HES
$57.92
Hess
$1.81
3.23%
Earnings Details
3rd Quarter September 2016
Wednesday, October 26, 2016 7:30:19 AM
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Summary

Hess (HES) Recent Earnings

Hess (HES) reported a 3rd Quarter September 2016 loss of $1.12 per share on revenue of $1.2 billion. The consensus estimate was a loss of $1.27 per share on revenue of $1.2 billion. Revenue fell 29.2% 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
($1.12)
Earnings Whisper
-
Consensus Estimate
($1.27)
Reported Revenue
$1.20 Bil
Revenue Estimate
$1.22 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Hess Reports Estimated Results for the Third Quarter of 2016

Net loss was $339 million, or $1.12 per common share, compared with a net loss of $279 million, or $0.98 per common share, in the prior-year quarter

Adjusted net loss was $340 million, or $1.12 per common share, compared to an adjusted net loss of $291 million, or $1.03 per common share, in the third quarter of last year

Reduced E&P capital and exploratory expenditures by 49 percent to $435 million from $849 million in the prior-year quarter

Oil and gas production was 314,000 barrels of oil equivalent per day (boepd); Bakken net production was 107,000 boepd

Successful Liza-3 well in the Stabroek block, offshore Guyana (Hess 30 percent), confirms world class oil discovery; estimated recoverable resources for Liza now expected to be at the upper end of the previously announced range of 800 million to 1.4 billion barrels of oil equivalent

Issued $1 billion of 4.30% notes due in 2027 and $500 million of 5.80% notes due in 2047; proceeds to be used primarily to purchase or redeem higher-coupon bonds and near-term maturities ($750 million of proceeds used through September 30, 2016)

Cash and cash equivalents were $3.5 billion at September 30, 2016 ($625 million committed for debt retirement in October)

Hess Corporation (HES) today reported a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016 compared with a net loss of $279 million, or $0.98 per common share, in the third quarter of 2015. On an adjusted basis, the Corporation reported a net loss of $340 million, or $1.12 per common share, in the third quarter of 2016 compared with an adjusted net loss of $291 million, or $1.03 per common share, in the prior-year quarter. Third quarter 2016 after-tax results reflect lower production and realized selling prices compared with the third quarter of 2015, as well as lower operating costs and depreciation, depletion and amortization expenses.

"Our company continues to take steps to maintain a strong balance sheet and materially reduce our spending," Chief Executive Officer John Hess said. "We also are investing in growth projects including the world-class Liza oil discovery in Guyana that we believe will create significant value for our shareholders. Based on the positive results of the Liza-3 well, we now expect Liza to be at the upper end of the previously announced estimated recoverable resources range of 800 million to 1.4 billion barrels of oil equivalent."

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

Three Months Ended
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess
Corporation
Exploration and Production
$
(234 )
$
(188 )
$
(1,013 )
$
(1,004 )
Bakken Midstream
13
16
38
75
Corporate, Interest and Other
(118 )
(94 )
(265 )
(266 )
Net income (loss) from continuing operations
(339 )
(266 )
(1,240 )
(1,195 )
Discontinued operations
--
(13 )
--
(40 )
Net income (loss) attributable to Hess Corporation
$
(339 )
$
(279 )
$
(1,240 )
$
(1,235 )
Net income (loss) per common share (diluted) (a)
$
(1.12 )
$
(0.98 )
$
(4.11 )
$
(4.35 )
Adjusted Net Income (Loss) Attributable to
Hess
Corporation
(b)
Exploration and Production
$
(285 )
$
(221 )
$
(1,007 )
$
(538 )
Bakken Midstream
13
16
38
75
Corporate, Interest and Other
(68 )
(86 )
(215 )
(254 )
Adjusted net income (loss) from continuing operations
(340 )
(291 )
(1,184 )
(717 )
Discontinued operations
--
--
--
--
Adjusted net income (loss) attributable to Hess Corporation
$
(340 )
$
(291 )
$
(1,184 )
$
(717 )
Adjusted net income (loss) per common share (diluted) (a)
$
(1.12 )
$
(1.03 )
$
(3.93 )
$
(2.53 )
Weighted average number of shares (diluted)
313.2
283.5
308.7
283.8
(a)
Calculated as net income (loss) attributable to Hess
Corporation or, as applicable, adjusted 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 third quarter of 2016 was $234 million compared to a net loss of $188 million in the prior-year quarter. On an adjusted basis, the third quarter 2016 adjusted net loss was $285 million compared to $221 million in the prior-year quarter.

The Corporation’s average realized crude oil selling price was $41.50 per barrel in the third quarter of 2016, down 9 percent from $45.66 per barrel in the year-ago quarter, including the effect of hedging. The average realized natural gas liquids selling price in the third quarter of 2016 was $9.23 per barrel compared to $7.17 per barrel in the prior-year quarter while the average realized natural gas selling price was $3.20 per mcf, down from $4.02 per mcf in the third quarter of 2015.

Net production in the third quarter of 2016 was 314,000 boepd compared to pro forma net production, which excludes assets sold, of 372,000 boepd in the third quarter of 2015. Lower volumes were primarily due to a reduced drilling program across our portfolio, planned and unplanned downtime, and natural field declines.

Operational Highlights for the Third Quarter of 2016:

Bakken (Onshore U.S.): Net production from the Bakken was 107,000 boepd compared to 113,000 boepd in the prior-year quarter, due to a reduced drilling program. The Corporation operated an average of three rigs in the quarter and brought 22 gross operated wells on production. Drilling and completion costs averaged $4.7 million per operated well in the third quarter, down 11 percent from the year-ago quarter, while increasing our standard well design to a 50-stage completion from the previous 35-stage completion design.

Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 61,000 boepd compared to 83,000 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.

Valhall (Offshore Norway): Net production from the Valhall Field (Hess 64 percent) averaged 31,000 boepd in the third quarter of 2016, down from 35,000 boepd in the year-ago quarter, primarily due to a reduced drilling program.

South Arne (Offshore Denmark): Net production from the South Arne Field (Hess 62 percent) averaged 11,000 boepd in the third quarter of 2016, down from 14,000 boepd in the year-ago quarter, as a result of a planned maintenance shutdown during the third quarter of 2016.

Joint Development Area of Malaysia / Thailand (Offshore): At the Joint Development Area of Malaysia / Thailand (Hess 50 percent), the operator shut down the field in the third quarter to commission the booster compressor project. Net production averaged 24,000 boepd in the third quarter of 2016, down from 36,000 boepd in the prior-year quarter due to the shut down and lower entitlement.

Development Projects: At the North Malay Basin project, offshore Malaysia (Hess operated - 50 percent), we completed installation of the topsides at three remote wellhead platforms and development drilling operations continued. First gas from the full field development is projected for the third quarter of 2017. At the Stampede project in the Gulf of Mexico (Hess operated - 25 percent), the topsides deck was installed on the hull and drilling operations in the field continued. First production is targeted for 2018.

Guyana (Offshore): The Liza-3 appraisal well on the Stabroek Block (Hess 30 percent), operated by Esso Exploration and Production Guyana Limited, was successfully completed. Based on the Liza-3 results, we now expect the estimated recoverable resources to be at the upper end of the previously announced range of 800 million to 1.4 billion barrels of oil equivalent. On a separate prospect 25 miles northwest of the Liza discovery, the operator completed drilling of the Skipjack exploration well, which was unsuccessful and expensed in the quarter.

Bakken Midstream:

The Corporation’s share of Bakken Midstream segment net income was $13 million in the third quarter of 2016 compared to $16 million in the prior-year quarter, primarily due to lower throughput volumes.

Capital and Exploratory Expenditures:

Exploration and Production capital and exploratory expenditures were $435 million in the third quarter of 2016 down 49 percent from $849 million in the prior-year quarter reflecting reduced activities in response to the weak commodity price environment. Bakken Midstream capital expenditures were $88 million in the third quarter of both 2016 and 2015.

Liquidity:

Net cash provided by operating activities before changes in operating assets and liabilities was $309 million in the third quarter of 2016 compared to $509 million in the prior-year quarter. In the third quarter, the Corporation issued $1 billion of senior notes with a 4.30% coupon due in 2027 and $500 million of senior notes with a 5.80% coupon due in 2047, with proceeds to be used primarily to purchase or redeem higher-coupon bonds and near-term maturities. Through September 30, 2016, $750 million has been used to purchase the tendered 8.125% notes, due in 2019.

The Corporation had cash and cash equivalents of $3,529 million and total debt, excluding the Bakken Midstream, of $6,654 million at September 30, 2016. The Corporation’s debt to capitalization ratio was 26.0 percent at September 30, 2016.

In October, the Corporation expects to purchase and redeem notes for $625 million to complete the debt refinancing. Pro forma for the notes to be purchased or redeemed in October and excluding the Bakken Midstream, debt amounted to $6,095 million at September 30, 2016. The Corporation’s pro forma debt to capitalization ratio was 24.5 percent.

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
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Exploration and Production
$
51
$
33
$
(6 )
$
(466 )
Bakken Midstream
--
--
--
--
Corporate, Interest and Other
(50 )
(8 )
(50 )
(12 )
Discontinued operations
--
(13 )
--
(40 )
$
1
$
12
$
(56 )
$
(518 )
Total items affecting comparability of earnings
between
periods

Third quarter 2016 Exploration and Production results include a tax benefit of $51 million related to the resolution of certain international tax matters. Third quarter 2016 Corporate, Interest and Other results include an after-tax charge of $50 million ($80 million pre-tax) for the premium paid to purchase 65 percent of the principal amount of our 8.125% notes, due in 2019.

Third quarter 2015 Exploration and Production results include an after-tax gain of $31 million ($49 million pre-tax) from the sale of dry gas acreage in the Utica shale play and a tax benefit of $50 million associated with an international investment incentive. Exploration and Production results also include after-tax charges totaling $48 million ($74 million pre-tax) for undeveloped leasehold impairment and other exit costs. Third quarter 2015 Corporate, Interest and Other results include an after-tax charge of $8 million ($10 million pre-tax) related to the HOVENSA bankruptcy.

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
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Net income (loss) attributable to Hess Corporation
$
(339 )
$
(279 )
$
(1,240 )
$
(1,235 )
Less: Total items affecting comparability of earnings
1
12
(56 )
(518 )
between
periods
$
(340 )
$
(291 )
$
(1,184 )
$
(717 )
Adjusted net income (loss) attributable to Hess
Corporation

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
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2016
2015
2016
2015
(In millions)
Cash provided by continuing operating activities before
$
309
$
509
$
714
$
1,720
changes
in operating assets and liabilities
Changes in operating assets and liabilities
23
(217 )
(245 )
(331 )
332
292
469
1,389
Cash provided by (used in) continuing operating
activities
Cash used in discontinued operating activities
--
(10 )
--
(31 )
Net cash provided by (used in) operating activities
$
332
$
282
$
469
$
1,358

A reconciliation of pro forma debt to total debt on a GAAP basis is provided on page 10.

Hess Corporation will review third 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 Company’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 measures 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. In addition, "Pro forma debt" presented in this release is defined as reported debt less debt balances that we have committed to repurchase or redeem at September 30, 2016. Management used pro forma debt to evaluate the Corporation’s financing structure and believes that investors’ understanding of our liquidity and debt is enhanced by disclosing this measure.

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)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Income Statement
Revenues and non-operating income
Sales and other operating revenues
$
1,177
$
1,671
$
1,224
Other, net
19
18
45
Total revenues and non-operating income
1,196
1,689
1,269
Costs and expenses
Cost of products sold (excluding items shown separately below)
222
356
277
Operating costs and expenses
421
508
455
Production and severance taxes
27
29
28
Exploration expenses, including dry holes and lease impairment
78
144
199
General and administrative expenses
106
119
106
Interest expense
84
84
85
Loss on debt extinguishment
80
--
--
Depreciation, depletion and amortization
811
988
797
Total costs and expenses
1,829
2,228
1,947
Income (loss) from continuing operations before income taxes
(633 )
(539 )
(678 )
Provision (benefit) for income taxes
(316 )
(300 )
(305 )
Income (loss) from continuing operations
(317 )
(239 )
(373 )
Income (loss) from discontinued operations, net of income taxes
--
(13 )
--
Net income (loss)
(317 )
(252 )
(373 )
Less: Net income (loss) attributable to noncontrolling interests
22
27
19
Net income (loss) attributable to Hess Corporation
(339 )
(279 )
(392 )
Less: Preferred stock dividends
12
--
12
Net income (loss) applicable to Hess Corporation common
$
(351 )
$
(279 )
$
(404 )
stockholders
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Nine Months Ended September 30,
2016
2015
Income Statement
Revenues and non-operating income
Sales and other operating revenues
$
3,374
$
5,162
Other, net
84
12
Total revenues and non-operating income
3,458
5,174
Costs and expenses
Cost of products sold (excluding items shown separately below)
688
990
Operating costs and expenses
1,312
1,517
Production and severance taxes
74
110
Exploration expenses, including dry holes and lease impairment
409
503
General and administrative expenses
310
417
Interest expense
254
255
Loss on debt extinguishment
80
--
Depreciation, depletion and amortization
2,476
2,972
Impairments
--
385
Total costs and expenses
5,603
7,149
Income (loss) from continuing operations before income taxes
(2,145 )
(1,975 )
Provision (benefit) for income taxes
(967 )
(807 )
Income (loss) from continuing operations
(1,178 )
(1,168 )
Income (loss) from discontinued operations, net of income taxes
--
(40 )
Net income (loss)
(1,178 )
(1,208 )
Less: Net income (loss) attributable to noncontrolling interests
62
27
Net income (loss) attributable to Hess Corporation
(1,240 )
(1,235 )
Less: Preferred stock dividends
30
--
Net income (loss) applicable to Hess Corporation common
$
(1,270 )
$
(1,235 )
stockholders
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
September 30,
December 31,
2016
2015
Balance Sheet Information
Cash and cash equivalents
$
3,529
$
2,716
Other current assets
1,364
1,688
Property, plant and equipment - net
25,537
26,352
Other long-term assets
4,029
3,401
Total assets
$
34,459
$
34,157
Current maturities of long-term debt
$
666
$
86
Other current liabilities
1,951
2,542
Long-term debt
6,671
6,506
Other long-term liabilities
4,256
4,622
Total equity excluding other comprehensive income (loss)
21,210
21,050
Accumulated other comprehensive income (loss)
(1,372 )
(1,664 )
Noncontrolling interests
1,077
1,015
Total liabilities and equity
$
34,459
$
34,157
September 30,
December 31,
2016
2015
Total Debt
Hess
$
6,654
$
5,888
Bakken Midstream (a)
683
704
Hess Consolidated
$
7,337
$
6,592
Debt to capitalization ratio
Hess Consolidated
26.0%
24.4%
(a)
Bakken Midstream debt is non-recourse to Hess Corporation.
September 30,
2016
Pro forma Debt (a)
Hess excluding Bakken Midstream
Total debt - GAAP
$
6,654
559
Less: October 2016 debt purchases and redemptions (a)
Hess excluding Bakken Midstream pro forma debt
$
6,095
Hess Consolidated
Total debt - GAAP
$
7,337
559
Less: October 2016 debt purchases and redemptions (a)
Hess pro forma debt
$
6,778
Pro forma Debt to capitalization ratio
Hess Consolidated
24.5%
(a)
At September 30, 2016, current maturities of long-term debt
include $559 million of notes that will be purchased or redeemed
in October 2016 associated with the debt refinancing transaction.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Cash Flow Information
Cash Flows from Operating Activities
Net income (loss)
$
(317 )
$
(252 )
$
(373 )
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating
activities
(Gains) losses on asset sales, net
--
(50 )
(27 )
Depreciation, depletion and amortization
811
988
797
Exploratory dry hole costs
16
4
133
Exploration lease impairment
9
61
15
--
10
--
Loss from equity affiliates
Stock compensation expense
22
20
22
Provision (benefit) for deferred income taxes and other tax accruals
(312 )
(285 )
(310 )
Loss on debt extinguishment
80
--
--
(Income) loss from discontinued operations, net of income taxes
--
13
--
309
509
257
Cash provided by operating activities before changes in operating
assets and
liabilities
Changes in operating assets and liabilities
23
(217 )
(60 )
Cash provided by (used in) continuing operating activities
332
292
197
Cash provided by (used in) discontinued operating activities
--
(10 )
--
Net cash provided by (used in) operating activities
332
282
197
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P
(463 )
(918 )
(547 )
Additions to property, plant and equipment - Bakken Midstream
(66 )
(45 )
(68 )
Proceeds from asset sales
--
25
80
Other, net
3
(31 )
8
Cash provided by (used in) continuing investing activities
(526 )
(969 )
(527 )
Cash provided by (used in) discontinued investing activities
--
13
--
Net cash provided by (used in) investing activities
(526 )
(956 )
(527 )
Cash Flows from Financing Activities
Debt with maturities of greater than 90 days
Borrowings
1,496
600
--
Repayments
(765 )
(17 )
(43 )
Common stock acquired and retired
--
(64 )
--
Cash dividends paid
(91 )
(71 )
(89 )
Noncontrolling interests, net
--
2,329
--
Other, net
(12 )
(21 )
--
Cash provided by (used in) continued financing activities
628
2,756
(132 )
Cash provided by (used in) discontinued financing activities
--
--
--
Net cash provided by (used in) financing activities
628
2,756
(132 )
Net Increase (Decrease) in Cash and Cash Equivalents
434
2,082
(462 )
Cash and Cash Equivalents at Beginning of Period
3,095
931
3,557
Cash and Cash Equivalents at End of Period
$
3,529
$
3,013
$
3,095
Additions to Property, plant and
equipment included within Investing activities:
Capital expenditures incurred
$
(471 )
$
(858 )
$
(501 )
Increase (decrease) in related liabilities
(58 )
(105 )
(114 )
Additions to Property, plant and equipment
$
(529 )
$
(963 )
$
(615 )
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Nine Months Ended September 30,
2016
2015
Cash Flow Information
Cash flows From Operating Activities
Net income (loss)
$
(1,178 )
$
(1,208 )
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities
(Gains) losses on asset sales, net
(27 )
(50 )
Depreciation, depletion and amortization
2,476
2,972
Exploratory dry hole costs
234
180
Exploration lease impairment
33
139
Impairments
--
385
Loss from equity affiliates
--
10
Stock compensation expense
69
71
Provision (benefit) for deferred income taxes and other tax accruals
(973 )
(819 )
Loss on debt extinguishment
80
--
(Income) loss from discontinued operations, net of income taxes
--
40
Cash provided by operating activities before changes in operating
714
1,720
assets and liabilities
Changes in operating assets and liabilities
(245 )
(331 )
Cash provided by (used in) continuing operating activities
469
1,389
Cash provided by (used in) discontinued operating activities
--
(31 )
Net cash provided by (used in) operating activities
469
1,358
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P
(1,578 )
(3,232 )
Additions to property, plant and equipment - Bakken Midstream
(186 )
(154 )
Proceeds from asset sales
80
25
Other, net
18
(44 )
Cash provided by (used in) continuing investing activities
(1,666 )
(3,405 )
Cash provided by (used in) discontinued investing activities
--
108
Net cash provided by (used in) investing activities
(1,666 )
(3,297 )
Cash Flows from Financing Activities
Debt with maturities of greater than 90 days
Borrowings
1,501
600
Repayments
(825 )
(51 )
Proceeds from issuance of preferred stock
557
--
Proceeds from issuance of common stock
1,087
--
Common stock acquired and retired
--
(142 )
Cash dividends paid
(260 )
(215 )
Noncontrolling interests, net
--
2,329
Other, net
(50 )
(13 )
Cash provided by (used in) continued financing activities
2,010
2,508
Cash provided by (used in) discontinued financing activities
--
--
Net cash provided by (used in) financing activities
2,010
2,508
Net Increase (Decrease) in Cash and Cash Equivalents
813
569
Cash and Cash Equivalents at Beginning of Year
2,716
2,444
Cash and Cash Equivalents at End of Period
$
3,529
$
3,013
Additions to Property, plant and
equipment included within Investing activities:
Capital expenditures incurred
$
(1,512 )
$
(3,108 )
Increase (decrease) in related liabilities
(252 )
(278 )
Additions to Property, plant and equipment
$
(1,764 )
$
(3,386 )
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Capital and Exploratory Expenditures
E&P Capital and exploratory expenditures
United States
Bakken
$
126
$
295
$
88
Other Onshore
4
70
22
Total Onshore
130
365
110
Offshore
191
199
168
Total United States
321
564
278
Europe
1
58
14
Africa
4
13
--
Asia and other
109
214
193
E&P Capital and exploratory expenditures
$
435
$
849
$
485
Total exploration expenses charged to income included above
$
52
$
79
$
51
Bakken Midstream Capital expenditures
$
88
$
88
$
67
Nine Months Ended September 30,
2016
2015
Capital and Exploratory Expenditures
E&P Capital and exploratory expenditures
United States
Bakken
$
330
$
1,060
Other Onshore
48
260
Total Onshore
378
1,320
Offshore
564
666
Total United States
942
1,986
Europe
63
255
Africa
7
159
Asia and other
452
699
E&P Capital and exploratory expenditures
$
1,464
$
3,099
Total exploration expenses charged to income included above
$
142
$
184
Bakken Midstream Capital expenditures
$
190
$
193
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS DATA (UNAUDITED)
(IN MILLIONS)
Third Quarter 2016
United States
International
Total
Income Statement
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 )
Third Quarter 2015
United States
International
Total
Income Statement
Total revenues and non-operating income
Sales and other operating revenues
$
1,022
$
649
$
1,671
Other, net
46
(19 )
27
Total revenues and non-operating income
1,068
630
1,698
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
350
36
386
Operating costs and expenses
193
250
443
Production and severance taxes
28
1
29
Bakken Midstream tariffs
117
--
117
Exploration expenses, including dry holes and lease impairment
87
57
144
General and administrative expenses
47
13
60
Depreciation, depletion and amortization
622
341
963
Total costs and expenses
1,444
698
2,142
Results of operations before income taxes
(376 )
(68 )
(444 )
Provision (benefit) for income taxes
(129 )
(127 )
(256 )
Net income (loss) attributable to Hess Corporation
$
(247 )
(b)
$
59
(c)
$
(188 )
(a)
Includes amounts charged from the Bakken Midstream.
(b)
After-tax results from crude oil hedging activities amounted to
realized gains of $13 million and unrealized losses of $5 million.
(c)
After-tax results from crude oil hedging activities amounted to
realized gains of $19 million and unrealized losses of $0.3
million.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS DATA (UNAUDITED)
(IN MILLIONS)
Second Quarter 2016
United States
International
Total
Income Statement
Total revenues and non-operating income
Sales and other operating revenues
$
752
$
472
$
1,224
Other, net
22
15
37
Total revenues and non-operating income
774
487
1,261
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
230
57
287
Operating costs and expenses
230
179
409
Production and severance taxes
27
1
28
Bakken Midstream tariffs
109
--
109
Exploration expenses, including dry holes and lease impairment
164
35
199
General and administrative expenses
54
6
60
Depreciation, depletion and amortization
497
273
770
Total costs and expenses
1,311
551
1,862
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 Bakken Midstream.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS DATA (UNAUDITED)
(IN MILLIONS)
Nine Months Ended September 30, 2016
United States
International
Total
Income Statement
Total revenues and non-operating income
Sales and other operating revenues
$
2,142
$
1,232
$
3,374
Other, net
23
31
54
Total revenues and non-operating income
2,165
1,263
3,428
Costs and expenses
Cost of products sold (excluding items shown separately below)(a)
648
64
712
Operating costs and expenses
631
547
1,178
Production and severance taxes
68
6
74
Bakken Midstream tariffs
334
--
334
Exploration expenses, including dry holes and lease impairment
301
108
409
General and administrative expenses
162
15
177
Depreciation, depletion and amortization
1,556
840
2,396
Total costs and expenses
3,700
1,580
5,280
Results of operations before income taxes
(1,535 )
(317 )
(1,852 )
Provision (benefit) for income taxes
(583 )
(256 )
(839 )
Net income (loss) attributable to Hess Corporation
$
(952 )
$
(61 )
$
(1,013 )
Nine Months Ended September 30, 2015
United States
International
Total
Income Statement
Total revenues and non-operating income
Sales and other operating revenues
$
3,218
$
1,944
$
5,162
Other, net
26
(5 )
21
Total revenues and non-operating income
3,244
1,939
5,183
Costs and expenses
Cost of products sold (excluding items shown separately below)(a)
1,076
2
1,078
Operating costs and expenses
587
734
1,321
Production and severance taxes
106
4
110
Bakken Midstream tariffs
335
--
335
Exploration expenses, including dry holes and lease impairment
171
332
503
General and administrative expenses
202
41
243
Depreciation, depletion and amortization
1,759
1,140
2,899
Impairments
385
--
385
Total costs and expenses
4,621
2,253
6,874
Results of operations before income taxes
(1,377 )
(314 )
(1,691 )
Provision (benefit) for income taxes
(340 )
(347 )
(687 )
Net income (loss) attributable to Hess Corporation
$
(1,037 )
(b)
$
33
(c)
$
(1,004 )
(a)
Includes amounts charged from the Bakken Midstream.
(b)
After-tax results from crude oil hedging activities amounted to
realized gains of $12 million and unrealized losses of $2 million.
(c)
After-tax results from crude oil hedging activities amounted to
realized gains of $12 million and unrealized losses of $6 million.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
(UNAUDITED)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Net Production Per Day (in thousands)
Crude oil - barrels
United States
Bakken
67
82
69
Other Onshore
9
10
8
Total Onshore
76
92
77
Offshore
46
60
41
Total United States
122
152
118
Europe
34
40
26
Africa (a)
33
50
33
Asia
1
2
2
Total
190
244
179
Natural gas liquids - barrels
United States
Bakken
29
20
27
Other Onshore
11
12
12
Total Onshore
40
32
39
Offshore
4
7
4
Total United States
44
39
43
Europe
1
1
1
Total
45
40
44
Natural gas - mcf
United States
Bakken
66
65
59
Other Onshore
139
125
134
Total Onshore
205
190
193
Offshore
65
93
52
Total United States
270
283
245
Europe
41
45
40
Asia
161
246
254
Total
472
574
539
Barrels of oil equivalent
314
380
313
(a)
The Corporation sold its Algerian operations on December 31,
2015.
Production was 8,000 barrels of oil per day (bopd) in the
third quarter of 2015 in Algeria.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
(UNAUDITED)
Nine Months Ended September 30,
2016
2015
Net Production Per Day (in thousands)
Crude oil - barrels
United States
Bakken
70
82
Other Onshore
9
11
Total Onshore
79
93
Offshore
46
57
Total United States
125
150
Europe
32
38
Africa (a)
34
50
Asia
2
2
Total
193
240
Natural gas liquids - barrels
United States
Bakken
27
21
Other Onshore
12
11
Total Onshore
39
32
Offshore
5
6
Total United States
44
38
Europe
1
1
Total
45
39
Natural gas - mcf
United States
Bakken
64
65
Other Onshore
136
100
Total Onshore
200
165
Offshore
64
85
Total United States
264
250
Europe
42
41
Asia
221
297
Total
527
588
Barrels of oil equivalent
326
377
(a)
The Corporation sold its Algerian operations on December 31,
2015. Production was 6,000 bopd for the nine months ended
September 30, 2015 in Algeria.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
(UNAUDITED)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Sales Volumes Per Day (in thousands)
Crude oil - barrels
190
245
198
Natural gas liquids - barrels
45
40
44
Natural gas - mcf
472
574
539
Barrels of oil equivalent
314
381
332
Sales Volumes (in thousands)
Crude oil - barrels
17,528
22,592
18,053
Natural gas liquids - barrels
4,167
3,701
3,968
Natural gas - mcf
43,413
52,784
48,998
Barrels of oil equivalent
28,931
35,090
30,187
Nine Months Ended September 30,
2016
2015
Sales Volumes Per Day (in thousands)
Crude oil - barrels
201
238
Natural gas liquids - barrels
45
39
Natural gas - mcf
527
588
Barrels of oil equivalent
334
375
Sales Volumes (in thousands)
Crude oil - barrels
55,030
65,028
Natural gas liquids - barrels
12,389
10,668
Natural gas - mcf
144,381
160,604
Barrels of oil equivalent
91,483
102,463
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
(UNAUDITED)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Average Selling Prices
Crude oil - per barrel (including hedging)
United States
Onshore
$
39.19
$
40.43
$
39.96
Offshore
39.55
42.70
40.15
Total United States
39.33
41.33
40.02
Europe
46.01
53.49
45.28
Africa
44.22
51.98
44.66
Asia
47.36
--
38.96
Worldwide
41.50
45.66
41.95
Crude oil - per barrel (excluding hedging)
United States
Onshore
$
39.19
$
37.91
$
39.96
Offshore
39.55
42.70
40.15
Total United States
39.33
39.81
40.02
Europe
46.01
50.12
45.28
Africa
44.22
48.60
44.66
Asia
47.36
--
38.96
Worldwide
41.50
43.43
41.95
Natural gas liquids - per barrel
United States
Onshore
$
8.48
$
5.45
$
8.34
Offshore
13.94
12.56
13.52
Total United States
9.00
6.69
8.84
Europe
17.68
21.44
19.23
Worldwide
9.23
7.17
9.03
Natural gas - per mcf
United States
Onshore
$
1.49
$
1.70
$
1.30
Offshore
2.24
2.37
1.50
Total United States
1.67
1.92
1.34
Europe
3.74
6.43
3.74
Asia
5.66
5.98
5.70
Worldwide
3.20
4.02
3.58
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
(UNAUDITED)
Nine Months Ended September 30,
2016
2015
Average Selling Prices
Crude oil - per barrel (including hedging)
United States
Onshore
$
35.16
$
43.38
Offshore
35.08
48.75
Total United States
35.13
45.43
Europe
40.66
55.87
Africa
39.66
54.99
Asia
43.11
56.85
Worldwide
37.05
49.14
Crude oil - per barrel (excluding hedging)
United States
Onshore
$
35.16
$
42.61
Offshore
35.08
48.75
Total United States
35.13
44.95
Europe
40.66
55.01
Africa
39.66
54.26
Asia
43.11
56.85
Worldwide
37.05
48.55
Natural gas liquids - per barrel
United States
Onshore
$
7.89
$
9.47
Offshore
12.14
14.60
Total United States
8.33
10.32
Europe
17.50
25.50
Worldwide
8.55
10.84
Natural gas - per mcf
United States
Onshore
$
1.33
$
1.78
Offshore
1.74
2.26
Total United States
1.43
1.95
Europe
4.04
7.18
Asia
5.65
6.07
Worldwide
3.41
4.40
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
BAKKEN MIDSTREAM EARNINGS (UNAUDITED) AND OPERATING DATA
($ IN MILLIONS)
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Income Statement
Revenues and non-operating income
Total revenues and non-operating income
$
120
$
148
$
119
Costs and expenses
Operating costs and expenses
43
65
46
General and administrative expenses
4
4
5
Depreciation, depletion and amortization
25
22
25
Interest expense
4
4
6
Total costs and expenses
76
95
82
Results of operations before income taxes
44
53
37
Provision (benefit) for income taxes
9
10
7
Net income (loss)
35
43
30
Less: Net income attributable to noncontrolling interests
22
27
19
Net income (loss) attributable to Hess Corporation
$
13
$
16
$
11
Third
Third
Second
Quarter
Quarter
Quarter
2016
2015
2016
Bakken Midstream - Operating Volumes (in
thousands)
Processing
Tioga gas plant - mcf of natural gas per day
196
210
183
Export
Terminal throughput - bopd (a)
51
72
64
Tioga rail terminal crude loading - bopd (b)
43
47
39
Rail services - bopd (c)
20
45
30
Pipelines
Oil gathering - bopd
58
41
59
Gas gathering - mcf of natural gas per day
208
226
199
(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) AND OPERATING DATA
($ IN MILLIONS)
Nine Months Ended September 30,
2016
2015
Income Statement
Revenues and non-operating income
Total revenues and non-operating income
$
358
$
423
Costs and expenses
Operating costs and expenses
134
196
General and administrative expenses
13
9
Depreciation, depletion and amortization
73
65
Interest expense
14
6
Total costs and expenses
234
276
Results of operations before income taxes
124
147
Provision (benefit) for income taxes
24
45
Net income (loss)
100
102
Less: Net income attributable to noncontrolling interests (a)
62
27
Net income (loss) attributable to Hess Corporation
$
38
$
75
(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.
Nine Months Ended September 30,
2016
2015
Bakken Midstream - Operating Volumes (in
thousands)
Processing
Tioga gas plant - mcf of natural gas per day
191
197
Export
Terminal throughput - bopd (a)
59
78
Tioga rail terminal crude loading - bopd (b)
38
49
Rail services - bopd (c)
26
43
Pipelines
Oil gathering - bopd
58
35
Gas gathering - mcf of natural gas per day
204
219
(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:
Sard Verbinnen & Co
Michael Henson/Patrick Scanlan
212-687-8080