HES
$47.31
Hess
$.42
.90%
Earnings Details
4th Quarter December 2016
Wednesday, January 25, 2017 7:30:14 AM
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Summary

Hess (HES) Recent Earnings

Hess (HES) reported a 4th Quarter December 2016 loss of $1.01 per share on revenue of $1.4 billion. The consensus estimate was a loss of $1.08 per share on revenue of $1.3 billion. Revenue fell 0.1% compared to the same quarter a year ago.

Hess Corp is a Exploration and Production (E&P) company that develops, produces, purchases, transports and sells crude oil and natural gas. The Company operates in two segments: E&P and Retail Marketing.

Results
Reported Earnings
($1.01)
Earnings Whisper
-
Consensus Estimate
($1.08)
Reported Revenue
$1.39 Bil
Revenue Estimate
$1.30 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Hess Reports Estimated Results for the Fourth Quarter of 2016

Net loss was $4,892 million, or $15.65 per common share, compared with a net loss of $1,821 million, or $6.43 per common share in the fourth quarter of 2015; Fourth quarter 2016 results include a noncash accounting charge of $3,749 million on deferred tax assets and other after-tax charges totaling $838 million

Adjusted net loss was $305 million, or $1.01 per common share, compared with an adjusted net loss of $396 million, or $1.40 per common share in the fourth quarter of 2015

Oil and gas production was 311,000 barrels of oil equivalent per day (boepd) compared to 368,000 boepd in the fourth quarter of 2015

E&P capital and exploratory expenditures were $414 million. Full year E&P capital and exploratory expenditures were $1.9 billion, down 54 percent from $4.0 billion in 2015

Confirmed a second oil discovery on the Stabroek Block, offshore Guyana (Hess 30 percent) at the Payara-1 well located approximately 10 miles northwest of the Liza discovery

--Year-end 2016 cash and cash equivalents totaled $2.7 billion

Year-end total proved reserves were 1,109 million barrels of oil equivalent (boe), reserve replacement was 119 percent for 2016 at a finding and development cost of approximately $13 per boe

--2017 Guidance:

E&P capital and exploratory expenditures are expected to be $2.25 billion, up from $1.9 billion in 2016

Oil and gas production excluding Libya is forecast to be in the range of 300,000 to 310,000 boepd compared to full year 2016 net production of 321,000 boepd

Hess Corporation (HES) today reported a net loss of $4,892 million, or $15.65 per common share, in the fourth quarter of 2016 compared with a net loss of $1,821 million, or $6.43 per common share, in the fourth quarter of 2015. Fourth quarter 2016 results include a noncash accounting charge of $3,749 million on deferred tax assets. This financial reporting requirement has no cash flow or economic impact. Fourth quarter results also include an after-tax charge of $693 million to impair our Equus natural gas project, offshore the North West Shelf of Australia, and other after-tax charges totaling $145 million. Excluding items affecting comparability between periods, fourth quarter 2016 net loss was $305 million, or $1.01 per common share, compared to a net loss of $396 million, or $1.40 per share in the fourth quarter of 2015. The adjusted fourth quarter 2016 results reflect higher realized crude oil selling prices and improved total production unit costs.

"We see 2017 as the start of an exciting new chapter of value-driven growth for our company and our shareholders," Chief Executive Officer John Hess said. "We are increasing activity in the Bakken, our two offshore developments at North Malay Basin in the Gulf of Thailand and Stampede in the Gulf of Mexico are on track to come online in 2017 and 2018, and the Liza Field in Guyana is one of the industry’s largest oil discoveries in the last 10 years."

After-tax income (loss) by major operating activity was as follows:

Three Months Ended
Year Ended
December 31,
December 31,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess
Corporation
Exploration and Production
$
(3,950 )
$
(1,713 )
$
(4,963 )
$
(2,717 )
Bakken Midstream
3
11
41
86
Corporate, Interest and Other
(945 )
(111 )
(1,210 )
(377 )
Net income (loss) from continuing operations
(4,892 )
(1,813 )
(6,132 )
(3,008 )
Discontinued operations
--
(8 )
--
(48 )
Net income (loss) attributable to Hess Corporation
$
(4,892 )
$
(1,821 )
$
(6,132 )
$
(3,056 )
Net income (loss) per common share (diluted) (a)
$
(15.65 )
$
(6.43 )
$
(19.92 )
$
(10.78 )
Adjusted Net Income (Loss) Attributable to
Hess
Corporation (b)
Exploration and Production
$
(257 )
$
(328 )
$
(1,264 )
$
(866 )
Bakken Midstream
24
11
62
86
Corporate, Interest and Other
(72 )
(79 )
(287 )
(333 )
Adjusted net income (loss) from continuing operations
(305 )
(396 )
(1,489 )
(1,113 )
Discontinued operations
--
--
--
--
Adjusted net income (loss) attributable to Hess Corporation
$
(305 )
$
(396 )
$
(1,489 )
$
(1,113 )
Adjusted net income (loss) per common share (diluted) (a)
$
(1.01 )
$
(1.40 )
$
(4.94 )
$
(3.93 )
Weighted average number of shares (diluted)
313.3
283.2
309.9
283.6
(a)
Calculated as net income (loss) attributable to Hess
Corporation less preferred stock dividends as applicable, divided
by weighted average number of diluted shares.
(b)
Adjusted net income (loss) attributable to Hess Corporation
excludes items affecting comparability summarized on page 6. A
reconciliation of net income (loss) attributable to Hess
Corporation to adjusted net income (loss) attributable to Hess
Corporation is provided on page 8.

Exploration and Production:

The Exploration and Production net loss in the fourth quarter of 2016 was $3,950 million compared to a net loss of $1,713 million in the fourth quarter of 2015. On an adjusted basis, the fourth quarter of 2016 net loss was $257 million compared to $328 million in the prior-year quarter.

The Corporation’s average realized crude oil selling price was $45.97 per barrel in the fourth quarter of 2016, up 5 percent from $43.73 per barrel in the year-ago quarter, including the effect of hedging. The average realized natural gas liquids selling price in the fourth quarter of 2016 was $14.68 per barrel, up from $9.61 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.24 per mcf compared with $3.44 per mcf in the fourth quarter of 2015.

Excluding production from Libya and assets sold, pro forma net production in the fourth quarter of 2016 was 307,000 boepd, compared to 358,000 boepd in the fourth quarter of 2015. Lower volumes were primarily due to a reduced drilling program across our portfolio, planned and unplanned downtime, and natural field declines. Production in Libya resumed in the fourth quarter at a net rate of 4,000 boepd.

Oil and Gas Reserve Estimates:

Oil and gas proved reserves were 1,109 million barrels of oil equivalent (boe) at December 31, 2016, compared with 1,086 million boe at December 31, 2015. Proved reserve additions and other technical revisions added 172 million boe in 2016, primarily relating to the Bakken, North Malay Basin in Malaysia, and the South Arne Field in Denmark. Lower crude oil prices used for estimating proved reserves resulted in negative revisions of 29 million boe. The net additions of 143 million boe, which are subject to final review, replaced approximately 119 percent of the Corporation’s 2016 production at a finding and development cost of approximately $13 per boe, and resulted in a year-end 2016 reserve life of 9.2 years.

Operational Highlights for the Fourth Quarter of 2016:

Bakken (Onshore U.S.): Net production from the Bakken decreased approximately 13 percent to 95,000 boepd from the prior-year quarter due to constrained production operations in the quarter caused by severe winter weather and a reduced drilling program during 2016. The Corporation operated an average of two rigs and brought 21 gross operated wells on production in the fourth quarter of 2016, increasing the year-to-date total to 100 wells. Drilling and completion costs per operated well averaged $4.6 million in the fourth quarter of 2016, down 10 percent from the year-ago quarter, despite increasing our standard well design to a 50-stage completion from the previous 35-stage completion design used in the prior year.

Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 61,000 boepd compared to 73,000 boepd in the prior-year quarter, primarily as a result of unplanned well downtime due to subsurface valve failures at two fields and natural field declines. At the Stampede project in the Gulf of Mexico (Hess operated - 25 percent), drilling operations and construction of production facilities continued on schedule with first production targeted for 2018.

North Malay Basin Full-field development (Offshore): At the North Malay Basin project, offshore Malaysia (Hess operated - 50 percent), we completed subsea tie-in work, hook-up and commissioning of the three wellhead platforms, and drilling operations continued. First gas is projected for the third quarter of 2017.

Guyana (Offshore): At the Stabroek Block (Hess 30 percent), operated by Esso Exploration and Production Guyana Limited, results from the Payara-1 well confirmed a second oil discovery on the block located approximately 10 miles (16 kilometers) northwest of the world-class Liza oil discovery. The well encountered more than 95 feet (29 meters) of high-quality, oil-bearing sandstone reservoirs and a production test is planned in the first quarter. In 2017, the co-venture partners plan to appraise the Liza and Payara discoveries and continue to evaluate the resource potential on the broader Stabroek block with additional exploration drilling and seismic analysis planned. We expect to be in a position to sanction the first phase of the Liza development in 2017.

Bakken Midstream:

The Corporation’s Bakken Midstream segment had net income of $3 million in the fourth quarter of 2016 compared to $11 million in the prior-year quarter. Revenues were higher in the quarter primarily due to recognition of deferred minimum volume deficiency payments earned, partly offset by lower throughput volumes caused by severe weather conditions. Fourth quarter results include a pre-tax charge of $67 million ($21 million after income taxes and noncontrolling interest) to impair older specification rail cars. Excluding the rail car charge, adjusted fourth quarter 2016 net income was $24 million compared to $11 million in the prior-year quarter.

Capital and Exploratory Expenditures:

Exploration and Production capital and exploratory expenditures were $414 million in the fourth quarter of 2016, down 56 percent from $943 million in the prior-year quarter, reflecting our reduced work program in response to the low commodity price environment. Full year 2017 E&P capital and exploratory expenditures are forecast to be $2.25 billion.

Bakken Midstream capital expenditures were $86 million in the fourth quarter of 2016 and $103 million in the year-ago quarter. In 2017, Midstream capital expenditures are forecast to be $190 million, down from full year 2016 capital expenditures of $276 million due to the expected completion of the Hawkeye compressor station project in the first quarter.

In 2017, the Midstream segment will also include our interest in the Permian gas plant in West Texas and related CO2 assets, and additional water handling assets in North Dakota. These assets are wholly owned by the Company and are not included in our Hess Infrastructure Partners joint venture.

Liquidity:

Net cash provided by operating activities was $326 million in the fourth quarter of 2016 and $623 million in the fourth quarter of 2015. Net cash provided by operating activities before changes in operating assets and liabilities was $128 million in the fourth quarter of 2016, which reflects a reduction of approximately $200 million associated with cash-related charges in items affecting comparability of earnings and higher well workover costs. In the fourth quarter of 2016, the Corporation used $625 million of cash to purchase and redeem notes to complete the previously announced debt refinancing that commenced in the third quarter.

The Corporation had cash and cash equivalents of $2,732 million and total debt, excluding the Bakken Midstream, of $6,073 million at December 31, 2016. The Corporation’s debt to capitalization ratio was 30.4 percent and 24.4 percent at December 31, 2016 and 2015, respectively.

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
Year Ended
December 31,
December 31,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Exploration and Production
$
(3,693 )
$
(1,385 )
$
(3,699 )
$
(1,851 )
Bakken Midstream
(21 )
--
(21 )
--
Corporate, Interest and Other
(873 )
(32 )
(923 )
(44 )
Discontinued operations
--
(8 )
--
(48 )
$
(4,587 )
$
(1,425 )
$
(4,643 )
$
(1,943 )
Total items affecting comparability of earnings between
periods

Fourth quarter 2016 results include:

A noncash charge of $3,749 million (Exploration & Production: $2,920 million; Corporate, Interest and Other: $829 million) to establish valuation allowances against net deferred tax assets as of December 31, 2016, as required under accounting standards following a three-year cumulative loss.

An after-tax charge of $693 million ($938 million pre-tax) in Exploration and Production to fully impair the carrying value of our interests in blocks WA-390-P and WA-474-P (Hess 100 percent) offshore the North West Shelf of Australia following the decision to defer further development of the Equus natural gas fields.

Other after-tax charges of $145 million ($272 million pre-tax) related to exit costs for an offshore drilling rig, loss on debt extinguishment, impairment of rail cars (Bakken Midstream), severance and other charges.

Fourth quarter 2015 results include:

Noncash charges of $1,359 million in Exploration and Production, comprised of a goodwill impairment charge of $1,098 million and other charges totaling $261 million after income taxes ($404 million pre-tax) to write-off assets.

Corporate, Interest and Other results include after-tax charges of $41 million ($66 million pre-tax) for the Corporation’s estimated liability resulting from HOVENSA LLC’s bankruptcy settlement.

The following table summarizes the items affecting comparability of earnings between periods by line item in the income statement:

Three Months Ended
Year Ended
December 31,
December 31,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Other non-operating income/(loss), net
$ --
$
(74 )
$
27
$
(35 )
Cost of products sold
--
(39 )
--
(39 )
Operating costs and expenses
(128 )
(30 )
(164 )
(51 )
Exploration expenses, including dry holes and lease impairment
(946 )
(275 )
(1,029 )
(518 )
General and administrative expenses
(1 )
(8 )
(1 )
(42 )
Loss on debt extinguishment
(68 )
--
(148 )
--
Depreciation, depletion and amortization
--
(3 )
--
(3 )
Impairments
(67 )
(1,231 )
(67 )
(1,616 )
Total pre-tax items affecting comparability
(1,210 )
(1,660 )
(1,382 )
(2,304 )
Provision (benefit) for income taxes (a)
3,410
(243 )
3,294
(409 )
Discontinued operations, net of taxes
--
(8 )
--
(48 )
Noncontrolling interests
33
--
33
--
Total items affecting comparability of earnings between periods
$
(4,587 )
$
(1,425 )
$
(4,643 )
$
(1,943 )
(a)
Amounts include the tax effect associated with pre-tax items
affecting comparability of earnings between periods.

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
Year Ended
December 31,
December 31,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Net income (loss) attributable to Hess Corporation
$
(4,892 )
$
(1,821 )
$
(6,132 )
$
(3,056 )
Less: Total items affecting comparability of earnings between periods
(4,587 )
(1,425 )
(4,643 )
(1,943 )
Adjusted net income (loss) attributable to Hess Corporation
$
(305 )
$
(396 )
$
(1,489 )
$
(1,113 )

The following table reconciles reported net cash provided by (used in) operating activities to cash provided by continuing operating activities before changes in operating assets and liabilities:

Three Months Ended
Year Ended
December 31,
December 31,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Cash provided by operating activities before changes in operating
$
128
$ 236
$
842
$
1,956
assets
and liabilities
Changes in operating assets and liabilities
198
391
(47 )
60
Cash provided by (used in) continuing operating activities
326
627
795
2,016
Cash used in discontinued operating activities
--
(4 )
--
(35 )
Net cash provided by (used in) operating activities
$
326
$ 623
$
795
$
1,981

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 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 company’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 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.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Income Statement
Revenues and non-operating income
Sales and other operating revenues
$
1,388
$
1,474
$
1,177
Other, net
(2 )
(87 )
19
Total revenues and non-operating income
1,386
1,387
1,196
Costs and expenses
Cost of products sold (excluding items shown separately below)
375
304
222
Operating costs and expenses
568
512
421
Production and severance taxes
27
36
27
Exploration expenses, including dry holes and lease impairment
1,033
378
78
General and administrative expenses
105
140
106
Interest expense
84
86
84
Loss on debt extinguishment
68
--
80
Depreciation, depletion and amortization
768
983
811
Impairments
67
1,231
--
Total costs and expenses
3,095
3,670
1,829
Income (loss) from continuing operations before income taxes
(1,709 )
(2,283 )
(633 )
Provision (benefit) for income taxes
3,189
(492 )
(316 )
Income (loss) from continuing operations
(4,898 )
(1,791 )
(317 )
Income (loss) from discontinued operations, net of income taxes
--
(8 )
--
Net income (loss)
(4,898 )
(1,799 )
(317 )
Less: Net income (loss) attributable to noncontrolling interests
(6 )
22
22
Net income (loss) attributable to Hess Corporation
(4,892 )
(1,821 )
(339 )
Less: Preferred stock dividends
11
--
12
Net income (loss) applicable to Hess Corporation common
$
(4,903 )
$
(1,821 )
$
(351 )
stockholders
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Year Ended December 31,
2016
2015
Income Statement
Revenues and non-operating income
Sales and other operating revenues
$
4,762
$
6,636
Other, net
82
(75 )
Total revenues and non-operating income
4,844
6,561
Costs and expenses
Cost of products sold (excluding items shown separately below)
1,063
1,294
Operating costs and expenses
1,880
2,029
Production and severance taxes
101
146
Exploration expenses, including dry holes and lease impairment
1,442
881
General and administrative expenses
415
557
Interest expense
338
341
Loss on debt extinguishment
148
--
Depreciation, depletion and amortization
3,244
3,955
Impairments
67
1,616
Total costs and expenses
8,698
10,819
Income (loss) from continuing operations before income taxes
(3,854 )
(4,258 )
Provision (benefit) for income taxes
2,222
(1,299 )
Income (loss) from continuing operations
(6,076 )
(2,959 )
Income (loss) from discontinued operations, net of income taxes
--
(48 )
Net income (loss)
(6,076 )
(3,007 )
Less: Net income (loss) attributable to noncontrolling interests
56
49
Net income (loss) attributable to Hess Corporation
(6,132 )
(3,056 )
Less: Preferred stock dividends
41
--
Net income (loss) applicable to Hess Corporation common
$
(6,173 )
$
(3,056 )
stockholders
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
December 31,
2016
2015
Balance Sheet Information
Cash and cash equivalents
$
2,732
$
2,716
Other current assets
1,544
1,688
Property, plant and equipment - net
23,595
26,352
Other long-term assets
750
3,401
Total assets
$
28,621
$
34,157
Current maturities of long-term debt
$
112
$
86
Other current liabilities
2,139
2,542
Long-term debt
6,694
6,506
Other long-term liabilities
4,085
4,622
Total equity excluding other comprehensive income (loss)
16,238
21,050
Accumulated other comprehensive income (loss)
(1,704 )
(1,664 )
Noncontrolling interests
1,057
1,015
Total liabilities and equity
$
28,621
$
34,157
-------------------- ========================================================================================================================== =========================================================================================================================
December 31,
2016
2015
Total Debt
Hess
$
6,073
$
5,888
Bakken Midstream (a)
733
704
Hess Consolidated
$
6,806
$
6,592

(a) Bakken Midstream debt is non-recourse to Hess Corporation.

December 31,
2016
Debt to capitalization ratio
Hess Consolidated
30.4 %
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Cash Flow Information
Cash Flows from Operating Activities
Net income (loss)
$
(4,898 )
$
(1,799 )
$
(317 )
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities
(Gains) losses on asset sales, net
4
(1 )
--
Depreciation, depletion and amortization
768
983
811
Impairments
67
1,231
--
Loss from equity affiliates
--
15
--
Exploratory dry hole costs
830
230
16
Exploration lease and other impairment
111
43
9
Stock compensation expense
5
26
22
Provision (benefit) for deferred income taxes and other tax accruals
3,173
(500 )
(312 )
Loss on debt extinguishment
68
--
80
(Income) loss from discontinued operations, net of income taxes
--
8
--
Cash provided by operating activities before changes in operating
128
236
309
assets and liabilities
Changes in operating assets and liabilities
198
391
23
Cash provided by (used in) continuing operating activities
326
627
332
Cash provided by (used in) discontinued operating activities
--
(4 )
--
Net cash provided by (used in) operating activities
326
623
332
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P
(401 )
(724 )
(463 )
Additions to property, plant and equipment - Bakken Midstream
(86 )
(211 )
(66 )
Proceeds from asset sales
60
25
--
Other, net
3
--
3
Cash provided by (used in) continuing investing activities
(424 )
(910 )
(526 )
Cash provided by (used in) discontinued investing activities
--
1
--
Net cash provided by (used in) investing activities
(424 )
(909 )
(526 )
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or
57
110
6
less
Debt with maturities of greater than 90 days
Borrowings
--
--
1,496
Repayments
(649 )
(16 )
(771 )
Cash dividends paid
(90 )
(72 )
(91 )
Noncontrolling interests, net
(23 )
(33 )
--
Other, net
6
--
(12 )
Cash provided by (used in) continuing financing activities
(699 )
(11 )
628
Cash provided by (used in) discontinued financing activities
--
--
--
Net cash provided by (used in) financing activities
(699 )
(11 )
628
Net Increase (Decrease) in Cash and Cash Equivalents
(797 )
(297 )
434
Cash and Cash Equivalents at Beginning of Period
3,529
3,013
3,095
Cash and Cash Equivalents at End of Period
$
2,732
$
2,716
$
3,529
Additions to Property, plant and
equipment included within Investing activities:
Capital expenditures incurred
$
(409 )
$
(941 )
$
(471 )
Increase (decrease) in related liabilities
(78 )
6
(58 )
Additions to property, plant and equipment
$
(487 )
$
(935 )
$
(529 )
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Year Ended December 31,
2016
2015
Cash Flow Information
Cash flows From Operating Activities
Net income (loss)
$
(6,076 )
$
(3,007 )
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities
(Gains) losses on asset sales, net
(23 )
(51 )
Depreciation, depletion and amortization
3,244
3,955
Impairments
67
1,616
Loss from equity affiliates
--
25
Exploratory dry hole costs
1,064
410
Exploration lease and other impairment
144
182
Stock compensation expense
74
97
Provision (benefit) for deferred income taxes and other tax accruals
2,200
(1,319 )
Loss on debt extinguishment
148
--
(Income) loss from discontinued operations, net of income taxes
--
48
Cash provided by operating activities before changes in operating
842
1,956
assets and liabilities
Changes in operating assets and liabilities
(47 )
60
Cash provided by (used in) continuing operating activities
795
2,016
Cash provided by (used in) discontinued operating activities
--
(35 )
Net cash provided by (used in) operating activities
795
1,981
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P
(1,979 )
(3,956 )
Additions to property, plant and equipment - Bakken Midstream
(272 )
(365 )
Proceeds from asset sales
140
50
Other, net
21
(44 )
Cash provided by (used in) continuing investing activities
(2,090 )
(4,315 )
Cash provided by (used in) discontinued investing activities
--
109
Net cash provided by (used in) investing activities
(2,090 )
(4,206 )
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or
43
110
less
Debt with maturities of greater than 90 days
Borrowings
1,496
600
Repayments
(1,455 )
(67 )
Proceeds from issuance of preferred stock
557
--
Proceeds from issuance of common stock
1,087
--
Common stock acquired and retired
--
(142 )
Cash dividends paid
(350 )
(287 )
Employee stock options exercised, including income tax benefits
--
12
Noncontrolling interests, net
(23 )
2,296
Other, net
(44 )
(25 )
Cash provided by (used in) continuing financing activities
1,311
2,497
Cash provided by (used in) discontinued financing activities
--
--
Net cash provided by (used in) financing activities
1,311
2,497
Net Increase (Decrease) in Cash and Cash Equivalents
16
272
Cash and Cash Equivalents at Beginning of Year
2,716
2,444
Cash and Cash Equivalents at End of Year
$
2,732
$
2,716
Additions to Property, plant and
equipment included within Investing activities:
Capital expenditures incurred
$
(1,921 )
$
(4,049 )
Increase (decrease) in related liabilities
(330 )
(272 )
Additions to property, plant and equipment
$
(2,251 )
$
(4,321 )
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Capital and Exploratory Expenditures
E&P Capital and exploratory expenditures
United States
Bakken
$
99
$
248
$
126
Other Onshore
5
72
4
Total Onshore
104
320
130
Offshore
171
257
191
Total United States
275
577
321
Europe
2
43
1
Africa
3
2
4
Asia and other
134
321
109
E&P Capital and exploratory expenditures
$
414
$
943
$
435
Total exploration expenses charged to income included above
$
91
$
105
$
52
Bakken Midstream Capital expenditures
$
86
$
103
$
88
Year Ended December 31,
2016
2015
Capital and Exploratory Expenditures
E&P Capital and exploratory expenditures
United States
Bakken
$
429
$
1,308
Other Onshore
53
332
Total Onshore
482
1,640
Offshore
735
923
Total United States
1,217
2,563
Europe
65
298
Africa
10
161
Asia and other
586
1,020
E&P Capital and exploratory expenditures
$ 1,878
$
4,042
Total exploration expenses charged to income included above
$
233
$
289
Bakken Midstream Capital expenditures
$
276
$
296
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
Fourth Quarter 2016
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
943
$
445
$
1,388
Other, net
(8 )
(3 )
(11 )
Total revenues and non-operating income
935
442
1,377
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
342
41
383
Operating costs and expenses
324
195
519
Production and severance taxes
26
1
27
Bakken Midstream tariffs
144
--
144
Exploration expenses, including dry holes and lease impairment
41
992
1,033
General and administrative expenses
56
2
58
Depreciation, depletion and amortization
475
261
736
Total costs and expenses
1,408
1,492
2,900
Results of operations before income taxes
(473 )
(1,050 )
(1,523 )
Provision (benefit) for income taxes
969
(b)
1,458
(b)
2,427
Net income (loss) attributable to Hess Corporation
$
(1,442 )
$
(2,508 )
$
(3,950 )
Fourth Quarter 2015
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
932
$
542
$
1,474
Other, net
(15 )
(36 )
(51 )
Total revenues and non-operating income
917
506
1,423
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
342
(11 )
331
Operating costs and expenses
199
244
443
Production and severance taxes
32
4
36
Bakken Midstream tariffs
114
--
114
Exploration expenses, including dry holes and lease impairment
84
294
378
General and administrative expenses
60
14
74
Depreciation, depletion and amortization
602
351
953
Impairments
601
630
1,231
Total costs and expenses
2,034
1,526
3,560
Results of operations before income taxes
(1,117 )
(1,020 )
(2,137 )
Provision (benefit) for income taxes
(234 )
(190 )
(424 )
Net income (loss) attributable to Hess Corporation
$
(883 ) (c)
$
(830 ) (c)
$
(1,713 )
(a)
Includes amounts charged from the Bakken Midstream.
(b)
Includes charges of $1,144 million (U.S.) and $1,776 million
(International) to establish valuation allowances against net
deferred tax assets.
(c)
After-tax realized net gains from crude oil hedging activities
were $18 million (U.S.) and $37 million (International).
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
Third Quarter 2016
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
791
$
386
$
1,177
Other, net
(5 )
12
7
Total revenues and non-operating income
786
398
1,184
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
234
(5 )
229
Operating costs and expenses
180
198
378
Production and severance taxes
24
3
27
Bakken Midstream tariffs
113
--
113
Exploration expenses, including dry holes and lease impairment
29
49
78
General and administrative expenses
57
4
61
Depreciation, depletion and amortization
522
262
784
Total costs and expenses
1,159
511
1,670
Results of operations before income taxes
(373 )
(113 )
(486 )
Provision (benefit) for income taxes
(139 )
(113 )
(252 )
Net income (loss) attributable to Hess Corporation
$
(234 )
$
--
$
(234 )

(a) Includes amounts charged from the Bakken Midstream.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
Year Ended December 31, 2016
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
3,085
$
1,677
$
4,762
Other, net
15
28
43
Total revenues and non-operating income
3,100
1,705
4,805
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
990
105
1,095
Operating costs and expenses
955
742
1,697
Production and severance taxes
94
7
101
Bakken Midstream tariffs
478
--
478
Exploration expenses, including dry holes and lease impairment
342
1,100
1,442
General and administrative expenses
218
17
235
Depreciation, depletion and amortization
2,031
1,101
3,132
Total costs and expenses
5,108
3,072
8,180
Results of operations before income taxes
(2,008 )
(1,367 )
(3,375 )
Provision (benefit) for income taxes
386
(b)
1,202
(b)
1,588
Net income (loss) attributable to Hess Corporation
$
(2,394 )
$
(2,569 )
$
(4,963 )
Year Ended December 31, 2015
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
4,150
$
2,486
$
6,636
Other, net
11
(41 )
(30 )
Total revenues and non-operating income
4,161
2,445
6,606
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
1,418
(9 )
1,409
Operating costs and expenses
786
978
1,764
Production and severance taxes
138
8
146
Bakken Midstream tariffs
449
--
449
Exploration expenses, including dry holes and lease impairment
255
626
881
General and administrative expenses
262
55
317
Depreciation, depletion and amortization
2,361
1,491
3,852
Impairments
986
630
1,616
Total costs and expenses
6,655
3,779
10,434
Results of operations before income taxes
(2,494 )
(1,334 )
(3,828 )
Provision (benefit) for income taxes
(574 )
(537 )
(1,111 )
Net income (loss) attributable to Hess Corporation
$
(1,920 )
(c)
$
(797 )
(c)
$
(2,717 )
(a)
Includes amounts charged from the Bakken Midstream.
(b)
Includes charges of $1,144 million (U.S.) and $1,776 million
(International) to establish valuation allowances against net
deferred tax assets.
(c)
After-tax realized net gains from crude oil hedging activities
were $30 million (U.S.) and $49 million (International).
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Net Production Per Day (in thousands)
Crude oil - barrels
United States
Bakken
62
78
67
Other Onshore
8
11
9
Total Onshore
70
89
76
Offshore
45
52
46
Total United States
115
141
122
Europe
37
38
34
Africa (a) (b)
32
52
33
Asia
2
2
1
Total
186
233
190
Natural gas liquids - barrels
United States
Bakken
24
21
29
Other Onshore
10
12
11
Total Onshore
34
33
40
Offshore
5
6
4
Total United States
39
39
44
Europe
1
1
1
Total
40
40
45
Natural gas - mcf
United States
Bakken
52
60
66
Other Onshore
123
138
139
Total Onshore
175
198
205
Offshore
68
90
65
Total United States
243
288
270
Europe
45
48
41
Asia
224
235
161
Total
512
571
472
Barrels of oil equivalent
311
368
314
(a)
Production from Libya was 4,000 barrels of oil per day (bopd)
in the fourth quarter of 2016.
(b)
The Corporation sold its Algerian operations on December 31,
2015, which had net production of 10,000 bopd in the fourth
quarter of 2015.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Year Ended December 31,
2016
2015
Net Production Per Day (in thousands)
Crude oil - barrels
United States
Bakken
68
81
Other Onshore
9
10
Total Onshore
77
91
Offshore
45
56
Total United States
122
147
Europe
33
38
Africa (a) (b)
34
51
Asia
2
2
Total
191
238
Natural gas liquids - barrels
United States
Bakken
27
20
Other Onshore
11
12
Total Onshore
38
32
Offshore
5
6
Total United States
43
38
Europe
1
1
Total
44
39
Natural gas - mcf
United States
Bakken
61
64
Other Onshore
133
109
Total Onshore
194
173
Offshore
64
87
Total United States
258
260
Europe
43
43
Asia
222
282
Total
523
585
Barrels of oil equivalent
322
375
(a)
Production from Libya was 1,000 bopd for the year ended
December 31, 2016.
(b)
The Corporation sold its Algerian operations on December 31,
2015, which had net production of 7,000 bopd in 2015.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Sales Volumes Per Day (in thousands)
Crude oil - barrels
190
221
190
Natural gas liquids - barrels
40
41
45
Natural gas - mcf
512
572
472
Barrels of oil equivalent
315
357
314
Sales Volumes (in thousands)
Crude oil - barrels
17,432
20,316
17,528
Natural gas liquids - barrels
3,666
3,732
4,167
Natural gas - mcf
47,101
52,591
43,413
Barrels of oil equivalent
28,948
32,813
28,931
Year Ended December 31,
2016
2015
Sales Volumes Per Day (in thousands)
Crude oil - barrels
198
234
Natural gas liquids - barrels
44
39
Natural gas - mcf
523
584
Barrels of oil equivalent
329
371
Sales Volumes (in thousands)
Crude oil - barrels
72,462
85,344
Natural gas liquids - barrels
16,055
14,400
Natural gas - mcf
191,482
213,195
Barrels of oil equivalent
120,431
135,277
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Average Selling Prices
Crude oil - per barrel (including hedging)
United States
Onshore
$
42.82
$
40.48
$
39.19
Offshore
44.73
37.88
39.55
Total United States
43.57
39.52
39.33
Europe
50.37
52.81
46.01
Africa
49.15
49.99
44.22
Asia
40.96
40.89
47.36
Worldwide
45.97
43.73
41.50
Crude oil - per barrel (excluding hedging)
United States
Onshore
$
42.82
$
36.93
$
39.19
Offshore
44.73
37.88
39.55
Total United States
43.57
37.28
39.33
Europe
50.37
44.49
46.01
Africa
49.15
41.98
44.22
Asia
40.96
40.89
47.36
Worldwide
45.97
39.40
41.50
Natural gas liquids - per barrel
United States
Onshore
$
13.70
$
8.34
$
8.48
Offshore
18.89
13.74
13.94
Total United States
14.38
9.13
9.00
Europe
25.05
22.19
17.68
Worldwide
14.68
9.61
9.23
Natural gas - per mcf
United States
Onshore
$
1.99
$
1.31
$
1.49
Offshore
2.66
1.37
2.24
Total United States
2.18
1.33
1.67
Europe
3.75
5.55
3.74
Asia
4.30
5.60
5.66
Worldwide
3.24
3.44
3.20
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION
AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)
Year Ended December 31,
2016
2015
Average Selling Prices
Crude oil - per barrel (including hedging)
United States
Onshore
$ 36.92
$
42.67
Offshore
37.47
46.21
Total United States
37.13
44.01
Europe
43.33
55.10
Africa
41.88
53.89
Asia
42.98
52.74
Worldwide
39.20
47.85
Crude oil - per barrel (excluding hedging)
United States
Onshore
$ 36.92
$
41.22
Offshore
37.47
46.21
Total United States
37.13
43.11
Europe
43.33
52.37
Africa
41.88
51.57
Asia
42.98
52.74
Worldwide
39.20
46.37
Natural gas liquids - per barrel
United States
Onshore
$
9.18
$
9.18
Offshore
13.96
14.40
Total United States
9.71
10.02
Europe
19.48
24.59
Worldwide
9.95
10.52
Natural gas - per mcf
United States
Onshore
$
1.48
$
1.64
Offshore
1.99
2.03
Total United States
1.61
1.77
Europe
3.97
6.72
Asia
5.31
5.97
Worldwide
3.37
4.16
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
BAKKEN
MIDSTREAM EARNINGS (UNAUDITED)
(IN MILLIONS)
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Income Statement
Revenues and non-operating income
Total revenues and non-operating income
$ 152
$
141
$
120
Costs and expenses
Operating costs and expenses
49
69
43
General and administrative expenses
4
5
4
Depreciation, depletion and amortization
29
23
25
Impairments
67
--
--
Interest expense
5
4
4
Total costs and expenses
154
101
76
Results of operations before income taxes
(2 )
40
44
Provision (benefit) for income taxes
1
7
9
Net income (loss)
(3 )
33
35
Less: Net income attributable to noncontrolling interests
(6 )
22
22
Net income (loss) attributable to Hess Corporation
$
3
$
11
$
13
Fourth
Fourth
Third
Quarter
Quarter
Quarter
2016
2015
2016
Bakken Midstream - Operating Volumes (in
thousands)
Processing
Tioga gas plant - mcf of natural gas per day
179
186
196
Export
Terminal throughput - bopd (a)
59
62
51
Tioga rail terminal crude loading - bopd (b)
43
42
43
Rail services - bopd (c)
24
43
20
Pipelines
Oil gathering - bopd
54
50
58
Gas gathering - mcf of natural gas per day
197
198
208
(a)
Volume of crude oil received at the Ramburg truck facility and
transported through the Tioga rail terminal or third party
pipelines.
(b)
Volume of crude oil loaded to Hess Midstream and third party
rail cars at the Tioga rail terminal.
(c)
Volume of crude oil transported by Hess Midstream rail cars
from the Tioga rail terminal and third party terminals.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
BAKKEN
MIDSTREAM EARNINGS (UNAUDITED)
(IN MILLIONS)
Year Ended December 31,
2016
2015
Income Statement
Revenues and non-operating income
Total revenues and non-operating income
$ 510
$
564
Costs and expenses
Operating costs and expenses
183
265
General and administrative expenses
17
14
Depreciation, depletion and amortization
102
88
Impairments
67
--
Interest expense
19
10
Total costs and expenses
388
377
Results of operations before income taxes
122
187
Provision (benefit) for income taxes
25
52
Net income (loss)
97
135
Less: Net income attributable to noncontrolling interests (a)
56
49
Net income (loss) attributable to Hess Corporation
$
41
$
86
(a)
On July 1, 2015, the Corporation completed the sale of a 50
percent interest in its Bakken Midstream segment. Our partner’s 50
percent share of net income is presented as a noncontrolling
interest charge in the Bakken Midstream income statements
effective from the third quarter of 2015.
Year Ended December 31,
2016
2015
Bakken Midstream - Operating Volumes (in
thousands)
Processing
Tioga gas plant - mcf of natural gas per day
188
194
Export
Terminal throughput - bopd (a)
59
73
Tioga rail terminal crude loading - bopd (b)
39
47
Rail services - bopd (c)
26
43
Pipelines
Oil gathering - bopd
57
39
Gas gathering - mcf of natural gas per day
202
214
(a)
Volume of crude oil received at the Ramburg truck facility and
transported through the Tioga rail terminal or third party
pipelines.
(b)
Volume of crude oil loaded to Hess Midstream and third party
rail cars at the Tioga rail terminal.
(c)
Volume of crude oil transported by Hess Midstream rail cars
from the Tioga rail terminal and third party terminals.

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SOURCE: Hess Corporation

For Hess Corporation
Investors:
Jay Wilson, 212-536-8940
or
Media Contact:
Michael Henson/Patrick Scanlan
Sard Verbinnen & Co
212-687-8080