0000950123-95-002292.txt : 19950815 0000950123-95-002292.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950123-95-002292 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERADA HESS CORP CENTRAL INDEX KEY: 0000004447 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [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: 95562261 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 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 June 30, 1995 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 June 30, 1995, 93,002,755 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 (in thousands, except per share data)
Three Months Six Months Ended June 30 Ended June 30 ----------------------- ------------------------- 1995 1994 1995 1994 -------- -------- -------- --------- REVENUES Sales (excluding excise taxes) and other operating revenues $ 1,773,326 $ 1,488,226 $ 3,665,537 $ 3,345,854 Interest and other non-operating revenues 4,723 7,688 90,846 19,286 ----------- ----------- ------------- -------------- Total revenues 1,778,049 1,495,914 3,756,383 3,365,140 ----------- ----------- ------------- -------------- COSTS AND EXPENSES Cost of products sold and operating expenses 1,268,006 995,959 2,631,881 2,201,587 Exploration expenses, including dry holes 77,139 62,516 141,887 122,374 Selling, general and administrative expenses 149,395 139,353 303,860 296,707 Interest expense 63,026 59,728 127,977 120,294 Depreciation, depletion and amortization 202,210 222,171 410,013 452,040 Lease impairment 9,393 12,733 19,713 25,534 Provision for income taxes 49,099 20,185 136,109 79,679 ----------- ----------- ------------- -------------- Total costs and expenses 1,818,268 1,512,645 3,771,440 3,298,215 ----------- ----------- ------------- -------------- NET INCOME (LOSS) $ (40,219) $ (16,731) $ (15,057) $ 66,925 =========== =========== ============= ============== NET INCOME (LOSS) PER SHARE $ (0.43) $ (0.18) $ (0.16) $ 0.72 =========== =========== ============= ============== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 92,995 93,005 92,995 92,947 COMMON STOCK DIVIDENDS PER SHARE $ .15 $ .15 $ .30 $ .30
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
June 30, December 31, 1995 1994 ------------ ---------------- CURRENT ASSETS Cash and cash equivalents $ 48,322 $ 53,135 Accounts receivable 564,867 570,525 Inventories 926,679 945,635 Prepaid expenses 112,627 152,366 ------------- ---------------- Total current assets 1,652,495 1,721,661 ------------- ---------------- INVESTMENTS AND ADVANCES 176,857 140,300 ------------- ---------------- PROPERTY, PLANT AND EQUIPMENT Total - at cost 14,603,293 14,304,826 Less reserves for depreciation, depletion, amortization and lease impairment 8,375,159 7,938,824 ------------- ---------------- Property, plant and equipment - net 6,228,134 6,366,002 ------------- ---------------- OTHER ASSETS 89,281 109,977 ------------- ---------------- TOTAL ASSETS $ 8,146,767 $ 8,337,940 ============= ================ 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 $ 338,902 $ 291,571 Accrued liabilities 586,481 555,363 Notes payable 11,800 63,747 Taxes payable 193,510 168,927 Current maturities of long-term debt 136,689 121,806 ------------- ---------------- Total current liabilities 1,267,382 1,201,414 ------------- ---------------- LONG-TERM DEBT 2,873,692 3,154,235 ------------- ---------------- CAPITALIZED LEASE OBLIGATIONS 74,453 80,928 ------------- ---------------- DEFERRED LIABILITIES AND CREDITS Deferred income taxes 594,612 547,537 Other 249,839 254,197 ------------- ---------------- Total deferred liabilities and credits 844,451 801,734 ------------- ---------------- 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 - 93,002,755 shares at June 30, 1995; 92,995,755 shares at December 31, 1994 93,003 92,996 Capital in excess of par value 743,841 743,537 Retained earnings 2,424,311 2,467,267 Equity adjustment from foreign currency translation (174,366) (204,171) ------------- ---------------- Total stockholders' equity 3,086,789 3,099,629 ------------- ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,146,767 $ 8,337,940 ============= ================
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 Six Months Ended June 30 (in thousands)
1995 1994 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (15,057) $ 66,925 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, depletion, amortization and lease impairment 429,726 477,574 Exploratory dry hole costs 83,720 75,778 Changes in operating assets and liabilities 185,472 (6,729) Deferred income taxes and other items 32,170 37,281 -------------- ------------- Net cash provided by operating activities 716,031 650,829 -------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (332,761) (259,391) Other (18,459) 10,082 -------------- ------------- Net cash used in investing activities (351,220) (249,309) -------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Decrease in notes payable (51,941) (114,900) Long-term borrowings 25,000 218,046 Repayment of long-term debt and capitalized lease obligations (304,113) (509,921) Cash dividends paid (41,847) (41,770) -------------- ------------- Net cash used in financing activities (372,901) (448,545) -------------- ------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,277 2,202 -------------- ------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (4,813) (44,823) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 53,135 79,635 -------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 48,322 $ 34,812 ============== =============
See accompanying notes to consolidated financial statements. 3 5 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) 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 June 30, 1995 and December 31, 1994, and the consolidated results of operations for the three and six-month periods ended June 30, 1995 and 1994 and the consolidated cash flows for the six month periods ended June 30, 1995 and 1994. 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 1994 Annual Report to Stockholders, which have been incorporated by reference in the Corporation's Form 10-K for the year ended December 31, 1994. Note 2 - Inventories consist of the following:
June 30, December 31, 1995 1994 ----------- ----------- Crude oil and other charge stocks $ 311,780 $ 250,291 Refined and other finished products 501,354 582,696 Materials and supplies 113,545 112,648 --------- --------- Total inventories $ 926,679 $ 945,635 ========= =========
Note 3 - The provision for income taxes consisted of the following:
Three months Six months ended June 30 ended June 30 ------------------------------ ------------------------------ 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Current $ 36,934 $ 16,425 $ 95,838 $ 48,705 Deferred 12,165 3,760 40,271 30,974 ---------- ---------- --------- ---------- Total $ 49,099 $ 20,185 $ 136,109 $ 79,679 ========== ========== ========= ==========
Note 4 - The net effect of foreign currency exchange transactions, after applicable income taxes, amounted to gains of $2,533 and $1,494, respectively, for the three and six-month periods ended June 30, 1995, compared to losses of $328 and $2,120 for the corresponding periods of 1994. 4 6 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Note 5 - The Corporation uses futures, forward, option and swap contracts to reduce the impact of fluctuations in the prices of crude oil, natural gas and refined products. These contracts correlate to movements in the value of inventory and the prices of crude oil and natural gas, and as hedges, any resulting gains or losses are recorded as part of the hedged transaction. Net unrealized gains on the Corporation's petroleum hedging activities were approximately $48,000 at June 30, 1995. 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 The results of operations for the second quarter of 1995 amounted to a net loss of $40 million ($.43 per share) compared with a net loss of $17 million ($.18 per share) in the second quarter of 1994. In the first half of 1995, the Corporation had a net loss of $15 million ($.16 per share) compared with net income of $67 million ($.72 per share) in the first half of 1994. The results for the first half of 1995 include income of $44 million ($.47 per share) from the refund of windfall profits taxes applicable to the years 1981 through 1986 and related interest. Following is a summary of net income by major operating activity (in millions):
Three months Six months ended June 30 ended June 30 -------------------- --------------------- 1995 1994 1995 1994 ------ ------ ------ ------ Exploration and production $ 10 $ 23 $ 101 $ 67 Refining and marketing 3 8 (12) 84 Corporate administration, including interest expense, and other operating activities (53) (48) (104) (84) ------- ------- ------- ------- Total $ (40) $ (17) $ (15) $ 67 ======= ======= ======= =======
Earnings from exploration and production activities decreased by $13 million in the second quarter of 1995 and $10 million in the first half of 1995 (excluding the tax refund referred to above) compared with the corresponding periods of 1994. Crude oil selling prices were higher in 1995 than in 1994, but natural gas selling prices decreased. The Corporation's average selling prices, including the effects of hedging, were as follows:
Three months Six months ended June 30 ended June 30 ----------------- ------------------ 1995 1994 1995 1994 ------ ------ ------ ------ Crude oil and natural gas liquids (per barrel) United States $15.83 $15.16 $15.94 $15.16 Foreign 17.66 16.30 17.26 15.53 Natural gas (per Mcf) United States 1.59 1.87 1.65 2.10 Foreign 1.51 1.74 1.64 1.76
6 8 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) The Corporation's net daily worldwide production was as follows:
Three months Six months ended June 30 ended June 30 ------------------------ ------------------------ 1995 1994 1995 1994 -------- -------- --------- -------- Crude oil and natural gas liquids (barrels per day) United States 64,301 70,044 64,071 70,227 Foreign 174,169 187,209 181,415 186,351 ------- --------- --------- --------- Total 238,470 257,253 245,486 256,578 ======= ========= ========= ========= Natural gas (Mcf per day) United States 411,121 449,345 408,252 470,571 Foreign 438,314 372,899 478,504 443,589 ------- ---------- --------- --------- Total 849,435 822,244 886,756 914,160 ======= ========== ========= =========
United States crude oil and natural gas production was lower in 1995, principally reflecting natural decline. Foreign crude oil production was lower in the second quarter of 1995, because of scheduled maintenance in the United Kingdom North Sea. The increase in foreign natural gas production in the second quarter of 1995 largely reflects increased deliverability in Canada. Depreciation, depletion and amortization expense was lower in the second quarter and first half of 1995 compared to the comparable periods of the prior year, reflecting lower United States production volumes and positive oil and gas reserve revisions. Exploration expenses, including dry holes, were higher in the second quarter of 1995 due primarily to increased activity in the United Kingdom. Exploration expenses for the first half of 1995 increased over 1994 because of the increased activity in the United Kingdom and new exploration activity in Denmark, partially offset by reduced United States expenses. The overall effective income tax rate on exploration and production earnings continued to be high, principally reflecting the effect of the Petroleum Revenue Tax in the United Kingdom and the Special Tax in Norway. Future exploration and production earnings will be affected by changes in crude oil and natural gas selling prices, differing income tax rates in the various countries in which the Company operates and other factors. Refining and marketing operations had income of $3 million in the second quarter of 1995 compared with $8 million in the second quarter of 1994. While average refined product selling prices increased in the second quarter of 1995 compared with the second quarter of 1994, the cost of crude oil and purchased refined products also increased. In periods of price volatility, movements in the selling prices of refined products may not correspond with movements in the Company's cost of crude oil and other charge stocks. These conditions, which existed in the second quarters of 1995 and 1994, contributed to the earnings decrease. 7 9 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) In the first half of 1995, refining and marketing operations had a loss of $12 million compared with income of $84 million in the corresponding period of 1994. Cold winter weather in the first half of 1994 resulted in more favorable margins on distillates and residual fuel oil than in 1995. Income taxes were not provided in either period on the earnings of a refining subsidiary that has a net operating loss carryforward. Refined product sales volumes amounted to 92 million barrels in the first half of 1995 compared with 87 million barrels in the corresponding period of 1994. The increase was due to higher sales volumes of gasoline, reflecting increased production from the fluid catalytic cracking unit in the Virgin Islands. Refining and marketing earnings will continue to be affected by competitive industry conditions which impact refined product margins. Corporate administration, including interest expense, and other operating activities (principally transportation), had net expenses of $53 million and $104 million in the second quarter and first half of 1995, respectively, compared with $48 million and $84 million in the corresponding periods of 1994. The increase in 1995 is due in part to higher interest expense, reflecting higher interest rates, although debt has been reduced. Corporate expenses in 1995 also reflect an increased effective income tax rate related to the impact of foreign source earnings on United States taxes. Sales and other operating revenues in the second quarter and first half of 1995 increased by 19% and 10%, respectively, compared with the corresponding periods of 1994. The increases are primarily due to higher sales volumes and selling prices of gasoline. Non-operating revenue in the first half of 1995 includes the refund of windfall profits taxes and related interest totaling $67 million (before income tax effect). Selling, general and administrative expenses increased by approximately $10 million in the second quarter of 1995 compared with the second quarter of 1994. The increase was primarily in exploration and production units. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities, including changes in operating assets and liabilities, amounted to $716 million in the first half of 1995 compared with $651 million in the first half of 1994. The increase was due to changes in working capital components, partially offset by lower operating results. Cash provided by operating activities exceeded capital expenditures of $333 million and $259 million in the first half of 1995 and 1994, respectively. The excess cash flow in each period was used principally to repay debt. Total debt was $3,022 million at June 30, 1995 compared with $3,340 million at December 31, 1994. The debt to total capitalization ratio decreased to 49.5% at June 30, 1995 from nearly 52% at year-end 1994. 8 10 PART I - FINANCIAL INFORMATION (CONT'D.) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) At June 30, 1995, the Corporation had additional borrowing capacity available under existing revolving credit agreements of $764 million and additional unused lines of credit under uncommitted arrangements with banks of $710 million. The Corporation uses futures, forward, option and swap contracts to reduce the effects of fluctuations in the prices of crude oil, natural gas and refined products. These instruments are used to set the selling and purchase prices of crude oil, natural gas and refined products and the related gains or losses are an integral part of the Corporation's selling prices and costs. At June 30, 1995, the Corporation had open hedge positions on approximately 25% of its estimated worldwide crude oil production over the next eighteen months. In certain circumstances, hedge counterparties may elect to purchase up to an additional 15% of this production. In addition, the Corporation had open option contracts, providing varying degrees of protection against declines in market prices, covering 5% of crude oil production. The Corporation also had open contracts equal to approximately 5% of its estimated United States and Canadian natural gas production over the next twelve months and option contracts providing varying degrees of price protection, covering approximately 10% of its natural gas production. The Corporation had hedges covering approximately 35% of its refining and marketing inventories and had additional short positions, principally crack spreads, approximating 10% of refined products to be manufactured in the next twelve months. As market conditions change, the Corporation will adjust its hedging positions. Capital expenditures in the first half of 1995 amounted to $333 million compared with $259 million in the corresponding period of 1994. Capital expenditures for exploration and production activities were $299 million in the first half of 1995 compared with $229 million in the first six months of 1994. Capital expenditures for the remainder of 1995 are currently expected to be approximately $370 million. It is anticipated that these expenditures will be financed by internally generated funds. 9 11 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS The Annual Meeting of Stockholders of the Registrant was held on May 3, 1995. The Inspectors of Election reported that 78,449,101 shares of Common Stock of the Registrant were represented in person or by proxy at the meeting, constituting 84% of the votes entitled to be cast. At the meeting, stockholders voted upon the election of six nominees for the Board of Directors for the three year term expiring in 1998 and upon the ratification of the selection by the Board of Directors of Ernst & Young LLP as the independent auditors of the Registrant for the fiscal year ended December 31, 1995. With respect to the election of directors, the inspectors of election reported as follows:
Authority to Vote Name of Nominee Vote for Nominee Withheld for Nominee --------------- ---------------- -------------------- Marco B. Bianchi 77,204,531 1,244,570 Nicholas F. Brady 77,277,437 1,171,664 J. Barclay Collins 77,207,412 1,241,689 Leon Hess 77,186,208 1,262,893 Thomas H. Kean 77,277,908 1,171,193 H. W. McCollum 77,266,403 1,182,698
The inspectors further reported that 78,314,517 votes were cast for the ratification of the selection of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, 1995, 65,064 votes were cast against said ratification and holders of 69,520 votes abstained. There were no broker non-votes with respect to either the election of directors or the ratification of the selection of independent auditors. 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 June 30, 1995. 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. AMERADA HESS CORPORATION (REGISTRANT) By /s/ John B. Hess JOHN B. HESS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER By /s/ John Y. Schreyer JOHN Y. SCHREYER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Date: August 10, 1995 11 13 EXHIBIT INDEX Exhibit 27 - Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 48,322 0 564,867 0 926,679 1,652,495 14,603,293 8,375,159 8,146,767 1,267,382 2,873,692 93,003 0 0 2,993,786 8,146,767 3,665,537 3,756,383 2,631,881 2,631,881 0 0 127,977 121,052 136,109 (15,057) 0 0 0 (15,057) (0.16) (0.16)