Jul 26, 2017   SOURCE: BusinessWire

Hess Reports Estimated Results for the Second Quarter of 2017

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 operating
assets 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) operating
activities

(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 and
liabilities

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