Hess Reports Estimated Results for the Fourth Quarter of 2011

Published on Wednesday, 25 January 2012 07:44 Written by TradersHuddle Staff

NEW YORK-( Business Wire )-

Hess Corporation (NYSE: HES) reported a net loss of $131 million for the fourth quarter of 2011 compared with net income of $58 million for the fourth quarter of 2010. The after-tax income (loss) by major operating activity was as follows:

				Three Months Ended							Year Ended
				December 31, (unaudited)							December 31, (unaudited)
				2011			2010				2011			2010
				(In millions, except per share amounts)
Exploration and Production				$	527		$	420			$	2,675		$	2,736
Marketing and Refining					(561)			(261)				(584)			(231)
Corporate					(40)			(43)				(154)			(159)
Interest expense					(57)			(58)				(234)			(221)
Net income (loss) attributable to Hess Corporation				$	(131)		$	58			$	1,703		$	2,125
Net income (loss) per share (diluted)				$	(.39)		$	.18			$	5.01		$	6.47
Weighted average number of shares (diluted)					337.5			330.5				339.9			328.3

Note: See the following page for a table of items affecting comparability of earnings between periods.

Exploration and Production earnings were $527 million in the fourth quarter of 2011 compared with $420 million in the fourth quarter of 2010. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $89.70 per barrel, up from $71.73 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.32 per Mcf in the fourth quarter of 2011, up from $5.30 per Mcf in the fourth quarter of 2010. Fourth quarter oil and gas production was 367,000 barrels of oil equivalent per day, compared with 420,000 barrels of oil equivalent per day in the fourth quarter a year ago, largely due to production interruptions and asset sales. Fourth quarter 2011 results included higher exploration expenses reflecting total dry hole costs of $236 million ($143 million after-tax), primarily associated with two exploration wells on the Semai V Block, offshore Indonesia.

Oil and gas proved reserves were 1,573 million barrels of oil equivalent at the end of 2011, compared with 1,537 million barrels at the end of 2010. During 2011, the Corporation added 203 million barrels of oil equivalent to proved reserves. These additions, which are subject to final review, replaced approximately 147 percent of the Corporation’s 2011 production, resulting in a reserve life of 11.4 years.

Marketing and Refining generated a loss of $561 million in the fourth quarter of 2011 compared with a loss of $261 million in the same period in 2010. Refining operations incurred a loss of $598 million in the fourth quarter of 2011, including the HOVENSA L.L.C. shutdown charge discussed below, and a loss of $308 million in the fourth quarter a year ago. Marketing earnings were $48 million compared with $37 million in the same quarter of 2010. Trading activities generated a loss of $11 million in the fourth quarter of 2011 and income of $10 million in the fourth quarter of last year.

The following table reflects the total after-tax income (expense) of items affecting comparability of earnings between periods:

						Three Months Ended									Year Ended
						December 31, (unaudited)									December 31, (unaudited)
						2011			2010						2011			2010
						(Millions of dollars)
Exploration and Production						$	-		$	(51)					$	244		$	732
Marketing and Refining							(525)			(289)						(525)			(289)
Corporate							-			-						-			(7)
						$	(525)		$	(340)					$	(281)		$	436

Fourth quarter 2011 results included an after-tax charge of $525 million related to the Corporation’s investment in HOVENSA L.L.C. and the shutdown of the refinery in St. Croix, U.S. Virgin Islands.

Net cash provided by operating activities was $1,138 million in the fourth quarter of 2011, compared with $1,478 million in the same quarter of 2010. Capital and exploratory expenditures were $2,236 million, of which $2,185 million related to Exploration and Production operations. Capital and exploratory expenditures for the fourth quarter of 2010 were $2,464 million, of which $2,438 million related to Exploration and Production operations.

At December 31, 2011, cash and cash equivalents totaled $351 million compared with $1,608 million at December 31, 2010. Total debt was $6,057 million at December 31, 2011 and $5,583 million at December 31, 2010. The Corporation’s debt to capitalization ratio at December 31, 2011 was 24.6 percent compared with 24.9 percent at the end of 2010.

Hess Corporation will review fourth quarter financial and operating results and other matters on a webcast at 10 a.m. today. For details about 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, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. More information on Hess Corporation is available at www.hess.com.

__________________________________________________________

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)
				Fourth			Fourth			Third
				Quarter			Quarter			Quarter
				2011			2010			2011
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues				$	9,733		$	9,007		$	8,665
Income (loss) from equity investment in HOVENSA L.L.C.					(940)			(348)			(36)
Other, net					31			31			97
Total revenues and non-operating income					8,824			8,690			8,726
Costs and Expenses
Cost of products sold (excluding items shown separately below)					6,712			6,221			6,181
Production expenses					613			532			609
Marketing expenses					273			291			266
Exploration expenses, including dry holes and lease impairment					426			317			199
Other operating expenses					44			42			43
General and administrative expenses					187			197			177
Interest expense					93			100			94
Depreciation, depletion and amortization					674			633			586
Asset impairments					-			-			358
Total costs and expenses					9,022			8,333			8,513
Income (loss) before income taxes					(198)			357			213
Provision (benefit) for income taxes					(64)			274			(54)
Net income (loss)					(134)			83			267
Less: Net income (loss) attributable to noncontrolling interests					(3)			25			(31)
Net income (loss) attributable to Hess Corporation				$	(131)		$	58		$	298
Supplemental Income Statement Information
Foreign currency gains (losses), after-tax				$	(8)		$	2		$	(2)
Capitalized interest					5			2			4
Cash Flow Information
Net cash provided by operating activities (*)				$	1,138		$	1,478		$	1,022
Capital and Exploratory Expenditures
Exploration and Production
United States				$	1,372		$	1,820		$	1,600
International					813			618			917
Total Exploration and Production					2,185			2,438			2,517
Marketing, Refining and Corporate					51			26			33
Total Capital and Exploratory Expenditures				$	2,236		$	2,464		$	2,550
Exploration expenses charged to income included above
United States				$	51		$	46		$	48
International					70			77			68
				$	121		$	123		$	116

(*) Includes changes in working capital.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS)
							Year Ended December 31,
							2011			2010
Income Statement
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues							$	38,466		$	33,862
Income (loss) from equity investment in HOVENSA L.L.C.								(1,073)			(522)
Other, net								478			1,273
Total revenues and non-operating income								37,871			34,613
Costs and Expenses
Cost of products sold (excluding items shown separately below)								26,774			23,407
Production expenses								2,352			1,924
Marketing expenses								1,069			1,021
Exploration expenses, including dry holes and lease impairment								1,195			865
Other operating expenses								171			213
General and administrative expenses								702			662
Interest expense								383			361
Depreciation, depletion and amortization								2,406			2,317
Asset impairments								358			532
Total costs and expenses								35,410			31,302
Income (loss) before income taxes								2,461			3,311
Provision (benefit) for income taxes								785			1,173
Net income (loss)								1,676			2,138
Less: Net income (loss) attributable to noncontrolling interests								(27)			13
Net income (loss) attributable to Hess Corporation							$	1,703		$	2,125
Supplemental Income Statement Information
Foreign currency gains (losses), after-tax							$	(15)		$	(8)
Capitalized interest								13			5
Cash Flow Information
Net cash provided by operating activities (*)							$	4,984		$	4,530
Capital and Exploratory Expenditures
Exploration and Production
United States							$	4,305		$	2,935
International								3,039			2,822
Total Exploration and Production								7,344			5,757
Marketing, Refining and Corporate								118			98
Total Capital and Exploratory Expenditures							$	7,462		$	5,855
Exploration expenses charged to income included above
United States							$	197		$	154
International								259			209
							$	456		$	363

(*) Includes changes in working capital.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS)
									December 31,				December 31,
									2011				2010
Balance Sheet Information
Cash and cash equivalents									$	351			$	1,608
Other current assets										7,965				7,172
Investments										384				443
Property, plant and equipment – net										24,550				21,127
Other long-term assets										5,688				5,046
Total assets									$	38,938			$	35,396
Short-term debt and current maturities of long-term debt									$	52			$	46
Other current liabilities										8,025				7,567
Long-term debt										6,005				5,537
Other long-term liabilities										6,294				5,437
Total equity excluding other comprehensive income (loss)										19,659				17,968
Accumulated other comprehensive income (loss)										(1,097)				(1,159)
Total liabilities and equity									$	38,938			$	35,396

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED) (IN MILLIONS OF DOLLARS)
			Fourth Quarter 2011
			United
			States				International			Total
Sales and other operating revenues			$	937			$	1,662		$	2,599
Other, net				3				25			28
Total revenues and non-operating income				940				1,687			2,627
Costs and expenses
Production expenses, including related taxes				170				443			613
Exploration expenses, including dry holes and lease impairment				118				308			426
General, administrative and other expenses				49				33			82
Depreciation, depletion and amortization				273				378			651
Asset impairments				-				-			-
Total costs and expenses				610				1,162			1,772
Results of operations before income taxes				330				525			855
Provision (benefit) for income taxes				130				198			328
Results of operations attributable to Hess Corporation			$	200			$	327		$	527
			Fourth Quarter 2010
			United
			States				International			Total
Sales and other operating revenues			$	679			$	1,613		$	2,292
Other, net				(5)				13			8
Total revenues and non-operating income				674				1,626			2,300
Costs and expenses
Production expenses, including related taxes				143				389			532
Exploration expenses, including dry holes and lease impairment				121				196			317
General, administrative and other expenses				56				24			80
Depreciation, depletion and amortization				184				425			609
Asset impairments				-				-			-
Total costs and expenses				504				1,034			1,538
Results of operations before income taxes				170				592			762
Provision (benefit) for income taxes				72				270			342
Results of operations attributable to Hess Corporation			$	98			$	322		$	420
			Third Quarter 2011
			United
			States				International			Total
Sales and other operating revenues			$	830			$	1,307		$	2,137
Other, net				4				93			97
Total revenues and non-operating income				834				1,400			2,234
Costs and expenses
Production expenses, including related taxes				174				435			609
Exploration expenses, including dry holes and lease impairment				120				79			199
General, administrative and other expenses				44				27			71
Depreciation, depletion and amortization				209				355			564
Asset impairments				16				342			358
Total costs and expenses				563				1,238			1,801
Results of operations before income taxes				271				162			433
Provision (benefit) for income taxes				108				(97)			11
Results of operations attributable to Hess Corporation			$	163			$	259		$	422

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED) (IN MILLIONS OF DOLLARS)
			Year Ended December 31, 2011
			United
			States			International			Total
Sales and other operating revenues			$	3,371		$	6,676		$	10,047
Other, net				(7)			471			464
Total revenues and non-operating income				3,364			7,147			10,511
Costs and expenses
Production expenses, including related taxes				660			1,692			2,352
Exploration expenses, including dry holes and lease impairment				475			720			1,195
General, administrative and other expenses				190			123			313
Depreciation, depletion and amortization				800			1,505			2,305
Asset impairments				16			342			358
Total costs and expenses				2,141			4,382			6,523
Results of operations before income taxes				1,223			2,765			3,988
Provision (benefit) for income taxes				470			843			1,313
Results of operations attributable to Hess Corporation			$	753		$	1,922		$	2,675
			Year Ended December 31, 2010
			United
			States			International			Total
Sales and other operating revenues			$	2,453		$	6,291		$	8,744
Other, net				(3)			1,236			1,233
Total revenues and non-operating income				2,450			7,527			9,977
Costs and expenses
Production expenses, including related taxes				489			1,435			1,924
Exploration expenses, including dry holes and lease impairment				364			501			865
General, administrative and other expenses				161			120			281
Depreciation, depletion and amortization				649			1,573			2,222
Asset impairments				-			532			532
Total costs and expenses				1,663			4,161			5,824
Results of operations before income taxes				787			3,366			4,153
Provision (benefit) for income taxes				304			1,113			1,417
Results of operations attributable to Hess Corporation			$	483		$	2,253		$	2,736

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
													Fourth							Fourth							Third
													Quarter							Quarter							Quarter
													2011							2010							2011
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States														89							76							82
Europe														95							103							68
Africa														54							99							59
Asia														13							13							15
Total														251							291							224
Natural gas liquids - barrels
United States														13							14							13
Europe														4							4							3
Asia														1							1							1
Total														18							19							17
Natural gas - mcf
United States														90							114							102
Europe														92							138							55
Asia and other														408							411							458
Total														590							663							615
Barrels of oil equivalent														367							420							344
Average Selling Price
Crude oil - per barrel (including hedging)*
United States													$	100.76						$	80.65						$	95.12
Europe														77.18							63.18							65.92
Africa														85.49							70.21							89.41
Asia														111.08							86.94							112.31
Worldwide														89.70							71.73							85.81
Crude oil - per barrel (excluding hedging)
United States													$	100.76						$	80.65						$	95.12
Europe														77.18							63.18							65.92
Africa														109.28							86.40							113.03
Asia														111.08							86.94							112.31
Worldwide														95.16							77.17							92.33
Natural gas liquids - per barrel
United States													$	57.86						$	51.89						$	57.72
Europe														66.47							64.65							82.18
Asia														66.18							70.22							71.30
Worldwide														59.81							55.00							63.64
Natural gas - per mcf
United States													$	2.50						$	3.11						$	3.43
Europe														8.88							7.81							8.93
Asia and other														6.57							5.06							5.86
Worldwide														6.32							5.30							5.74

*	The realized after-tax losses from crude oil hedging activities were $83 million in the fourth quarter of 2011, $86 million in the fourth quarter of 2010 and $82 million in the third quarter of 2011.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
																				Year Ended December 31,
																				2011								2010
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States																					81								75
Europe																					89								88
Africa																					66								113
Asia																					13								13
Total																					249								289
Natural gas liquids - barrels
United States																					13								14
Europe																					3								3
Asia																					1								1
Total																					17								18
Natural gas - mcf
United States																					100								108
Europe																					81								134
Asia and other																					442								427
Total																					623								669
Barrels of oil equivalent																					370								418
Average Selling Price
Crude oil - per barrel (including hedging)*
United States																				$	98.56							$	75.02
Europe																					80.18								58.11
Africa																					88.46								65.02
Asia																					111.71								79.23
Worldwide																					89.99								66.20
Crude oil - per barrel (excluding hedging)
United States																				$	98.56							$	75.02
Europe																					80.18								58.11
Africa																					110.28								78.31
Asia																					111.71								79.23
Worldwide																					95.60								71.40
Natural gas liquids - per barrel
United States																				$	58.59							$	47.92
Europe																					75.49								59.23
Asia																					72.29								63.50
Worldwide																					62.72								50.49
Natural gas - per mcf
United States																				$	3.39							$	3.70
Europe																					8.79								6.23
Asia and other																					6.02								5.93
Worldwide																					5.96								5.63

*

The realized after-tax losses from crude oil hedging activities were $327 million for the year ended December 31, 2011 and $338 million for the year ended December 31, 2010.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)
												Fourth					Fourth					Third
												Quarter					Quarter					Quarter
												2011					2010					2011
Financial Information (in millions of dollars)
Marketing and Refining Results
Income (loss) before income taxes												$	(885)				$	(251)				$	(23)
Provision (benefit) for income taxes													(324)					10					-
Results of operations attributable to Hess Corporation												$	(561)				$	(261)				$	(23)
Summary of Marketing and Refining Results
Refining												$	(598)				$	(308)				$	(38)
Marketing													48					37					41
Trading													(11)					10					(26)
Results of operations attributable to Hess Corporation												$	(561)				$	(261)				$	(23)
Operating Data (barrels and gallons in thousands)
Refined Product Sales (barrels per day)
Gasoline													214					225					222
Distillates													143					144					100
Residuals													65					78					53
Other													19					42					14
Total													441					489					389
Refinery Throughput (barrels per day)
HOVENSA - Crude runs													271					384					297
HOVENSA - Hess 50% share													136					192					149
Port Reading													58					60					63
Refinery Utilization	Refinery Capacity
HOVENSA	(barrels per day)
Crude	350 (a)												77.5	%				76.8	%				84.9	%
FCC	150												64.0	%				57.3	%				79.2	%
Coker	58												80.4	%				73.3	%				91.0	%
Port Reading	70												82.9	%				86.0	%				90.0	%
Retail Marketing
Number of retail stations (b)													1,361					1,362					1,358
Convenience store revenue (in millions of dollars) (c)												$	290				$	298				$	316
Average gasoline volume per station (gallons per month) (c)													195					201					201

(a)		HOVENSA’s refining crude capacity was reduced to 350,000 from 500,000 barrels per day in the first quarter of 2011.
(b)		Includes company operated, Wilco-Hess, dealer and branded retailer.
(c)		Company operated only.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)
																Year Ended December 31,
																2011						2010
Financial Information (in millions of dollars)
Marketing and Refining Results
Income (loss) before income taxes																$	(857)					$	(227)
Provision (benefit) for income taxes																	(273)						4
Results of operations attributable to Hess Corporation																$	(584)					$	(231)
Summary of Marketing and Refining Results
Refining																$	(728)					$	(445)
Marketing																	185						215
Trading																	(41)						(1)
Results of operations attributable to Hess Corporation																$	(584)					$	(231)
Operating Data (barrels and gallons in thousands)
Refined Product Sales (barrels per day)
Gasoline																	222						242
Distillates																	123						120
Residuals																	65						69
Other																	20						40
Total																	430						471
Refinery Throughput (barrels per day)
HOVENSA - Crude runs																	284						390
HOVENSA - Hess 50% share																	142						195
Port Reading																	63						55
Refinery Utilization	Refinery Capacity
HOVENSA	(barrels per day)
Crude	350 (a)																81.1	%					78.0	%
FCC	150																71.7	%					66.5	%
Coker	58																77.4	%					78.3	%
Port Reading	70																90.0	%					78.1	%
Retail Marketing
Number of retail stations (b)																	1,361						1,362
Convenience store revenue (in millions of dollars) (c)																$	1,189					$	1,213
Average gasoline volume per station (gallons per month) (c)																	195						199

(a)		HOVENSA’s refining crude capacity was reduced to 350,000 from 500,000 barrels per day in the first quarter of 2011.
(b)		Includes company operated, Wilco-Hess, dealer and branded retailer.
(c)		Company operated only.

Hess CorporationInvestor Contact:Jay Wilson, (212) 536-8940orMedia Contact:Jon Pepper, (212) 536-8550