and Refining Results
Marketing $ 18 $ 28 $ 22
Refining 8 (44) (6)
Trading     (18)     (23)     (5)
Results of operations attributable to Hess Corporation $   8 $   (39) $   11
                             
 

Operating Data
 

Sales Volumes
Refined petroleum products (thousands of barrels per day)
Gasoline 212 228 210
Distillates 108 114 115
Residuals 54 56 61
Other     17     28     18
Total     391     426     404
 
Natural gas (thousands of mcf per day)     1,860     1,900     2,560
 
Electricity (megawatts round the clock)     4,405     4,100     4,350
 

Retail Marketing
Number of retail stations (a) 1,361 1,356 1,361
Convenience store revenue (in millions of dollars) (b) $ 288 $ 305 $ 272
Average gasoline volume per station (thousands of gallons per month) (b) 194 199 185
 

Port Reading
Refinery throughput (thousands of barrels per day) 69 66 47
Refinery utilization (capacity - 70,000 barrels per day) 98.0% 93.6% 67.4%
 
(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)
 
First Half
2012 2011

Financial Information (in millions of dollars)
 

Marketing and Refining Results
Income (loss) before income taxes $ 27 $ 51
Provision (benefit) for income taxes     8     51
Results of operations attributable to Hess Corporation $   19 $   -
 

Summary of Marketing and Refining Results
Marketing $ 40 $ 96
Refining 2 (92)
Trading     (23)     (4)
Results of operations attributable to Hess Corporation $   19 $   -
                       
 

Operating Data
 

Sales Volumes
Refined petroleum products (thousands of barrels per day)
Gasoline 210 227
Distillates 112 124
Residuals 58 71
Other     18     24
Total     398     446
 
Natural gas (thousands of mcf per day)     2,205     2,400
 
Electricity (megawatts round the clock)     4,390     4,200
 

Retail Marketing
Number of retail stations (a) 1,361 1,356
Convenience store revenue (in millions of dollars) (b) $ 560 $ 583
Average gasoline volume per station (thousands of gallons per month) (b) 190 192
 

Port Reading
Refinery throughput (thousands of barrels per day) 58 66
Refinery utilization (capacity - 70,000 barrels per day) 82.7% 93.8%
 
(a)   Includes company operated, Wilco-Hess, dealer and branded retailer.
(b) Company operated only.

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