-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q/yjtYFJ5gJPNnuzOn9bZfPfRNYuQMoxg6RroDEjNlnuq1If+nAQ1ieEBYNTXdgO DMNq9IzzxwKiVHyB2IVp6Q== 0000950123-96-001358.txt : 19960328 0000950123-96-001358.hdr.sgml : 19960328 ACCESSION NUMBER: 0000950123-96-001358 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01204 FILM NUMBER: 96539380 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-K 1 FORM 10-K, AMERADA HESS CORPORATION 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Fee Required For the fiscal year ended December 31, 1995 or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 No Fee Required 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. 10036 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code, is (212) 997-8500) ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED Common Stock (par value $1.00) New York Stock Exchange Toronto Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / The aggregate market value of voting stock held by non-affiliates of the Registrant amounted to $4,097,000,000 as of February 29, 1996. At February 29, 1996, 92,998,755 shares of Common Stock were outstanding. Certain items in Parts I and II incorporate information by reference from the 1995 Annual Report to Stockholders and Part III is incorporated by reference from the Proxy Statement for the annual meeting of stockholders to be held on May 1, 1996. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS Amerada Hess Corporation (the "Registrant") was incorporated in 1920 in the State of Delaware. The Registrant and its subsidiaries (collectively referred to herein as the "Corporation") engage in the exploration for and the production, purchase, transportation and sale of crude oil and natural gas. The Corporation also manufactures, purchases, transports and markets refined petroleum products. EXPLORATION AND PRODUCTION The Corporation's exploration and production activities are located primarily in the United States, Canada, the United Kingdom, Norway and Gabon. The Corporation also conducts exploration and/or production activities in Abu Dhabi, Denmark, Namibia, Thailand and Indonesia. Of the Company's proved reserves (on a barrel of oil equivalent basis), 34% are located in the United States, 51% are located in the United Kingdom and Norwegian sectors of the North Sea, 10% are located in Canada and the remainder are located in Gabon, Abu Dhabi and Thailand. Worldwide crude oil and natural gas liquids production amounted to 260,460 barrels per day in 1995 compared with 250,520 barrels per day in 1994. Worldwide natural gas production was 884,131 Mcf per day in 1995 compared with 846,118 Mcf per day in 1994. At December 31, 1995, the Corporation has 695 million barrels of proved crude oil and natural gas liquids reserves compared with 644 million barrels at the end of 1994. Proved natural gas reserves are 2,481 million Mcf at December 31, 1995 compared with 2,581 million Mcf at December 31, 1994. The Corporation has an inventory of drillable prospects primarily in the United States, Canada and the United Kingdom and Norwegian sectors of the North Sea. The Corporation is currently offering for sale its wholly-owned subsidiary, Amerada Hess Canada Ltd., as well as certain United States properties representing approximately 20% of United States production and 15% of proved United States crude oil and natural gas reserves. The Corporation also anticipates the sale of its remaining interest in Abu Dhabi in the first half of 1996 and expects that certain non-core North Sea properties may be sold. UNITED STATES. The Corporation operates principally offshore in the Gulf of Mexico and onshore in the states of Texas, Louisiana and North Dakota. During 1995, 24% of the Corporation's crude oil and natural gas liquids production and 45% of its natural gas production were from United States operations. The table below sets forth the Corporation's average daily net production by area in the United States:
1995 1994 ------- ------- CRUDE OIL, INCLUDING CONDENSATE AND NATURAL GAS LIQUIDS (BARRELS PER DAY) Texas........................................................ 23,256 26,237 North Dakota................................................. 12,414 13,158 Gulf of Mexico............................................... 12,114 14,349 Louisiana.................................................... 3,592 2,331 Alaska*...................................................... 3,133 3,735 Other........................................................ 8,497 7,792 ------- ------- Total................................................ 63,006 67,602 ======= ======= * Sold in the fourth quarter of 1995. NATURAL GAS (MCF PER DAY) Gulf of Mexico............................................... 186,427 217,203 Louisiana.................................................... 54,387 51,727 North Dakota................................................. 48,228 46,530 Texas........................................................ 37,077 39,973 New Mexico................................................... 23,297 23,276 Oklahoma..................................................... 21,491 20,986 California................................................... 15,144 19,623 Other........................................................ 15,530 7,785 ------- ------- Total................................................ 401,581 427,103 ======= =======
1 3 CANADA. The Corporation, through its wholly-owned Canadian subsidiary, Amerada Hess Canada Ltd., conducts operations in the Provinces of Alberta and British Columbia. The Corporation's net crude oil and natural gas liquids production in Canada amounted to 11,396 barrels per day in 1995 compared to 12,390 barrels per day in 1994, and its natural gas production increased to 215,500 Mcf per day in 1995 from 185,856 Mcf per day in 1994. UNITED KINGDOM. The Corporation's activities in the United Kingdom are conducted by its wholly-owned British subsidiary, Amerada Hess Limited. During 1995, 55% of the Corporation's crude oil and natural gas liquids production and 27% of its natural gas production were from United Kingdom operations. The table below sets forth the Corporation's average daily net production in the United Kingdom by field and the Corporation's interest in each at December 31, 1995:
PRODUCING FIELD INTEREST 1995 1994 ---------- ------- CRUDE OIL, INCLUDING CONDENSATE AND NATURAL GAS LIQUIDS (BARRELS PER DAY) Scott.................................. 34.95% 64,209 59,161 Beryl/Ness............................. 20.00 18,442 18,687 Ivanhoe/Rob Roy/Hamish................. 42.08 18,227 24,913 Fife................................... 85.00 13,123 -- Arbroath/Montrose...................... 28.21 10,484 9,823 Hudson................................. 28.46 9,813 8,413 Other.................................. Various 8,031 7,802 ------- ------- Total............................. 142,329 128,799 ======= ======= NATURAL GAS (MCF PER DAY) Beryl/Ness............................. 20.00% 46,725 43,329 Leman.................................. 21.74 46,241 28,663 Everest/Lomond......................... 18.67/16.67 42,491 41,685 Scott.................................. 34.95 28,913 26,092 Indefatigable.......................... 23.08 27,409 20,855 Anglia................................. 29.29 18,601 19,538 Davy/Bessemer.......................... 27.78/23.08 11,812 -- Other.................................. Various 17,115 28,580 ------- ------- Total............................. 239,307 208,742 ======= =======
Crude oil production commenced from the Fife Field in the third quarter of 1995. Natural gas production commenced from the Davy and Bessemer Fields in the fourth quarter of 1995. NORWAY. The Corporation's activities in Norway are conducted through its wholly-owned Norwegian subsidiary, Amerada Hess Norge A/S. The Corporation's Norwegian operations accounted for crude oil and natural gas liquids production of 26,990 and 25,599 net barrels per day in 1995 and 1994, respectively. Approximately 60% of this production is from the Corporation's 28.09% interest in the Valhall Field. GABON. The Corporation has a 5.5% interest in the Rabi Kounga oil field onshore Gabon. The Corporation's share of production from Gabon averaged 9,468 and 8,746 net barrels of crude oil per day in 1995 and 1994, respectively. REFINING AND MARKETING The Corporation's refining facilities are located in St. Croix, United States Virgin Islands and Port Reading, New Jersey. Total crude runs averaged 377,000 barrels per day in 1995 and 388,000 barrels per day in 1994. The Corporation's production supplied approximately 7% of its crude runs. The balance came from various suppliers under contracts of one year or less and through spot purchases on the open market. Approximately 78% of the refined products marketed in 1995 was obtained from the Corporation's refineries. The Corporation purchased the balance from others under short-term supply contracts and by spot purchases 2 4 from various sources. Sales of refined products averaged 487,000 barrels per day in 1995 compared with 468,000 barrels per day in 1994. HESS OIL VIRGIN ISLANDS REFINERY. The Corporation owns and operates a petroleum refinery in St. Croix, United States Virgin Islands through its wholly-owned subsidiary, Hess Oil Virgin Islands Corp. ("HOVIC"). In 1995, refined products produced were approximately 68% gasoline and distillates, 13% refinery feedstocks and the remainder principally residual fuel oil. In addition to crude distillation capacity, the refinery has a fluid catalytic cracking unit, which is currently operated at 110,000 barrels per day. The Corporation expects to increase the production capacity of the catcracker to 125,000 barrels per day in late 1996 or early 1997. The refinery also has catalytic reforming units, vacuum distillation capacity, visbreakers, a sulfolane unit, a penex unit, distillate desulfurizers, vacuum gas oil desulfurizers and sulfur recovery facilities. HOVIC has approximately 31 million barrels of storage capacity. The refinery has the capability to process a variety of crude oils, including high-sulfur crudes. The refinery has a 60-foot-deep harbor and docking facilities for ten ocean-going tankers. The refinery's harbor accommodates very large crude carriers after a portion of their crude oil cargo is lightered at the Corporation's storage and transshipment facility in Saint Lucia, which has a 90-foot-deep harbor. The Saint Lucia facility has approximately 9 million barrels of storage capacity. PORT READING FACILITY. The Corporation owns and operates a fluid catalytic cracking facility in Port Reading, New Jersey, which processes vacuum gas oil and operates at a rate of approximately 54,000 barrels per day. The Port Reading facility primarily produces gasoline and heating oil. MARKETING. The Corporation markets refined petroleum products principally on the East and Gulf Coasts of the United States to the motoring public, wholesale distributors, industrial and commercial users, other petroleum companies, commercial airlines, governmental agencies and public utilities. At December 31, 1995, the Corporation has 551 HESS(R) gasoline stations of which approximately 82% are operated by the Corporation. Most of the Corporation's stations are concentrated in highly-populated, urban areas, principally in New York, New Jersey and Florida. Of the Corporation's stations, 166 have HESS MART(R) convenience stores. The Corporation owns in fee approximately 75% of the properties on which its stations are located. The Corporation also has 42 terminals located throughout its marketing area, with aggregate storage capacity of approximately 47 million barrels. COMPETITION AND MARKET CONDITIONS The petroleum industry is highly competitive. The Corporation encounters competition from numerous companies in each of its activities, particularly in acquiring rights to explore for crude oil and natural gas and in the purchasing and marketing of refined products. Many competitors are larger and have substantially greater resources than the Corporation. The Corporation is also in competition with producers and marketers of other forms of energy. The petroleum business involves large-scale capital expenditures and risk-taking. In the search for new oil and gas reserves, long lead times are often required from successful exploration to subsequent production. Operations in the petroleum industry depend on a depleting natural resource. The number of areas where it can be expected that hydrocarbons will be discovered in commercial quantities is constantly diminishing and exploration risks are high. Areas where hydrocarbons may be found are often in remote locations or offshore where exploration and development activities are capital intensive and operating costs are high. In addition, low crude oil prices have reduced the number of areas from which hydrocarbons can be economically produced. The major foreign oil producing countries, including members of the Organization of Petroleum Exporting Countries ("OPEC"), exert considerable influence over the supply and price of crude oil and refined petroleum products. Their ability or inability to agree on a common policy on rates of production, oil prices, and other matters has a significant impact on the oil market and the Corporation. The derivatives markets are also important in influencing the prices of crude oil, natural gas and refined products. The Corporation cannot predict the extent to which future market conditions may be affected by OPEC, the derivatives markets or other external influences. 3 5 Market conditions continue to affect the Corporation's earnings. The Corporation's refining and marketing operations incurred a loss in 1995 after realizing a profit in 1994. While gasoline margins improved in 1995, this improvement was more than offset by lower distillate and residual fuel oil margins. While the average refined product selling price increased in 1995, the cost of purchased crude oil and refined products increased by a greater amount. The selling prices of all refined products, particularly gasolines, continue to be subject to competitive industry conditions. Supply and demand factors, including the effects of weather, will continue to affect all refined product markets. The Corporation's exploration and production operations were profitable in 1995, but continue to be impacted by volatility in the selling prices of crude oil and natural gas. Average worldwide crude oil selling prices increased in 1995. The available supply of natural gas in the United States continued to exceed demand in 1995, resulting in lower average selling prices. Natural gas selling prices recovered somewhat in late 1995 and early 1996, but the Corporation is unable to predict how long this trend will continue. OTHER ITEMS The Corporation's operations may be affected by federal, state, local, territorial and foreign laws and regulations relating to tax increases and retroactive tax claims, expropriation of property, cancellation of contract rights, and changes in import regulations, as well as other political developments. The Corporation has been affected by certain of these events in various countries in which it operates. The Corporation markets motor fuels through lessee-dealers and wholesalers in certain states where legislation prohibits producers or refiners of crude oil from directly engaging in retail marketing of motor fuels. Similar legislation is periodically proposed in the U.S. Congress and in various other states. The Corporation, at this time, cannot predict the effect of any of the foregoing on its future operations. Compliance with the various environmental and pollution control regulations imposed by federal, state and local governments is not expected to have a materially adverse effect on the Corporation's earnings and competitive position within the industry. However, the cost of such compliance is expected to increase in the future. Capital expenditures for facilities, primarily to comply with federal, state and local environmental standards, were $15 million in 1995 and the Corporation anticipates comparable capital expenditures in 1996. In addition, the Corporation expended $15 million in 1995 for environmental remediation, with a comparable amount anticipated for 1996. The number of persons employed by the Corporation averaged 9,574 in 1995 and 9,858 in 1994. Additional operating and financial information relating to the business and properties of the Corporation appears in the text on pages 6 and 9 under the heading "United States Exploration and Production," on pages 10, 13 and 14 under the heading "International Exploration and Production," on pages 17 and 18 under the heading "Refining and Marketing," on pages 21 through 25 under the heading "Financial Review" and on pages 26 through 51 of the accompanying 1995 Annual Report to Stockholders, which information is incorporated herein by reference.* - -------------------------------------------------------------------------------- * Except as to information specifically incorporated herein by reference under Items 1, 2, 5, 6, 7 and 8, no other information or data appearing in the 1995 Annual Report to Stockholders is deemed to be filed with the Securities and Exchange Commission (SEC) as part of this Annual Report on Form 10-K, or otherwise subject to the SEC's regulations or the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended. 4 6 ITEM 2. PROPERTIES Reference is made to Item 1 and the operating and financial information relating to the business and properties of the Corporation, which is incorporated in Item 1 by reference. Additional information relating to the Corporation's oil and gas operations follows. 1. OIL AND GAS RESERVES The Corporation's net proved oil and gas reserves at the end of 1995, 1994 and 1993 are presented under Supplementary Oil and Gas Data in the accompanying 1995 Annual Report to Stockholders, which has been incorporated herein by reference. During 1995, the Corporation provided oil and gas reserve estimates for 1994 to the Department of Energy. Such estimates are compatible with the information furnished to the SEC on Form 10-K, although not necessarily directly comparable due to the requirements of the individual requests. There were no differences in excess of 5%. The Corporation has no long-term contracts or agreements to supply fixed quantities of its crude oil production. Approximately 65% of the Corporation's 1995 natural gas sales were made under long-term contracts to various purchasers. Contractual commitments in 1996 (which are expected to be comparable to 1995) will be filled from the Corporation's production and from contractual purchases. 2. AVERAGE SELLING PRICES AND AVERAGE PRODUCTION COSTS
1995 1994 1993 - ---------------------------------------------------------------------------------- Average selling prices (Note A) Crude oil, including condensate and natural gas liquids (per barrel) United States.......................... $ 15.82 $ 15.43 $ 17.40 Canada................................. 15.77 15.94 16.30 Europe................................. 17.05 15.96 17.04 Other areas............................ 16.79 15.45 16.41 Average................................ 16.68 15.78 17.05 Natural gas (per Mcf) United States.......................... $ 1.70 $ 1.91 $ 2.11 Canada................................. 1.02 1.36 1.43 Europe................................. 2.05 2.04 1.83 Average................................ 1.67 1.86 1.98
- -------------------------------------------------------------------------------- Note A: Includes inter-company transfers valued at approximate market prices and the effect of the Corporation's hedging activities. 5 7
1995 1994 1993 - -------------------------------------------------------------------------------- Average production (lifting) costs per barrel of production (Note B) United States.......................... $ 4.29 $ 4.10 $ 4.06 Canada................................. 2.65 2.98 3.21 Europe................................. 4.34 4.37 4.89 Other areas............................ 3.41 3.08 4.15 Average................................ 4.09 4.06 4.31
- -------------------------------------------------------------------------------- Note B: Production (lifting) costs consist of amounts incurred to operate and maintain the Corporation's producing oil and gas wells and related equipment and facilities, including severance and other related production taxes. The average production (lifting) costs per barrel of production reflect the crude oil equivalent of natural gas production converted on the basis of relative energy content. The foregoing tabulation does not include substantial costs and charges applicable to finding and developing proved oil and gas reserves, nor does it reflect significant outlays for related general and administrative expenses, interest expense and income taxes. 3. GROSS AND NET DEVELOPED ACREAGE AND PRODUCTIVE WELLS AT DECEMBER 31, 1995
DEVELOPED ACREAGE PRODUCTIVE WELLS (NOTE A) APPLICABLE TO ------------------------------------- PRODUCTIVE WELLS (IN THOUSANDS) OIL GAS ----------------- ---------------- - ------------------------------------------------------------------------------------------------ GROSS NET GROSS NET GROSS NET ------ ------ ------- ------ ------ ------ United States...................... 3,013 712 13,486 1,604 1,955 786 Canada............................. 727 324 1,949 483 1,047 345 Europe............................. 586 125 335 48 142 29 Other areas........................ 82 23 146 19 - - ------ ------ ------- ------ ------ ------ Total.................... 4,408 1,184 15,916 2,154 3,144 1,160 ===== ===== ====== ===== ===== =====
- -------------------------------------------------------------------------------- Note A: Includes multiple completion wells (wells producing from different formations in the same bore hole) totaling 173 gross wells and 109 net wells. 4. GROSS AND NET UNDEVELOPED ACREAGE AT DECEMBER 31, 1995
UNDEVELOPED ACREAGE (IN THOUSANDS) ----------------- GROSS NET United States................................ 2,186 1,440 Canada....................................... 1,359 799 Europe....................................... 8,112 2,702 Other areas.................................. 9,920 2,370 ------ ------ Total.............................. 21,577 7,311 ====== =====
- -------------------------------------------------------------------------------- 6 8 5. NUMBER OF NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
NET EXPLORATORY WELLS NET DEVELOPMENT WELLS ---------------------- ---------------------- 1995 1994 1993 1995 1994 1993 - ----------------------------------- Productive wells United States................. 20 10 25 25 27 43 Canada........................ 3 9 9 12 13 10 Europe........................ 3 5 6 10 6 3 Other areas................... - 1 - 1 1 1 ---- ---- ---- ---- ---- ---- Total.................... 26 25 40 48 47 57 ---- ---- ---- ---- ---- ---- Dry holes United States................. 24 17 23 3 - 1 Canada........................ 14 5 10 2 1 2 Europe........................ 6 1 1 - - - Other areas................... 1 - - - - - ---- ---- ---- ---- ---- ---- Total.................... 45 23 34 5 1 3 ---- ---- ---- ---- ---- ---- Total.............................. 71 48 74 53 48 60 ==== ==== ==== ==== ==== ====
- -------------------------------------------------------------------------------- 6. NUMBER OF WELLS IN PROCESS OF DRILLING AT DECEMBER 31, 1995
GROSS NET WELLS WELLS
- -------------------------------------------------------------------------------- United States.................................... 30 10 Canada........................................... 14 10 Europe........................................... 10 2 Other areas...................................... 1 - ----- ----- Total.................................. 55 22 ==== ====
- -------------------------------------------------------------------------------- 7. NUMBER OF WATERFLOODS AND PRESSURE MAINTENANCE PROJECTS IN PROCESS OF INSTALLATION AT DECEMBER 31, 1995 -- Five (four in the United States and one in Canada) - -------------------------------------------------------------------------------- ITEM 3. LEGAL PROCEEDINGS The Registrant is under investigation by a grand jury in, and by the United States Attorney's Office for, the District of New Jersey, and is also under investigation by a grand jury in, and by the United States Attorney's Office for, the District of Arizona and by the Environmental Crimes Unit of the United States Department of Justice. The focus of these investigations concerns the storage and shipment of allegedly hazardous waste. The waste at issue was shipped from the HOVIC refinery to various locations in the United States, including Arizona. One question in the investigation is whether criminal violations of the Resource Conservation and Recovery Act resulted from the transportation of hazardous waste without designating the waste as hazardous and from the transportation of that waste to a site that did not have a permit to receive hazardous waste. Another subject of the investigation is whether the Registrant and others failed to report promptly the release of a hazardous substance as required by law. The investigation also includes whether false statements regarding the catalyst were made by representatives of the Registrant to government officials. It is not possible at this time for Registrant to state what the outcome of these investigations will be, or, if an indictment of Registrant and HOVIC were to be returned or any other proceedings arising out of the investigations were to be commenced against the Registrant or HOVIC, what other claims would be asserted or what relief would be sought. 7 9 On April 27, 1993, the Texas Natural Resource Conservation Commission ("TNRCC", then known as the Texas Water Commission) notified the Registrant of alleged violation of the Texas Water Code as a result of alleged discharges of hydrocarbon compounds into the groundwater in the vicinity of the Registrant's terminal in Corpus Christi, Texas. Penalties provided for these violations include administrative penalties not to exceed $10,000 per day. The Registrant has undertaken a groundwater assessment, an interim correction measures program and other appropriate responses to these allegations. On December 9, 1994, the Executive Director of the TNRCC forwarded a Notice of Executive Director's Preliminary Report and Petition for a TNRCC Order Assessing Administrative Penalties and Requiring Certain Actions of Amerada Hess Corporation. This Notice recommended a $542,400 penalty be assessed and the Registrant be ordered to undertake remedial actions at the Corpus Christi terminal. The Registrant is engaging in settlement discussions with the TNRCC regarding this matter. On June 21, 1994, Region II of the EPA commenced an administrative proceeding under Section 325 of the Emergency Planning and Community Right-to-Know Act ("EPCRA") against HOVIC, alleging violations of Section 313 of EPCRA arising out of HOVIC's alleged failure to comply with certain reporting requirements relating to toxic chemicals manufactured or otherwise used at HOVIC's refinery. The proceeding seeks civil penalties totaling $252,000 for the alleged violations. HOVIC is engaging in settlement discussions with the EPA regarding this matter. The Corporation periodically receives notices from the EPA that the Corporation is a "potentially responsible party" under the Superfund legislation with respect to various waste disposal sites. Under this legislation, all potentially responsible parties are jointly and severally liable. For certain sites, EPA's claims or assertions of liability against the Corporation relating to these sites have not been fully developed. With respect to the remaining sites, EPA's claims have been settled, or a proposed settlement is under consideration, in all cases for amounts which are not material. The ultimate impact of these proceedings, and of any related proceedings by private parties, on the business or accounts of the Corporation cannot be predicted at this time due to the large number of other potentially responsible parties and the speculative nature of clean-up cost estimates, but is not expected to be material. The Corporation is from time to time involved in other judicial and administrative proceedings, including proceedings relating to other environmental matters. Although the ultimate outcome of these proceedings cannot be ascertained at this time and some of them may be resolved adversely to the Corporation, no such proceeding is required to be disclosed under applicable rules of the Securities and Exchange Commission. In management's opinion, based upon currently known facts and circumstances, such proceedings in the aggregate will not have a material adverse effect on the financial condition of the Corporation. 8 10 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of 1995, no matter was submitted to a vote of security holders through the solicitation of proxies or otherwise. EXECUTIVE OFFICERS OF THE REGISTRANT The following table presents information as of February 1, 1996 regarding executive officers of the Registrant:
YEAR INDIVIDUAL BECAME AN EXECUTIVE NAME AGE OFFICE HELD* OFFICER -------------------------------------------------------------------------------------------- John B. Hess............ 41 Chairman of the Board, Chief Executive 1983 Officer and Director W. S. H. Laidlaw........ 40 President, Chief Operating Officer and 1986 Director Leon Hess............... 81 Chairman of the Executive Committee and 1969 Director H. W. McCollum.......... 82 Chairman of the Finance Committee and 1969 Director J. Barclay Collins II... 51 Executive Vice President, General Counsel and 1986 Director Michael W. Press........ 48 Executive Vice President and Director 1994 John Y. Schreyer........ 56 Executive Vice President, Chief Financial 1990 Officer and Director Alan A. Bernstein....... 51 Senior Vice President 1987 Marco B. Bianchi........ 56 Senior Vice President and Director 1986 F. Lamar Clark.......... 62 Senior Vice President 1990 Neal Gelfand............ 51 Senior Vice President 1980 Daniel F. McCarthy...... 51 Senior Vice President 1995 Charles H. Norz......... 58 Senior Vice President 1982 Benedict J. O'Bryan..... 58 Senior Vice President 1991 Lawrence H. Ornstein.... 44 Senior Vice President 1995 Rene L. Sagebien........ 55 Senior Vice President 1990 Gerald A. Jamin......... 54 Treasurer 1985
- -------------------------------------------------------------------------------- * All officers referred to herein hold office in accordance with the By-Laws until the first meeting of the Directors following the annual meeting of stockholders of the Registrant, and until their successors shall have been duly chosen and qualified. Each of said officers was elected to the office set forth opposite his name on May 3, 1995, except that Mr. Ornstein was elected to his present office by the Board of Directors at its regular meeting on December 6, 1995. The first meeting of Directors following the next annual meeting of stockholders of the Registrant is scheduled to be held May 1, 1996. Except for Mr. Press, each of the above officers has been employed by the Registrant in various managerial and executive capacities for more than five years. Prior to his employment with the Registrant in October 1994, Mr. Press was a Senior Vice President of BP Oil Company, a unit of The British Petroleum Company p.l.c. 9 11 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Information pertaining to the market for the Registrant's Common Stock, high and low sales prices of the Common Stock in 1995 and 1994, dividend payments and restrictions thereon and the number of holders of Common Stock is presented on page 25 (Financial Review), page 33 (Long-Term Debt) and on page 48 (Ten-Year Summary of Financial Data) of the accompanying 1995 Annual Report to Stockholders, which has been incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA A Ten-Year Summary of Financial Data is presented on pages 46 through 49 of the accompanying 1995 Annual Report to Stockholders, which has been incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is presented on pages 21 through 25 of the accompanying 1995 Annual Report to Stockholders, which has been incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements, including the Report of Ernst & Young LLP, Independent Auditors, the Supplementary Oil and Gas Data (unaudited) and the Quarterly Financial Data (unaudited) are presented on pages 25 through 45 of the accompanying 1995 Annual Report to Stockholders, which has been incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ------------------------ PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information relating to Directors is incorporated herein by reference to "Election of Directors" from the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 1, 1996. Information regarding executive officers is included in Part I hereof. ITEM 11. EXECUTIVE COMPENSATION Information relating to executive compensation is incorporated herein by reference to "Election of Directors-Executive Compensation and Other Information," other than information under "Compensation Committee Report on Executive Compensation" and "Performance Graph" included therein, from the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 1, 1996. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information pertaining to security ownership of certain beneficial owners and management is incorporated herein by reference to "Election of Directors-Ownership of Voting Securities by Certain Beneficial Owners" and "Election of Directors-Ownership of Equity Securities by Management" from the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 1, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information relating to this item is incorporated herein by reference to "Election of Directors" from the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 1, 1996. ------------------------ 10 12 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. AND 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The financial statements filed as part of this Annual Report on Form 10-K are listed in the accompanying index to financial statements and schedules. 3. EXHIBITS 3(1) -Restated Certificate of Incorporation of Registrant incorporated by reference to Exhibit 19 of Form 10-Q of Registrant for the three months ended September 30, 1988. 3(2) -By-Laws of Registrant incorporated by reference to Exhibit 3(2) of Form 10-K of Registrant for the fiscal year ended December 31, 1985. 4(1) -Note and Warrant Purchase Agreement, dated June 27, 1991 (including the form of the Common Stock Purchase Warrant expiring June 27, 2001, included as Exhibit B thereof) incorporated by reference to Exhibit 4 of Form 10-Q of Registrant for the three months ended June 30, 1991. 4(2) -Amendment, dated as of May 15, 1992 to the Note and Warrant Purchase Agreement, dated June 27, 1991 (including the form of the common stock purchase warrant expiring June 27, 2001, included as Exhibit B thereof), incorporated by reference to Exhibit 19 of Form 10-Q of Registrant for the three months ended June 30, 1992. -Other instruments defining the rights of holders of long-term debt of Registrant and its consolidated subsidiaries are not being filed since the total amount of securities authorized under each such instrument does not exceed 10 percent of the total assets of Registrant and its subsidiaries on a consolidated basis. Registrant agrees to furnish to the Commission a copy of any instruments defining the rights of holders of long-term debt of Registrant and its subsidiaries upon request. 10(1) -Extension and Amendment Agreement between the Government of the Virgin Islands and Hess Oil Virgin Islands Corp. incorporated by reference to Exhibit 10(4) of Form 10-Q of Registrant for the three months ended June 30, 1981. 10(2) -Restated Second Extension and Amendment Agreement dated July 27, 1990 between Hess Oil Virgin Islands Corp. and the Government of the Virgin Islands incorporated by reference to Exhibit 19 of Form 10-Q of Registrant for the three months ended September 30, 1990. 10(3) -Technical Clarifying Amendment dated as of November 17, 1993 to Restated Second Extension and Amendment Agreement between the Government of the Virgin Islands and Hess Oil Virgin Islands Corp. incorporated by reference to Exhibit 10(3) of Form 10-K of Registrant for the fiscal year ended December 31, 1993. 10(4)* -Incentive Compensation Award Plan for Key Employees of Amerada Hess Corporation and its subsidiaries incorporated by reference to Exhibit 10(2) of Form 10-K of Registrant for the fiscal year ended December 31, 1980. 10(5)* -Financial Counseling Program description incorporated by reference to Exhibit 10(3) of Form 10-K of Registrant for the fiscal year ended December 31, 1980.
11 13 3. EXHIBITS (continued) 10(6)* -Executive Long-Term Incentive Compensation and Stock Ownership Plan of Registrant dated June 3, 1981 incorporated by reference to Exhibit 10(5) of Form 10-Q of Registrant for the three months ended June 30, 1981. 10(7)* -Amendment dated as of December 5, 1990 to the Executive Long-Term Incentive Compensation and Stock Ownership Plan of Registrant incorporated by reference to Exhibit 10(9) of Form 10-K of Registrant for the fiscal year ended December 31, 1990. 10(8)* -Amerada Hess Corporation Pension Restoration Plan dated January 19, 1990 incorporated by reference to Exhibit 10(9) of Form 10-K of Registrant for the fiscal year ended December 31, 1989. 10(9)* -Letter Agreement dated August 8, 1990 between Registrant and Mr. John Y. Schreyer relating to Mr. Schreyer's participation in the Amerada Hess Corporation Pension Restoration Plan incorporated by reference to Exhibit 10(11) of Form 10-K of Registrant for the fiscal year ended December 31, 1991. 10(10)* -Letter Agreement dated November 2, 1994 between Registrant and Mr. Michael W. Press relating to Mr. Press's participation in the Amerada Hess Corporation Pension Restoration Plan and his severance benefits incorporated by reference to Exhibit 10(10) of Form 10-K of Registrant for the fiscal year ended December 31, 1994. 10(11)* -1995 Long-Term Incentive Plan, as amended, incorporated by reference to Appendix A of Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 1, 1996.** 13 -1995 Annual Report to Stockholders of Registrant. 21 -Subsidiaries of Registrant. 23 -Consent of Ernst & Young LLP, Independent Auditors, dated March 22, 1996, to the incorporation by reference in Registrant's Registration Statements on Form S-8 (Nos. 33-39816 and 33-65115) of its report relating to Registrant's financial statements, which consent appears on page F-2 herein. 27 -Financial Data Schedule (for electronic filing only).
- -------------------------------------------------------------------------------- * These exhibits relate to executive compensation plans and arrangements. ** This plan was adopted by the Board of Directors of Registrant, subject to stockholder approval of the plan at the next annual meeting of stockholders scheduled to be held on May 1, 1996. (b) REPORTS ON FORM 8-K During the fourth quarter of 1995, the Registrant filed a report on Form 8-K, dated December 6, 1995. Such report covered Item 5 -- Other Events, and dealt with the issuance of a press release reporting that the Registrant will take a charge to earnings in connection with the adoption of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. 12 14 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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, ON THE 22ND DAY OF MARCH 1996. AMERADA HESS CORPORATION (REGISTRANT) By /s/ JOHN Y. SCHREYER .................................... (JOHN Y. SCHREYER) EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE - ---------------------------------------------------------------------------------------------- Director, Chairman of the Board and Chief Executive Officer /s/ JOHN B. HESS (Principal Executive Officer) March 22, 1996 ...................................... (JOHN B. HESS) Director, President and Chief /s/ W.S.H. LAIDLAW Operating Officer March 22, 1996 ...................................... (W.S.H. LAIDLAW) Director March 22, 1996 ...................................... (MARCO B. BIANCHI) /s/ NICHOLAS F. BRADY Director March 22, 1996 ..................................... (NICHOLAS F. BRADY) /s/ J. BARCLAY COLLINS II Director March 22, 1996 ..................................... (J. BARCLAY COLLINS II) /s/ BERNARD T. DEVERIN Director March 22, 1996 ..................................... (BERNARD T. DEVERIN) /s/ PETER S. HADLEY Director March 22, 1996 ..................................... (PETER S. HADLEY) /s/ LEON HESS Director March 22, 1996 ..................................... (LEON HESS) /s/ EDITH E. HOLIDAY Director March 22, 1996 ..................................... (EDITH E. HOLIDAY) /s/ THOMAS H. KEAN Director March 22, 1996 ..................................... (THOMAS H. KEAN) /s/ H. W. MCCOLLUM Director March 22, 1996 ..................................... (H. W. MCCOLLUM) /s/ ROGER B. ORESMAN Director March 22, 1996 ..................................... (ROGER B. ORESMAN)
13 15
SIGNATURE TITLE DATE - ---------------------------------------------------------------------------------------------- Director March 22, 1996 ......................................... (WILLIAM A. POGUE) /s/ MICHAEL W. PRESS Director March 22, 1996 ......................................... (MICHAEL W. PRESS) Director, Executive Vice President and Chief Financial Officer (Principal Accounting and /s/ JOHN Y. SCHREYER Financial Officer) March 22, 1996 ......................................... (JOHN Y. SCHREYER) /s/ RICHARD B. SELLARS Director March 22, 1996 ......................................... (RICHARD B. SELLARS) /s/ WILLIAM I. SPENCER Director March 22, 1996 ......................................... (WILLIAM I. SPENCER) Director March 22, 1996 ......................................... (ROBERT F. WRIGHT) - ----------------------------------------------------------------------------------------------
14 16 AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE NUMBER - ------------------------------------------------------------------------------------------ Consolidated Balance Sheet at December 31, 1995 and 1994......................... * Statement of Consolidated Income for each of the three years in the period ended December 31, 1995.............................................................. * Statement of Consolidated Retained Earnings for each of the three years in the period ended December 31, 1995................................................. * Statement of Consolidated Cash Flows for each of the three years in the period ended December 31, 1995........................................................ * Statement of Consolidated Changes in Common Stock and Capital in Excess of Par Value for each of the three years in the period ended December 31, 1995........ * Notes to Consolidated Financial Statements....................................... * Report of Ernst & Young LLP, Independent Auditors................................ * Quarterly Financial Data......................................................... * Supplementary Oil and Gas Data................................................... * Consent of Independent Auditors.................................................. F-2 Schedules........................................................................ **
- -------------------------------------------------------------------------------- * The financial statements and notes thereto together with the Report of Ernst & Young LLP, Independent Auditors, on pages 26 through 40, the Quarterly Financial Data (unaudited) on page 25, and the Supplementary Oil and Gas Data (unaudited) on pages 41 through 45 of the accompanying 1995 Annual Report to Stockholders are incorporated herein by reference. ** All schedules have been omitted because of the absence of the conditions under which they are required or because the required information is presented in the financial statements or the notes thereto. F-1 17 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Amerada Hess Corporation of our report dated February 15, 1996, included in the 1995 Annual Report to Stockholders of Amerada Hess Corporation. We also consent to the incorporation by reference in the Registration Statements (Form S-8, Nos. 33-39816 and 33-65115) pertaining to the Amerada Hess Corporation Employees' Savings and Stock Bonus Plan and the 1995 Long-Term Incentive Plan, of our report dated February 15, 1996, with respect to the consolidated financial statements incorporated herein by reference. /S/ ERNST & YOUNG LLP ERNST & YOUNG LLP New York, N.Y. March 22, 1996 F-2 18 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------------ ---------------------------------------------------------- 3(1) -- Restated Certificate of Incorporation of Registrant incorporated by reference to Exhibit 19 of Form 10-Q of Registrant for the three months ended September 30, 1988. 3(2) -- By-Laws of Registrant incorporated by reference to Exhibit 3(2) of Form 10-K of Registrant for the fiscal year ended December 31, 1985. 4(1) -- Note and Warrant Purchase Agreement, dated June 27, 1991 (including the form of the Common Stock Purchase Warrant expiring June 27, 2001, included as Exhibit B thereof) incorporated by reference to Exhibit 4 of Form 10-Q of Registrant for the three months ended June 30, 1991. 4(2) -- Amendment, dated as of May 15, 1992 to the Note and Warrant Purchase Agreement, dated June 27, 1991 (including the form of the common stock purchase warrant expiring June 27, 2001, included as Exhibit B thereof), incorporated by reference to Exhibit 19 of Form 10-Q of Registrant for the three months ended June 30, 1992. -- Other instruments defining the rights of holders of long-term debt of Registrant and its consolidated subsidiaries are not being filed since the total amount of securities authorized under each such instrument does not exceed 10 percent of the total assets of Registrant and its subsidiaries on a consolidated basis. Registrant agrees to furnish to the Commission a copy of any instruments defining the rights of holders of long-term debt of Registrant and its subsidiaries upon request. 10(1) -- Extension and Amendment Agreement between the Government of the Virgin Islands and Hess Oil Virgin Islands Corp. incorporated by reference to Exhibit 10(4) of Form 10-Q of Registrant for the three months ended June 30, 1981. 10(2) -- Restated Second Extension and Amendment Agreement dated July 27, 1990 between Hess Oil Virgin Islands Corp. and the Government of the Virgin Islands incorporated by reference to Exhibit 19 of Form 10-Q of Registrant for the three months ended September 30, 1990. 10(3) -- Technical Clarifying Amendment dated as of November 17, 1993 to Restated Second Extension and Amendment Agreement between the Government of the Virgin Islands and Hess Oil Virgin Islands Corp. incorporated by reference to Exhibit 10(3) of Form 10-K of Registrant for the fiscal year ended December 31, 1993. 10(4)* -- Incentive Compensation Award Plan for Key Employees of Amerada Hess Corporation and its subsidiaries incorporated by reference to Exhibit 10(2) of Form 10-K of Registrant for the fiscal year ended December 31, 1980. 10(5)* -- Financial Counseling Program description incorporated by reference to Exhibit 10(3) of Form 10-K of Registrant for the fiscal year ended December 31, 1980. 10(6)* -- Executive Long-Term Incentive Compensation and Stock Ownership Plan of Registrant dated June 3, 1981 incorporated by reference to Exhibit 10(5) of Form 10-Q of Registrant for the three months ended June 30, 1981. 10(7)* -- Amendment dated as of December 5, 1990 to the Executive Long-Term Incentive Compensation and Stock Ownership Plan of Registrant incorporated by reference to Exhibit 10(9) of Form 10-K of Registrant for the fiscal year ended December 31, 1990.
19
EXHIBIT NUMBER DESCRIPTION ------------ ---------------------------------------------------------- 10(8)* -- Amerada Hess Corporation Pension Restoration Plan dated January 19, 1990 incorporated by reference to Exhibit 10(9) of Form 10-K of Registrant for the fiscal year ended December 31, 1989. 10(9)* -- Letter Agreement dated August 8, 1990 between Registrant and Mr. John Y. Schreyer relating to Mr. Schreyer's participation in the Amerada Hess Corporation Pension Restoration Plan incorporated by reference to Exhibit 10(11) of Form 10-K of Registrant for the fiscal year ended December 31, 1991. 10(10)* -- Letter Agreement dated November 2, 1994 between Registrant and Mr. Michael W. Press relating to Mr. Press's participation in the Amerada Hess Corporation Pension Restoration Plan and his severance benefits incorporated by reference to Exhibit 10(10) of Form 10-K of Registrant for the fiscal year ended December 31, 1994. 10(11)* -- 1995 Long-Term Incentive Plan, as amended, incorporated by reference to Appendix A of Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 1, 1996.** 13 -- 1995 Annual Report to Stockholders of Registrant. 21 -- Subsidiaries of Registrant. 23 -- Consent of Ernst & Young LLP, Independent Auditors, dated March 22, 1996, to the incorporation by reference in Registrant's Registration Statements on Form S-8 (Nos. 33-39816 and 33-65115) of its report relating to Registrant's financial statements, which consent appears on page F-2 herein. 27 -- Financial Data Schedule (for electronic filing only).
- -------------------------------------------------------------------------------- * These exhibits relate to executive compensation plans and arrangements. ** This plan was adopted by the Board of Directors of Registrant, subject to stockholder approval of the plan at the next annual meeting of stockholders scheduled to be held on May 1, 1996. EX-13 2 1995 ANNUAL REPORT TO STOCKHOLDERS OF REGISTRANT 1 6 UNITED STATES EXPLORATION AND PRODUCTION Amerada Hess replaced 130% of its crude oil production and 124% of its natural gas production in the United States during 1995. This success resulted primarily from discoveries in the Garden Banks area of the Gulf of Mexico. Amerada Hess, as operator with a 50% interest, has begun developing its Baldpate prospect located in the Garden Banks Blocks 215/216/259/260 area of the Gulf of Mexico. The Corporation will install a compliant tower in 1,650 feet of water. It will have the capacity to process 40,000 barrels of oil per day and 150,000 Mcf of natural gas per day. First production is expected in mid-1998. Subsequent to commencing development of the Baldpate prospect, Amerada Hess drilled a well into a separate structure on Garden Banks Block 216, about three miles northeast of the Baldpate platform location. That well encountered a significant hydrocarbon accumulation. Amerada Hess is studying the feasibility of tying this discovery back to the Baldpate production facilities. North of the Baldpate prospect, the Enchilada prospect was discovered on Garden Banks Blocks 172 (AHC 60%), 127 (AHC 25%) and 128 (AHC 25%). Development has commenced, with first production expected late in 1997. On Mustang Island Block A-86 (AHC 53.33%), Amerada Hess drilled two wells that proved extensions to a producing field on Mustang Island Block A-85 (AHC 53.33%). These wells currently are producing a total of 30,000 Mcf of natural gas per day. Two major developments are under way in [PHOTO OF the Garden Banks area of the Gulf of AMERADA HESS Mexico. Production facilities will be CORPORATION EMPLOYEE] installed on Block 260 to develop the Baldpate prospect which is primarily an oil field. To the north, a natural gas and condensate field is being developed on Blocks 127, 128 and 172. 2 7 PHOTO OF GARDEN BANKS 172 Gulf of Mexico 3 8 PHOTO OF SALT DOME PROSPECT Mississippi 4 9 On West Cameron Block 498 (AHC 57.43%), Amerada Hess drilled two delineation wells that encountered prospective sections of crude oil and natural gas pay with limited areal extent. Two previous discovery wells have been drilled on West Cameron Block 498. A development plan is being formulated. On Galveston Block 300 (AHC 50%), an exploration well tested at a rate of 11,400 Mcf of natural gas per day and 300 barrels of condensate per day. A successful delineation well has been drilled on Galveston Block 301 (AHC 50%) and a third well is currently being drilled. Development of these discoveries is scheduled for 1996. At the Gulf of Mexico lease sales in 1995, Amerada Hess acquired interests in 18 blocks in Federal waters and 15 blocks in State of Texas waters. Onshore, Amerada Hess continued its successful drilling in the Mississippi Salt Dome trend, where it has 75% interests in the Carson Dome, Dry Creek Dome and the Prentiss Dome Fields. Combined gross production from these three fields is averaging 27,000 Mcf of natural gas per day and 850 barrels of oil per day. Two wells are being completed in the Midway Dome Field (AHC 75%) that should add gross production of 9,000 Mcf of natural gas per day and 500 barrels of oil per day. In South Louisiana, three successful natural gas wells tested at a combined rate of 22,000 Mcf of natural gas per day and 700 barrels of oil per day. Amerada Hess has working interests in these wells ranging from 50 to 55%. The Corporation participated in two successful Lodgepole Reef wells in North Dakota that tested at a combined rate of 3,325 barrels of oil per day. Amerada Hess has working interests in these two wells of 25% and 65%. Additional drilling is planned. Production is increasing from discoveries by Amerada Hess on its Mississippi Salt Dome prospects. The [PHOTO OF AMERADA HESS Corporation is intensifying drilling to CORPORATION EMPLOYEES] exploit recent discoveries on the Lodgepole Reef trend in North Dakota. 5 10 INTERNATIONAL EXPLORATION AND PRODUCTION UNITED KINGDOM Amerada Hess Limited, the Corporation's British subsidiary, achieved record levels of hydrocarbon production in 1995. Crude oil and natural gas liquids production averaged 142,329 barrels per day compared with 128,799 barrels per day in 1994. Natural gas production increased to 239,307 Mcf per day from 208,742 Mcf per day in 1994. Contributing to the 1995 crude oil and liquids production was the tie-in by Amerada Hess Limited of South Scott to the Scott Field (AHL 34.95%), continued excellent performance from the Ivanhoe/Rob Roy Fields (AHL 42.08%) and the commencement of production in August from the Fife Field (AHL 85%). The Davy (AHL 27.78%) and Bessemer (AHL 23.08%) natural gas fields also came on stream in 1995. As a result of previous exploration successes, seven new oil fields currently are being developed. As operator, Amerada Hess Limited is tying the Telford Field (AHL 31.42%), a satellite of the Scott Field, into the Scott production facilities. This field is expected to come on stream early in 1997 at a gross rate of 30,000 barrels of oil per day. Amerada Hess Limited is in the process of developing the Durward and Dauntless Fields (AHL 28%), with first oil anticipated early in 1997 at a gross rate of 55,000 barrels per day. The Fergus Field (AHL 65%) is being tied into the Fife Field, with first oil production expected late in 1996. This is expected to keep gross production through the Fife facilities at the current level of 40,000 barrels of oil per day. The Telford Field is being developed and [PHOTO OF AMERADA HESS will be produced through the nearby CORPORATION EMPLOYEE] Scott facilities. Gross production from the Scott Field has been running at a rate in excess of 180,000 barrels of oil per day. 6 11 PHOTO OF TELFORD FIELD United Kingdom 7 12 Photo of FIFE FIELD United Kingdom 8 13 West of Shetlands, Amerada Hess Limited is participating in the development of the Schiehallion Field. Subject to obtaining necessary governmental consent, first oil is anticipated as early as October 1997. The Nevis Field (AHL 22.72%) is being tied to the Beryl Field and will be brought on stream in the fourth quarter of 1996 at an estimated gross rate of 13,500 barrels of oil per day. Development of the Arkwright Field (AHL 28.21%), a satellite of the Montrose and Arbroath Fields, is proceeding with first production expected late in 1996 at a gross rate of about 12,000 barrels of oil per day. Natural gas was discovered in several areas in 1995. Well 21/20a-5 (AHL 28.46%) was drilled on the Bligh prospect and discovered natural gas and condensate that flowed at rates of 14,500 Mcf per day and 2,400 barrels per day, respectively. On Block 49/18 (AHL 23.08%) a potential satellite for the Indefatigable Field was discovered and a gas bearing structure (AHL 6.48%) was discovered on Block 47/14a. Further evaluation of these discoveries is planned. In the Sixteenth Round of United Kingdom License Awards, Amerada Hess Limited received a substantial number of exploration blocks and also received an award in the first Isle of Man License Round. NORWAY Amerada Hess Norge A/S, the Corporation's Norwegian subsidiary, completed a successful year in 1995. Amerada Hess Norge replaced 250% of its crude oil and natural gas liquids production and 170% of its natural gas production. In the Valhall Field (AHN 28.09%), a new platform is expected to come on stream in mid-1996 and significantly increase production by 1998. In the Hod Field (AHN 25%), an appraisal well extended the field and has been brought into production. The Fife Field came on stream in 1995 and is being produced through the [Photo of Amerada Hess floating production, storage and Corporation employees] offloading vessel, the Uisge Gorm. The Fergus Field also will be produced through the Uisge Gorm. 9 14 An extension of the Elli Field on Block 25/7 (AHN 12.50%) was confirmed by an appraisal well. Unitization discussions have begun with the owners of the adjacent block, with the intent of submitting a development plan in 1996. In the Norwegian Fifteenth Round of License Awards early in 1996, Amerada Hess Norge received 20% interests in Blocks 24/9, 24/11 and 24/12 and a 15% interest in Block 6710/10. DENMARK Amerada Hess A/S, the Corporation's Danish subsidiary, drilled its first well in 1995 on the South Arne Field (AH A/S 65.69%) and discovered oil that tested at a rate of 2,341 barrels per day. Development options are being assessed. In the Danish Fourth Round of Licensing, Amerada Hess A/S received interests in 10 offshore blocks. It also is participating in a study of the possibility of building a new natural gas pipeline system in the Danish sector of the North Sea. GABON The Corporation's share of production from the Rabi Kounga Field in Gabon averaged 9,468 barrels per day in 1995 compared with 8,746 barrels per day in 1994. Amerada Hess, as operator with a 55% interest, completed an extensive gravity and magnetic survey on its Mazoumbel exploration permit during 1995. A 150 mile seismic program covering the 573,534 acre permit is under way for 1996. SOUTHEAST ASIA The Corporation continues to develop its upstream activities in Southeast Asia and during 1995 farmed into Block 11/27 offshore Thailand (AHC 15%), Block M-10 in the Andaman Sea (AHC 15%) and the Lematang Field in Indonesia (AHC 50%). Gas sales negotiations for the Pailin Field (AHC 15%) are continuing. A potentially significant oil discovery [Photo of Amerada Hess was made in the South Arne Field Corporation employees] offshore Denmark. Additional drilling is planned in the South Arne Field and on several other properties offshore Denmark. 10 15 PHOTO OF SOUTH ARNE FIELD Denmark 11 16 PHOTO OF FLUID CATALYTIC CRACKING UNIT St. Croix, Virgin Islands 12 17 REFINING AND MARKETING REFINING Hess Oil Virgin Islands Corp., the Corporation's Virgin Islands subsidiary (HOVIC), conducted an engineering study in 1995 which concluded that the capacity of its fluid catalytic cracking unit can be increased to about 125,000 barrels per day with minor modifications to current equipment. Modifications are scheduled to be made during the next maintenance turnaround, which is likely to occur late this year. The fluid catalytic cracking unit, which came on stream in October 1993 at 90,000 barrels per day, currently is operating at a rate of 110,000 barrels per day. The strategic location of the Virgin Islands refinery enables it to effectively supply markets outside its traditional markets along the East and Gulf Coasts of the United States. HOVIC is seeking to use this advantage to capitalize on the growing demand for gasoline and distillates in South America. In order to improve financial results in refining, HOVIC has undertaken a number of initiatives to reduce costs, increase use of computers to optimize refinery operations and improve operating procedures. Additional changes are expected to be made during 1996. Refinery runs averaged 377,000 barrels per day in 1995 compared with 388,000 barrels per day in 1994. During the fourth quarter of 1995, refinery runs increased to 406,000 barrels per day in order to meet demand created by the colder winter weather. HOVIC will be upgrading the capacity of the fluid catalytic cracking unit at its [Photo of Amerada Hess Virgin Islands refinery from the current Corporation employee] level of about 110,000 barrels per day to approximately 125,000 per day late in 1996 or early in 1997. 13 18 MARKETING Amerada Hess will concentrate its retail gasoline marketing in states in which it has, or can establish, a significant presence. The Corporation also plans to expand its retail gasoline marketing business. The Corporation will continue its emphasis on establishing relationships with new contract dealers. This ongoing program is increasing the amount of the Corporation's gasoline marketed under the HESS brand name without requiring significant capital expenditures. Amerada Hess also is taking steps to increase non-gasoline revenues and further strengthen the HESS brand. Future convenience stores will be designed to accommodate new sources of revenue. In 1996 the Corporation will test several new concepts related to food and other non-fuel services. During 1995 Amerada Hess introduced a proprietary HESS fleet credit card and reached agreement with two universal fleet card providers. These cards will be accepted at all HESS company-operated gasoline stations. In 1996 the Corporation will begin to introduce credit card readers at fuel dispensers. As part of its effort to enhance financial returns from its terminal operations, thruput arrangements with third parties are being consummated and several terminals have been closed. Additional actions will be considered in 1996. Total refined product sales averaged 487,000 barrels per day in 1995 compared with 468,000 barrels per day in 1994. Gasoline sales increased to 207,000 barrels per day, the most ever sold by the Corporation, compared with 182,000 barrels per day in 1994. [Photo of Amerada Hess At HESS gasoline stations, HESS MART Corporation employee convenience stores are being upgraded to and customer] offer additional products to customers. Other services will be made available at a number of HESS gasoline stations. 14 19 Photo of HESS STATION New York 15 21 FINANCIAL REVIEW Amerada Hess Corporation and Consolidated Subsidiaries Management's Discussion and Analysis of Results of Operations and Financial Condition Consolidated Results of Operations The results of operations for 1995 amounted to a net loss of $394 million ($4.24 per share), compared with net income of $74 million ($.79 per share) in 1994 and a net loss of $268 million ($2.90 per share) in 1993. The results for 1995 included an after-tax charge of $416 million ($4.47 per share) resulting from the adoption of Financial Accounting Standard (FAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This noncash charge to earnings related primarily to the Corporation's Port Reading refinery, United States flag ships and certain domestic exploration and production properties. The 1995 results also include net gains of approximately $68 million from asset sales, principally from a United States crude oil pipeline and gathering system and an interest in an undeveloped United Kingdom natural gas field. The Corporation also had income from a refund of Windfall Profits Taxes (and related interest) and an insurance recovery and recorded charges for costs associated with Hurricane Marilyn and staff reductions. The after-tax effects of special items in 1995, 1994 and 1993, summarized by major operating activity, are as follows (in millions):
- ----------------------------------------------------------------------------- Exploration Refining Corporate and and and Total Production Marketing Other - ----------------------------------------------------------------------------- 1995 Net income (loss) $(394) $ 142 $(207) $(329) Less special items-- FAS No. 121 asset impairment (416) (69) (175) (172) Gain on asset sales 68 40 3 25 Tax refund 44 44 -- -- Insurance recovery 8 8 -- -- Hurricane Marilyn costs (19) -- (19) -- Staff-reduction costs (14) -- -- (14) - ----------------------------------------------------------------------------- Income (loss), excluding special items $ (65) $ 119 $ (16) $(168) =============================================================================
- ----------------------------------------------------------------------------- Exploration Refining Corporate and and and Total Production Marketing Other - ----------------------------------------------------------------------------- 1994 Net income (loss) $ 74 $ 157 $ 95 $(178) Less special item-- Gain on asset sales 41 41 -- -- - ----------------------------------------------------------------------------- Income (loss), excluding special item $ 33 $ 116 $ 95 $(178) - ----------------------------------------------------------------------------- 1993 Net income (loss) $(268) $ 116 $(293) $ (91) Less special items-- Consolidation of offices, refinery closing and asset writedowns (55) (40) (15) -- Change in accounting for income taxes 29 -- -- 29 - ----------------------------------------------------------------------------- Income (loss), excluding special items $(242) $ 156 $(278) $(120) =============================================================================
Sales and other operating revenues amounted to $7,302 million in 1995, an increase of $700 million, or 11%, from 1994. Approximately one-half of the increase was due to higher gasoline selling prices and sales volumes. The remainder was largely due to increased foreign crude oil production and the higher average selling price for crude oil in 1995. Sales and other operating revenues in 1994 were 12% higher than in 1993. The increase was primarily due to higher refined product sales volumes, including an increased proportion of gasoline sales. Foreign crude oil sales volumes were also higher. Non-operating revenues reflected pre-tax gains from asset sales of $96 million and $42 million in 1995 and 1994, respectively. Non-operating revenues in 1995 also included $68 million before income taxes from the refund of Windfall Profits Taxes, including interest. Selling, general and administrative expenses in 1995 included pre-tax, staff-reduction costs amounting to approximately $24 million, primarily severance and enhanced pension expenses. In each of the three years in the period ended December 31, 1995, the Corporation's effective income tax rate exceeded the U.S. statutory rate primarily because of higher taxes on foreign exploration and production earnings, including special petroleum taxes in Norway and on certain fields in the United Kingdom. 16 22 Comparison of Results Exploration and Production: Excluding special items, exploration and production earnings increased by $3 million in 1995 and decreased by $40 million in 1994 compared with the results of the prior year. The change in 1995 was largely due to higher average worldwide crude oil selling prices and increased foreign crude oil and natural gas production, offset by lower average natural gas selling prices and increased exploration expenses. The earnings decline in 1994 was primarily due to lower average worldwide crude oil and domestic natural gas selling prices. The Corporation's average selling prices, including the effects of hedging, were as follows:
- --------------------------------------------------------------------------------------------------- 1995 1994 1993 - --------------------------------------------------------------------------------------------------- Crude oil and natural gas liquids (per barrel) United States $ 15.82 $ 15.43 $ 17.40 Foreign 16.95 15.91 16.89 Natural gas (per Mcf) United States 1.70 1.91 2.11 Foreign 1.60 1.75 1.66 =================================================================================================== The Corporation's net daily worldwide production was as follows: - --------------------------------------------------------------------------------------------------- 1995 1994 1993 - --------------------------------------------------------------------------------------------------- Crude oil and natural gas liquids (barrels per day) United States 63,006 67,602 71,971 Foreign 197,454 182,918 143,419 - --------------------------------------------------------------------------------------------------- Total 260,460 250,520 215,390 =================================================================================================== Natural gas (Mcf per day) United States 401,581 427,103 502,459 Foreign 482,550 419,015 384,850 - --------------------------------------------------------------------------------------------------- Total 884,131 846,118 887,309 ===================================================================================================
United States crude oil production was lower in 1995 and 1994, principally reflecting natural decline. The increase in foreign crude oil production in 1995 was largely due to the commencement of production from the Fife Field in the United Kingdom in August 1995. The increase in foreign production in 1994 was primarily due to a full year of production from the Scott Field, which came on stream in September 1993. United States natural gas production decreased in 1995 and 1994 reflecting natural decline, however, these decreases were offset by increased production in the United Kingdom and Canada. In November 1995, the Corporation announced that it would offer for sale its wholly-owned Canadian subsidiary, which had net daily production of 11,396 barrels of crude oil and natural gas liquids and 215,500 Mcf of natural gas during 1995. Certain additional United States and international producing properties are expected to be sold in 1996. Depreciation, depletion, amortization and lease impairment charges were lower in 1995, principally reflecting lower production volumes and positive oil and gas reserve revisions in the United States, partially offset by the effect of increased production in the United Kingdom. Higher depreciation and related charges in 1994 were largely due to increased United Kingdom production. Exploration expenses were higher in 1995 than in 1994, due to increased exploration activity in the United Kingdom and Denmark, partially offset by reduced United States expenses. Selling, general and administrative expenses were higher in 1995, primarily reflecting expanded international activities and increased marketing of natural gas in the United Kingdom. The overall effective income tax rate on exploration and production earnings continued to be impacted by high foreign tax rates, principally the Petroleum Revenue Tax on certain fields in the United Kingdom and the Special Tax in Norway. Excluding the effect of planned asset sales, the Corporation's production of crude oil and natural gas in 1996 is expected to be comparable to 1995 levels. However, future exploration and production earnings may be affected by changes in crude oil and natural gas selling prices, the level of exploration spending, income tax rates in the various countries in which the Corporation operates and other factors. 17 23 Refining and Marketing: Excluding special items, refining and marketing operations had a loss of $16 million in 1995 compared with income of $95 million in 1994 and a loss of $278 million in 1993. Gasoline margins improved somewhat in 1995, however, this improvement was more than offset by lower distillate and residual fuel oil margins, largely reflecting the warmer weather during the winter of 1994-1995. Overall, the Corporation's average refined product selling prices increased by approximately $1.00 per barrel in 1995, however, the increased cost of purchased crude oil and refined products exceeded the increase in selling prices. The improvement in 1994 compared with 1993 was due to higher average refined product margin, the first full year of operation of the fluid catalytic cracking unit in the Virgin Islands and increased refinery runs. Average refined product selling prices were comparable in 1994 and 1993 but the cost of crude oil declined significantly in 1994. Income taxes or benefits have not been recorded on the results of operations of a refining subsidiary because of a net operating loss carryforward. A substantial portion of the increase in refining and marketing earnings in 1994 related to the refining subsidiary. Total refined product sales volumes amounted to 178 million barrels in 1995, 171 million barrels in 1994 and 141 million barrels in 1993, reflecting higher gasoline sales in each period. The fluid catalytic cracking unit in the Virgin Islands operated at a rate in excess of 100,000 barrels per day in 1995, an increase of more than 10% over 1994. The increase in sales volume in 1994 over 1993 largely reflects the start-up of the Virgin Islands catcracker. The Corporation expects to further increase the production capacity of the catcracker in late 1996 or early 1997. Refining and marketing industry conditions are extremely competitive and earnings may continue to be volatile. The 1995 FAS No. 121 asset impairment charges will reduce the amount of fixed costs affecting refining and marketing operations in the future. The future role of certain refining and marketing assets in the Corporation's operations is under review. Corporate and Other: Excluding special items, corporate administration and other operating activities had net expenses as follows (in millions):
- ----------------------------------------------------------------------------- 1995 1994 1993 - ----------------------------------------------------------------------------- Corporate administrative expenses $ 33 $ 33 $ 51 Income tax expense (benefit) (14) 5 (14) - ----------------------------------------------------------------------------- 19 38 37 Interest 193 191 113 Shipping and pipeline income (44) (51) (30) - ----------------------------------------------------------------------------- Total corporate and other (after tax) $ 168 $ 178 $ 120 =============================================================================
Corporate administrative expenses were comparable in 1995 and 1994, but included a charge for refinancing long-term debt in 1993. The fluctuation in income taxes in each year reflects the impact of foreign source earnings on United States income taxes. Income from shipping and pipelines in 1994 included an insurance recovery and the reversal into income of accrued maintenance costs on a ship that was sold. Corporate-wide interest expense was comparable in 1995 and 1994, but higher than in 1993, as interest was capitalized on major construction projects in 1993. Interest expense is expected to be lower in 1996 because of debt repayments in 1995 and anticipated further debt reductions in 1996 from cash generated by ongoing operations and asset sales. Liquidity and Capital Resources Net cash provided by operating activities, including changes in operating assets and liabilities, amounted to $1,241 million in 1995 compared with $957 million in 1994 and $819 million in 1993. The 1995 FAS No. 121 asset impairment charge did not affect cash provided by operations. The increase in 1995 was primarily due to changes in working capital components and an advance sale of future production of $151 million, and in 1994, the increase reflects improved operating results. Cash provided by operating activities exceeded capital expenditures of $692 million in 1995 and $596 million in 1994. The remaining cash flow in each period was used principally to repay debt. In 1993, capital expenditures exceeded net cash provided by operating activities, reflecting major construction activity in the North Sea and at the Virgin Islands refinery. 18 24 Total debt was $2,718 million at December 31, 1995 compared with $3,340 million at December 31, 1994. The debt to total capitalization ratio was 50.5% at December 31, 1995 compared with 51.9% at the end of 1994. In 1995, the Corporation sold forward $151 million of future crude oil production, which contributed to debt reduction during the year. In addition, the proceeds from asset sales amounted to $161 million in 1995 and $49 million in 1994. At December 31, 1995, floating rate debt amounted to 37% of total debt, including the effect of interest rate conversion agreements. The Corporation had borrowing capacity available under existing revolving credit agreements at December 31, 1995 of $985 million and additional unused lines of credit under uncommitted arrangements with banks of $655 million. The Corporation's borrowing arrangements, including restrictive covenants, are more fully described in Note 5 to the financial statements. The Corporation is presently offering for sale its wholly- owned Canadian subsidiary, Amerada Hess Canada Ltd., as well as certain United States exploration and production properties representing approximately 20% of current United States production. In addition, the Corporation expects to sell certain non-core North Sea producing properties and anticipates that the sale of its interest in a non-operated offshore Abu Dhabi oil field will be completed in the first half of 1996. See the Supplementary Oil and Gas Data beginning on page 41 for information on oil and gas activities by geographic area. The Corporation uses futures, forwards, options and swaps 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 December 31, 1995, the Corporation had open hedge positions equal to approximately 35% of its estimated 1996 worldwide crude oil production and approximately 5% of 1997 production. In certain circumstances, hedge counterparties may elect to purchase up to an additional 5% of 1996 and 1997 production. In addition, the Corporation had open option contracts, providing varying degrees of protection against declines in market prices, covering 10% of 1996 crude oil production. The Corporation also had open contracts equal to approximately 25% of its estimated 1996 United States natural gas production. In certain circumstances, hedge counterparties may elect to purchase up to an additional 20% of this production. The Corporation had hedges covering approximately 70% of its refining and marketing inventories and had additional short positions, principally crack spreads, approximating 15% of refined products to be manufactured in the next twelve months. As market conditions change, the Corporation will adjust its hedging positions. At December 31, 1995, the Corporation also had outstanding interest rate conversion agreements that reduce the percentage of floating rate debt and decrease exposure to rising interest rates. The Corporation also may hedge a portion of its exposure to fluctuating foreign exchange rates, principally the Pound Sterling. Generally, these exchange rates are fixed by purchasing currency forward to correspond with crude oil sales commitments. See Note 11 to the financial statements for additional information on the Corporation's hedging activities. The Corporation conducts foreign exploration and production activities, principally in the United Kingdom, Norway, Canada and Gabon and intends to increase its exploration activities in other international areas. Therefore, the Corporation is subject to business risks associated with foreign operations. Such risks may include the effect of foreign currency gains and losses on reported earnings. However, the effect of foreign currency transactions and the translation of foreign currency financial statements on the Corporation's earnings and stockholders' equity has not been material and has not affected the Corporation's liquidity or ability to raise capital. Capital Expenditures The following table summarizes the Corporation's capital expenditures in 1995, 1994 and 1993 (in millions):
- -------------------------------------------------------------------------------- 1995 1994 1993 - -------------------------------------------------------------------------------- Exploration and production Intangible drilling costs and equipment United States $ 195 $ 216 $ 241 Foreign 383 294 458 Lease acquisitions 44 18 40 Purchases of oil and gas reserves 4 3 16 - -------------------------------------------------------------------------------- 626 531 755 Refining and marketing 63 62 591 Transportation and other 3 3 2 - -------------------------------------------------------------------------------- Total $ 692 $ 596 $1,348(*) ================================================================================
(*)Includes expenditures of $722 million for major projects in the North Sea and at the Virgin Islands refinery. Capital expenditures in 1996 are expected to be approximately $850 million and will be financed by internally generated funds. 19 25 Environment, Health and Safety The Corporation's awareness of its environmental responsibilities, along with increasing environmental regulations at the federal, state and local levels, have led to programs requiring higher operating costs and capital investments by the Corporation. The Corporation believes that it has made the necessary expenditures to comply with laws currently being implemented and that it is well positioned to meet proposed regulations. The Corporation continues to improve its environment, health and safety programs. These programs include pollution control and reduction, waste minimization and treatment, compliance evaluation, facility auditing and employee training to monitor operational activities and conditions and to prevent non-compliant activities that might threaten the environment. The Corporation continues to produce gasolines that meet the requirements for oxygenated and reformulated gasolines under the Clean Air Act of 1990. Reformulated gasolines decrease emissions of volatile and toxic organic compounds. The Corporation's production of reformulated gasolines from the Virgin Islands and Port Reading facilities exceeds the total requirements at its gasoline stations. The Corporation has the capabilities to meet the more restrictive requirements for reformulated gasoline that take effect in 1998 and 2000. The Corporation's Virgin Islands refinery also has desulfurization capabilities enabling it to produce low-sulfur diesel fuel that meets the requirements of the Clean Air Act. The Corporation will continue upgrading its facilities to meet regulatory changes. The Corporation expects continuing expenditures for environmental assessment and remediation. Sites where corrective action may be necessary include gasoline stations, terminals, refineries (including solid waste management units under permits issued pursuant to the Resource Conservation and Recovery Act) and, although not significant, Superfund sites where the Corporation has been named a potentially responsible party under the Superfund legislation. The Corporation expects that existing reserves for environmental liabilities will adequately cover costs of assessing and remediating known environmental sites. The Corporation expended $15 million in 1995, $16 million in 1994 and $14 million in 1993 for remediation, mostly in its refining and marketing activity. In addition, capital expenditures for facilities, primarily to comply with federal, state and local environmental standards, were $15 million in 1995, $8 million in 1994 and $28 million in 1993. Dividends Cash dividends on common stock totaled $.60 per share ($.15 per quarter) during 1995 and 1994. Stock Market Information The common stock of Amerada Hess Corporation is traded principally on the New York Stock Exchange (ticker symbol: AHC). High and low sales prices in 1995 and 1994 were as follows:
- -------------------------------------------------------------------------------- 1995 1994 -------------------- -------------------- Quarter Ended High Low High Low - -------------------------------------------------------------------------------- March 31 50-1/2 43-3/4 49-7/8 44-5/8 June 30 53-1/8 47-1/2 52-1/4 44 September 30 51-3/4 45-3/4 52-5/8 45-1/8 December 31 53-5/8 43-1/4 50-1/4 43-7/8 ================================================================================
Quarterly Financial Data Quarterly results of operations for the years ended December 31, 1995 and 1994 follow (millions of dollars, except per share data):
- ------------------------------------------------------------------------ Sales Net and other Net income operating Gross income (loss) Quarter revenues profit(a) (loss) per share - ------------------------------------------------------------------------ 1995 First $1,892 $ 310 $ 25(b) $ .27 Second 1,773 294 (40) (.43) Third 1,642 223 (104)(c) (1.13) Fourth 1,995 362 (275)(d,e) (2.95) - ------------------------------------------------------------------------ Total $7,302 $1,189 $ (394) $(4.24) ======================================================================== 1994 First $1,858 $ 409 $ 84 $ .90 Second 1,488 257 (17) (.18) Third 1,494 250 (2)(f) (.02) Fourth 1,762 308 9 .09 - ------------------------------------------------------------------------ Total $6,602 $1,224 $ 74 $ .79 ========================================================================
(a) Gross profit represents sales and other operating revenues less cost of products sold and operating expenses and depreciation, depletion, amortization and lease impairment. (b) Includes income of $44 million from the refund of Windfall Profits Taxes and related interest. (c) Includes net charges of $14 million and $19 million for costs associated with staff reductions and Hurricane Marilyn, respectively. Also includes income of $8 million from an insurance recovery. (d) Reflects an after-tax charge for asset impairment of $416 million resulting from the adoption of FAS No. 121. (e) Includes a net gain on asset sales of $68 million and a benefit of $23 million from the recognition, as a result of fourth quarter events, of foreign tax credits relating to the first nine months of the year. (f) Includes a net gain on asset sales of $41 million. The results of operations for the periods reported herein should not be considered as indicative of future operating results. 20 26 CONSOLIDATED BALANCE SHEET Amerada Hess Corporation and Consolidated Subsidiaries
- -------------------------------------------------------------------------------- At December 31 ----------------------------- Thousands of dollars 1995 1994 - -------------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 56,071 $ 53,135 Accounts receivable Trade 760,947 546,341 Other 37,384 24,184 Inventories 838,770 945,635 Other current assets 269,372 152,366 - -------------------------------------------------------------------------------- Total current assets 1,962,544 1,721,661 - -------------------------------------------------------------------------------- Investments and Advances 185,522 140,300 - -------------------------------------------------------------------------------- Property, Plant and Equipment Exploration and production 9,257,851 9,656,923 Refining 2,619,721 3,005,198 Marketing 832,191 887,526 Transportation 314,607 715,407 Other 39,842 39,772 - -------------------------------------------------------------------------------- Total--at cost 13,064,212 14,304,826 Less reserves for depreciation, depletion, amortization and lease impairment 7,694,496 7,938,824 - -------------------------------------------------------------------------------- Property, plant and equipment--net 5,369,716 6,366,002 - -------------------------------------------------------------------------------- Deferred Income Taxes and Other Assets 238,588 109,977 - -------------------------------------------------------------------------------- Total Assets $ 7,756,370 $ 8,337,940 ================================================================================
21 27
- ----------------------------------------------------------------------------------------------------- At December 31 ----------------------- 1995 1994 - ----------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable--trade $ 443,513 $ 291,571 Accrued liabilities 575,886 533,640 Deferred revenue 151,416 21,723 Taxes payable 239,080 168,927 Notes payable 90,000 63,747 Current maturities of long-term debt 104,685 121,806 - ----------------------------------------------------------------------------------------------------- Total current liabilities 1,604,580 1,201,414 - ----------------------------------------------------------------------------------------------------- Long-Term Debt 2,523,181 3,154,235 - ----------------------------------------------------------------------------------------------------- Capitalized Lease Obligations 64,202 80,928 - ----------------------------------------------------------------------------------------------------- Deferred Liabilities and Credits Deferred income taxes 602,792 547,537 Other 301,219 254,197 - ----------------------------------------------------------------------------------------------------- Total deferred liabilities and credits 904,011 801,734 - ----------------------------------------------------------------------------------------------------- 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--93,011,255 shares in 1995; 92,995,755 shares in 1994 93,011 92,996 Capital in excess of par value 744,252 743,537 Retained earnings 2,017,064 2,467,267 Equity adjustment from foreign currency translation (193,931) (204,171) - ----------------------------------------------------------------------------------------------------- Total stockholders' equity 2,660,396 3,099,629 - ----------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 7,756,370 $ 8,337,940 =====================================================================================================
The consolidated financial statements reflect the successful efforts method of accounting for oil and gas exploration and producing activities. See accompanying notes to consolidated financial statements. 22 28 STATEMENT OF CONSOLIDATED INCOME Amerada Hess Corporation and Consolidated Subsidiaries
- --------------------------------------------------------------------------------------------------------------------- For the Years Ended December 31 ------------------------------------------------- Thousands of dollars, except per share data 1995 1994 1993 - --------------------------------------------------------------------------------------------------------------------- Revenues Sales (excluding excise taxes) and other operating revenues $ 7,302,307 $ 6,601,984 $ 5,879,521 Non-operating revenues 222,482 96,809 21,153 - --------------------------------------------------------------------------------------------------------------------- Total revenues 7,524,789 6,698,793 5,900,674 - --------------------------------------------------------------------------------------------------------------------- Costs and Expenses Cost of products sold and operating expenses 5,220,657 4,449,819 4,287,139 Exploration expenses, including dry holes 297,817 249,433 258,826 Selling, general and administrative expenses 634,271 590,647 596,919 Interest expense 247,465 245,149 156,615 Depreciation, depletion, amortization and lease impairment 893,067 927,933 824,651 Asset impairment 584,161 -- -- Provision for income taxes 41,764 162,098 74,186 - --------------------------------------------------------------------------------------------------------------------- Total costs and expenses 7,919,202 6,625,079 6,198,336 - --------------------------------------------------------------------------------------------------------------------- Income (Loss) Before Cumulative Effect of Accounting Change (394,413) 73,714 (297,662) Cumulative Effect of Change in Accounting for Income Taxes -- -- 29,459 - --------------------------------------------------------------------------------------------------------------------- Net Income (Loss) $ (394,413) $ 73,714 $ (268,203) - --------------------------------------------------------------------------------------------------------------------- Net Income (Loss) Per Share Before Accounting Change $ (4.24) $ .79 $ (3.22) - --------------------------------------------------------------------------------------------------------------------- Net Income (Loss) Per Share $ (4.24) $ .79 $ (2.90) =====================================================================================================================
STATEMENT OF CONSOLIDATED RETAINED EARNINGS - --------------------------------------------------------------------------------------------------------------------- For the Years Ended December 31 ------------------------------------------------- Thousands of dollars, except per share data 1995 1994 1993 - --------------------------------------------------------------------------------------------------------------------- Balance at Beginning of Year $ 2,467,267 $ 2,449,325 $ 2,773,018 Net income (loss) (394,413) 73,714 (268,203) Dividends declared--common stock ($.60 per share in 1995, 1994 and 1993) (55,790) (55,772) (55,490) - --------------------------------------------------------------------------------------------------------------------- Balance at End of Year $ 2,017,064 $ 2,467,267 $ 2,449,325 =====================================================================================================================
See accompanying notes to consolidated financial statements. 23 29 STATEMENT OF CONSOLIDATED CASH FLOWS Amerada Hess Corporation and Consolidated Subsidiaries
- ------------------------------------------------------------------------------------------------------------------------------ For the Years Ended December 31 ------------------------------------------------- Thousands of dollars 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows From Operating Activities Net income (loss) $ (394,413) $ 73,714 $ (268,203) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, depletion, amortization and lease impairment 893,067 927,933 824,651 Asset impairment 584,161 -- -- Exploratory dry hole costs 178,883 152,971 155,725 (Increase) decrease in accounts receivable (226,790) (15,927) 201,290 (Increase) decrease in inventories 106,357 (90,258) 127,990 Increase (decrease) in accounts payable, accrued liabilities and deferred revenue 328,457 (191,282) (154,257) Increase (decrease) in taxes payable 67,229 62,437 (8,980) Changes in deferred income taxes and other (295,944) 37,430 (58,793) - ------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 1,241,007 957,018 819,423 - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows From Investing Activities Capital expenditures Exploration and production (625,679) (531,409) (754,876) Refining and marketing (63,070) (62,238) (591,545) Transportation and other (3,362) (2,637) (1,620) - ------------------------------------------------------------------------------------------------------------------------------ Total capital expenditures (692,111) (596,284) (1,348,041) Investment in affiliate (31,552) -- -- Proceeds from sales of property, plant and equipment and other 177,344 72,804 12,436 - ------------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (546,319) (523,480) (1,335,605) - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows From Financing Activities Issuance (repayment) of notes 26,247 (54,153) 117,791 Long-term borrowings 25,000 289,843 547,704 Repayment of long-term debt and capitalized lease obligations (689,355) (642,112) (167,769) Cash dividends paid (55,788) (55,711) (41,603) - ------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used in) financing activities (693,896) (462,133) 456,123 - ------------------------------------------------------------------------------------------------------------------------------ Effect of Exchange Rate Changes on Cash 2,144 2,095 (1,320) - ------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Cash and Cash Equivalents 2,936 (26,500) (61,379) Cash and Cash Equivalents at Beginning of Year 53,135 79,635 141,014 - ------------------------------------------------------------------------------------------------------------------------------ Cash and Cash Equivalents at End of Year $ 56,071 $ 53,135 $ 79,635 ==============================================================================================================================
See accompanying notes to consolidated financial statements. 24 30 STATEMENT OF CONSOLIDATED CHANGES IN COMMON STOCK AND CAPITAL IN EXCESS OF PAR VALUE Amerada Hess Corporation and Consolidated Subsidiaries
- ----------------------------------------------------------------------------------------------------------- Common stock Capital in ----------------------------- Number of excess of Thousands of dollars shares Amount par value - ----------------------------------------------------------------------------------------------------------- BALANCE AT JANUARY 1, 1993 92,583,702 $ 92,584 $ 725,668 Cancellations under executive incentive compensation and stock ownership plan (net) (17,000) (17) (589) Employee stock options exercised 20,153 20 364 - ----------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1993 92,586,855 92,587 725,443 Distribution to trustee under executive incentive compensation and stock ownership plan (net) 408,900 409 18,094 - ----------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1994 92,995,755 92,996 743,537 Distribution to trustee under executive incentive compensation and stock ownership plan (net) 15,500 15 715 - ----------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1995 93,011,255 $ 93,011 $ 744,252 ===========================================================================================================
See accompanying notes to consolidated financial statements. 25 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Amerada Hess Corporation and Consolidated Subsidiaries 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business: Amerada Hess Corporation and subsidiaries (the "Corporation") engage in the exploration for and the production, purchase, transportation and sale of crude oil and natural gas. These activities are conducted primarily in the United States, Canada, United Kingdom, Norway and Gabon. The Corporation also manufactures, purchases, transports and markets refined petroleum products. The Corporation markets refined products principally on the East and Gulf Coasts of the United States. In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the Consolidated Balance Sheet and revenues and expenses in the Statement of Consolidated Income. Actual results could differ from those estimates. Estimates made by management include: oil and gas reserves, inventory valuations, pension and postemployment liabilities, environmental obligations, depreciation and dismantlement and income taxes. Principles of Consolidation: The consolidated financial statements include the accounts of Amerada Hess Corporation and subsidiaries. The Corporation's interests in oil and gas exploration and production ventures are proportionately consolidated. Investments in affiliated companies, owned 20% to 50% inclusive, are stated at cost of acquisition plus the Corporation's equity in undistributed net income since acquisition. The change in the equity in net income of these companies is included in non-operating revenues in the Statement of Consolidated Income. Intercompany transactions and accounts are eliminated in consolidation. Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments, which are readily convertible into cash and have maturities of three months or less. Inventories: Crude oil and refined product inventories are valued at the lower of cost or market value. Cost is determined on the first-in, first-out method for approximately 60% of the inventories and the average cost method for the remainder. Inventories of materials and supplies are valued at or below cost. Exploration and Development Costs: Oil and gas exploration and production activities are accounted for on the successful efforts method. Costs of acquiring undeveloped oil and gas leasehold acreage, including lease bonuses, brokers' fees and other related costs, are capitalized. Provisions for impairment of undeveloped oil and gas leases are based on periodic evaluations and other factors. Annual lease rentals and exploration expenses, including geological and geophysical expenses and exploratory dry hole costs, are charged against income as incurred. Costs of drilling and equipping productive wells, including development dry holes, and related production facilities are capitalized. Depreciation, Depletion and Amortization: Depreciation, depletion and amortization of oil and gas production equipment, properties and wells are determined on the unit-of-production method based on estimated recoverable oil and gas reserves. Depreciation of refinery facilities is determined on the unit-of-production method based on estimated thruput volumes. Depreciation of all other plant and equipment is determined on the straight-line method based on estimated useful lives. The estimated costs of dismantlement, restoration and abandonment, less estimated salvage values, of offshore oil and gas production platforms and certain other facilities are taken into account in determining depreciation. Retirement of Property, Plant and Equipment: Costs of property, plant and equipment retired or otherwise disposed of, less accumulated reserves, are reflected in net income. Maintenance and Repairs: The estimated costs of major maintenance, including turnarounds at refineries, are accrued. Other expenditures for maintenance and repairs are charged against income as incurred. Renewals and improvements are treated as additions to property, plant and equipment, and items replaced are treated as retirements. 26 32 Environmental Expenditures: The Corporation capitalizes environmental expenditures that increase the life or efficiency of property or that reduce or prevent environmental contamination. The Corporation accrues for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable. Foreign Currency Translation: The local currency is the functional currency (primary currency in which business is conducted) for the Corporation's North Sea and Canadian operations. The U.S. dollar is the functional currency for other foreign operations. Adjustments resulting from translating foreign functional currency assets and liabilities into U.S. dollars are recorded in a separate component of stockholders' equity entitled "Equity adjustment from foreign currency translation." Gains or losses resulting from transactions in other than the functional currency are reflected in net income. Hedging: The Corporation uses futures, forwards, options and swaps to hedge the effects of fluctuations in the prices of crude oil, natural gas and refined products, interest rates and the exchange rates of foreign currencies. These transactions meet the requirements for hedge accounting, including designation and correlation. The resulting gains or losses, measured by quoted market prices, termination values or other methods, are accounted for as part of the transactions being hedged, except that losses not expected to be recovered upon the completion of hedged transactions are expensed. On the balance sheet, deferred gains are included in deferred revenue and deferred losses in other current assets. Oil and gas trading activity is marked to market, with gains and losses recorded in income. Income Taxes: Deferred income taxes are determined on the liability method. No provision is made for U.S. income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. 2. ASSET IMPAIRMENT AND ASSET SALES In the fourth quarter of 1995, the Corporation adopted Statement of Financial Accounting Standards (FAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. As required by this standard, the Corporation recorded losses on long-lived assets where events or circumstances indicated that the assets were impaired and the estimated future net cash flows from the assets, without interest and undiscounted, were less than the carrying amounts of the assets. The impairment charge was the difference between the carrying value and the estimated fair value of the assets. The Corporation estimated fair values based on sales prices for comparable assets or discounted future cash flows. Impairment indicators and the fair value estimates used by the Corporation may change in the future as circumstances change. The total impairment of long-lived assets and a long-term operating lease was $584,161,000 ($415,542,000 after income taxes). Of the after-tax amount, $174,850,000 related to refining and marketing operations, principally for a refining facility, $69,146,000 related to oil and gas producing properties, and the remainder was for ocean going vessels and was recorded as a charge in the operating activity "Corporate and other." In 1995, the Corporation sold a crude oil pipeline and gathering system in the southeastern United States, an interest in an undeveloped United Kingdom natural gas field and various other assets. The net gain from asset sales in 1995 was approximately $68,100,000. In 1994, the Corporation also sold an interest in a United Kingdom natural gas field for a gain of $41,200,000. The Corporation is also offering for sale its wholly-owned Canadian subsidiary and certain United States and international exploration and production properties. These asset sales are expected to be completed in 1996. In 1993, the Corporation recorded special charges, including asset write-downs, amounting to $78,900,000 ($54,500,000 after income taxes). Of the after-tax amount, $40,000,000 related to consolidating U.S. exploration and production activities and offices, reducing the carrying value of certain North Sea oil properties and surrendering an operated joint venture in Abu Dhabi. The remainder represented costs associated with mothballing the Purvis, Mississippi refinery. In total, fixed assets were reduced by $39,200,000. The charges other than fixed asset reductions were primarily for relocation, severance, and related expenses, substantially all of which were included in selling, general and administrative expenses. 27 33 3. INVENTORIES Inventories at December 31 are as follows:
- -------------------------------------------------------------------------------- Thousands of dollars 1995 1994 - -------------------------------------------------------------------------------- Crude oil and other charge stocks $240,425 $250,291 Refined and other finished products 492,613 582,696 - -------------------------------------------------------------------------------- 733,038 832,987 Materials and supplies 105,732 112,648 - -------------------------------------------------------------------------------- Total $838,770 $945,635 ================================================================================
4. SHORT-TERM NOTES PAYABLE AND RELATED LINES OF CREDIT Short-term notes payable to banks at December 31, 1995 amount to $90,000,000 compared to $63,747,000 at December 31, 1994. The weighted average interest rates on these borrowings were 6.4% and 6.2% at December 31, 1995 and 1994, respectively. At December 31, 1995, the Corporation has unused lines of credit under uncommitted arrangements with several banks aggregating approximately $655,000,000. No compensating balances or fees are required for such lines of credit. 5. LONG-TERM DEBT Long-term debt at December 31 consists of the following:
- -------------------------------------------------------------------------------- Thousands of dollars 1995 1994 - -------------------------------------------------------------------------------- 6.1% Marine Terminal Revenue Bonds-- Series 1994--City of Valdez, Alaska, due 2024 $ 20,000 $ 20,000 Pollution Control Revenue Bonds with sinking fund requirements, weighted average rate 6.6%,* due through 2022 52,557 52,541 Fixed rate notes, payable principally to insurance companies, weighted average rate 8.7%, due through 2014 1,285,491 1,461,815 Revolving Credit Agreement with banks, weighted average rate 6.8%,* due 1999 760,928 1,043,749 Revolving Credit Agreement with banks, weighted average rate 6.4%,* due through 2002 414,090 547,222 Revolving Credit Agreement with banks, weighted average rate 6.7%, due through 1998 90,000 112,000 Other loans, at 8.0%, due 2007 4,800 38,714 - -------------------------------------------------------------------------------- 2,627,866 3,276,041 Less amount included in current maturities 104,685 121,806 - -------------------------------------------------------------------------------- Total $2,523,181 $3,154,235 ================================================================================
*Includes effect of interest rate conversion agreements. The aggregate long-term debt maturing during the next five years is as follows (in thousands): 1996--$104,685 (included in current liabilities); 1997--$229,686; 1998--$114,686; 1999--$900,613 and 2000--$400. The Corporation's long-term debt agreements contain various restrictions and conditions, including the requirement to maintain a ratio of current assets to current liabilities of not less than 1 to 1. There are also limitations on total borrowings under the agreements. In addition, the cumulative amount of cash dividends and stock distributions (as defined), under the most restrictive covenant, may not exceed consolidated net income (as defined) subsequent to December 31, 1990, plus $600,000,000. At December 31, 1995, the ratio of current assets to current liabilities is 1.2 to 1 and the Corporation has additional allowable borrowing capacity for the construction or acquisition of assets of $985,000,000. Retained earnings free of restrictions at December 31, 1995 amount to $210,000,000. At December 31, 1995, the Corporation has a Revolving Credit Agreement with banks aggregating $1,400,000,000 ($760,928,000 outstanding at December 31, 1995), which is due to be repaid in 1999. Borrowings bear interest based on various money market rates chosen by the Corporation. Commitment fees of .2% per annum are payable on the unused portion of the credit lines. A wholly-owned subsidiary of the Corporation operating in the United Kingdom has a multi-currency Revolving Credit Agreement (the "United Kingdom Facility") with banks aggregating $800,000,000 ($414,090,000 outstanding at December 31, 1995), which declines each year from 1999 through 2002. The United Kingdom Facility bears interest at .425% above the London Interbank Offered Rate (LIBOR). Commitment fees of .188% per annum are payable on the unused portion of the credit lines. A wholly-owned subsidiary of the Corporation operating in Canada has a dual-currency Revolving Credit Agreement (the "Canada Facility") with banks aggregating $110,000,000 ($90,000,000 outstanding at December 31, 1995). The amount available under the Canada Facility declines ratably each year through 1998. Borrowings bear interest at .75% above LIBOR. Commitment fees of .25% per annum are payable on the unused portion of the credit lines. 28 34 In the latter part of 1995, the Corporation sold forward a portion of its 1996 domestic crude oil production for $151,073,000 and used the proceeds to repay revolving credit debt. This amount is included in deferred revenue on the Consolidated Balance Sheet. At December 31, 1995, the Corporation has interest rate conversion agreements, which are accounted for by the accrual method, that effectively reduce the percentage of its floating rate debt from 53% to 37%. No interest was capitalized in 1995 or 1994. Capitalized interest amounted to $92,228,000 in 1993. The total amount of interest paid (net of amounts capitalized), principally on short-term and long-term debt, in 1995, 1994 and 1993 was $254,760,000, $248,595,000 and $169,277,000, respectively. 6. STOCKHOLDERS' EQUITY At December 31, 1995, the number of shares of common stock reserved for issuance is as follows: - -------------------------------------------------------------------------------- Future distributions under the following plans Executive Long-Term Incentive Compensation and Stock Ownership Plan 217,000 1995 Long-Term Incentive Plan* 4,500,000 Warrants** 1,044,354 - -------------------------------------------------------------------------------- Total 5,761,354 ================================================================================
*Subject to stockholder approval. **Exercisable through June 27, 2001 at $65.11 per share. In December 1995, the Corporation's Board of Directors approved the 1995 Long-Term Incentive Plan (the "Plan") and the Corporation registered 4,500,000 shares for issuance thereunder. Pursuant to the Plan, the Corporation awarded rights to receive 202,500 shares of restricted common stock and 872,000 stock options with exercise prices ranging from $49.75 to $64.75 per share. The Plan is subject to stockholder approval at the 1996 Annual Meeting of Stockholders. 7. FOREIGN CURRENCY TRANSLATION Foreign currency exchange transactions reflected in net income (after income tax effect) amounted to a gain of $1,475,000 in 1995 and losses of $931,000 in 1994 and $1,788,000 in 1993. The equity adjustment from foreign currency translation, included as a component of stockholders' equity, reflected gains of $10,240,000 in 1995 and $34,273,000 in 1994. The cumulative translation adjustments at December 31 consist of:
- -------------------------------------------------------------------------------- Thousands of dollars 1995 1994 - -------------------------------------------------------------------------------- Working capital $ 42,281 $ 36,424 Property, plant and equipment, net (385,066) (392,586) Long-term debt 77,105 77,967 Deferred income taxes 16,530 23,569 Other items 55,219 50,455 - -------------------------------------------------------------------------------- Total $(193,931) $(204,171) ================================================================================
8. PENSION PLANS The Corporation has noncontributory, defined benefit pension plans covering substantially all employees, except those covered by union pension plans. Retirement benefits are based on credited service and final average compensation. The Corporation's policy is to fund pension costs accrued, except where funding limitations are imposed under income tax regulations. Pension expense consisted of:
- ---------------------------------------------------------------------------------------------------------------- Thousands of dollars 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------- Cost of benefits earned $ 27,270 $ 24,119 $ 21,540 Accrued interest on projected benefit obligation 26,149 24,080 21,859 Loss (return) on plan assets (67,063) 9,326 (35,053) Net amortization and deferral 39,707 (36,860) 10,082 - ---------------------------------------------------------------------------------------------------------------- Total $ 26,063 $ 20,665 $ 18,428 ================================================================================================================
29 35 Plan assets include fixed income and equity securities, including investments in commingled funds. A summary of the funded status of the Corporation's pension plans at December 31 follows:
- ------------------------------------------------------------------------------ Thousands of dollars 1995 1994 - ------------------------------------------------------------------------------ Market value of plan assets $ 343,782 $ 289,294 Book reserves 53,347 34,197 - ------------------------------------------------------------------------------ Total assets and reserves 397,129 323,491 - ------------------------------------------------------------------------------ Actuarial present value of benefit obligation Vested 338,920 279,374 Non-vested 3,849 3,585 - ------------------------------------------------------------------------------ Total 342,769 282,959 Effects of projected future salary increases 61,813 53,063 - ------------------------------------------------------------------------------ Projected benefit obligation 404,582 336,022 - ------------------------------------------------------------------------------ Projected benefit obligation in excess of assets and reserves $ (7,453) $ (12,531) ============================================================================== Components of projected benefit obligation in excess of assets and reserves Unrecognized prior service costs $ (5,569) $ (4,923) Unrecognized net experience losses (6,200) (15,748) Unrecognized net transitional asset 4,316 8,140 - ------------------------------------------------------------------------------ Total $ (7,453) $ (12,531) ==============================================================================
The discount rate and assumed rate of future salary increases used in determining the actuarial present value of the projected benefit obligation were 7% and 5.5%, respectively, in 1995 and 8% and 6%, respectively, in 1994. The expected long-term rate of return on plan assets was 8.5% in 1995 and 8% in 1994. The Corporation has nonqualified supplemental pension plans covering certain employees, which provide for incremental pension payments from the Corporation's funds so that total pension payments equal amounts that would have been payable from the Corporation's principal pension plans if it were not for limitations imposed by income tax regulations. The projected benefit obligation related to these unfunded plans totaled $21,330,000 at December 31, 1995, and $17,979,000 at December 31, 1994. Pension expense for the plans was $3,706,000 in 1995, $3,871,000 in 1994 and $1,823,000 in 1993. At December 31, 1995, the Corporation has accrued $11,700,000 for these plans. 9. PROVISION FOR INCOME TAXES The provision for income taxes consisted of:
- ------------------------------------------------------------------------------- Thousands of dollars 1995 1994 1993 - ------------------------------------------------------------------------------- United States Federal Current $ 4,411 $ (350) $ 15,380 Deferred (190,512) (39,948)(a) (72,040) State 2,796 1,666 1,552 - ------------------------------------------------------------------------------- (183,305) (38,632) (55,108) - ------------------------------------------------------------------------------- Foreign Current 190,609 131,107 93,895 Deferred 34,460 69,623 41,272 - ------------------------------------------------------------------------------- 225,069 200,730 135,167 - ------------------------------------------------------------------------------- Adjustment of deferred tax liability for income tax rate changes -- -- (5,873) - ------------------------------------------------------------------------------- Total $ 41,764 $ 162,098 $ 74,186(b) ===============================================================================
(a) Includes benefit of operating loss of $43,121. (b) Excludes benefit of $29,459 as of January 1, 1993, from the cumulative effect of the change in accounting for income taxes required by FAS No. 109. Income (loss) before income taxes consisted of the following:
- ---------------------------------------------------------------------- Thousands of dollars 1995 1994 1993 - ---------------------------------------------------------------------- United States $(656,190) $(170,813) $(190,726) Foreign* 303,541 406,625 (32,750) - ---------------------------------------------------------------------- Total $(352,649) $ 235,812 $(223,476) ======================================================================
* Foreign income includes the Corporation's Virgin Islands, shipping and other operations located outside of the United States. 30 36 Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. A summary of the components of deferred tax liabilities and assets at December 31 follows:
- ------------------------------------------------------------------------------- Thousands of dollars 1995 1994 - ------------------------------------------------------------------------------- Deferred tax liabilities Fixed assets $ 388,994 $ 580,651 Foreign petroleum taxes 239,218 184,033 Other items 74,551 84,254 - ------------------------------------------------------------------------------- Total deferred tax liabilities 702,763 848,938 - ------------------------------------------------------------------------------- Deferred tax assets Accrued liabilities 169,250 123,619 Net operating and other loss carryforwards 400,839 390,430 Tax credit carryforwards 104,516 111,117 Other items 17,636 29,261 - ------------------------------------------------------------------------------- Total deferred tax assets 692,241 654,427 Valuation allowance (325,739) (281,529) - ------------------------------------------------------------------------------- Net deferred tax assets 366,502 372,898 - ------------------------------------------------------------------------------- Net deferred tax liabilities $ 336,261 $ 476,040 ===============================================================================
The difference between the Corporation's effective income tax rate and the United States statutory rate is reconciled below:
- ------------------------------------------------------------------------------ 1995 1994 1993 - ------------------------------------------------------------------------------ United States statutory rate (35.0)% 35.0% (35.0)% Effect of foreign operations, including foreign tax credits 46.7 33.4 71.6 State income taxes, net of Federal income tax benefit .5 .5 .5 Alternative minimum tax -- (1.8) (2.9) Tax credits (.6) -- (2.6) Other items .2 1.6 1.6 - ------------------------------------------------------------------------------ Total 11.8% 68.7% 33.2% ==============================================================================
The Corporation has not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. Undistributed earnings amounted to approximately $950 million at December 31, 1995, excluding amounts which, if remitted, generally would not result in any additional U.S. income taxes because of available foreign tax credits. If the earnings of such foreign subsidiaries were not indefinitely reinvested, a deferred tax liability of approximately $200 million would have been required. For income tax reporting at December 31, 1995, the Corporation has general business credit carryforwards of approximately $20 million, expiring in 1999 through 2001. In addition, the Corporation has alternative minimum tax credit carryforwards of approximately $74 million, which can be carried forward indefinitely. A refining subsidiary of the Corporation also has a net operating loss carryforward of approximately $850 million, expiring through 2010. Income taxes paid (net of refunds) in 1995, 1994 and 1993 amounted to $101,066,000, $66,569,000 and $117,849,000, respectively. 10. NET INCOME PER SHARE Net income per share was computed on the weighted average number of shares of common stock and common stock equivalents outstanding during each year (93,001,601 shares in 1995, 92,968,993 shares in 1994 and 92,594,871 shares in 1993). 11. FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES The Corporation uses futures, forwards, options and swaps, individually or in combinations, to reduce the effects of fluctuations in crude oil, natural gas and refined product prices. In addition, the Corporation uses interest rate conversion agreements to fix the interest rates on a portion of its long-term, floating-rate debt. Foreign currency contracts are used to protect the Corporation from fluctuations in exchange rates. Commodity Hedging: At December 31, 1995, the Corporation's hedging activities included commodity and financial contracts maturing mostly through 1996, covering 92,000,000 barrels of crude oil and refined products (56,000,000 barrels in 1994) and 38,900,000 Mcf of natural gas (195,000,000 Mcf in 1994). Of the crude oil and refined product hedges, 49,000,000 barrels related to exploration and production activities (26,500,000 barrels in 1994), and the remainder related to refining and marketing operations. 31 37 The Corporation produced 95,000,000 barrels of crude oil and natural gas liquids and 323,000,000 Mcf of natural gas in 1995 and had approximately 34,000,000 barrels of crude oil and refined products in its refining and marketing inventories at December 31, 1995. Since the contracts described above are designated as hedges and correlate to price movements of crude oil, natural gas and refined products, any gains or losses resulting from market changes will be offset by losses or gains on the Corporation's hedged inventory or production. Net unrealized hedging losses were $34,000,000 at December 31, 1995. Net unrealized gains were $20,000,000 at December 31, 1994. Deferred gains or losses related to anticipated transactions are not material. Financial Instruments: At December 31, 1995, the Corporation has $490,000,000 of notional value interest rate conversion agreements with a weighted average maturity of approximately eight years ($225,000,000 at December 31, 1994), $430,000,000 of notional value foreign currency forward and purchased option contracts maturing in 1996 ($155,000,000 at December 31, 1994) and $36,300,000 in letters of credit outstanding ($117,000,000 at December 31, 1994). Notional amounts do not quantify risk or represent assets or liabilities of the Corporation, but are used in the calculation of cash settlements under the contracts. Fair Value Disclosure: The Corporation values financial instruments as required by FAS No. 107, Disclosures about Fair Values of Financial Instruments. The carrying amounts of cash and cash equivalents, short-term debt and long-term, variable-rate debt approximate fair value. The Corporation estimates the fair value of its long-term, fixed-rate debt generally using discounted cash flow analysis based on the Corporation's current borrowing rates for debt with similar maturities. Interest rate conversion agreements and foreign currency exchange contracts are valued based on current termination values or quoted market prices of comparable contracts. The Corporation's valuation of commodity contracts considers quoted market prices, time value, volatility of the underlying commodities and other factors. The carrying amounts of the Corporation's financial instruments and commodity contracts, including those used in the Corporation's hedging activities, generally approximate their fair values at December 31, except as follows:
- ------------------------------------------------------------------------------------- 1995 1994 ---------------------- ---------------------- Balance Balance Millions of dollars, Sheet Fair Sheet Fair asset (liability) Amount Value Amount Value - ------------------------------------------------------------------------------------- Long-term, fixed-rate debt $(1,363) $(1,528) $(1,548) $(1,519) Interest rate conversion agreements -- (23) -- (2) Foreign currency exchange agreements and options -- (2) -- (2) =====================================================================================
At times, the Corporation uses oil and gas futures, forwards, options and swaps for trading activities, which are not related to the hedging program discussed above. This activity and its results are not material. The Corporation's financial instruments with off-balance-sheet risks are with major financial institutions and, along with cash and cash equivalents and accounts receivable, expose the Corporation to market and credit risks and may at times be concentrated with certain counterparties or groups of counterparties. The credit worthiness of counterparties is subject to continuing review, however, full performance is anticipated. 32 38 12. LEASED ASSETS The Corporation and certain of its subsidiaries lease floating production systems, tankers, gasoline stations, office space and other assets for varying periods. Leases that expire generally are expected to be renewed or replaced by other leases. At December 31, 1995, the Corporation had net capital lease assets of $88,121,000, representing natural gas production and transportation facilities in the United Kingdom, which are included in property, plant and equipment in the Consolidated Balance Sheet. At December 31, 1995, future minimum rental payments applicable to capital and noncancelable operating leases (other than oil and gas leases) are as follows:
- -------------------------------------------------------------------------------- Operating Capital Thousands of dollars Leases Leases - -------------------------------------------------------------------------------- 1996 $129,266 $20,038 1997 118,825 21,130 1998 73,332 22,305 1999 56,383 26,063 2000 54,809 -- Remaining years 391,867 -- - -------------------------------------------------------------------------------- Total minimum lease payments 824,482 89,536 Less: Imputed interest -- 9,485 Income from subleases 17,343 -- - -------------------------------------------------------------------------------- Net minimum lease payments $807,139 $80,051 ================================================================================ Capitalized lease obligations-- Current $15,849 Long-term 64,202 - -------------------------------------------------------------------------------- Total $80,051 ================================================================================
Rental expense for all operating leases, other than rentals applicable to oil and gas leases, was as follows:
- -------------------------------------------------------------------------------- Thousands of dollars 1995 1994 1993 - -------------------------------------------------------------------------------- Total rental expense $179,255 $164,395 $180,459 Less income from subleases 1,748 3,443 855 - -------------------------------------------------------------------------------- Net rental expense $177,507 $160,952 $179,604 ================================================================================
13. INFORMATION ON MAJOR OPERATING ACTIVITIES Financial data by major geographic area for each of the three years ended December 31, 1995 follow:
- -------------------------------------------------------------------------------- Consol- Millions of dollars United States(a) Europe Other idated(b) - ---------------------------------------------------------------------------------- 1995 Operating revenues Unaffiliated customers $ 5,750 $ 1,320 $ 232 $ 7,302 Intergeographic transfers -- 71 96 Operating profit (loss) (536) 309 122 (105) Identifiable assets 4,804 2,308 644 7,756 Net assets 1,236 869 555 2,660 ================================================================================== 1994 Operating revenues Unaffiliated customers $ 5,437 $ 907 $ 258 $ 6,602 Intergeographic transfers -- 247 77 Operating profit 66 303 112 481 Identifiable assets 5,293 2,316 729 8,338 Net assets 1,804 796 500 3,100 ================================================================================== 1993 Operating revenues Unaffiliated customers $ 4,743 $ 929 $ 208 $ 5,880 Intergeographic transfers -- -- 147 Operating profit (loss) (330) 147 116 (67) Identifiable assets 5,401 2,412 829 8,642 Net assets 1,808 743 478 3,029 ==================================================================================
(a) Includes U.S. Virgin Islands and shipping operations. (b) After elimination of transactions between affiliates, which are valued at approximate market prices. 33 39 Financial data by major operating activity for each of the three years ended December 31, 1995 follow:
- ------------------------------------------------------------------------------------------------------------------------- Exploration and Refining and Corporate Millions of dollars Production Marketing and Other Consolidated(a) - ------------------------------------------------------------------------------------------------------------------------- 1995 Operating revenues Total operating revenues $ 2,858 $ 4,556 $ 542 Less: Transfers between affiliates 248 48 358 - ------------------------------------------------------------------------------------------------------------------------- Operating revenues from unaffiliated customers $ 2,610 $ 4,508 $ 184 $ 7,302 - ------------------------------------------------------------------------------------------------------------------------- Operating profit (loss) $ 386 $ (327) $ (164) $ (105) Interest expense -- -- (247) (247) (Provision) benefit for income taxes (244) 120 82 (42) - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 142 $ (207) $ (329) $ (394) - ------------------------------------------------------------------------------------------------------------------------- Depreciation, depletion, amortization and lease impairment $ 719 $ 144 $ 30 $ 893 Asset impairment 106 269 209 584 Identifiable assets 3,873 3,294 589 7,756 Capital expenditures 626 63 3 692 ========================================================================================================================= 1994 Operating revenues Total operating revenues $ 2,665 $ 4,205 $ 527 Less: Transfers between affiliates 402 51 342 - ------------------------------------------------------------------------------------------------------------------------- Operating revenues from unaffiliated customers $ 2,263 $ 4,154 $ 185 $ 6,602 - ------------------------------------------------------------------------------------------------------------------------- Operating profit $ 368 $ 83 $ 30 $ 481 Interest expense -- -- (245) (245) (Provision) benefit for income taxes (211) 12 37 (162) - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 157 $ 95 $ (178) $ 74 - ------------------------------------------------------------------------------------------------------------------------- Depreciation, depletion, amortization and lease impairment $ 746 $ 150 $ 32 $ 928 Identifiable assets 4,117 3,617 604 8,338 Capital expenditures 531 62 3 596 ========================================================================================================================= 1993 Operating revenues Total operating revenues $ 2,541 $ 3,540 $ 578 Less: Transfers between affiliates 248 59 472 - ------------------------------------------------------------------------------------------------------------------------- Operating revenues from unaffiliated customers $ 2,293 $ 3,481 $ 106 $ 5,880 - ------------------------------------------------------------------------------------------------------------------------- Operating profit (loss) $ 260 $ (318) $ (9) $ (67) Interest expense -- -- (156) (156) (Provision) benefit for income taxes (144) 25 74 (b) (45) - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 116 $ (293) $ (91) $ (268) - ------------------------------------------------------------------------------------------------------------------------- Depreciation, depletion, amortization and lease impairment $ 695 $ 101 $ 29 $ 825 Identifiable assets 4,446 3,576 620 8,642 Capital expenditures 755 591 2 1,348 =========================================================================================================================
(a) After elimination of transactions between affiliates, which are valued at approximate market prices. (b) Includes a benefit of $29 million from the cumulative effect of the change in accounting for income taxes required by FAS No. 109. 34 40 REPORT OF MANAGEMENT Amerada Hess Corporation and Consolidated Subsidiaries The consolidated financial statements of Amerada Hess Corporation and consolidated subsidiaries were prepared by and are the responsibility of management. These financial statements conform with generally accepted accounting principles and are, in part, based on estimates and judgements of management. Other information included in this Annual Report is consistent with that in the consolidated financial statements. The Corporation maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded and that transactions are properly executed and recorded. Judgements are required to balance the relative costs and benefits of this system of internal controls. The Corporation's consolidated financial statements have been audited by Ernst & Young LLP, independent auditors, who have been selected by the Audit Committee of the Board of Directors and approved by the stockholders. Ernst & Young LLP assesses the Corporation's system of internal controls and performs tests and procedures that they consider necessary to arrive at an opinion on the fairness of the consolidated financial statements. The Audit Committee of the Board of Directors, which consists solely of nonemployee directors, meets periodically with the independent auditors, internal auditors and management to review and discuss the Corporation's financial information, the system of internal controls and the results of internal and external audits. Ernst & Young LLP and the Corporation's internal auditors have unrestricted access to the Audit Committee to discuss audit findings and other financial matters. /s/ JOHN B. HESS - ---------------------------- John B. Hess Chairman of the Board and Chief Executive Officer /s/ JOHN Y. SCHREYER - ---------------------------- John Y. Schreyer Executive Vice President and Chief Financial Officer REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Stockholders Amerada Hess Corporation We have audited the accompanying consolidated balance sheet of Amerada Hess Corporation and consolidated subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, retained earnings, changes in common stock and capital in excess of par value and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Amerada Hess Corporation and consolidated subsidiaries at December 31, 1995 and 1994 and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note 2 to the consolidated financial statements, in 1995 the Corporation adopted Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. /s/ ERNST & YOUNG LLP - --------------------- Ernst & Young LLP New York, NY February 15, 1996 35 41 SUPPLEMENTARY OIL AND GAS DATA Amerada Hess Corporation and Consolidated Subsidiaries The supplementary oil and gas data that follows is presented in accordance with Statement of Financial Accounting Standards (FAS) No. 69, Disclosures about Oil and Gas Producing Activities, and includes (1) costs incurred, capitalized costs and results of operations relating to oil and gas producing activities, (2) net proved oil and gas reserves, and (3) a standardized measure of discounted future net cash flows relating to proved oil and gas reserves, including a reconciliation of changes therein. The Corporation is offering for sale its wholly-owned Canadian subsidiary and certain United States exploration and production properties. In addition, the Corporation expects to sell certain non-core North Sea producing properties and anticipates the sale of its interest in Abu Dhabi in the first half of 1996. COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------ United Other For the Years Ended December 31 (Millions of dollars) Total States Canada Europe Areas - ------------------------------------------------------------------------------------------------------------ 1995 Property acquisitions $ 48 $ 36 $ 8 $ 2 $ 2 Exploration 320 137 28 145 10 Development 377 107 18 242 10 1994 Property acquisitions $ 21 $ 14 $ 5 $-- $ 2 Exploration 274 139 31 99 5 Development 333 120 31 170 12 1993 Property acquisitions $ 56 $ 48 $ 5 $ 2 $ 1 Exploration 274 147 27 98 2 Development 527 151 22 345 9 ============================================================================================================
CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
- ------------------------------------------------------------------------------------------------------- At December 31 (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------------------------------------- Unproved properties $ 407 $ 439 Proved properties 1,763 2,071 Wells, equipment and related facilities 7,088 7,147 - ------------------------------------------------------------------------------------------------------- Total costs 9,258 9,657 Less: Reserves for depreciation, depletion, amortization and lease impairment 6,032 5,988 - ------------------------------------------------------------------------------------------------------- Net capitalized costs $3,226 $3,669 =======================================================================================================
36 42 The results of operations for oil and gas producing activities shown below exclude sales of purchased crude oil and natural gas, non-operating revenues (including gains on sales of oil and gas properties), interest expense and gains and losses resulting from foreign currency exchange transactions. Therefore, these results differ from the net income from exploration and production operations in Note 13 to the financial statements. RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------------------------- United Other For the Years Ended December 31 (Millions of dollars) Total States Canada Europe Areas - -------------------------------------------------------------------------------------------------------------------------------- 1995 Sales and other operating revenues Unaffiliated customers $1,956 $ 508 $ 148 $1,247 $ 53 Inter-company 241 102 8 67 64 - -------------------------------------------------------------------------------------------------------------------------------- Total revenues 2,197 610 156 1,314 117 - -------------------------------------------------------------------------------------------------------------------------------- Costs and expenses Production expenses, including related taxes 623 204 46 350 23 Exploration expenses, including dry holes 298 113 24 151 10 Other operating expenses 222 66 13 126 17 Depreciation, depletion, amortization and lease impairment 719 224 48 415 32 Asset impairment 106 106 -- -- -- Provision for income taxes 191 (36) 13 207 7 - -------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 2,159 677 144 1,249 89 - -------------------------------------------------------------------------------------------------------------------------------- Results of operations $ 38 $ (67) $ 12 $ 65 $ 28 - -------------------------------------------------------------------------------------------------------------------------------- 1994 Sales and other operating revenues Unaffiliated customers $1,687 $ 576 $ 172 $ 879 $ 60 Inter-company 385 98 2 237 48 - -------------------------------------------------------------------------------------------------------------------------------- Total revenues 2,072 674 174 1,116 108 - -------------------------------------------------------------------------------------------------------------------------------- Costs and expenses Production expenses, including related taxes 593 210 47 318 18 Exploration expenses, including dry holes 250 128 18 99 5 Other operating expenses 187 70 11 92 14 Depreciation, depletion, amortization and lease impairment 746 293 57 368 28 Provision for income taxes 197 (10) 22 167 18 - -------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 1,973 691 155 1,044 83 - -------------------------------------------------------------------------------------------------------------------------------- Results of operations $ 99 $ (17) $ 19 $ 72 $ 25 - -------------------------------------------------------------------------------------------------------------------------------- 1993 Sales and other operating revenues Unaffiliated customers $1,790 $ 704 $ 176 $ 890 $ 20 Inter-company 227 119 -- -- 108 - -------------------------------------------------------------------------------------------------------------------------------- Total revenues 2,017 823 176 890 128 - -------------------------------------------------------------------------------------------------------------------------------- Costs and expenses Production expenses, including related taxes 607 233 49 294 31 Exploration expenses, including dry holes 259 150 18 89 2 Other operating expenses 218 79 12 109 18 Depreciation, depletion, amortization and lease impairment 694 332 54 271 37 Provision for income taxes 133 9 23 82 19 - -------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 1,911 803 156 845 107 - -------------------------------------------------------------------------------------------------------------------------------- Results of operations $ 106 $ 20 $ 20 $ 45 $ 21 ================================================================================================================================
37 43 The Corporation's net oil and gas reserves have been estimated by DeGolyer and MacNaughton, independent consultants. The Corporation is offering for sale its Canadian operations and approximately 15% of its December 31, 1995 United States reserves on a barrel of oil equivalent basis. Reserves in Abu Dhabi, which the Corporation anticipates selling in the first half of 1996, represent approximately 60% of crude oil reserves in Other Areas. The reserves in the tabulation below include proved undeveloped crude oil and natural gas reserves that will require substantial future development expenditures. The estimates of the Corporation's proved reserves of crude oil and natural gas (after deducting royalties and operating interests owned by others) follow: OIL AND GAS RESERVES
- ----------------------------------------------------------------------------------------------------------------------- United Other Total States Canada Europe Areas - ----------------------------------------------------------------------------------------------------------------------- Net Proved Developed and Undeveloped Reserves Crude Oil, Including Condensate and Natural Gas Liquids (Millions of Barrels) At January 1, 1993 652 203 40 371 38 Revisions of previous estimates 66 16 -- 43 7 Extensions, discoveries and other additions 28 5 3 20 -- Purchases of minerals in-place 3 -- 1 2 -- Production (79) (26) (5) (41) (7) - ----------------------------------------------------------------------------------------------------------------------- At December 31, 1993 670 198 39 395 38 Revisions of previous estimates 49 13 (2) 35 3 Extensions, discoveries and other additions 12 8 2 2 -- Purchases of minerals in-place 8 4 -- -- 4 Sales of minerals in-place (3) -- -- (3) -- Production (92) (25) (5) (56) (6) - ----------------------------------------------------------------------------------------------------------------------- At December 31, 1994 644 198 34 373 39 Revisions of previous estimates 68 11 -- 44 13 Extensions, discoveries and other additions 95 30 3 61 1 Sales of minerals in-place (17) (11) (2) (4) -- Production (95) (23) (4) (62) (6) - ----------------------------------------------------------------------------------------------------------------------- At December 31, 1995 695 205 31 412 47 ======================================================================================================================= Natural Gas (Millions of Mcf) At January 1, 1993 2,640 1,009 597 1,034 -- Revisions of previous estimates 127 30 (5) 102 -- Extensions, discoveries and other additions 189 82 65 42 -- Purchases of minerals in-place 20 11 4 5 -- Production (323) (183) (61) (79) -- - ----------------------------------------------------------------------------------------------------------------------- At December 31, 1993 2,653 949 600 1,104 -- Revisions of previous estimates 142 105 (1) 38 -- Extensions, discoveries and other additions 167 101 50 16 -- Purchases of minerals in-place 4 3 -- 1 -- Sales of minerals in-place (76) -- -- (76) -- Production (309) (156) (68) (85) -- - ----------------------------------------------------------------------------------------------------------------------- At December 31, 1994 2,581 1,002 581 998 -- Revisions of previous estimates 53 6 (10) 57 -- Extensions, discoveries and other additions 270 200 10 7 53 Sales of minerals in-place (100) (23) (39) (38) -- Production (323) (147) (79) (97) -- - ----------------------------------------------------------------------------------------------------------------------- At December 31, 1995 2,481 1,038* 463 927 53 ======================================================================================================================= Net Proved Developed Reserves Crude Oil, Including Condensate and Natural Gas Liquids (Millions of barrels) At January 1, 1993 436 173 40 191 32 At December 31, 1993 514 169 38 271 36 At December 31, 1994 505 171 33 263 38 At December 31, 1995 540 157 31 310 42 Natural Gas (Millions of Mcf) At January 1, 1993 2,002 851 576 575 -- At December 31, 1993 2,260 794 579 887 -- At December 31, 1994 2,210 838 558 814 -- At December 31, 1995 2,036 755 458 823 -- =======================================================================================================================
*Excludes 527 million Mcf of carbon dioxide gas for sale or use in company operations. 38 44 The standardized measure of discounted future net cash flows relating to proved oil and gas reserves required to be disclosed by FAS No. 69 is based on assumptions and judgements. As a result, the future net cash flow estimates are highly subjective and could be materially different if other assumptions were used. Therefore, caution should be exercised in the use of the data presented below. Future net cash flows are calculated by applying year-end oil and gas selling prices (adjusted for price changes provided by contractual arrangements, including hedges) to estimated future production of proved oil and gas reserves, less estimated future development and production costs and future income tax expenses. Future net cash flows are discounted at the prescribed rate of 10%. No recognition is given in the discounted future net cash flow estimates to depreciation, depletion, amortization and lease impairment, exploration expenses, interest expense, general and administrative expenses and changes in future prices and costs. The selling prices of crude oil and natural gas are highly volatile. STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES
- ------------------------------------------------------------------------------------------------------------------- United Other At December 31 (Millions of dollars) Total States Canada Europe Areas - ------------------------------------------------------------------------------------------------------------------- 1995 Future revenues $17,201 $ 5,343 $ 1,093 $ 9,857 $ 908 - ------------------------------------------------------------------------------------------------------------------- Less: Future development and production costs 7,352 2,289 539 4,273 251 Future income tax expenses 4,034 921 142 2,631 340 - ------------------------------------------------------------------------------------------------------------------- 11,386 3,210 681 6,904 591 - ------------------------------------------------------------------------------------------------------------------- Future net cash flows 5,815 2,133 412 2,953 317 Less: Discount at 10% annual rate 2,057 899 143 952 63 - ------------------------------------------------------------------------------------------------------------------- Standardized measure of discounted future net cash flows $ 3,758 $ 1,234 $ 269 $ 2,001 $ 254 - ------------------------------------------------------------------------------------------------------------------- 1994 Future revenues $14,545 $ 4,267 $ 1,266 $ 8,236 $ 776 - ------------------------------------------------------------------------------------------------------------------- Less: Future development and production costs 6,874 2,317 667 3,696 194 Future income tax expenses 2,789 465 152 1,910 262 - ------------------------------------------------------------------------------------------------------------------- 9,663 2,782 819 5,606 456 - ------------------------------------------------------------------------------------------------------------------- Future net cash flows 4,882 1,485 447 2,630 320 Less: Discount at 10% annual rate 1,622 577 168 787 90 - ------------------------------------------------------------------------------------------------------------------- Standardized measure of discounted future net cash flows $ 3,260 $ 908 $ 279 $ 1,843 $ 230 - ------------------------------------------------------------------------------------------------------------------- 1993 Future revenues $13,484 $ 4,135 $ 1,714 $ 7,059 $ 576 - ------------------------------------------------------------------------------------------------------------------- Less: Future development and production costs 6,505 2,258 704 3,360 183 Future income tax expenses 2,235 407 308 1,380 140 - ------------------------------------------------------------------------------------------------------------------- 8,740 2,665 1,012 4,740 323 - ------------------------------------------------------------------------------------------------------------------- Future net cash flows 4,744 1,470 702 2,319 253 Less: Discount at 10% annual rate 1,705 556 266 797 86 - ------------------------------------------------------------------------------------------------------------------- Standardized measure of discounted future net cash flows $ 3,039 $ 914 $ 436 $ 1,522 $ 167 ===================================================================================================================
39 45 CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES
- ------------------------------------------------------------------------------------------------------------------------- For the years ended December 31 (Millions of dollars) 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------- Standardized measure of discounted future net cash flows at beginning of year $ 3,260 $ 3,039 $ 3,496 - ------------------------------------------------------------------------------------------------------------------------- Changes during the year Sales and transfers of oil and gas produced during year, net of production costs (1,574) (1,479) (1,410) Development costs incurred during year 377 333 527 Net changes in prices and production costs applicable to future production 1,195 604 (1,569) Net change in estimated future development costs (118) (264) (68) Extensions and discoveries (including improved recovery) of oil and gas reserves, less related costs 451 135 167 Revisions of previous oil and gas reserve estimates 277 314 288 Purchases (sales) of minerals in-place (165) (2) 23 Accretion of discount 498 437 539 Net change in income taxes (758) (380) 547 Revision in rate or timing of future production and other changes 315 523 499 - ------------------------------------------------------------------------------------------------------------------------- Total 498 221 (457) - ------------------------------------------------------------------------------------------------------------------------- Standardized measure of discounted future net cash flows at end of year $ 3,758 $ 3,260 $ 3,039 =========================================================================================================================
40 46 TEN-YEAR SUMMARY OF FINANCIAL DATA Amerada Hess Corporation and Consolidated Subsidiaries
- ------------------------------------------------------------------------------------------------------------------------- Thousands of dollars, except per share data 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------- Statement of Consolidated Income Revenues Sales (excluding excise taxes) and other operating revenues Crude oil (including sales of purchased oil) $ 1,565,310 $ 1,228,045 $ 1,219,750 Natural gas (including sales of purchased gas) 1,120,450 1,063,560 1,020,563 Petroleum products 4,311,082 3,980,563 3,348,900 Other operating revenues 305,465 329,816 290,308 - ------------------------------------------------------------------------------------------------------------------------- Total 7,302,307 6,601,984 5,879,521 Non-operating revenues 222,482 96,809 21,153 - ------------------------------------------------------------------------------------------------------------------------- Total revenues 7,524,789 6,698,793 5,900,674 - ------------------------------------------------------------------------------------------------------------------------- Costs and expenses Cost of products sold and operating expenses 5,220,657 4,449,819 4,287,139 Exploration expenses, including dry holes 297,817 249,433 258,826 Selling, general and administrative expenses 634,271 590,647 596,919 Interest expense 247,465 245,149 156,615 Depreciation, depletion, amortization and lease impairment 893,067 927,933 824,651 Asset impairment 584,161(*) -- -- Provision for income taxes 41,764 162,098 44,727(**) - ------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 7,919,202 6,625,079 6,168,877 - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (394,413) $ 73,714 $ (268,203) - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) per share(***) $ (4.24) $ .79 $ (2.90) - ------------------------------------------------------------------------------------------------------------------------- Dividends Per Share of Common Stock $ .60 $ .60 $ .60 Weighted Average Number of Shares Outstanding (in thousands) 93,002 92,969 92,595 =========================================================================================================================
(*)Reflects a charge for impairment of long-lived assets on adoption of FAS No. 121. The net effect, after income taxes, was $415,542 ($4.47 per share). See Note 2 to financial statements. (**)Includes a benefit of $29,459 ($.32 per share) from the cumulative effect of the change in accounting for income taxes required by FAS No. 109. (***)For a description of the basis of computing earnings per share, see Note 10 to financial statements. 41 47
- ----------------------------------------------------------------------------------------------------------------------------------- Thousands of dollars, except per share data 1992 1991 1990 1989 - ----------------------------------------------------------------------------------------------------------------------------------- Statement of Consolidated Income Revenues Sales (excluding excise taxes) and other operating revenues Crude oil (including sales of purchased oil) $ 1,362,118 $ 1,448,793 $ 1,248,193 $ 904,233 Natural gas (including sales of purchased gas) 787,996 574,004 458,615 315,578 Petroleum products 3,428,702 3,897,748 4,587,646 4,107,770 Other operating revenues 279,541 346,300 653,051 261,373 - ----------------------------------------------------------------------------------------------------------------------------------- Total 5,858,357 6,266,845 6,947,505 5,588,954 Non-operating revenues 95,352 149,496 133,593 90,373 - ----------------------------------------------------------------------------------------------------------------------------------- Total revenues 5,953,709 6,416,341 7,081,098 5,679,327 - ----------------------------------------------------------------------------------------------------------------------------------- Costs and expenses Cost of products sold and operating expenses 4,039,180 4,409,832 4,708,925 3,837,800 Exploration expenses, including dry holes 228,998 301,183 276,200 164,925 Selling, general and administrative expenses 581,542 582,549 512,805 422,491 Interest expense 147,099 177,850 224,200 187,811 Depreciation, depletion, amortization and lease impairment 833,405 828,765 743,467 545,934 Asset impairment -- -- -- -- Provision for income taxes 115,940 31,854 132,788 44,017 - ----------------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 5,946,164 6,332,033 6,598,385 5,202,978 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 7,545 $ 84,308 $ 482,713 $ 476,349 - ----------------------------------------------------------------------------------------------------------------------------------- Net income (loss) per share(***) $ .09 $ 1.04 $ 5.96 $ 5.87 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends Per Share of Common Stock .60 $ .60 $ .60 $ .60 Weighted Average Number of Shares Outstanding (in thousands) 87,317 81,088 81,023 81,147 ===================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------- Thousands of dollars, except per share data 1988 1987 1986 - ------------------------------------------------------------------------------------------------------------------- Statement of Consolidated Income Revenues Sales (excluding excise taxes) and other operating revenues Crude oil (including sales of purchased oil) $ 872,757 $ 886,504 $ 806,927 Natural gas (including sales of purchased gas) 288,915 284,610 284,533 Petroleum products 2,864,342 3,347,242 2,649,197 Other operating revenues 179,997 195,209 270,525 - ------------------------------------------------------------------------------------------------------------------- Total 4,206,011 4,713,565 4,011,182 Non-operating revenues 57,533 71,024 51,073 - ------------------------------------------------------------------------------------------------------------------- Total revenues 4,263,544 4,784,589 4,062,255 - ------------------------------------------------------------------------------------------------------------------- Costs and expenses Cost of products sold and operating expenses 2,964,534 3,521,552 3,155,868 Exploration expenses, including dry holes 182,205 106,440 148,506 Selling, general and administrative expenses 380,169 328,118 315,199 Interest expense 145,439 144,147 164,275 Depreciation, depletion, amortization and lease impairment 441,414 431,482 468,244 Asset impairment -- -- -- Provision for income taxes 25,566 22,990 (7,267) - ------------------------------------------------------------------------------------------------------------------- Total costs and expenses 4,139,327 4,554,729 4,244,825 - ------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 124,217 $ 229,860 $ (182,570) - ------------------------------------------------------------------------------------------------------------------- Net income (loss) per share(***) $ 1.51 $ 2.73 $ (2.16) - ------------------------------------------------------------------------------------------------------------------- Dividends Per Share of Common Stock $ .60 $ .45 -- Weighted Average Number of Shares Outstanding (in thousands) 82,031 84,136 84,440 ===================================================================================================================
42 48 TEN-YEAR SUMMARY OF FINANCIAL DATA Amerada Hess Corporation and Consolidated Subsidiaries
- -------------------------------------------------------------------------------------------------------------------- Thousands of dollars, except per share data 1995 1994 1993 - -------------------------------------------------------------------------------------------------------------------- SELECTED BALANCE SHEET DATA AT YEAR-END Cash and cash equivalents $ 56,071 $ 53,135 $ 79,635 Working capital 357,964 520,247 245,026 Property, plant and equipment Exploration and production $ 9,257,851 $ 9,656,923 $ 9,227,937 Refining and marketing 3,451,912 3,892,724 3,834,674 Transportation and other 354,449 755,179 724,629 - -------------------------------------------------------------------------------------------------------------------- Total--at cost 13,064,212 14,304,826 13,787,240 Less reserves 7,694,496 7,938,824 7,052,328 - -------------------------------------------------------------------------------------------------------------------- Property, plant and equipment--net $ 5,369,716 $ 6,366,002 $ 6,734,912 - -------------------------------------------------------------------------------------------------------------------- Total assets $ 7,756,370 $ 8,337,940 $ 8,641,546 Total debt 2,717,866 3,339,788 3,687,922 Stockholders' equity 2,660,396 3,099,629 3,028,911 Stockholders' equity per share $ 28.60 $ 33.33 $ 32.71 - -------------------------------------------------------------------------------------------------------------------- SUMMARIZED STATEMENT OF CASH FLOWS Net cash provided by operating activities $ 1,241,007 $ 957,018 $ 819,423 - -------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities Capital expenditures Exploration and production (625,679) (531,409) (754,876) Refining and marketing (63,070) (62,238) (591,545) Transportation and other (3,362) (2,637) (1,620) - -------------------------------------------------------------------------------------------------------------------- Total capital expenditures (692,111) (596,284) (1,348,041) Proceeds from sales of property, plant and equipment and other 145,792 72,804 12,436 - -------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (546,319) (523,480) (1,335,605) - -------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities Issuance (repayment) of notes 26,247 (54,153) 117,791 Long-term borrowings 25,000 289,843 547,704 Repayment of long-term debt and capitalized lease obligations (689,355) (642,112) (167,769) Issuance of common stock -- -- -- Cash dividends paid (55,788) (55,711) (41,603) Common and preferred stock retired -- -- -- - -------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (693,896) (462,133) 456,123 - -------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash 2,144 2,095 (1,320) - -------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents $ 2,936 $ (26,500) $ (61,379) - -------------------------------------------------------------------------------------------------------------------- STOCKHOLDER DATA AT YEAR-END Number of common shares outstanding (in thousands) 93,011 92,996 92,587 Number of stockholders (based on number of holders of record) 11,294 11,506 12,000 Market price of common stock $ 53.00 $ 45.63 $ 45.13 ====================================================================================================================
43 49
- -------------------------------------------------------------------------------------------------------------------------------- Thousands of dollars, except per share data 1992 1991 1990 1989 - -------------------------------------------------------------------------------------------------------------------------------- SELECTED BALANCE SHEET DATA AT YEAR-END Cash and cash equivalents $ 141,014 $ 120,170 $ 129,914 $ 120,300 Working capital 551,459 625,370 603,244 493,168 Property, plant and equipment Exploration and production $ 9,071,396 $ 9,174,705 $ 8,210,531 $ 6,403,799 Refining and marketing 3,294,958 2,632,026 2,230,000 2,053,018 Transportation and other 724,411 723,101 717,452 710,439 - -------------------------------------------------------------------------------------------------------------------------------- Total--at cost 13,090,765 12,529,832 11,157,983 9,167,256 Less reserves 6,646,801 6,339,232 5,594,399 4,688,142 - -------------------------------------------------------------------------------------------------------------------------------- Property, plant and equipment--net $ 6,443,964 $ 6,190,600 $ 5,563,584 $ 4,479,114 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $ 8,721,756 $ 8,841,435 $ 9,056,636 $ 6,867,411 Total debt 3,186,199 3,266,195 2,925,285 2,697,184 Stockholders' equity 3,387,599 3,131,982 3,106,029 2,560,628 Stockholders' equity per share $ 36.59 $ 38.63 $ 38.34 $ 31.69 - -------------------------------------------------------------------------------------------------------------------------------- SUMMARIZED STATEMENT OF CASH FLOWS Net cash provided by operating activities $ 1,137,707 $ 1,364,268 $ 1,326,444 $ 805,848 - -------------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities Capital expenditures Exploration and production (915,476) (1,292,935) (1,265,168) (1,729,357) Refining and marketing (639,365) (410,645) (182,090) (86,645) Transportation and other (2,953) (8,735) (14,169) (12,667) - -------------------------------------------------------------------------------------------------------------------------------- Total capital expenditures (1,557,794) (1,712,315) (1,461,427) (1,828,669) Proceeds from sales of property, plant and equipment and other 25,423 37,788 (12,012) 6,644 - -------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (1,532,371) (1,674,527) (1,473,439) (1,822,025) - -------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities Issuance (repayment) of notes (159,756) (183,351) 46,744 13,823 Long-term borrowings 675,016 786,280 461,413 1,203,994 Repayment of long-term debt and capitalized lease obligations (524,384) (269,414) (287,531) (194,870) Issuance of common stock 497,360 -- -- -- Cash dividends paid (64,194) (36,468) (60,681) (48,785) Common and preferred stock retired -- -- (6,213) (43,632) - -------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 424,042 297,047 153,732 930,530 - -------------------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash (8,534) 3,468 2,877 (7,237) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents $ 20,844 $ (9,744) $ 9,614 $ (92,884) - -------------------------------------------------------------------------------------------------------------------------------- STOCKHOLDER DATA AT YEAR-END Number of common shares outstanding (in thousands) 92,584 81,068 81,019 80,804 Number of stockholders (based on number of holders of record) 13,088 13,732 14,669 16,638 Market price of common stock $ 46.00 $ 47.50 $ 46.38 $ 48.75 ================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------- Thousands of dollars, except per share data 1988 1987 1986 - ---------------------------------------------------------------------------------------------------------------- SELECTED BALANCE SHEET DATA AT YEAR-END Cash and cash equivalents $ 213,184 $ 226,513 $ 92,681 Working capital 285,074 161,764 231,602 Property, plant and equipment Exploration and production $ 5,360,817 $ 5,010,724 $ 4,508,499 Refining and marketing 1,973,782 1,922,620 1,900,919 Transportation and other 703,862 680,257 721,743 - ---------------------------------------------------------------------------------------------------------------- Total--at cost 8,038,461 7,613,601 7,131,161 Less reserves 4,358,765 4,064,227 3,601,978 - ---------------------------------------------------------------------------------------------------------------- Property, plant and equipment--net $ 3,679,696 $ 3,549,374 $ 3,529,183 - ---------------------------------------------------------------------------------------------------------------- Total assets $ 5,371,979 $ 5,304,808 $ 4,904,710 Total debt 1,672,329 1,631,345 1,528,367 Stockholders' equity 2,215,154 2,158,544 1,938,793 Stockholders' equity per share $ 27.02 $ 26.30 $ 22.97 - ---------------------------------------------------------------------------------------------------------------- SUMMARIZED STATEMENT OF CASH FLOWS Net cash provided by operating activities $ 747,393 $ 452,158 $ 560,063 - ---------------------------------------------------------------------------------------------------------------- Cash flows from investing activities Capital expenditures Exploration and production (652,600) (304,462) (207,374) Refining and marketing (60,084) (36,018) (7,511) Transportation and other (17,245) (7,663) (2,545) - ---------------------------------------------------------------------------------------------------------------- Total capital expenditures (729,929) (348,143) (217,430) Proceeds from sales of property, plant and equipment and other 16,401 4,845 13,895 - ---------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (713,528) (343,298) (203,535) - ---------------------------------------------------------------------------------------------------------------- Cash flows from financing activities Issuance (repayment) of notes (205,414) 398,889 (95,314) Long-term borrowings 416,161 63,000 21,102 Repayment of long-term debt and capitalized lease obligations (191,159) (372,115) (336,224) Issuance of common stock -- -- -- Cash dividends paid (49,248) (25,857) (23,757) Common and preferred stock retired (7,420) (62,138) -- - ---------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (37,080) 1,779 (434,193) - ---------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash (10,114) 23,193 (728) - ---------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents $ (13,329) $ 133,832 $ (78,393) - ---------------------------------------------------------------------------------------------------------------- STOCKHOLDER DATA AT YEAR-END Number of common shares outstanding (in thousands) 81,979 82,089 84,408 Number of stockholders (based on number of holders of record) 18,031 19,343 23,696 Market price of common stock $ 31.50 $ 24.88 $ 23.75 ================================================================================================================
44 50 TEN-YEAR SUMMARY OF OPERATING DATA Amerada Hess Corporation and Consolidated Subsidiaries
- --------------------------------------------------------------------------------------------------------- 1995 1994 1993 - --------------------------------------------------------------------------------------------------------- Production Per Day (net) Crude oil (barrels) United States 52,284 55,638 60,173 Canada 9,749 10,581 11,536 United Kingdom 135,429 122,043 80,019 Norway 25,576 24,279 26,388 Abu Dhabi 7,227 7,273 10,004 Africa(*) 9,512 8,857 8,301 - --------------------------------------------------------------------------------------------------------- Total 239,777 228,671 196,421 - --------------------------------------------------------------------------------------------------------- Natural gas liquids (barrels) United States 10,722 11,964 11,798 Canada 1,647 1,809 1,956 United Kingdom 6,900 6,756 3,783 Norway 1,414 1,320 1,432 - --------------------------------------------------------------------------------------------------------- Total 20,683 21,849 18,969 - --------------------------------------------------------------------------------------------------------- Natural gas (Mcf) United States 401,581 427,103 502,459 Canada 215,500 185,856 167,839 United Kingdom 239,307 208,742 188,024 Norway 27,743 24,417 28,987 - --------------------------------------------------------------------------------------------------------- Total 884,131 846,118 887,309 - --------------------------------------------------------------------------------------------------------- Well Completions (net) Oil wells 33 28 48 Gas wells 41 44 49 Dry holes 50 24 37 Productive Wells at Year-End (net) Oil wells 2,154 2,160 2,189 Gas wells 1,160 1,146 1,115 - --------------------------------------------------------------------------------------------------------- Total 3,314 3,306 3,304 - --------------------------------------------------------------------------------------------------------- Undeveloped Net Acreage (held at end of year) United States 1,440,000 1,685,000 1,854,000 Canada 799,000 743,000 788,000 Other international 5,072,000 3,827,000 3,522,000 - --------------------------------------------------------------------------------------------------------- Total 7,311,000 6,255,000 6,164,000 - --------------------------------------------------------------------------------------------------------- Shipping Vessels owned or under charter at year-end 16 17 15 Total deadweight tons 2,010,000 2,265,000 2,398,000 Refining (barrels daily) Refinery crude runs 377,000 388,000 351,000 Petroleum Products Sold (barrels daily) Gasoline, distillates and other light products 401,000 375,000 291,000 Residual fuel oils 86,000 93,000 95,000 - --------------------------------------------------------------------------------------------------------- Total 487,000 468,000 386,000 - --------------------------------------------------------------------------------------------------------- Storage Capacity at Year-End (barrels) 89,165,000 94,597,000 94,380,000 Number of Employees (average) 9,574 9,858 10,173 =========================================================================================================
(*)Principally production from Gabon after 1990 and from Libya prior to June 30, 1986, when the Corporation ceased operations in accordance with United States Government regulations. 45 51
- -------------------------------------------------------------------------------------------------------------------- 1992 1991 1990 1989 - -------------------------------------------------------------------------------------------------------------------- Production Per Day (net) Crude oil (barrels) United States 62,517 66,063 62,434 60,992 Canada 11,528 11,966 9,494 9,178 United Kingdom 86,265 59,979 56,027 38,707 Norway 29,598 28,619 24,351 24,135 Abu Dhabi 11,150 9,866 8,475 7,230 Africa(*) 6,910 8,952 -- -- - -------------------------------------------------------------------------------------------------------------------- Total 207,968 185,445 160,781 140,242 - -------------------------------------------------------------------------------------------------------------------- Natural gas liquids (barrels) United States 11,063 10,047 9,436 9,986 Canada 1,981 1,997 1,704 1,732 United Kingdom 1,468 766 805 466 Norway 1,707 1,752 2,004 2,016 - -------------------------------------------------------------------------------------------------------------------- Total 16,219 14,562 13,949 14,200 - -------------------------------------------------------------------------------------------------------------------- Natural gas (Mcf) United States 601,824 583,740 457,042 335,112 Canada 137,680 104,151 76,768 72,855 United Kingdom 153,599 128,014 145,921 126,643 Norway 31,858 26,947 25,656 24,371 - -------------------------------------------------------------------------------------------------------------------- Total 924,961 842,852 705,387 558,981 - -------------------------------------------------------------------------------------------------------------------- Well Completions (net) Oil wells 33 45 17 19 Gas wells 20 41 33 19 Dry holes 22 36 38 31 Productive Wells at Year-End (net) Oil wells 2,082 2,103 2,111 2,048 Gas wells 966 927 905 714 - -------------------------------------------------------------------------------------------------------------------- Total 3,048 3,030 3,016 2,762 - -------------------------------------------------------------------------------------------------------------------- Undeveloped Net Acreage (held at end of year) United States 1,819,000 1,802,000 1,716,000 1,589,000 Canada 840,000 842,000 835,000 582,000 Other international 2,328,000 2,638,000 2,494,000 2,501,000 - -------------------------------------------------------------------------------------------------------------------- Total 4,987,000 5,282,000 5,045,000 4,672,000 - -------------------------------------------------------------------------------------------------------------------- Shipping Vessels owned or under charter at year-end 21 21 23 22 Total deadweight tons 3,223,000 2,825,000 3,012,000 3,081,000 Refining (barrels daily) Refinery crude runs 335,000 320,000 383,000 397,000 Petroleum Products Sold (barrels daily) Gasoline, distillates and other light products 275,000 285,000 296,000 299,000 Residual fuel oils 102,000 128,000 132,000 171,000 - -------------------------------------------------------------------------------------------------------------------- Total 377,000 413,000 428,000 470,000 - -------------------------------------------------------------------------------------------------------------------- Storage Capacity at Year-End (barrels) 95,199,000 94,879,000 93,867,000 91,794,000 Number of Employees (average) 10,263 10,317 9,645 8,740 ====================================================================================================================
- -------------------------------------------------------------------------------------------------- 1988 1987 1986 - -------------------------------------------------------------------------------------------------- Production Per Day (net) Crude oil (barrels) United States 60,782 62,635 65,877 Canada 9,251 8,592 8,548 United Kingdom 32,223 27,709 32,955 Norway 21,782 20,937 17,088 Abu Dhabi 9,374 6,903 9,673 Africa(*) -- -- 15,375 - -------------------------------------------------------------------------------------------------- Total 133,412 126,776 149,516 - -------------------------------------------------------------------------------------------------- Natural gas liquids (barrels) United States 7,183 5,913 2,944 Canada 1,529 1,306 1,627 United Kingdom 295 402 734 Norway 1,884 1,847 1,690 - -------------------------------------------------------------------------------------------------- Total 10,891 9,468 6,995 - -------------------------------------------------------------------------------------------------- Natural gas (Mcf) United States 283,114 282,906 228,827 Canada 61,653 49,229 46,248 United Kingdom 141,139 180,594 168,926 Norway 20,389 18,771 15,230 - -------------------------------------------------------------------------------------------------- Total 506,295 531,500 459,231 - -------------------------------------------------------------------------------------------------- Well Completions (net) Oil wells 39 35 23 Gas wells 8 13 6 Dry holes 35 28 25 Productive Wells at Year-End (net) Oil wells 2,014 2,058 2,056 Gas wells 612 620 616 - -------------------------------------------------------------------------------------------------- Total 2,626 2,678 2,672 - -------------------------------------------------------------------------------------------------- Undeveloped Net Acreage (held at end of year) United States 1,556,000 1,566,000 1,949,000 Canada 786,000 787,000 851,000 Other international 3,936,000 3,875,000 3,626,000 - -------------------------------------------------------------------------------------------------- Total 6,278,000 6,228,000 6,426,000 - -------------------------------------------------------------------------------------------------- Shipping Vessels owned or under charter at year-end 21 21 22 Total deadweight tons 2,719,000 2,903,000 2,953,000 Refining (barrels daily) Refinery crude runs 296,000 371,000 293,000 Petroleum Products Sold (barrels daily) Gasoline, distillates and other light products 222,000 257,000 207,000 Residual fuel oils 157,000 154,000 151,000 - -------------------------------------------------------------------------------------------------- Total 379,000 411,000 358,000 - -------------------------------------------------------------------------------------------------- Storage Capacity at Year-End (barrels) 90,798,000 88,047,000 87,746,000 Number of Employees (average) 8,151 7,890 7,776 ==================================================================================================
EX-21 3 SUBSIDIARIES OF REGISTRANT 1 EXHIBIT 21 AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT
Organized under Name of Subsidiary the laws of ------------------ --------------- AH 1980 Program, Inc. (*) ........................ Delaware A.H. Shipping Guaranty Corporation ............... Delaware Amerada Hess Canada Ltd. ......................... Canada Amerada Hess Limited ............................. United Kingdom Amerada Hess Norge A/S ........................... Norway Amerada Hess Oil Corporation of Abu Dhabi ........ Delaware Amerada Hess Pipeline Corporation ................ Delaware Amerada Hess Production Gabon .................... Gabon Amerada Hess Shipping Corporation ................ Liberia Hess Oil St. Lucia Limited ....................... St. Lucia Hess Oil Virgin Islands Corp. .................... U.S. Virgin Islands Hess Pipeline Company (*) ........................ Delaware Jamestown Insurance Company Limited .............. Bermuda Tug New York Company ............................. Delaware
(*) Principal assets sold in 1995. Other subsidiaries (names omitted because such unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary) Each of the foregoing subsidiaries conducts business under the name listed, and is 100% owned by the Registrant, except for Amerada Hess Production Gabon, which is 55% owned by the Registrant. EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1995 JAN-01-1995 DEC-31-1995 56,071 0 798,331 0 838,770 1,962,544 13,064,212 7,694,496 7,756,370 1,604,580 2,523,181 0 0 93,011 2,567,385 7,756,370 7,302,307 7,524,789 5,220,657 5,220,657 0 0 247,465 (352,649) 41,764 (394,413) 0 0 0 (394,413) (4.24) (4.24)
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