-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, D6DDlEHpPougsiA+YRJ7pAeQjHrd3TzgEsj2EXVEUGDY2NBDsXtPekQDYtQQmLwp tVvmphbS+PGRNjGw/F1+sg== 0000950123-94-000892.txt : 19940613 0000950123-94-000892.hdr.sgml : 19940613 ACCESSION NUMBER: 0000950123-94-000892 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERADA HESS CORP CENTRAL INDEX KEY: 0000004447 STANDARD INDUSTRIAL CLASSIFICATION: 2911 IRS NUMBER: 134921002 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01204 FILM NUMBER: 94527361 BUSINESS ADDRESS: STREET 1: 1185 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2129978500 FORMER COMPANY: FORMER CONFORMED NAME: AMERADA PETROLEUM CORP DATE OF NAME CHANGE: 19690727 10-Q 1 AMERADA HESS CORPORATION FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1994 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-1204 AMERADA HESS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 13-4921002 (I.R.S. employer identification number) 1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y. (Address of principal executive offices) 10036 (Zip Code) (Registrant's telephone number, including area code is (212) 997-8500) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] At March 31, 1994, 93,011,355 shares of Common Stock were outstanding. 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME Three Months Ended March 31 (in thousands, except per share data)
1994 1993 -------- -------- REVENUES Sales (excluding excise taxes) and other operating revenues $ 1,857,628 $ 1,565,169 Interest, dividends and other revenues 11,598 12,847 ----------- ------------ Total revenues 1,869,226 1,578,016 ----------- ------------ COSTS AND EXPENSES Cost of products sold and operating expenses 1,205,628 1,120,444 Exploration expenses, including dry holes 59,858 57,787 Selling, general and administrative expenses 157,354 134,745 Interest expense 60,566 30,113 Depreciation, depletion and amortization 229,869 171,871 Lease impairment 12,801 13,220 Provision for income taxes 59,494 46,362 ----------- ------------ Total costs and expenses 1,785,570 1,574,542 ----------- ------------ INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 83,656 3,474 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES -- 29,459 ----------- ------------ NET INCOME $ 83,656 $ 32,933 =========== ============ INCOME PER SHARE BEFORE ACCOUNTING CHANGE $ .90 $ .04 =========== ============ NET INCOME PER SHARE $ .90 $ .36 =========== ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (FULLY DILUTED BASIS) 92,905 92,596 COMMON STOCK DIVIDENDS PER SHARE $ .15 $ .15
See accompanying notes to consolidated financial statements. 1 3 PART I - FINANCIAL INFORMATION (CONT'D.) AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands of dollars) A S S E T S
MARCH 31, DECEMBER 31, 1994 1993 ----------- ------------ CURRENT ASSETS Cash and cash equivalents $ 84,306 $ 79,635 Accounts receivable 492,679 554,987 Inventories 807,512 853,393 Prepaid expenses 183,130 200,151 ----------- ------------ Total current assets 1,567,627 1,688,166 ----------- ------------ INVESTMENTS AND ADVANCES 127,840 137,161 ----------- ------------ PROPERTY, PLANT AND EQUIPMENT Total - at cost 13,856,486 13,787,240 Less reserves for depreciation, depletion, amortization and lease impairment 7,239,971 7,052,328 ----------- ------------ Property, plant and equipment - net 6,616,515 6,734,912 ----------- ------------ OTHER ASSETS 90,250 81,307 ----------- ------------ TOTAL ASSETS $ 8,402,232 $ 8,641,546 =========== ===========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y CURRENT LIABILITIES Accounts payable - trade $ 321,390 $ 329,648 Accrued liabilities 549,516 613,791 Deferred revenue 76,542 128,566 Notes payable 28,000 117,900 Taxes payable 142,166 106,893 Current maturities of long-term debt 96,033 146,342 ----------- ------------ Total current liabilities 1,213,647 1,443,140 ----------- ------------ LONG-TERM DEBT 3,277,217 3,423,680 ----------- ------------ CAPITALIZED LEASE OBLIGATIONS 91,242 91,094 ----------- ------------ DEFERRED LIABILITIES AND CREDITS Deferred income taxes 481,450 462,273 Other 229,794 192,448 ----------- ------------ Total deferred liabilities and credits 711,244 654,721 ----------- ------------ STOCKHOLDERS' EQUITY Preferred stock, par value $1.00 Authorized - 20,000,000 shares for issuance in series -- -- Common stock, par value $1.00 Authorized - 200,000,000 shares Issued - 93,011,355 shares at March 31, 1994; 92,586,855 shares at December 31, 1993 93,011 92,587 Capital in excess of par value 744,202 725,443 Retained earnings 2,519,030 2,449,325 Equity adjustment from foreign currency translation (247,361) (238,444) ----------- ------------ Total stockholders' equity 3,108,882 3,028,911 ----------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,402,232 $ 8,641,546 =========== ============
See accompanying notes to consolidated financial statements. 2 4 PART I - FINANCIAL INFORMATION (CONT'D.) AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOWS Three Months Ended March 31 (in thousands)
1994 1993 ------ ------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 83,656 $ 32,933 Adjustments to reconcile net income to net cash provided by operating activities Depreciation, depletion, amortization and lease impairment 242,670 185,091 Exploratory dry hole costs 39,559 29,188 Changes in operating assets and liabilities 81,549 170,509 Deferred income taxes and other items 31,681 (17,711) ---------- ---------- Net cash provided by operating activities 479,115 400,010 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (131,082) (380,005) Proceeds from sales of property, plant and equipment and other 1,906 768 ---------- ---------- Net cash used in investing activities (129,176) (379,237) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Decrease in notes payable (89,900) -- Long-term borrowings 65,929 111,307 Repayment of long-term debt and capitalized lease obligations (293,768) (97,142) Cash dividends paid (27,838) (13,872) ---------- ---------- Net cash provided by (used in) financing activities (345,577) 293 ---------- ---------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 309 (2,358) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,671 18,708 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 79,635 141,014 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 84,306 $ 159,722 ========== ==========
See accompanying notes to consolidated financial statements. 3 5 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of dollars) Note 1 - The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the Company's consolidated financial position at March 31, 1994 and December 31, 1993, and the consolidated results of operations and the consolidated cash flows for the three-month periods ended March 31, 1994 and 1993. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the year. Certain notes and other information have been condensed or omitted from these interim financial statements. Such statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the 1993 Annual Report to Stockholders, which have been incorporated by reference in the Corporation's Form 10-K for the year ended December 31, 1993. Note 2 - Inventories consist of the following:
March 31, December 31, 1994 1993 ----------- ----------- Crude oil and other charge stocks $ 282,636 $ 299,015 Refined and other finished products 403,915 436,633 Materials and supplies 120,961 117,745 ----------- ----------- Total inventories $ 807,512 $ 853,393 =========== ===========
Note 3 - The provision for income taxes consisted of the following:
Three months ended March 31 ---------------------- 1994 1993 -------- -------- Current $ 32,280 $ 35,655 Deferred 27,214 10,707 -------- -------- Total $ 59,494 $ 46,362 ======== ========
On January 1, 1993, the Corporation changed its method of accounting for income taxes in accordance with FAS No. 109, Accounting for Income Taxes. The cumulative effect of this accounting change at January 1, 1993 was to increase net income by $29,459 ($.32 per share). 4 6 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Foreign currency exchange transactions, reflected in selling, general and administrative expenses, amounted to a loss of $2,053 and a gain of $1,199, respectively, for the three-month periods ended March 31, 1994 and 1993. The net effect, after applicable income taxes, amounted to a loss of $1,792 and a gain of $1,469, respectively, for the three-month periods ended March 31, 1994 and 1993. Note 5 - Interest cost related to certain long-term construction projects has been capitalized in accordance with FAS No. 34. During the first quarter of 1993, interest cost of $31,335 was capitalized. There was no interest capitalized in the first quarter of 1994. Note 6 - The Corporation uses futures, forward, option and swap contracts to reduce the price volatility of crude oil, natural gas and refined products. Since these contracts qualify as hedges and correlate to price movements of inventory and crude oil and natural gas production, any gains or losses resulting from market changes will be offset by losses or gains on the Corporation's hedged inventory or production. Total unrealized gains on the Corporation's petroleum hedging activities were approximately $57,000 at March 31, 1994. 5 7 PART I - FINANCIAL INFORMATION (CONT'D.) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. RESULTS OF OPERATIONS First Quarter 1994 compared with First Quarter 1993. Net income for the first quarter of 1994 amounted to $84 million ($.90 per share) compared with net income of $33 million ($.36 per share) for the first quarter of 1993. Net income for the first quarter of 1993 included income of $29 million ($.32 per share) from the cumulative effect of the change in accounting for income taxes required by Statement of Financial Accounting Standards No. 109. Following is a summary of net income by major operating activity (in millions):
Three months ended March 31 ---------------------- 1994 1993 -------- -------- Exploration and production $ 44 $ 60 Refining and marketing 76 (36) Corporate administration, including interest expense, and other operating activities (36) 9 ------ ------ Total $ 84 $ 33 ====== ======
Earnings from exploration and production activities decreased by $16 million in the first quarter of 1994 compared with the corresponding period of 1993, primarily due to lower worldwide crude oil selling prices. The Corporation's average selling prices, including the effects of forward sales, were as follows:
Three months ended March 31 ---------------------- Crude oil and natural gas liquids 1994 1993 -------- -------- (per barrel) United States $ 16.53 $ 19.49 Foreign 15.11 18.94 Natural gas (per Mcf) United States 2.31 1.87 Foreign 1.77 1.58
6 8 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) The Corporation's net daily worldwide crude oil and natural gas production increased in the first quarter of 1994, as follows:
Three months ended March 31 ------------------------ Crude oil and natural gas liquids 1994 1993 --------- --------- (barrels per day) United States 70,412 71,840 Foreign 185,487 136,794 -------- -------- Total 255,899 208,634 ========= ======== Natural gas (Mcf per day) United States 492,033 530,900 Foreign 515,067 453,432 --------- -------- Total 1,007,100 984,332 ========= ========
The increase in foreign crude oil production in the first quarter of 1994 resulted primarily from the Scott Field, which commenced production in September of 1993. The decrease in U.S. natural gas production was principally due to natural field decline, but was offset by increases in Canada and the United Kingdom. The benefit of increased crude oil and natural gas production was offset by the negative impact of lower worldwide crude oil selling prices and higher production costs and depreciation, depletion and amortization charges related to the increased production. In the United States, selling, general and administrative expenses were also higher, reflecting expenses related to the consolidation of exploration and production activities and offices. Foreign effective income tax rates increased, largely because of the elimination of the deductibility of exploration and appraisal expenditures in the determination of the Petroleum Revenue Tax in the United Kingdom. Although the Corporation's overall crude oil production in the remaining quarters of 1994 will likely exceed production in the corresponding periods of 1993, exploration and production earnings may continue to be negatively affected by low crude oil selling prices. Earnings from refining and marketing operations were $76 million in the first quarter of 1994 compared with a loss of $36 million in the first quarter of 1993. The increase was primarily due to improved refined product margins, principally for distillates and residual fuel oils, and increased sales volumes. Selling prices for these products were firm, reflecting the cold winter weather, while crude oil costs were substantially lower. Total refined product sales volumes amounted to 50 million barrels in the first quarter of 1994 compared with 39 million barrels in the first quarter of 1993. The increase reflected higher refinery runs resulting from weather related demand for distillates and higher gasoline production from the fluid catalytic cracking unit at the Virgin Islands refinery, which commenced operations in late 1993. Income taxes were not provided on approximately 50% of the 1994 refining and marketing income, reflecting the utilization of the net operating loss carryforward of a refining subsidiary. Refining and marketing earnings are impacted by supply and demand conditions, including the effects of weather, and will continue to be volatile in the future. 7 9 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) Corporate administration, including interest expense, and other operating activities (principally transportation), had net expenses of $36 million in the first quarter of 1994 compared with income of $9 million in the first quarter of 1993. The results for 1993 included a benefit of $29 million from the adoption of FAS No. 109. Interest expense was higher in the first quarter of 1994, primarily because a substantial amount of interest was capitalized in 1993 as part of the Corporation's major construction projects. Each of these projects is now in operation. Because all interest is currently being expensed and due to increasing interest rates, interest expense for the remainder of 1994 will be higher than in the comparative periods of 1993, even though debt will be reduced. Consolidated revenues were $1,869 million in the first quarter of 1994, an increase of $291 million from the first quarter of 1993. The increase was primarily due to higher refined product sales volumes and increased United States and United Kingdom natural gas sales, including sales of purchased gas. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities, including changes in operating assets and liabilities, amounted to $479 million in the first quarter of 1994 compared with $400 million in the first quarter of 1993. The increase was due to improved operating results. Cash provided by operating activities exceeded capital expenditures of $131 million and $380 million in the first quarter of 1994 and 1993, respectively. The excess cash flow in the first quarter of 1994 was used to repay debt. Total debt was $3,401 million at March 31, 1994 compared with $3,688 million at December 31, 1993. The debt to total capitalization ratio decreased to 52% at March 31, 1994 from nearly 55% at year-end 1993. The Corporation anticipates that total borrowings will decline further in 1994 because of lower capital expenditures and increased cash flow from its major North Sea projects and the upgrading of the Virgin Islands refinery. At March 31, 1994, the Corporation had additional borrowing capacity available under existing revolving credit agreements of $689 million and additional unused lines of credit under uncommitted arrangements with banks of $686 million. During the first quarter of 1994, the Corporation exchanged its equity interests in certain shipping partnerships for increased interests in other shipping partnerships, including a controlling interest in one of the partnerships. As a result of these non-cash transactions, assets of approximately $30 million and long-term debt of approximately $30 million have been added to the consolidated balance sheet. In April 1994, the Corporation entered into a $100 million, 10-year borrowing with an insurance company at a fixed rate of 7.3%. Proceeds of the loan were used to repay revolving credit debt. 8 10 PART I - FINANCIAL INFORMATION (CONT'D.) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) In April 1994, Amerada Hess Limited, the Corporation's United Kingdom subsidiary, entered into arrangements to transfer its 6.8% interest in the Armada gas field to a third party for approximately $40 million. Under these arrangements, the gain on the transfer is not certain unless a field development plan is approved by the United Kingdom government prior to November 1, 1994. Accordingly, the gain will not be recorded until such time. The Corporation uses futures, forward, option and swap contracts to mitigate the effect on its business of volatility in the prices of crude oil, natural gas and refined products. At March 31, 1994, the Corporation has open forward sale positions on approximately 30% of its anticipated worldwide crude oil production over the next twelve months at an average price of approximately $17 per barrel. The Corporation also has option contracts covering an additional 12% of this production, which will generate revenue of approximately $.60 per barrel. The Corporation has hedges (primarily short futures and options) covering approximately 40% of its refining and marketing inventories and has short positions covering an additional 9 million barrels of refined products to be manufactured in the latter part of 1994. As market conditions change, the Corporation will adjust its hedging strategies. Existing hedge positions are not necessarily indicative of future results of operations. Capital expenditures in the first quarter of 1994 amounted to $131 million compared with $380 million in the first quarter of 1993. Capital expenditures in the first quarter of 1993 included $245 million related to the Corporation's three major projects. The three major projects were the development of the Scott oil field and the Everest and Lomond natural gas fields and related facilities in the United Kingdom North Sea and the construction of the fluid catalytic cracking complex in the Virgin Islands, all of which have been completed and are in operation. Capital expenditures for the remainder of 1994 are estimated to be approximately $400 million and will be financed by internally generated funds. 9 11 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits None (b) Reports on Form 8-K The Registrant filed no report on Form 8-K during the three months ended March 31, 1994. 10 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. [S] AMERADA HESS CORPORATION (REGISTRANT) By s/s Leon Hess --------------------------------------- LEON HESS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER By s/s John Y. Schreyer -------------------------------------- JOHN Y. SCHREYER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Date: May 6, 1994 11 -----END PRIVACY-ENHANCED MESSAGE-----