-----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, HcrqHJJWwcKqith+aOSyRLwTWGdiclS7uhx/i73Y7szhOqKpUCzylDouL6+VNCB6 /WKiUKf7t1TjqSwbfoqgKw== 0000950123-96-006560.txt : 19961118 0000950123-96-006560.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950123-96-006560 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERADA HESS CORP CENTRAL INDEX KEY: 0000004447 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 134921002 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01204 FILM NUMBER: 96663158 BUSINESS ADDRESS: STREET 1: 1185 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2129978500 FORMER COMPANY: FORMER CONFORMED NAME: AMERADA PETROLEUM CORP DATE OF NAME CHANGE: 19690727 10-Q 1 10-Q 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1996 or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- --------------- COMMISSION FILE NUMBER 1-1204 ------------------ AMERADA HESS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 13-4921002 (I.R.S. employer identification number) 1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y. (Address of principal executive officers) 10036 (Zip Code) (Registrant's telephone number, including area code is (212) 997-8500) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------- At September 30, 1996, 93,139,005 shares of Common Stock were outstanding. =============================================================================== 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (in thousands, except per share data)
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 -------------------------------- -------------------------------- 1996 1995 1996 1995 -------------- -------------- -------------- -------------- REVENUES Sales (excluding excise taxes) and other operating revenues $ 1,746,574 $ 1,641,904 $ 6,055,951 $ 5,307,441 Non-operating revenues Asset sales 100,262 -- 529,271 -- Other 23,060 21,349 60,978 112,195 -------------- -------------- -------------- -------------- Total revenues 1,869,896 1,663,253 6,646,200 5,419,636 -------------- -------------- -------------- -------------- COSTS AND EXPENSES Cost of products sold and operating expenses 1,284,545 1,200,956 4,526,936 3,832,837 Exploration expenses, including dry holes 64,464 82,379 187,639 224,266 Selling, general and administrative expenses 149,824 170,579 451,526 474,439 Interest expense 33,594 58,879 128,301 186,856 Depreciation, depletion, amortization and lease impairment 166,733 218,603 551,841 648,329 Provision for income taxes 72,909 36,440 259,706 172,549 -------------- -------------- -------------- -------------- Total costs and expenses 1,772,069 1,767,836 6,105,949 5,539,276 -------------- -------------- -------------- -------------- NET INCOME (LOSS) $ 97,827 $ (104,583) $ 540,251 $ (119,640) ============== ============== ============== ============== NET INCOME (LOSS) PER SHARE $ 1.05 $ (1.13) $ 5.80 $ (1.29) ============== ============== ============== ============== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (FULLY DILUTED BASIS) 93,159 93,007 93,101 92,999 COMMON STOCK DIVIDENDS PER SHARE $ .15 $ .15 $ .45 $ .45
See accompanying notes to consolidated financial statements. 1 3 PART I - FINANCIAL INFORMATION (CONT'D.) AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands of dollars) A S S E T S
SEPTEMBER 30, DECEMBER 31, 1996 1995 ----------------- ------------------ CURRENT ASSETS Cash and cash equivalents $ 84,764 $ 56,071 Accounts receivable 601,931 798,331 Inventories 1,132,299 838,770 Other current assets 168,577 269,372 ----------------- ------------------ Total current assets 1,987,571 1,962,544 ----------------- ------------------ INVESTMENTS AND ADVANCES 199,524 185,522 ----------------- ------------------ PROPERTY, PLANT AND EQUIPMENT Total - at cost 11,443,360 13,064,212 Less reserves for depreciation, depletion, amortization and lease impairment 6,599,591 7,694,496 ----------------- ------------------ Property, plant and equipment - net 4,843,769 5,369,716 ----------------- ------------------ DEFERRED INCOME TAXES AND OTHER ASSETS 273,892 238,588 ----------------- ------------------ TOTAL ASSETS $ 7,304,756 $ 7,756,370 ================= ================== L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y CURRENT LIABILITIES Accounts payable - trade $ 536,586 $ 443,513 Accrued liabilities 579,157 575,886 Deferred revenue 14,633 151,416 Taxes payable 277,674 239,080 Notes payable - - 90,000 Current maturities of long-term debt 114,685 104,685 ----------------- ------------------ Total current liabilities 1,522,735 1,604,580 ----------------- ------------------ LONG-TERM DEBT 1,636,256 2,523,181 ----------------- ------------------ CAPITALIZED LEASE OBLIGATIONS 56,051 64,202 ----------------- ------------------ DEFERRED LIABILITIES AND CREDITS Deferred income taxes 560,659 602,792 Other 326,447 301,219 ----------------- ------------------ Total deferred liabilities and credits 887,106 904,011 ----------------- ------------------ 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 - 93,139,005 shares at September 30, 1996; 93,011,255 shares at December 31, 1995 93,139 93,011 Capital in excess of par value 750,868 744,252 Retained earnings 2,515,390 2,017,064 Equity adjustment from foreign currency translation (156,789) (193,931) ----------------- ------------------ Total stockholders' equity 3,202,608 2,660,396 ----------------- ------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,304,756 $ 7,756,370 ================= ==================
See accompanying notes to consolidated financial statements. 2 4 PART I - FINANCIAL INFORMATION (CONT'D.) AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOWS Nine Months Ended September 30 (in thousands)
1996 1995 --------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 540,251 $ (119,640) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, depletion, amortization and lease impairment 551,841 648,329 Exploratory dry hole costs 100,835 133,308 Pre-tax gain on asset sales (529,271) -- Changes in operating assets and liabilities 19,398 198,024 Deferred income taxes and other items (13,359) 60,003 --------------- ---------------- Net cash provided by operating activities 669,695 920,024 --------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (610,038) (509,607) Proceeds from asset sales and other 998,358 3,120 --------------- ---------------- Net cash provided by (used in) investing activities 388,320 (506,487) --------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in notes payable (90,046) 66,247 Long-term borrowings - - 92,808 Repayment of long-term debt and capitalized lease obligations (885,054) (484,990) Cash dividends paid and other (55,902) (55,790) --------------- ---------------- Net cash used in financing activities (1,031,002) (381,725) --------------- ---------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,680 3,773 --------------- ---------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 28,693 35,585 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 56,071 53,135 --------------- ---------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 84,764 $ 88,720 =============== ================
See accompanying notes to consolidated financial statements. 3 5 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Note 1 - The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the Company's consolidated financial position at September 30, 1996 and December 31, 1995, and the consolidated results of operations for the three and nine- month periods ended September 30, 1996 and 1995 and the consolidated cash flows for the nine-month periods ended September 30, 1996 and 1995. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year. Certain notes and other information have been condensed or omitted from these interim financial statements. Such statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the 1995 Annual Report to Stockholders, which have been incorporated by reference in the Corporation's Form 10-K for the year ended December 31, 1995. Note 2 - Inventories consist of the following:
September 30, December 31, 1996 1995 ---------- ---------- Crude oil and other charge stocks $ 398,934 $ 240,425 Refined and other finished products 616,794 492,613 Materials and supplies 116,571 105,732 ---------- ---------- Total inventories $1,132,299 $ 838,770 ========== ==========
Note 3 - The provision for income taxes consists of the following:
Three months Nine months ended September 30 ended September 30 ----------------------- ----------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Current $ 56,756 $ 11,362 $234,532 $107,200 Deferred 16,153 25,078 25,174 65,349 -------- -------- -------- -------- Total $ 72,909 $ 36,440 $259,706 $172,549 ======== ======== ======== ========
Note 4 - Foreign currency exchange transactions are reflected in selling, general and administrative expenses. The net effect of foreign currency exchange transactions, after applicable income taxes, amounted to gains of $282 and $2,925, respectively, for the three and nine-month periods ended September 30, 1996, compared to a loss of $1,135 and a gain of $359 for the corresponding periods of 1995. 4 6 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Note 5 - The Corporation uses futures, forwards, options and swaps to reduce the impact of fluctuations in the prices of crude oil, natural gas and refined products. These contracts correlate to movements in the value of inventory and the prices of crude oil and natural gas, and as hedges, any resulting gains or losses are recorded as part of the hedged transaction. Net unrealized losses on the Corporation's petroleum hedging activities were approximately $30,000 at September 30, 1996. Note 6 - In the third quarter of 1996, certain exploration and production properties in the United States and United Kingdom were sold resulting in a net gain of $71,100. The net gain from asset sales for the nine months ended September 30, 1996 amounts to $421,200, including the sale of the Corporation's Canadian operations. 5 7 PART I - FINANCIAL INFORMATION (CONT'D.) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. RESULTS OF OPERATIONS Net income for the third quarter of 1996 amounted to $98 million ($1.05 per share) compared with a net loss of $105 million ($1.13 per share) in the third quarter of 1995. The results for the third quarter of 1996 include net gains of $71 million ($.76 per share) from the sale of exploration and production properties in the United Kingdom and the United States. Special items in the third quarter of 1995 included charges for costs associated with Hurricane Marilyn of $19 million and staff reduction costs amounting to $14 million, as well as income of $7 million from a business interruption insurance recovery. Net income for the first nine months of 1996 was $540 million ($5.80 per share) compared with a net loss of $120 million ($1.29 per share) in the first nine months of 1995. Earnings for the first nine months of 1996 reflect net gains of $421 million ($4.52 per share) from the sale of exploration and production properties, including the sale of the Corporation's Canadian subsidiary. The results for the first nine months of 1995 included the 1995 special items referred to above and income of $44 million from the refund of windfall profits taxes and related interest. The after-tax results by major operating activity for the three and nine month periods ended September 30, 1996 and 1995 were as follows (in millions):
Three months Nine months ended September 30 ended September 30 ------------------ ------------------ 1996 1995(*) 1996 1995(*) ---- ------- ---- ------- Exploration and production $ 22 $ 12 $ 121 $ 75 Refining, marketing and shipping 37 (33) 116 (33) Corporate (3) (13) (14) (33) Interest expense (29) (45) (104) (147) ----- ----- ----- ----- Income (loss), excluding special items 27 (79) 119 (138) Gain on asset sales 71 -- 421 -- 1995 special items, described above -- (26) -- 18 ----- ----- ----- ----- Net income (loss) $ 98 $(105) $ 540 $(120) ===== ===== ===== =====
(*) Restated to conform with current period presentation. Excluding special items, earnings from exploration and production activities increased by $10 million in the third quarter of 1996 and $46 million in the first nine months of 1996. The increases in both periods were primarily due to higher foreign crude oil selling prices. 6 8 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) The Corporation's average selling prices, including the effects of hedging, were as follows:
Three months Nine months ended September 30 ended September 30 ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Crude oil and natural gas liquids (per barrel) United States $15.55 $15.85 $15.59 $15.91 Foreign 20.27 16.30 19.15 16.93 Natural gas (per Mcf) United States(*) 2.13 1.55 2.33 1.62 Foreign 1.93 1.46 1.78 1.58
(*) Includes sales of purchased gas. The United States crude oil selling prices indicated above did not increase in 1996 because hedge positions limited the impact of increasing market prices. Hedge positions in 1995 had a positive effect on selling prices. The Corporation's net daily worldwide production was as follows:
Three months Nine months ended September 30 ended September 30 ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Crude oil and natural gas liquids (barrels per day) United States 43,168 61,452 51,816 63,188 Foreign 167,406 202,309 182,546 188,456 ------- ------- ------- ------- Total 210,574 263,761 234,362 251,644 ======= ======= ======= ======= Natural gas (Mcf per day) United States 285,089 389,261 348,838 401,852 Foreign 166,018 399,025 352,417 451,720 ------- ------- ------- ------- Total 451,107 788,286 701,255 853,572 ======= ======= ======= =======
United States crude oil and natural gas production was lower in 1996, principally reflecting the effects of asset sales and natural decline. The decrease in foreign crude oil production reflects the sale of the Corporation's Canadian and Abu Dhabi operations in April and June of 1996, respectively, and in the third quarter of 1996, reflects a decline in United Kingdom production, largely due to operational problems on two of the Corporation's fields. The decline in foreign natural gas production is principally due to the sale of the Corporation's operations in Canada. 7 9 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) Lower exploration expenses in the third quarter and nine months of 1996 were primarily attributable to foreign areas, including the United Kingdom and Denmark. Depreciation, depletion and amortization charges were also lower reflecting asset sales, lower production volumes, reduced asset carrying values and positive crude oil reserve revisions at the end of 1995. The effective income tax rate on exploration and production earnings continues to be higher than the United States statutory rate due to special petroleum taxes on certain fields in the United Kingdom and in Norway. The Corporation's program to sell certain exploration and production assets is substantially complete. Oil and gas production in the short-term will be lower than pre-sale levels, however, net income is not expected to be materially affected. New United States and foreign crude oil and natural gas developments will add to production in the future. There is no assurance that market prices of crude oil or natural gas will continue at current levels. Refining, marketing and shipping operations had income of $37 million in the third quarter of 1996 compared with a loss of $33 million in the third quarter of 1995. In the first nine months of 1996, refining, marketing and shipping income increased by $149 million over the comparable period of 1995. Refined product margins improved in 1996, as the average selling price increased by more than $3.00 per barrel, largely due to the improved selling prices of distillates and residual fuel oils. The cost of crude oil also increased in 1996, but was more than offset by higher selling prices. In the first nine months of 1996, a substantial amount of income was generated by a refining subsidiary, for which income taxes are not provided on earnings due to available loss carryforwards. The Corporation's inventories are accounted for on the first-in, first-out and average cost methods. Refined product sales volumes increased to 140 million barrels in the first nine months of 1996 from 131 million barrels in the first nine months of 1995. Corporate interest expense (after-tax) decreased by 36% in the third quarter of 1996 and 29% in the first nine months of 1996, compared with the corresponding periods of 1995. The decrease reflects the use of cash flow from operations and the proceeds of asset sales to reduce debt. Other corporate expenses decreased to $3 million and $14 million in the third quarter and first nine months of 1996 compared with $13 million and $33 million in the corresponding periods of 1995. The decreases were primarily due to the effect of foreign source income on the provision for United States taxes. 8 10 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) Sales and other operating revenues in the third quarter and first nine months of 1996 increased by approximately 6% and 14%, respectively, compared to the corresponding periods of 1995. The increases were primarily due to higher refined product selling prices and sales volumes. Also contributing to the increase were higher foreign crude oil selling prices and increased domestic natural gas selling prices, particularly sales of purchased gas. Non-operating revenues include the pre-tax gain on asset sales in the first nine months of 1996 of $529 million and the refund of windfall profits taxes and related interest of $67 million in the first nine months of 1995. Selling, general and administrative expenses were lower in 1996, principally because of the $24 million pre-tax charge for staff reduction costs in the third quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities, including changes in operating assets and liabilities, amounted to $670 million in the first nine months of 1996 compared with $920 million in the first nine months of 1995. The decrease was primarily due to changes in working capital items, including inventory. In 1996, the Corporation generated proceeds of $968 million from the sale of its Canadian operations, certain United States and United Kingdom producing properties, and Abu Dhabi assets. The proceeds from asset sales were used to repay debt. Total debt was $1,824 million at September 30, 1996 compared with $2,718 million at December 31, 1995. The debt to total capitalization ratio decreased to 36% from 50% at year-end 1995. At September 30, 1996, the Corporation had additional borrowing capacity available under existing revolving credit agreements of $1,737 million and additional unused lines of credit under uncommitted arrangements with banks of $751 million. In August 1996, the Corporation announced that its Board of Directors had authorized up to $250 million to repurchase shares of common stock. The stock will be purchased from time to time in the open market or as otherwise permitted under applicable rules. In September 1996, the Corporation purchased a 33.33% interest in the Jabung Production Sharing Contract in Indonesia for $39 million. The acquisition includes proved reserves, which are in the process of being developed, and exploration prospects. 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 September 30, 1996, the Corporation had open hedge positions equal to approximately 8% of its estimated worldwide crude oil production 9 11 PART 1 - FINANCIAL INFORMATION (CONT'D.) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) over the next twelve months and approximately 1% of its production for the succeeding twelve months. In certain circumstances, hedge counterparties may elect to purchase up to an additional 1% of this production. In addition, the Corporation had open option contracts, providing varying degrees of protection against declines in market prices, covering 1% of crude oil production through September 1997. The Corporation also had open contracts equal to approximately 10% of its estimated United States natural gas production over the next twelve months and approximately 2% of its production for the succeeding twelve months. In addition, the Corporation had hedges covering approximately 6% of its refining, marketing and shipping inventories and had additional short positions, principally crack spreads, approximating 2% of refined products to be manufactured in the next twelve months. As market conditions change, the Corporation will adjust its hedge positions. Capital expenditures in the first nine months of 1996 amounted to $610 million compared with $510 million in 1995. Capital expenditures for exploration and production activities were $574 million in the first nine months of 1996 compared with $460 million in the corresponding period of 1995. Capital expenditures for the remainder of 1996 are currently expected to be approximately $250 million and will be financed primarily by internally generated funds. 10 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On September 24, 1996, Region II of the Environmental Protection Agency ("EPA") commenced an administrative proceeding against Registrant and its wholly-owned subsidiary, Hess Oil Virgin Islands Corp. (HOVIC). The complaint alleges that HOVIC did not determine whether two wastes generated from maintenance activities at HOVIC's petroleum refinery in St. Croix, United States Virgin Islands, were hazardous, and that on six occasions in 1994, these wastes were placed on HOVIC's land treatment units in violation of federal land disposal restrictions regulations. EPA is seeking a penalty of $165,917. HOVIC and Registrant have filed answers to the complaint, which contest the validity of EPA's allegations and the amount of the penalty assessed. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits None (b) Reports on Form 8-K The Registrant filed no report on Form 8-K during the three months ended September 30, 1996. 11 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERADA HESS CORPORATION (REGISTRANT) By /s/ John B. Hess ---------------------------- JOHN B. HESS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER By /s/ John Y. Schreyer ---------------------------- JOHN Y. SCHREYER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Date: November 11, 1996 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 84,764 0 601,931 0 1,132,299 1,987,571 11,443,360 6,599,591 7,304,756 1,522,735 1,636,256 0 0 93,139 3,109,469 7,304,756 6,055,951 6,646,200 4,526,936 4,526,936 0 0 128,301 799,957 259,706 540,251 0 0 0 540,251 5.80 5.80
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