-----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, PXIFw7Hihj3q+j6zcZn0J/hdxPq0Ts2cMBk7qQfsppnTIABu/mlWFMzUMX96VpG0 DYmDXqnw8VlcFYAAN2dfig== 0001157523-07-004014.txt : 20070425 0001157523-07-004014.hdr.sgml : 20070425 20070425094532 ACCESSION NUMBER: 0001157523-07-004014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070425 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070425 DATE AS OF CHANGE: 20070425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HESS CORP CENTRAL INDEX KEY: 0000004447 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 134921002 STATE OF INCORPORATION: DE FISCAL YEAR END: 0503 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01204 FILM NUMBER: 07786262 BUSINESS ADDRESS: STREET 1: 1185 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2129978500 MAIL ADDRESS: STREET 1: 1185 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: AMERADA HESS CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERADA PETROLEUM CORP DATE OF NAME CHANGE: 19690727 8-K 1 a5385094.txt HESS CORPORATION 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): April 25, 2007 HESS CORPORATION (Exact Name of Registrant as Specified in Its Charter) DELAWARE No. 1-1204 No. 13-4921002 (State or Other (Commission (IRS Employer Jurisdiction of File Number) Identification No.) Incorporation) 1185 Avenue of the Americas New York, New York 10036 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (212) 997-8500 -------------- N/A (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ 1 Item 2.02. Results of Operations and Financial Condition. On April 25, 2007, Hess Corporation issued a news release reporting its results for the first quarter of 2007. A copy of this news release is attached hereto as Exhibit 99(1) and is hereby incorporated by reference. Item 7.01. Regulation FD Disclosure. Furnished hereunder are the prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer of Hess Corporation at a public conference call held on April 25, 2007. A copy of his remarks is attached as Exhibit 99(2) and is incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (c) Exhibits 99(1) News release dated April 25, 2007 reporting results for the first quarter of 2007. 99(2) Prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer. 2 SIGNATURE 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 hereunto duly authorized. Date: April 25, 2007 HESS CORPORATION By: /s/John P. Rielly ----------------------------------- Name: John P. Rielly Title: Senior Vice President and Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99(1) News release dated April 25, 2007 reporting results for the first quarter of 2007. 99(2) Prepared remarks of John B. Hess, Chairman of the Board of Directors and Chief Executive Officer. 4 EX-99.1 2 a5385094-ex991.txt EXHIBIT 99.1 EXHIBIT 99(1) Hess Reports Estimated Results for the First Quarter of 2007 NEW YORK--(BUSINESS WIRE)--April 25, 2007--Hess Corporation (NYSE: HES) Hess Corporation reported net income of $370 million for the first quarter of 2007 compared with net income of $699 million for the first quarter of 2006. First quarter 2006 results included an after-tax gain of $186 million related to the sale of certain United States producing properties. The after-tax results by major operating activities were as follows: Three months ended March 31 (unaudited) ------------------------- 2007 2006* ---------- ---------- (In millions, except per share amounts) Exploration and Production $ 340 $ 706 Marketing and Refining 101 53 Corporate (31) (23) Interest expense (40) (37) ---------- ---------- Net income $ 370 $ 699 ========== ========== Net income per share (diluted) $ 1.17 $ 2.22 ========== ========== Weighted average number of shares (diluted) 317.3 314.8 ========== ========== * Reflects the retrospective adoption of a new accounting pronouncement related to refinery turnarounds and the impact of the Corporation's 3-for-1 stock split on May 31, 2006. Exploration and Production earnings were $340 million in the first quarter of 2007 compared with $706 million in the first quarter of 2006. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 382,000 barrels per day in the first quarter of 2007 compared with 361,000 barrels per day in the first quarter of 2006. In the first quarter of 2007, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $50.74 per barrel, a decrease of $2.56 per barrel from the first quarter of 2006. The Corporation's average worldwide natural gas selling price was $5.00 per Mcf in the first quarter of 2007, compared to $6.73 per Mcf in the first quarter of 2006. Marketing and Refining earnings were $101 million in the first quarter of 2007 compared with $53 million in the first quarter of 2006. Refining earnings were $54 million in the first quarter of 2007 compared with $25 million in the first quarter of 2006, reflecting higher refined product margins and volumes. In the first quarter of 2006, refining earnings were affected by the unscheduled shutdown and maintenance of the fluid catalytic cracking unit at HOVENSA. Marketing earnings were $43 million in the first quarter of 2007 compared with $12 million in the same period of 2006, primarily reflecting higher margins. Earnings from trading operations were $4 million in the first quarter of 2007 compared to $16 million in the first quarter of 2006. Net cash provided by operating activities was $639 million in the first quarter of 2007 compared with $1,198 million in the first quarter of 2006. Capital and exploratory expenditures for the first quarter of 2007 amounted to $1,181 million, of which $1,159 million related to Exploration and Production operations. These expenditures include $371 million for the acquisition of a 28% interest in the Genghis Khan oil and gas development in the deepwater Gulf of Mexico. Capital and exploratory expenditures for the first quarter of 2006 amounted to $1,387 million, of which $1,354 million related to Exploration and Production operations. These expenditures included $673 million for the acquisition of assets in Egypt and the re-entry into Libya. At March 31, 2007, cash and cash equivalents totaled $249 million compared with $383 million at December 31, 2006. Total debt was $4,141 million at March 31, 2007 and $3,772 million at December 31, 2006. The Corporation's debt to capitalization ratio at March 31, 2007 was 32.5% compared with 31.6% at the end of 2006. Effective January 1, 2007, the Corporation retrospectively adopted a new accounting pronouncement related to refinery turnarounds. As a result of this accounting change, the Corporation's previously reported first quarter 2006 net income increased by $4 million, fourth quarter 2006 net income was unchanged and retained earnings as of December 31, 2006 increased by $36 million. All of the financial information presented in this release and the accompanying schedules reflect this retrospective accounting change. Hess Corporation will review first quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details on the event, refer to the Investor Relations section of our website at www.hess.com. Hess Corporation, with headquarters in New York, is a global integrated energy company engaged in the exploration for and the development, production, purchase, transportation and sale of crude oil and natural gas. The Corporation also manufactures, purchases, transports, trades and markets refined petroleum and other energy products. Forward Looking Statements Certain statements in this release may constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, uncertainties inherent in the measurement and interpretation of geological, geophysical and other technical data. HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS) First First Fourth Quarter Quarter Quarter 2007 2006 2006 -------- -------- -------- Income Statement - ----------------------------------------- Revenues and Non-operating Income Sales (excluding excise taxes) and other operating revenues $ 7,319 $ 7,159 $ 7,155 Non-operating income Equity in income of HOVENSA L.L.C. 56 3 29 Gain on asset sales -- 289 -- Other, net (1) 15 22 -------- -------- -------- Total revenues and non-operating income 7,374 7,466 7,206 -------- -------- -------- Costs and Expenses Cost of products sold (excluding items shown separately below) 5,410 5,229 5,058 Production expenses 347 265 358 Marketing expenses 222 231 254 Exploration expenses, including dry holes and lease impairment 93 112 140 Other operating expenses 33 29 33 General and administrative expenses 131 106 117 Interest expense 64 57 51 Depreciation, depletion and amortization 327 266 353 -------- -------- -------- Total costs and expenses 6,627 6,295 6,364 -------- -------- -------- Income before income taxes 747 1,171 842 Provision for income taxes 377 472 483 -------- -------- -------- Net income $ 370 $ 699 $ 359 ======== ======== ======== Preferred stock dividends -- 12 8 -------- -------- -------- Net income applicable to common stockholders $ 370 $ 687 $ 351 ======== ======== ======== Supplemental Income Statement Information - ----------------------------------------- Foreign currency gains (losses) net, after-tax $ (4) $ 7 $ 5 Capitalized interest 15 24 25 Cash Flow Information - ----------------------------------------- Net cash provided by operating activities * $ 639 $ 1,198 $ 779 Capital and Exploratory Expenditures - ----------------------------------------- Exploration and Production United States $ 651 $ 160 $ 269 International 508 1,194 715 -------- -------- -------- Total Exploration and Production 1,159 1,354 984 Marketing, Refining and Corporate 22 33 47 -------- -------- -------- Total Capital and Exploratory Expenditures $ 1,181 $ 1,387 $ 1,031 ======== ======== ======== Exploration expenses charged to income included above United States $ 40 $ 24 $ 42 International 35 27 28 -------- -------- -------- $ 75 $ 51 $ 70 ======== ======== ======== * includes changes in working capital HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS) March 31 December 31 2007 2006 --------- ----------- Balance Sheet Information - ------------------------------------------------- Cash and cash equivalents $ 249 $ 383 Other current assets 4,978 5,465 Investments 1,234 1,243 Property, plant and equipment - net 13,143 12,308 Other long-term assets 3,123 3,043 --------- ----------- Total assets $ 22,727 $ 22,442 ========= =========== Current maturities of long-term debt $ 30 $ 27 Other current liabilities 6,155 6,712 Long-term debt 4,111 3,745 Other long-term liabilities 3,818 3,811 Stockholders' equity excluding other comprehensive income (loss) 10,118 9,711 Accumulated other comprehensive income (loss) (1,505) (1,564) --------- ----------- Total liabilities and stockholders' equity $ 22,727 $ 22,442 ========= =========== HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED) (IN MILLIONS OF DOLLARS) First Quarter 2007 --------------------------------- United States International Total -------- -------------- --------- Sales and other operating revenues $ 241 $ 1,270 $ 1,511 Non-operating income 8 (14) (6) -------- -------------- --------- Total revenues 249 1,256 1,505 -------- -------------- --------- Costs and expenses Production expenses, including related taxes 59 288 347 Exploration expenses, including dry holes and lease impairment 50 43 93 General, administrative and other expenses 33 24 57 Depreciation, depletion and amortization 37 272 309 -------- -------------- --------- Total costs and expenses 179 627 806 -------- -------------- --------- Results of operations before income taxes 70 629 699 Provision for income taxes 26 333 359 -------- -------------- --------- Results of operations $ 44 $ 296 $ 340 ======== ============== ========= First Quarter 2006 --------------------------------- United States International Total -------- -------------- --------- Sales and other operating revenues $ 344 $ 1,207 $ 1,551 Non-operating income 288 13 301 -------- -------------- --------- Total revenues 632 1,220 1,852 -------- -------------- --------- Costs and expenses Production expenses, including related taxes 52 213 265 Exploration expenses, including dry holes and lease impairment 62 50 112 General, administrative and other expenses 20 25 45 Depreciation, depletion and amortization 29 222 251 -------- -------------- --------- Total costs and expenses 163 510 673 -------- -------------- --------- Results of operations before income taxes 469 710 1,179 Provision for income taxes 167 306 473 -------- -------------- --------- Results of operations $ 302 $ 404 $ 706 ======== ============== ========= Fourth Quarter 2006 --------------------------------- United States International Total -------- -------------- --------- Sales and other operating revenues $ 244 $ 1,438 $ 1,682 Non-operating income 3 18 21 -------- -------------- --------- Total revenues 247 1,456 1,703 -------- -------------- --------- Costs and expenses Production expenses, including related taxes 59 299 358 Exploration expenses, including dry holes and lease impairment 94 46 140 General, administrative and other expenses 30 16 46 Depreciation, depletion and amortization 31 305 336 -------- -------------- --------- Total costs and expenses 214 666 880 -------- -------------- --------- Results of operations before income taxes 33 790 823 Provision for income taxes 12 461 473 -------- -------------- --------- Results of operations $ 21 $ 329 $ 350 ======== ============== ========= HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL OPERATING DATA (IN THOUSANDS, EXCEPT FOR AVERAGE SELLING PRICES) First First Fourth Quarter Quarter Quarter 2007 2006 2006 ------- ------- ------- Operating Data - ---------------------------------------------- Net Production Per Day - ---------------------------------------------- Crude oil - barrels United States 29 41 29 Europe 110 113 111 Africa 99 82 89 Asia and other 15 10 13 ------- ------- ------- Total 253 246 242 ======= ======= ======= Natural gas liquids - barrels United States 9 9 9 Europe 7 4 7 ------- ------- ------- Total 16 13 16 ======= ======= ======= Natural gas - mcf United States 90 123 91 Europe 348 280 336 Asia and other 243 207 223 ------- ------- ------- Total 681 610 650 ======= ======= ======= Barrels of oil equivalent 382 361 366 ======= ======= ======= Average Selling Price - ---------------------------------------------- Crude oil - per barrel (including hedging) United States $53.19 $57.39 $53.64 Europe 51.32 54.98 50.01 Africa 48.17 45.67 49.77 Asia and other 56.44 59.04 57.09 Worldwide 50.74 53.30 50.76 Crude oil - per barrel (excluding hedging) United States $53.19 $57.39 $53.64 Europe 51.32 56.89 51.79 Africa 56.09 61.61 57.11 Asia and other 56.44 59.04 57.09 Worldwide 53.75 58.26 54.46 Natural gas liquids - per barrel United States $42.44 $44.21 $43.68 Europe 45.90 47.16 45.19 Worldwide 43.97 44.98 44.33 Natural gas - per mcf United States $ 7.21 $ 7.73 $ 6.27 Europe 4.74 8.39 5.55 Asia and other 4.56 3.89 4.39 Worldwide 5.00 6.73 5.25 HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION SUPPLEMENTAL HEDGING INFORMATION (UNAUDITED) The following is a summary of the Corporation's outstanding crude oil hedges at March 31, 2007: Brent Crude Oil* ----------------------------------- Average Thousands of Maturity Selling Price barrels per day ---------------- -------------- ------------------- 2007 $ 25.85 24 2008 25.56 24 2009 25.54 24 2010 25.78 24 2011 26.37 24 2012 26.90 24 * There were no WTI crude oil or natural gas hedges outstanding at March 31, 2007. The after-tax losses from crude oil hedges were $39 million in the first quarter of 2007, $65 million in first quarter of 2006, and $57 million in the fourth quarter of 2006. The after-tax deferred hedge loss included in accumulated other comprehensive income at March 31, 2007 amounted to $1.3 billion. HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED) First First Fourth Quarter Quarter Quarter 2007 2006 2006 -------- -------- -------- Financial Information (in millions of dollars) - ---------------------------------- Marketing and Refining Earnings - ---------------------------------- Income before income taxes $ 159 $ 83 $ 104 Provision for income taxes 58 30 37 -------- -------- -------- Marketing and Refining Earnings $ 101 $ 53 $ 67 ======== ======== ======== Summary of Marketing and Refining Earnings - ---------------------------------- Refining $ 54 $ 25 $ 45 Marketing 43 12 17 Trading 4 16 5 -------- -------- -------- Total Marketing and Refining Earnings $ 101 $ 53 $ 67 ======== ======== ======== - ---------------------------------------------------------------------- Operating Data (in thousands unless noted) - ---------------------------------- Refined Product Sales (barrels per day) - ---------------------------------- Gasoline 194 226 210 Distillates 174 166 169 Residuals 94 85 57 Other 29 43 33 -------- -------- -------- Total 491 520 469 ======== ======== ======== Refinery Throughput (barrels per day) - ---------------------------------- HOVENSA - Crude runs 470 420 469 HOVENSA - Hess 50% share 235 210 234 Port Reading 55 64 64 --------- Refinery Utilization Refinery Capacity - ---------------------------------- --------- HOVENSA (barrels per day) Crude 500 94.1% 84.0% 93.7% FCC 150 93.2% 66.4% 91.2% Coker 58 88.6% 85.7% 89.8% Port Reading 65 84.7% 98.6% 98.1% --------- Retail Marketing - ---------------------------------- Number of retail stations * 1,345 1,343 1,350 Convenience store revenue (in millions of dollars) ** $ 244 $ 233 $ 253 Average gasoline volume per station (gallons per month) ** 191 195 202 * Includes company operated, Wilco-Hess, dealer and branded retailer. ** Company operated only. CONTACT: Hess Corporation Jay Wilson, 212-536-8940 EX-99.2 3 a5385094-ex992.txt EXHIBIT 99.2 EXHIBIT 99(2) 2007 First Quarter Earnings Conference Call Thank you Jay, and welcome to our first quarter conference call. I will make a few brief comments after which John Rielly will review our financial results. Our first quarter 2007 Exploration and Production financial results were lower than the year ago quarter as the result of weaker commodity prices and higher production costs, which were partially offset by higher production volumes. First quarter 2007 oil and natural gas production averaged 382 thousand barrels of oil equivalent per day, which was about 6% above the year ago period. Our full year 2007 production forecast remains 370-380 thousand barrels of oil equivalent per day. Looking at the balance of the year, worldwide production is anticipated to average in the range of 350-360 thousand barrels of oil equivalent per day for the second and third quarters and then to increase to more than 400 thousand barrels of oil equivalent per day for the fourth quarter. -1- Our worldwide oil and natural gas production in 2007 is expected to be affected by several factors. Reductions in the second and third quarters will result from: o The sale of our interests in the Scott and Telford Fields in the UK North Sea, o A decision to reduce natural gas sales from the Cromarty Field during the second and third quarters, in response to market conditions in the United Kingdom, o The scheduled maintenance of our North Sea facilities, and o A 40 day planned shut down at the Malaysia-Thailand JDA during the third quarter to install facilities required for Phase 2 development. Growth during the year will come from: o The ramp-up in production from the Okume Complex in Equatorial Guinea throughout the year, o The start-up of natural gas production from the Pangkah Field, in Indonesia, in May, and o The commencement of production from the Genghis Khan Field, in the deepwater Gulf of Mexico, in the third quarter. -2- Our field developments continue to make good progress. In the deepwater Gulf of Mexico, our Shenzi development, in which Hess has a 28% interest, remains on schedule for initial production in mid-2009. The CR Luigs drillship is on location drilling development wells and all major contracts have been awarded. Construction of the TLP and topsides is underway and is on schedule and on budget. The focus of our exploration drilling program this year will be appraisal drilling in the deepwater Gulf of Mexico and the commencement of exploration drilling in Australia in the fourth quarter. In the deepwater Gulf of Mexico, appraisal drilling at our Pony discovery, in which we have a 100% interest, is continuing. The results of the Pony #2 well are expected by the end of the second quarter. In addition, appraisal activities at the Tubular Bells discovery in which Hess has a 20% working interest will include a #3 well which is expected to spud in the fourth quarter of 2007. As a result of the success of the #2 well and sidetrack, we have increased the gross reserve estimate to 200-400 million barrels. -3- Lastly, in the first quarter we acquired a 100% interest in an exploration license in the Carnarvon Basin offshore Western Australia. During the fourth quarter of 2007 and extending into early 2008, we will acquire 3-D seismic over the entire 780,000 acre block and drill four exploration wells. With regard to Marketing and Refining, our first quarter 2007 financial results strengthened versus the year ago quarter. In Refining, our results benefited from strong margins and operations, especially at our HOVENSA joint venture. In Energy Marketing, increased natural gas sales and higher margins contributed to improved financial performance. Lastly, in Retail Marketing, our business benefited from increased convenience store sales and higher gasoline margins than a year ago, but was negatively impacted by rising wholesale gasoline prices throughout the quarter. I will now turn the call over to John Rielly. -4- -----END PRIVACY-ENHANCED MESSAGE-----