Second Quarter Highlights:
- Second quarter 2017 pre-tax loss of
$425 million reflects improved operating results compared to the
pre-tax loss of $678 million in the year-ago quarter
- Net loss was $449 million, or $1.46
per common share, compared with a net loss of $392 million, or
$1.29 per common share, in the second quarter of 2016, reflecting a
lower effective tax rate in 2017 from the required change in
deferred tax accounting
- Oil and gas production exceeded
guidance; total production was 294,000 barrels of oil
equivalent per day (boepd), excluding Libya; Bakken production was
108,000 boepd
- Sanctioned the first phase of
development for the Liza Field, one of the industry’s largest oil
discoveries of the past decade, located on the Stabroek Block
offshore Guyana (Hess 30 percent); first oil expected by
2020
- Successfully completed Liza-4 well;
the recently announced Payara-2 well confirms a second giant oil
field in Guyana and increases the Payara gross discovered
recoverable resources to approximately 500 million barrels of oil
equivalent (boe); gross discovered recoverable resources for the
Stabroek Block now estimated between 2.25 billion and 2.75 billion
boe (Hess 30 percent)
- Announced an agreement to sell our
interests in enhanced oil recovery assets in the Permian Basin for
total consideration of $600 million
- Hess Midstream Partners LP sold
common units representing limited partner interests in an initial
public offering for net proceeds of $365.5 million, of which $175
million was distributed to Hess Corporation
- E&P capital and exploratory
expenditures were $528 million for the quarter and $921 million for
the first half of 2017
- Cash and cash equivalents were $2.5
billion at June 30, 2017; $2.7 billion at December 31,
2016
2017 Revised Full Year Guidance:
- Net production guidance, excluding
Libya, increased to 305,000 to 310,000 boepd, the upper end of
previous guidance, even with the loss of 8,000 boepd of production
associated with the sale of our enhanced oil recovery assets in the
Permian Basin scheduled to close August 1st
- E&P capital and exploratory
expenditures are projected to be $2.15 billion, down from original
guidance of $2.25 billion
Hess Corporation (NYSE:HES) today reported a net loss of
$449 million, or $1.46 per common share, in the second quarter
of 2017 compared with a net loss of $392 million, or $1.29 per
common share, in the second quarter of 2016, reflecting a lower
effective tax rate in 2017 from the required change in deferred tax
accounting. Our loss before income taxes was $425 million in the
second quarter of 2017, compared with a loss before income taxes of
$678 million in the prior-year quarter. The improved second quarter
2017 pre-tax results reflect higher realized crude oil selling
prices and lower operating costs and exploration expenses that were
partially offset by lower sales volumes. On an adjusted basis,
second quarter 2016 adjusted loss was $335 million, or $1.10 per
common share.
“Our company delivered strong
operational performance and achieved a number of major strategic
milestones in the quarter,” Chief Executive Officer John Hess said.
“We continue to take steps to reinforce our outstanding
value-driven growth outlook and drive improving returns and lower
capital and operating costs across our portfolio.”
After-tax income (loss) by major
operating activity was as follows:
Three Months Ended Six Months Ended June 30,
June 30, (unaudited) (unaudited)
2017
2016
2017
2016
(In millions, except per share amounts)
Net Income (Loss)
Attributable to Hess Corporation
Exploration and Production $ (354 ) $
(328 ) $ (587 ) $ (781 ) Midstream 16 11 34 27 Corporate, Interest
and Other (111 ) (75 )
(220 ) (147 ) Net income (loss) attributable to Hess
Corporation $ (449 ) $ (392 ) $ (773 ) $
(901 ) Net income (loss) per common share (diluted)
(a) $ (1.46 ) $ (1.29 ) $ (2.53 ) $
(3.00 )
Adjusted Net Income
(Loss) Attributable to Hess Corporation (b)
Exploration and Production $ (354 ) $ (271 ) $ (587 ) $ (724 )
Midstream 16 11 34 27 Corporate, Interest and Other
(111 ) (75 ) (220 ) (147
) Adjusted net income (loss) attributable to Hess Corporation $
(449 ) $ (335 ) $ (773 ) $ (844 )
Adjusted net income (loss) per common share (diluted) (a) $
(1.46 ) $ (1.10 ) $ (2.53 ) $ (2.81 )
Weighted average number of shares (diluted)
314.4 313.2 314.2 306.5
(a)
Calculated as net income (loss)
attributable to Hess Corporation less preferred stock dividends,
divided by weighted average number of diluted shares.
(b)
Adjusted net income (loss) attributable to
Hess Corporation excludes items affecting comparability summarized
on page 5. A reconciliation of net income (loss) attributable to
Hess Corporation to adjusted net income (loss) attributable to Hess
Corporation is provided on page 6.
Exploration and Production:
The Exploration and Production net
loss in the second quarter of 2017 was $354 million, compared
to a net loss of $328 million in the second quarter of 2016.
On an adjusted basis, second quarter 2016 net loss was $271
million. The Corporation’s average realized crude oil selling
price, including the effect of hedging, was $45.95 per barrel in
the second quarter of 2017, up from $41.95 per barrel in the
year-ago quarter. The average realized natural gas liquids selling
price in the second quarter of 2017 was $14.85 per barrel, versus
$9.03 per barrel in the prior-year quarter, while the average
realized natural gas selling price was $3.19 per mcf, compared
with $3.58 per mcf in the second quarter of 2016.
Net production, excluding Libya,
was 294,000 boepd in the second quarter of 2017, compared to
313,000 boepd in the prior-year quarter. Lower volumes were due to
a reduced drilling program across our portfolio, natural field
declines, and planned shut-downs in the Gulf of Mexico. Net
production in Libya, which recommenced in the fourth quarter of
2016, was 6,000 boepd in the second quarter of 2017.
Cash operating costs, which include operating
costs and expenses, production and severance taxes, and E&P
general and administrative expenses, were $14.68 per boe in the
second quarter, down 8 percent from $15.91 per boe in the
prior-year quarter. Second quarter 2017 results included
a charge of $15 million related to crude oil hedge
ineffectiveness. The E&P effective tax rate,
excluding Libya, was a benefit of 8 percent in the second quarter
of 2017, down from a benefit of 47 percent, excluding special
items, in the second quarter of 2016. Commencing in
2017, we do not recognize deferred tax benefit or expense in the
U.S., Denmark (hydrocarbon tax only), and Malaysia until deferred
tax assets are re-established in these
jurisdictions. This financial reporting requirement has
no cash flow or economic impact.
Operational Highlights for the Second Quarter of
2017:
Bakken (Onshore U.S.): Net
production from the Bakken averaged 108,000 boepd, compared to
106,000 boepd in the prior-year quarter. The Corporation operated
an average of four rigs in the second quarter, drilling 23 wells
and bringing 13 new wells online.
Gulf of Mexico (Offshore
U.S.): Net production from the Gulf of Mexico was 51,000 boepd,
compared to 54,000 boepd in the prior-year quarter, primarily
reflecting lower production as a result of planned shut-downs,
partially offset by higher production at the Tubular Bells Field.
At the Stampede development (Hess operated - 25 percent), the
tension leg platform (TLP) was installed in the field and hook-up
activities commenced. One well has been drilled and completed, and
completion operations are underway on the second and third wells.
First production from the field is expected in the first half of
2018.
North Malay Basin Full-field
Development (Offshore Malaysia): At the North Malay Basin
project (Hess operated - 50 percent), hook-up of the topsides for
the central processing platform was completed in the quarter and
first production of natural gas commenced in mid-July with
commissioning activities ongoing. The field is expected to ramp up
net production to approximately 165 million cubic feet per day
during the third quarter.
Guyana (Offshore): At the
Stabroek Block (Hess - 30 percent), operated by Esso Exploration
and Production Guyana Limited, the partners sanctioned the first
phase of the Liza Field development. This phase is
expected to have a gross capital cost of approximately $3.2 billion
for drilling and subsea infrastructure and will develop
approximately 450 million barrels of oil, with first production
expected by 2020. The Corporation’s net share of
development costs is forecast to be approximately $955 million, of
which $110 million is already included in our 2017 capital and
exploratory budget. Of the remaining net development
costs, approximately $250 million is expected in 2018 and
approximately $330 million in 2019, with the balance expected in
2020 and 2021.
In June, the operator confirmed positive
results from the Liza-4 well that encountered more than 197 feet of
high-quality, oil-bearing sandstone reservoirs. On July
25th, the operator announced the successful Payara-2 well, which
encountered 59 feet of high-quality, oil bearing sandstone
reservoirs and confirms a second giant field containing gross
discovered recoverable resources of approximately 500 million
boe. Gross discovered recoverable resources for the
Stabroek Block are now estimated to be 2.25 billion to 2.75 billion
barrels of oil equivalent.
Midstream:
The Midstream segment, which is
comprised primarily of our 50/50 midstream joint venture, Hess
Infrastructure Partners (HIP), had net income of $16 million in the
second quarter of 2017, compared to $11 million in the prior-year
quarter.
In April, Hess Midstream Partners
LP (the “Partnership”) successfully sold common units representing
limited partner interests in an initial public offering for net
proceeds of $365.5 million, of which $175 million was distributed
to the Corporation. The Partnership owns an approximate 20 percent
controlling interest in the operating assets that comprise HIP,
while HIP retains ownership of the remaining 80 percent. The public
unit holders own a 30.5 percent limited partner interest in the
Partnership.
Capital and Exploratory Expenditures:
Exploration and Production capital
and exploratory expenditures were $528 million in the second
quarter of 2017, up from $484 million in the prior-year quarter,
primarily reflecting increased drilling activity (Bakken, Stampede
and Norway), partially offset by lower exploration activity and a
reduction in development expenditures at North Malay Basin.
Liquidity:
Net cash provided by operating
activities was $165 million in the second quarter of 2017, compared
to $197 million in the second quarter of 2016. Net cash provided by
operating activities before changes in working capital was $332
million in the second quarter of 2017, up from $257 million in the
year-ago quarter. Changes in working capital during the second
quarter of 2017 included non-recurring cash outflows totaling
approximately $130 million related to crude oil provided to Dakota
Access Pipeline as line fill, termination payments for an offshore
drilling rig, premiums on crude oil hedging contracts, and
prepayments for frac sand in North Dakota.
At June 30, 2017, the Corporation
had cash and cash equivalents of $2,492 million and total
debt, excluding the Midstream segment, of $6,035 million. The
Corporation’s debt to capitalization ratio was 30.9 percent at June
30, 2017 and 30.4 percent at December 31, 2016.
In August, the Corporation expects
to complete the sale of its enhanced oil recovery assets in the
Permian Basin for total consideration of $600 million.
Items Affecting Comparability of Earnings Between
Periods:
The following table reflects the
total after-tax income (expense) of items affecting comparability
of earnings between periods:
Three Months Ended
Six Months Ended June 30, June 30, (unaudited) (unaudited)
2017
2016
2017
2016
(In millions) Exploration and Production $ — $ (57 )
$ — $ (57 ) Midstream — — — — Corporate, Interest and
Other — — —
— Total items affecting comparability of earnings between periods $
— $ (57 ) $ — $ (57 )
Second quarter 2016 Exploration
and Production results included after-tax charges totaling $74
million ($119 million pre-tax) associated with dry-hole costs for a
well completed in the prior year and termination of a drilling rig
contract, partially offset by an after-tax gain of $17 million ($27
million pre-tax) related to the sale of undeveloped acreage,
onshore United States.
Reconciliation of U.S. GAAP to Non-GAAP measures:
The following table reconciles
reported net income (loss) attributable to Hess Corporation and
adjusted net income (loss):
Three Months Ended Six Months Ended June 30,
June 30, (unaudited) (unaudited)
2017
2016
2017
2016
(In millions) Net income (loss) attributable to Hess Corporation $
(449 ) $ (392 ) $ (773 ) $ (901 ) Less:
Total items affecting comparability of earnings between periods
— (57 ) —
(57 ) Adjusted net income (loss) attributable to Hess Corporation $
(449 ) $ (335 ) $ (773 ) $ (844 )
The following table reconciles
reported net cash provided by (used in) operating activities to
cash provided by operating activities before changes in operating
assets and liabilities:
Three Months Ended
Six Months Ended June 30, June 30, (unaudited) (unaudited)
2017
2016
2017
2016
(In millions)
Cash provided by operating activities
before changes in operatingassets and liabilities
$ 332 $ 257 $ 775 $ 405 Changes in
operating assets and liabilities (167 )
(60 ) (261 ) (268 ) Net cash provided
by (used in) operating activities $ 165 $ 197 $
514 $ 137
Hess Corporation will review second 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 is a leading global independent energy company
engaged in the exploration and production of crude oil and natural
gas. 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. Estimates and projections
contained in this release are based on the Corporation’s current
understanding and assessment based on reasonable assumptions.
Actual results may differ materially from these estimates and
projections due to certain risk factors discussed in the
Corporation’s periodic filings with the Securities and Exchange
Commission and other factors.
Non-GAAP financial measure
The Corporation has used non-GAAP financial measures in this
earnings release. “Adjusted net income (loss)” presented in this
release is defined as reported net income (loss) attributable to
Hess Corporation excluding items identified as affecting
comparability of earnings between periods. “Net cash provided by
operating activities before changes in operating assets and
liabilities” is defined as Cash provided by operating activities
excluding changes in operating assets and liabilities. Management
uses adjusted net income (loss) to evaluate the Corporation’s
operating performance and believes that investors’ understanding of
our performance is enhanced by disclosing this measure, which
excludes certain items that management believes are not directly
related to ongoing operations and are not indicative of future
business trends and operations. Management believes that net cash
provided by operating activities before changes in operating assets
and liabilities demonstrates the Corporation’s ability to
internally fund capital expenditures, pay dividends and service
debt. These measures are not, and should not be viewed as, a
substitute for U.S. GAAP net income (loss) or net cash provided by
(used in) operating activities. A reconciliation of reported net
income (loss) attributable to Hess Corporation (U.S. GAAP) to
adjusted net income (loss) as well as a reconciliation of net cash
provided by (used in) operating activities (U.S. GAAP) to net cash
provided by operating activities before changes in operating assets
and liabilities are provided in the release.
Cautionary Note to Investors
We use certain terms in this release relating to resources other
than proved reserves, such as unproved reserves or resources.
Investors are urged to consider closely the oil and gas disclosures
in Hess’ Form 10-K, File No. 1-1204, available from Hess
Corporation, 1185 Avenue of the Americas, New York, New York 10036
c/o Corporate Secretary and on our website at www.hess.com. You can
also obtain this form from the SEC on the EDGAR system.
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS)
Second Second First
Quarter
Quarter
Quarter
2017 2016 2017
Income
Statement
Revenues and
non-operating income Sales and other operating revenues $ 1,216
$ 1,224 $ 1,277 Other, net 12
45 (2 ) Total revenues and
non-operating income 1,228
1,269 1,275
Costs and
expenses Cost of products sold (excluding items shown
separately below) 272 277 219 Operating costs and expenses 375 455
359 Production and severance taxes 30 28 31 Exploration expenses,
including dry holes and lease impairment 53 199 58 General and
administrative expenses 100 106 96 Interest expense 82 85 84
Depreciation, depletion and amortization 741
797 737 Total costs and
expenses 1,653 1,947
1,584
Income (loss) before income
taxes (425 ) (678 ) (309 ) Provision (benefit) for income taxes
(8 ) (305 )
(13 )
Net income (loss) (417 ) (373 ) (296 ) Less:
Net income (loss) attributable to noncontrolling interests
32 19 28
Net income (loss) attributable to Hess Corporation (449 )
(392 ) (324 ) Less: Preferred stock dividends
11 12 12
Net
income (loss) applicable to Hess Corporation common
stockholders $ (460 ) $ (404 ) $
(336 )
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS)
Six Months Ended June
30,
2017
2016
Income
Statement
Revenues and non-operating
income Sales and other operating revenues $ 2,493 $ 2,197
Other, net 10 65 Total
revenues and non-operating income 2,503
2,262
Costs and expenses Cost of
products sold (excluding items shown separately below) 491 466
Operating costs and expenses 734 891 Production and severance taxes
61 47 Exploration expenses, including dry holes and lease
impairment 111 331 General and administrative expenses 196 204
Interest expense 166 170 Depreciation, depletion and amortization
1,478 1,665 Total costs
and expenses 3,237 3,774
Income (loss) before income taxes (734 ) (1,512 )
Provision (benefit) for income taxes (21 )
(651 )
Net income (loss) (713 ) (861 )
Less: Net income (loss) attributable to noncontrolling interests
60 40
Net income
(loss) attributable to Hess Corporation (773 ) (901 )
Less: Preferred stock dividends 23
18
Net income (loss) applicable to Hess
Corporation common stockholders $ (796 ) $
(919 )
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS)
June
30,
December 31,
2017 2016
Balance Sheet
Information
Cash and cash equivalents $ 2,492 $
2,732 Other current assets 1,778 1,544 Property, plant and
equipment – net 22,793 23,595 Other long-term assets
735 750
Total assets $
27,798 $ 28,621 Current maturities of long-term debt
$ 121 $ 112 Other current liabilities 1,997 2,139 Long-term debt
6,612 6,694 Other long-term liabilities 3,990 4,085 Total equity
excluding other comprehensive income (loss) 15,298 16,238
Accumulated other comprehensive income (loss) (1,518 ) (1,704 )
Noncontrolling interests 1,298
1,057
Total liabilities and equity $ 27,798 $
28,621 June 30, December 31, 2017 2016
Total
Debt
Hess $ 6,035 $ 6,073 Midstream (a) 698
733
Hess Consolidated $ 6,733 $
6,806
(a) Midstream debt is
non-recourse to Hess Corporation.
June 30, December 31, 2017 2016
Debt to
Capitalization Ratio
Hess Consolidated 30.9 % 30.4 %
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS)
Second
Second First Quarter Quarter Quarter 2017 2016 2017
Cash Flow
Information
Cash Flows from Operating Activities Net income
(loss) $ (417 ) $ (373 ) $ (296 )
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operatingactivities
(Gains) losses on asset sales, net — (27 ) — Depreciation,
depletion and amortization 741 797 737 Exploratory dry hole costs —
133 — Exploration lease and other impairment 8 15 7 Stock
compensation expense 22 22 22 Provision (benefit) for deferred
income taxes and other tax accruals (22
) (310 )
(27 )
Cash provided by operating activities
before changes in operating assets andliabilities
332 257 443 Changes in operating assets and liabilities
(167 ) (60 )
(94 ) Net cash provided by (used in)
operating activities 165
197 349
Cash
Flows from Investing Activities Additions to property, plant
and equipment - E&P (446 ) (547 ) (340 ) Additions to property,
plant and equipment - Midstream (34 ) (68 ) (50 ) Proceeds from
asset sales 79 80 100 Other, net —
8 — Net
cash provided by (used in) investing activities
(401 ) (527 )
(290 )
Cash Flows from Financing
Activities Net borrowings (repayments) of debt with maturities
of 90 days or less (1 ) (25 ) 5 Debt with maturities of greater
than 90 days Borrowings — — — Repayments (51 ) (18 ) (26 ) Proceeds
from issuance of Hess Midstream Partnership units 366 — — Cash
dividends paid (90 ) (89 ) (92 ) Noncontrolling interests, net (175
) — — Other, net (7 )
— 8 Net cash provided by
(used in) financing activities 42
(132 ) (105
)
Net Increase (Decrease) in Cash and Cash
Equivalents (194 ) (462 ) (46 )
Cash and Cash Equivalents at
Beginning of Period 2,686
3,557 2,732
Cash and Cash Equivalents at End of Period $
2,492 $ 3,095 $
2,686
Additions to Property, Plant and
Equipment included within Investing Activities:
Capital expenditures incurred $ (503 ) $ (501 ) $
(370 ) Increase (decrease) in related liabilities
23 (114 )
(20 ) Additions to property, plant and equipment $
(480 ) $ (615 ) $
(390 )
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS)
Six Months Ended June 30, 2017 2016
Cash Flow
Information
Cash flows From Operating Activities Net income
(loss) $ (713 ) $ (861 ) Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities (Gains)
losses on asset sales, net — (27 ) Depreciation, depletion and
amortization 1,478 1,665 Exploratory dry hole costs — 218
Exploration lease and other impairment 15 24 Stock compensation
expense 44 47 Provision (benefit) for deferred income taxes and
other tax accruals (49 ) (661 ) Cash provided by
operating activities before changes in operating assets and
liabilities 775 405 Changes in operating assets and liabilities
(261 ) (268 ) Net cash provided by (used in)
operating activities 514 137
Cash Flows
from Investing Activities Additions to property, plant and
equipment - E&P (786 ) (1,114 ) Additions to property, plant
and equipment - Midstream (84 ) (121 ) Proceeds from asset sales
179 80 Other, net — 15 Net cash provided by (used in)
investing activities (691 ) (1,140 )
Cash
Flows from Financing Activities Net borrowings (repayments) of
debt with maturities of 90 days or less 4 (20 ) Debt with
maturities of greater than 90 days Borrowings — — Repayments (77 )
(35 ) Proceeds from issuance of Hess Midstream Partnership units
366 — Proceeds from issuance of preferred stock — 557 Proceeds from
issuance of common stock — 1,087 Cash dividends paid (182 ) (169 )
Noncontrolling interests, net (175 ) — Other, net 1
(38 ) Net cash provided by (used in) financing activities
(63 ) 1,382
Net Increase (Decrease) in Cash and
Cash Equivalents (240 ) 379
Cash and Cash Equivalents at
Beginning of Year 2,732 2,716
Cash and Cash
Equivalents at End of Period $ 2,492 $ 3,095
Additions to Property, Plant and Equipment included
within Investing Activities: Capital expenditures incurred $
(873 ) $ (1,041 ) Increase (decrease) in related liabilities
3 (194 ) Additions to property, plant and equipment $ (870 )
$ (1,235 )
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
(IN MILLIONS)
Second Second First
Quarter
Quarter
Quarter
2017 2016 2017
Capital and
Exploratory Expenditures
E&P
Capital and exploratory expenditures United States Bakken $ 148
$ 88 $ 90 Other Onshore 9
21 8 Total Onshore 157 109 98 Offshore
191 168
158 Total United States
348 277 256 Europe 42 14
15 Africa 11 — 6 Asia and other 127
193 116 E&P Capital
and exploratory expenditures $ 528 $
484 $ 393
Total exploration expenses
charged to income included above $ 45 $
51 $ 51
Midstream Capital
expenditures $ 20 $ 68 $
28
Six Months Ended June 30,
2017
2016
Capital and
Exploratory Expenditures
E&P Capital and
exploratory expenditures United States Bakken $ 238 $ 204 Other
Onshore 17 42 Total
Onshore 255 246 Offshore 349
373 Total United States 604
619 Europe 57 62 Africa 17 3 Asia and other
243 343 E&P Capital and
exploratory expenditures $ 921 $ 1,027
Total exploration expenses charged to income included
above $ 96 $ 90
Midstream
Capital expenditures $ 48 $ 104
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS
(UNAUDITED)
(IN MILLIONS)
Second Quarter 2017
Income
Statement
United States
International
Total
Total revenues and non-operating income Sales and
other operating revenues $ 837 $ 376 $ 1,213 Other, net (5 )
11 6 Total revenues and non-operating income
832 387 1,219
Costs and expenses Cost
of products sold (excluding items shown separately below) (a) 283 8
291 Operating costs and expenses 171 146 317 Production and
severance taxes 29 1 30 Midstream tariffs 135 — 135 Exploration
expenses, including dry holes and lease impairment 29 24 53 General
and administrative expenses 50 3 53 Depreciation, depletion and
amortization 484 224 708 Total costs and
expenses 1,181 406 1,587
Results of
operations before income taxes (349 ) (19 ) (368 ) Provision
(benefit) for income taxes (9 ) (5 ) (14 )
Net income (loss) attributable to Hess Corporation $ (340 )
(b) $ (14 ) (c) $ (354 ) Second Quarter 2016
Income
Statement
United States
International
Total
Total revenues and non-operating income Sales and
other operating revenues $ 750 $ 472 $ 1,222 Other, net 22
15 37 Total revenues and non-operating income
772 487 1,259
Costs and expenses Cost
of products sold (excluding items shown separately below) (a) 238
57 295 Operating costs and expenses 221 179 400 Production and
severance taxes 27 1 28 Midstream tariffs 113 — 113 Exploration
expenses, including dry holes and lease impairment 164 35 199
General and administrative expenses 54 6 60 Depreciation, depletion
and amortization 492 273 765 Total costs and
expenses 1,309 551 1,860
Results of
operations before income taxes (537 ) (64 ) (601 ) Provision
(benefit) for income taxes (203 ) (70 ) (273 )
Net income (loss) attributable to Hess Corporation $ (334 )
$ 6 $ (328 )
(a)
Includes amounts charged from the
Midstream.
(b)
After-tax results from crude oil hedging
activities amounted to realized gains of $1 million and unrealized
losses of $7 million.
(c)
After-tax results from crude oil hedging
activities amounted to realized gains of $3 million and unrealized
losses of $8 million.
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS
(UNAUDITED)
(IN MILLIONS)
First Quarter 2017
Income
Statement
United States
International
Total
Total revenues and non-operating income Sales and
other operating revenues $ 922 $ 353 $ 1,275 Other, net (5 )
— (5 ) Total revenues and non-operating income
917 353 1,270
Costs and expenses Cost
of products sold (excluding items shown separately below) (a) 295
(53 ) 242 Operating costs and expenses 174 135 309 Production and
severance taxes 31 — 31 Midstream tariffs 124 — 124 Exploration
expenses, including dry holes and lease impairment 22 36 58 General
and administrative expenses 51 5 56 Depreciation, depletion and
amortization 445 258 703 Total costs and
expenses 1,142 381 1,523
Results of
operations before income taxes (225 ) (28 ) (253 ) Provision
(benefit) for income taxes (14 ) (6 ) (20 )
Net income (loss) attributable to Hess Corporation $ (211 )
$ (22 )
(b)
$ (233 )
(a)
Includes amounts charged from the
Midstream.
(b)
After-tax results from crude oil hedging
activities amounted to realized losses of $1 million and unrealized
gains of $1 million.
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS
(UNAUDITED)
(IN MILLIONS)
Six Months Ended June 30, 2017
Income
Statement
United States
International
Total
Total revenues and non-operating income Sales and
other operating revenues $ 1,759 $ 729 $ 2,488 Other, net
(10 ) 11 1 Total revenues and non-operating income
1,749 740 2,489
Costs and
expenses Cost of products sold (excluding items shown
separately below) (a) 578 (45 ) 533 Operating costs and expenses
345 281 626 Production and severance taxes 60 1 61 Midstream
tariffs 259 — 259 Exploration expenses, including dry holes and
lease impairment 51 60 111 General and administrative expenses 101
8 109 Depreciation, depletion and amortization 929
482 1,411 Total costs and expenses 2,323 787
3,110
Results of operations before income
taxes (574 ) (47 ) (621 ) Provision (benefit) for income taxes
(23 ) (11 ) (34 )
Net income (loss)
attributable to Hess Corporation $ (551 ) (b) $ (36 ) (c) $
(587 ) Six Months Ended June 30, 2016
Income
Statement
United States International Total
Total revenues and
non-operating income Sales and other operating revenues $ 1,347
$ 846 $ 2,193 Other, net 28 19 47 Total
revenues and non-operating income 1,375 865
2,240
Costs and expenses Cost of products sold
(excluding items shown separately below) (a) 430 69 499 Operating
costs and expenses 435 349 784 Production and severance taxes 44 3
47 Midstream tariffs 231 — 231 Exploration expenses, including dry
holes and lease impairment 272 59 331 General and administrative
expenses 104 11 115 Depreciation, depletion and amortization
1,024 578 1,602 Total costs and expenses 2,540
1,069 3,609
Results of operations before
income taxes (1,165 ) (204 ) (1,369 ) Provision (benefit) for
income taxes (445 ) (143 ) (588 )
Net
income (loss) attributable to Hess Corporation $ (720 ) $ (61 )
$ (781 )
(a)
Includes amounts charged from the
Midstream.
(b)
After-tax results from crude oil hedging
activities amounted to realized gains of $1 million and unrealized
losses of $7 million.
(c)
After-tax results from crude oil hedging
activities amounted to realized gains of $2 million and unrealized
losses of $7 million.
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL
OPERATING DATA
Second Second First
Quarter
Quarter
Quarter
2017 2016 2017
Net Production
Per Day (in thousands)
Crude oil - barrels United States Bakken 68 69 67
Other Onshore 9 8 8 Total Onshore 77 77 75 Offshore 38 41 47 Total
United States 115 118 122 Europe 28 26 31 Africa (a) 32 33
35 Asia 2 2 2 Total 177 179 190
Natural gas liquids -
barrels United States Bakken 29 27 23 Other Onshore 8 12 10
Total Onshore 37 39 33 Offshore 4 4 6 Total United States 41 43 39
Europe 1 1 1 Total 42 44 40
Natural gas - mcf
United States Bakken 66 59 53 Other Onshore 99 134 106 Total
Onshore 165 193 159 Offshore 51 52 75 Total United States 216 245
234 Europe 33 40 38 Asia 238 254 212 Total 487 539 484
Barrels of oil equivalent 300 313 311
(a)
Production from Libya recommenced in the
fourth quarter of 2016. Production was 6,000 barrels of oil per day
(bopd) in the second quarter of 2017 and 4,000 bopd in the first
quarter of 2017.
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL
OPERATING DATA
Six Months Ended June
30,
2017
2016
Net Production
Per Day (in thousands)
Crude oil - barrels United States Bakken 68 71 Other
Onshore 8 9 Total Onshore 76 80 Offshore 43 46 Total United States
119 126 Europe 30 30 Africa (a) 33 35 Asia 2 2 Total 184 193
Natural gas liquids - barrels United States Bakken 26
27 Other Onshore 9 12 Total Onshore 35 39 Offshore 5 5 Total United
States 40 44 Europe 1 1 Total 41 45
Natural gas -
mcf United States Bakken 59 63 Other Onshore 103 134 Total
Onshore 162 197 Offshore 63 63 Total United States 225 260
Europe 36 43 Asia 225 252 Total 486 555
Barrels of oil
equivalent 306 331
(a)
Production from Libya recommenced in the
fourth quarter of 2016. Production was 5,000 bopd in the first six
months of 2017.
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL
OPERATING DATA
Second Second First
Quarter
Quarter
Quarter
2017 2016 2017
Sales Volumes Per
Day (in thousands)
Crude oil - barrels 174 198 175 Natural gas liquids -
barrels 42 44 40 Natural gas - mcf 487 539 484 Barrels of oil
equivalent 297 332 296
Sales Volumes (in
thousands)
Crude oil - barrels 15,757 18,053 15,744 Natural gas liquids
- barrels 3,848 3,968 3,623 Natural gas - mcf 44,390 48,998 43,544
Barrels of oil equivalent 27,003 30,187 26,624
Six Months Ended June
30,
2017
2016
Sales Volumes Per
Day (in thousands)
Crude oil - barrels 174 206 Natural gas liquids - barrels 41
45 Natural gas - mcf 486 555 Barrels of oil equivalent 296 344
Sales Volumes (in
thousands)
Crude oil - barrels 31,501 37,502 Natural gas liquids -
barrels 7,471 8,222 Natural gas - mcf 87,934 100,968 Barrels of oil
equivalent 53,628 62,552
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL
OPERATING DATA
Second Second
First
Quarter
Quarter
Quarter
2017 2016
2017
Average Selling
Prices
Crude oil - per
barrel (including hedging) United States Onshore $ 43.83 $
39.96 $ 46.47 Offshore 44.60 40.15 47.18 Total United States 44.09
40.02 46.74 Europe 50.27 45.28 54.04 Africa 48.81 44.66 51.25 Asia
41.95 38.96 54.70 Worldwide 45.95 41.95 48.58
Crude oil -
per barrel (excluding hedging) United States Onshore $ 43.72 $
39.96 $ 46.47 Offshore 44.60 40.15 47.18 Total United States 44.01
40.02 46.74 Europe 49.72 45.28 54.18 Africa 48.40 44.66 51.37 Asia
41.95 38.96 54.70 Worldwide 45.74 41.95 48.61
Natural gas
liquids - per barrel United States Onshore $ 14.25 $ 8.34 $
18.07 Offshore 18.47 13.52 20.55 Total United States 14.64 8.84
18.43 Europe 23.95 19.23 28.06 Worldwide 14.85 9.03 18.71
Natural gas - per mcf United States Onshore $ 2.20 $ 1.30 $
2.32 Offshore 2.29 1.50 2.40 Total United States 2.22 1.34 2.35
Europe 4.22 3.74 3.99 Asia 3.93 5.70 4.01 Worldwide 3.19 3.58 3.20
The following is a summary of the
Corporation’s commodity hedging program:
Brent
West
Texas Intermediate
Outstanding
Hedging Contracts – Oil Price Collars
Q3 and Q4 average barrels of oil per day 20,000 60,000 Ceiling
price $75 $70 Floor price $55 $50 End date December 31, 2017
December 31, 2017
HESS CORPORATION AND CONSOLIDATED
SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL
OPERATING DATA
Six Months Ended
June 30,
2017
2016
Average Selling
Prices
Crude oil - per barrel
(including hedging) United States Onshore $ 45.13 $ 33.22
Offshore 46.01 32.84 Total United States 45.45 33.08 Europe 52.01
37.39 Africa 49.84 38.31 Asia 52.55 39.11 Worldwide 47.25 34.97
Crude oil - per barrel (excluding hedging) United
States Onshore $ 45.07 $ 33.22 Offshore 46.01 32.84 Total United
States 45.41 33.08 Europe 51.78 37.39 Africa 49.66 38.31 Asia 52.55
39.11 Worldwide 47.16 34.97
Natural gas liquids - per
barrel United States Onshore $ 16.04 $ 7.59 Offshore 19.70
11.34 Total United States 16.47 8.00 Europe 26.19 17.40 Worldwide
16.72 8.21
Natural gas - per mcf United States
Onshore $ 2.26 $ 1.25 Offshore 2.35 1.48 Total United States 2.28
1.31 Europe 4.10 4.19 Asia 3.96 5.64 Worldwide 3.20 3.50
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726005316/en/
For Hess CorporationInvestors:Jay Wilson, (212)
536-8940orMedia:Sard Verbinnen & CoMichael
Henson/Patrick Scanlan(212) 687-8080
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