-----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, HeT+1WWwIBleBtCodmxODaVXG6OK1Wa3P9Ot2rPEAEKH3xxX1U9UQzjVWtdf8Gdu Z2Ix4d/KfW/klXzOW4W9UA== 0000950123-98-007479.txt : 19980814 0000950123-98-007479.hdr.sgml : 19980814 ACCESSION NUMBER: 0000950123-98-007479 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 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: SEC FILE NUMBER: 001-01204 FILM NUMBER: 98684897 BUSINESS ADDRESS: STREET 1: 1185 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2129978500 FORMER COMPANY: FORMER CONFORMED NAME: AMERADA PETROLEUM CORP DATE OF NAME CHANGE: 19690727 10-Q 1 AMERADA HESS CORPORATION 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1998 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ COMMISSION FILE NUMBER 1-1204 ---------------- AMERADA HESS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 13-4921002 (I.R.S. employer identification number) 1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y. (Address of principal executive offices) 10036 (Zip Code) (Registrant's telephone number, including area code is (212) 997-8500) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- At June 30, 1998, 90,957,905 shares of Common Stock were outstanding. ================================================================================ 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 ---------------------------- ---------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- REVENUES Sales (excluding excise taxes) and other operating revenues $ 1,617,254 $ 1,833,960 $ 3,443,043 $ 4,230,790 Non-operating revenues Asset sales -- 16,463 80,321 16,463 Other 27,072 28,401 43,948 47,669 ----------- ----------- ----------- ----------- Total revenues 1,644,326 1,878,824 3,567,312 4,294,922 ----------- ----------- ----------- ----------- COSTS AND EXPENSES Cost of products sold and operating expenses 1,198,111 1,361,763 2,609,484 3,233,837 Exploration expenses, including dry holes and lease impairment 92,859 91,157 197,326 152,945 Selling, general and administrative expenses 180,826 155,056 359,312 300,380 Interest expense 33,329 33,755 67,317 67,407 Depreciation, depletion and amortization 160,048 160,892 321,817 349,354 Provision for income taxes 872 34,544 46,369 144,754 ----------- ----------- ----------- ----------- Total costs and expenses 1,666,045 1,837,167 3,601,625 4,248,677 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ (21,719) $ 41,657 $ (34,313) $ 46,245 =========== =========== =========== =========== NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED $ (.24) $ .45 $ (.38) $ .50 =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 89,904 91,787 89,982 92,206 COMMON STOCK DIVIDENDS PER SHARE $ .15 $ .15 $ .30 $ .30
See accompanying notes to consolidated financial statements. 1 3 PART I - FINANCIAL INFORMATION (CONT'D.) AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF DOLLARS)
ASSETS JUNE 30, DECEMBER 31, 1998 1997 ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 40,894 $ 91,154 Accounts receivable 656,053 993,098 Inventories 826,004 937,949 Other current assets 199,594 181,431 ------------ ------------ Total current assets 1,722,545 2,203,632 ------------ ------------ INVESTMENTS AND ADVANCES 262,810 250,458 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT Total - at cost 13,125,318 12,621,635 Less reserves for depreciation, depletion, amortization and lease impairment 7,689,270 7,430,841 ------------ ------------ Property, plant and equipment - net 5,436,048 5,190,794 ------------ ------------ DEFERRED INCOME TAXES AND OTHER ASSETS 356,485 289,735 ------------ ------------ TOTAL ASSETS $ 7,777,888 $ 7,934,619 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade $ 588,111 $ 752,576 Accrued liabilities 445,378 513,389 Deferred revenue 71,185 175,684 Taxes payable 150,518 195,692 Notes payable 76,300 17,825 Current maturities of long-term debt 139,685 84,685 ------------ ------------ Total current liabilities 1,471,177 1,739,851 ------------ ------------ LONG-TERM DEBT 2,132,484 1,975,281 ------------ ------------ CAPITALIZED LEASE OBLIGATIONS 15,707 27,752 ------------ ------------ DEFERRED LIABILITIES AND CREDITS Deferred income taxes 567,945 562,371 Other 459,057 413,665 ------------ ------------ Total deferred liabilities and credits 1,027,002 976,036 ------------ ------------ 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 - 90,957,905 shares at June 30, 1998; 91,451,205 shares at December 31, 1997 90,958 91,451 Capital in excess of par value 770,018 774,631 Retained earnings 2,379,764 2,463,005 Equity adjustment from foreign currency translation (109,222) (113,388) ------------ ------------ Total stockholders' equity 3,131,518 3,215,699 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,777,888 $ 7,934,619 ============ ============
See accompanying notes to consolidated financial statements. 2 4 PART I - FINANCIAL INFORMATION (CONT'D.) AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOWS SIX MONTHS ENDED JUNE 30 (IN THOUSANDS)
1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (34,313) $ 46,245 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 321,817 349,354 Exploratory dry hole costs and lease impairment 131,699 94,938 Pre-tax gain on asset sales (80,321) (16,463) Changes in operating assets and liabilities 38,791 343,315 Deferred income taxes and other items (16,403) (25,640) --------- --------- Net cash provided by operating activities 361,270 791,749 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (709,098) (611,958) Proceeds from asset sales and other 108,267 59,873 --------- --------- Net cash used in investing activities (600,831) (552,085) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Increase in notes payable 58,458 137,000 Long-term borrowings 515,000 29,000 Repayment of long-term debt and capitalized lease obligations (313,222) (205,910) Cash dividends paid (41,115) (41,637) Common stock acquired (28,473) (81,965) --------- --------- Net cash provided by (used in) financing activities 190,648 (163,512) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,347) (1,717) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (50,260) 74,435 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 91,154 112,522 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 40,894 $ 186,957 ========= =========
See accompanying notes to consolidated financial statements. 3 5 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Note 1 - The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the Company's consolidated financial position at June 30, 1998 and December 31, 1997, and the consolidated results of operations for the three and six-month periods ended June 30, 1998 and 1997 and the consolidated cash flows for the six-month periods ended June 30, 1998 and 1997. 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. These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the 1997 Annual Report to Stockholders, which have been incorporated by reference in the Corporation's Form 10-K for the year ended December 31, 1997. Note 2 - On January 1, 1998, the Corporation began capitalizing the costs of internal use software in accordance with AICPA Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. This accounting change increased net income for the six months ended June 30, 1998 by $6,422 ($.07 per share). Note 3 - Inventories consist of the following:
June 30, December 31, 1998 1997 -------- ------------ Crude oil and other charge stocks $247,177 $269,783 Refined and other finished products 476,450 564,973 Materials and supplies 102,377 103,193 -------- -------- Total inventories $826,004 $937,949 ======== ========
Note 4 - The provision for income taxes consisted of the following:
Three months Six months ended June 30 ended June 30 ------------------------- ------------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Current $ (5,299) $ 44,620 $ 46,966 $ 145,406 Deferred 6,171 (10,076) (597) (652) --------- --------- --------- --------- Total $ 872 $ 34,544 $ 46,369 $ 144,754 ========= ========= ========= =========
4 6 PART I - FINANCIAL INFORMATION (CONT'D.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Note 5 - Foreign currency exchange transactions are reflected in selling, general and administrative expenses. The net effect, after applicable income taxes, amounted to gains of $593 and $315, respectively, for the three and six-month periods ended June 30, 1998 compared to losses of $1,832 and $449 for the corresponding periods of 1997. Note 6 - The weighted average number of common shares used in the basic and diluted earnings per share computations are as follows:
Three months Six months ended June 30 ended June 30 ----------------- ----------------- 1998 1997 1998 1997 ------ ------ ------ ------ Common shares - basic 89,904 91,387 89,982 91,810 Effect of dilutive securities (equivalent shares) Nonvested common stock -- 376 -- 361 Stock options -- 24 -- 35 ------ ------ ------ ------ Common shares - diluted 89,904 91,787 89,982 92,206 ====== ====== ====== ======
The antidilutive effects of 656 nonvested common shares and 127 stock options and 626 common shares and 120 stock options are excluded in the three months and six months ended June 30, 1998, respectively. Note 7 - 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 deferred gains resulting from the Corporation's petroleum hedging activities were approximately $16,000 at June 30, 1998, including $15,000 of unrealized gains. Note 8 - Interest costs related to certain long-term construction projects have been capitalized in accordance with FAS No. 34. During the three and six-month periods ended June 30, 1998, interest costs of $7,603 and $13,196, respectively, were capitalized compared to $1,770 and $3,287 for the corresponding periods of 1997. Note 9 - Comprehensive income, which includes net income and the effects of foreign currency translation recorded directly in stockholders' equity, is as follows:
Three months Six months ended June 30 ended June 30 ---------------------- ---------------------- 1998 1997 1998 1997 -------- -------- -------- -------- Comprehensive income (loss) $(30,760) $ 53,833 $(30,147) $ 17,984 ======== ======== ======== ========
5 7 PART I - FINANCIAL INFORMATION (CONT'D.) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. RESULTS OF OPERATIONS The results of operations for the second quarter of 1998 amounted to a net loss of $22 million compared with net income of $42 million in the second quarter of 1997. The net loss for the first half of 1998 amounted to $34 million compared with net income of $46 million in the first half of 1997. Excluding gains on asset sales, the loss in the first half of 1998 was $90 million compared with income of $35 million in the first half of 1997. The after-tax results by major operating activity for the three and six-month periods ended June 30, 1998 and 1997 were as follows (in millions, except per share data):
Three months Six months ended June 30 ended June 30 ---------------- ---------------- 1998 1997 1998 1997 ----- ----- ----- ----- Exploration and production $ (6) $ 64 $ 2 $ 161 Refining, marketing and shipping 18 3 (15) (53) Corporate (6) (7) (20) (14) Interest expense (28) (29) (57) (59) ----- ----- ----- ----- Income (loss) excluding asset sales (22) 31 (90) 35 Gains on asset sales -- 11 56 11 ----- ----- ----- ----- Net income (loss) $ (22) $ 42 $ (34) $ 46 ===== ===== ===== ===== Net income (loss) per share (diluted) $(.24) $ .45 $(.38) $ .50 ===== ===== ===== =====
The net gain on asset sales in 1998 of $56 million reflects the sale of three oil and gas properties in the United States and Norway. The 1997 asset sale represents the sale of a United States natural gas property. Exploration and Production Excluding gains on asset sales, earnings from exploration and production activities decreased by $70 million in the second quarter of 1998 and $159 million in the first half of 1998, compared with the corresponding periods of 1997. The decreases were primarily due to lower worldwide crude oil selling prices and lower United Kingdom crude oil sales volumes. Exploration expenses were higher, particularly in the first quarter of 1998. 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 Six months ended June 30 ended June 30 -------------------- -------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Crude oil and natural gas liquids (per barrel) United States $ 11.82 $ 17.92 $ 12.86 $ 19.29 Foreign 13.79 17.66 14.18 19.61 Natural gas (per Mcf) United States 2.10 2.24 2.16 2.47 Foreign 2.34 2.32 2.41 2.34
The Corporation's net daily worldwide production was as follows:
Three months Six months ended June 30 ended June 30 ------------------- ------------------- 1998 1997 1998 1997 ------- ------- ------- ------- Crude oil and natural gas liquids (barrels per day) United States 44,211 43,158 44,516 43,018 Foreign 159,237 164,867 161,751 178,297 ------- ------- ------- ------- Total 203,448 208,025 206,267 221,315 ======= ======= ======= ======= Natural gas (Mcf per day) United States 287,447 313,570 293,133 319,728 Foreign 302,798 250,823 293,182 286,857 ------- ------- ------- ------- Total 590,245 564,393 586,315 606,585 ======= ======= ======= =======
The decrease in foreign crude oil production reflects natural decline and temporary production interruptions in several United Kingdom fields. The decrease in United States natural gas production was due to natural decline and the effect of asset sales. The increase in foreign natural gas production principally reflects higher demand in the United Kingdom. The Corporation has several development projects which are anticipated to increase net production of crude oil in the second half of the year. 7 9 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) Depreciation, depletion and amortization charges were comparable in the second quarter of 1998 and 1997, but were lower in the first half of 1998 reflecting lower production volumes in the early part of the year. The Corporation also had positive oil and gas reserve revisions at the end of 1997, which reduced depreciation and related charges in 1998. Exploration expenses were comparable in the second quarter of each year, but were higher in the first half of 1998 reflecting increased activity in the United States and United Kingdom in the first quarter. Exploration expenses for the full year of 1998 are expected to be lower than the 1997 level. Exploration and production selling, general and administrative expenses were higher in the second quarter and first half of 1998, reflecting increased activity in new international areas and the expansion of natural gas marketing activities in the United Kingdom. The effective income tax rate on exploration and production earnings was higher in 1998 than in 1997, reflecting a higher effective tax rate in the United Kingdom, principally due to the increased impact of non-deductible items at lower earnings levels and the accrual of an ACT refund in 1997. The effective rate in both years was also affected by exploration expenses in certain international areas outside of the North Sea for which full income tax benefits have not been recorded. The Corporation's exploration and production earnings are very sensitive to crude oil selling prices and the Corporation cannot predict how long prices will remain at current low levels. Refining, Marketing and Shipping Refining, marketing and shipping operations had income of $18 million in the second quarter of 1998 compared with $3 million in the second quarter of 1997. Results for the first half of 1998 amounted to a loss of $15 million compared with a loss of $53 million in the first half of 1997. Refined product margins in 1998 improved somewhat from the 1997 levels in spite of continued low selling prices for gasoline and other refined products. The results, particularly in the early part of each year, were negatively impacted by relatively mild weather which depressed margins for distillates and residual fuel oils. Refined product sales volumes amounted to 93 million barrels in the first half of 1998 compared with 95 million barrels in the first half of 1997. Marketing selling, general and administrative expenses were higher in 1998, reflecting an emphasis on expanding retail activity including the costs of operating the chain of 66 retail marketing properties in Florida which was acquired in June 1997. In 1998 and 1997, income taxes or benefits were not recorded on the results of the Corporation's Virgin Islands subsidiary due to available loss carryforwards. The absence of income tax provisions increases the volatility of reported refining and marketing results. 8 10 PART I - FINANCIAL INFORMATION (CONT'D.) RESULTS OF OPERATIONS (CONTINUED) In February 1998, the Corporation announced an agreement in principle with Petroleos de Venezuela, S.A. (PDVSA) to form a joint venture, 50% owned by each party, to own and operate the Corporation's Virgin Islands refinery. In May, the third extension and amendment to the refinery's concession agreement in the Virgin Islands was signed into law extending it to the joint venture effective upon closing. Work is continuing on the underlying joint venture agreements with closing anticipated by year-end. Upon closing, the Corporation will receive the first installment of $62.5 million on a ten-year, $625 million note. The joint venture will also purchase the crude oil and refined product inventories and other working capital of the refinery. The Corporation estimates that at closing it will record a reserve of approximately $125 million for a note, payment of which is contingent on the future cash flow of the joint venture. Corporate and Interest Net corporate expenses were comparable in the second quarters of 1998 and 1997, but increased by $6 million in the first half of 1998 compared with the first half of 1997. The change includes the effects of timing of accruals for anticipated expenditures and variations in tax provisions related to foreign source income. After-tax interest expense was comparable in 1998 and 1997. For the full year of 1998, interest expense is anticipated to be somewhat higher than in 1997, reflecting increased borrowing to fund capital expenditures related to oil and gas development projects. Consolidated Revenues Sales and other operating revenues decreased by 12% and 19% in the second quarter and first half of 1998, respectively, compared with the comparable periods of 1997. The decreases were primarily due to lower crude oil and refined product selling prices. Crude oil sales volumes were also lower in 1998. Refined product sales volumes increased slightly in the second quarter of 1998 but were lower in the first half of 1998 compared with 1997 sales volumes. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities, including changes in operating assets and liabilities, amounted to $361 million in the first half of 1998 compared with $792 million in the first half of 1997. The decrease was primarily due to changes in working capital items, including inventories. Cash flow, excluding special items and changes in working capital components, amounted to $322 million in 1998 and $448 million in 1997. The difference largely resulted from changes in operating income. The sale of three oil and gas properties in the United States and Norway generated proceeds of $98 million in 1998. 9 11 PART 1 - FINANCIAL INFORMATION (CONT'D.) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) Total debt was $2,388 million at June 30, 1998 compared with $2,127 million at December 31, 1997, resulting in debt to total capitalization ratios of 43.3% and 39.8%, respectively. At June 30, 1998, floating rate debt amounted to 41% of total debt, including the effect of interest rate conversion (swap) agreements. At June 30, 1998, the Corporation had $745 million of additional borrowing capacity available under its revolving credit agreement and additional unused lines of credit under uncommitted arrangements with banks for $408 million. Debt is expected to increase in the third quarter due to exploration and production capital expenditures, but is anticipated to decline in the fourth quarter from the application of proceeds to be received on the closing of the refining joint venture. In August, the Corporation completed private placements of $225 million of fixed rate debt with three insurance companies. The weighted average maturity of the three notes is 7.4 years. In addition, the Corporation has entered into a 364-day revolving credit facility of $300 million. The Corporation also plans to sell and lease back its interests in two Gulf of Mexico oil and gas production platforms for approximately $180 million. In August 1996, the Corporation's Board of Directors approved a two-year, $250 million stock repurchase program. Through June 30, 1998, 3,004,600 shares have been purchased at a cost of approximately $160 million. In August 1998, the Board extended the term of the repurchase program to March 31, 1999. Futures, forwards, options and swaps are used to reduce the effects of changes in the selling prices of crude oil, natural gas and refined products. These instruments are used to set the selling prices of the Corporation's products and the related gains or losses are an integral part of the Corporation's selling prices. At June 30, 1998, the Corporation had open hedge positions equal to 3% of its estimated worldwide crude oil production over the next twelve months. The Corporation also had open contracts equal to 14% 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 17% of its refining and marketing inventories and had additional short positions, primarily crack spreads, approximating 5% 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 half of 1998 amounted to $709 million compared with $612 million in the first half of 1997. Capital expenditures for exploration and production activities were $659 million in the first half of 1998 compared with $507 million in the first six months of 1997. Capital expenditures in 1998 included significant expenditures for oil and gas field developments and $50 million for an increased interest in a consolidated subsidiary with proved crude oil reserves and exploration licenses in Gabon. 10 12 PART 1 - FINANCIAL INFORMATION (CONT'D.) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) In the second quarter of 1998, the Corporation reached agreement, subject to existing preemptive rights, to acquire various interests in three companies operating in Azerbaijan with production sharing contracts covering developed and undeveloped oil and gas reserves, exploration prospects and transportation rights. The cost to the Corporation of this acquisition, which is scheduled to close in the third quarter, is expected to be approximately $100 million. Capital expenditures for the remainder of 1998 including the pending oil and gas reserve acquisition described above, are expected to be approximately $750 million and will be financed by internally generated funds and external borrowings. The Corporation continues its program of identifying and modifying computer programs and systems that otherwise would not properly function in the year 2000. The Corporation expenses year 2000 remediation costs as incurred and expects that total future costs of this program will be approximately $15 million, a portion of which is included in its normal information technology budget. 11 13 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. The Annual Meeting of Stockholders of the Registrant was held on May 6, 1998. The Inspectors of Election reported that 77,787,522 shares of Common Stock of the Registrant were represented in person or by proxy at the meeting, constituting 85.12% of the votes entitled to be cast. At the meeting, stockholders voted upon the election of five nominees for the Board of Directors for the three-year term expiring in 2001 and the ratification of the selection by the Board of Directors of Ernst & Young LLP as the independent auditors of the Registrant for the fiscal year ended December 31, 1998. With respect to the election of directors, the inspectors of election reported as follows:
For Withhold Authority to Vote Name Nominee Listed For Nominee Listed ---- -------------- ------------------ Nicholas F. Brady 76,807,873 979,649 J. Barclay Collins 76,644,696 1,142,826 Leon Hess 76,624,828 1,162,694 Thomas H. Kean 76,653,251 1,134,271 Frank A. Olson 76,788,686 998,836
The inspectors further reported that 77,639,405 votes were cast for the ratification of the selection of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, 1998, 65,819 votes were cast against said ratification and holders of 82,298 votes abstained. There were no broker non-votes with respect to the election of directors or the ratification of the selection of independent auditors. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits None (b) Reports on Form 8-K The Registrant filed no report on Form 8-K during the three months ended June 30, 1998. 12 14 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/s John B. Hess ---------------------------- JOHN B. HESS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER By s/s John Y. Schreyer ---------------------------- JOHN Y. SCHREYER EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Date: August 10, 1998 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 40,894 0 656,053 0 826,004 1,722,545 13,125,318 7,689,270 7,777,888 1,471,177 2,132,484 0 0 90,958 3,040,560 7,777,888 3,443,043 3,567,312 2,609,484 2,609,484 0 0 67,317 12,056 46,369 (34,313) 0 0 0 (34,313) (.38) (.38)
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