HES
$43.56
Hess
($.99)
(2.22%)
Earnings Details
3rd Quarter September 2017
Wednesday, October 25, 2017 7:30:04 AM
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Summary

Hess Beats

Hess (HES) reported a 3rd Quarter September 2017 loss of $1.07 per share on revenue of $1.7 billion. The consensus estimate was a loss of $1.29 per share on revenue of $1.3 billion. The Earnings Whisper number was for a loss of $1.29 per share. Revenue grew 39.3% on a year-over-year basis.

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
($1.07)
Earnings Whisper
($1.29)
Consensus Estimate
($1.29)
Reported Revenue
$1.67 Bil
Revenue Estimate
$1.28 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Hess Reports Estimated Results for the Third Quarter of 2017

Agreement to sell our interests in Norway for $2 billion

--Agreement to sell our interests in Equatorial Guinea for $650 million

--Commencement of a process to sell our interests in Denmark in 2018

Proceeds along with cash on balance sheet to prefund our world class investment opportunity offshore Guyana (Hess - 30 percent)

--Third Quarter Highlights:

Net loss was $624 million, or $2.02 per common share, compared with a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016; Third quarter 2017 results include a noncash charge for Norway of $550 million after-tax and a $280 million after-tax gain on an asset sale

Adjusted net loss was $324 million, or $1.07 per common share, compared to an adjusted net loss of $340 million, or $1.12 per common share, in the third quarter of last year

Total production was 299,000 barrels of oil equivalent per day (boepd), excluding Libya; Bakken production was 103,000 boepd

Commenced production in July at North Malay Basin, offshore Malaysia (Hess operated - 50 percent) with current production of approximately 155 million cubic feet per day (mmcfd)

A fifth oil discovery on the Stabroek block, offshore Guyana, was announced at the Turbot-1 prospect located approximately 30 miles to the southeast of the Liza phase one project

Completed the sale of our interests in enhanced oil recovery assets in the Permian Basin for net proceeds of $597 million, after closing adjustments

E&P capital and exploratory expenditures were $558 million for the quarter and $1,479 million for nine months ended September 30, 2017

--Cash and cash equivalents were $2.5 billion at September 30, 2017

Hess Corporation (HES) today reported a net loss of $624 million, or $2.02 per common share, in the third quarter of 2017 compared with a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016. On an adjusted basis, the Corporation reported a net loss of $324 million, or $1.07 per common share, in the third quarter of 2017 compared with an adjusted net loss of $340 million, or $1.12 per common share, in the prior- year quarter. The improved adjusted results reflect higher realized crude oil selling prices and lower operating costs, depreciation, depletion and amortization, and exploration expenses. Third quarter 2017 results were adversely impacted by lower tax benefits compared to the prior-year quarter following a required change in deferred tax accounting. On an adjusted pre-tax basis, the Corporation reported a loss of $307 million in the third quarter of 2017, down from $553 million in the year-ago quarter.

"We are successfully executing our strategic plan to focus our portfolio by investing in our highest return assets and divesting mature higher cost assets," Chief Executive Officer John Hess said. "These actions in turn will lower our cash unit costs, bolster our balance sheet and prefund our world class investment opportunity in Guyana, which will position us to deliver a decade plus of returns-driven growth and increasing cash generation for our shareholders."

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

Three Months Ended
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2017
2016
2017
2016
(In millions, except per share amounts)
Net Income (Loss) Attributable to Hess
Corporation
Exploration and Production
$
(474 )
$
(234 )
$
1,061 )
$
(1,015 )
Midstream
(12 )
13
22
40
Corporate, Interest and Other
(138 )
(118 )
(358 )
(265 )
Net income (loss) attributable to Hess Corporation
$
(624 )
$
(339 )
$
(1,397 )
$
(1,240 )
Net income (loss) per common share (diluted) (a)
$
(2.02 )
$
(1.12 )
$
(4.55 )
$
(4.11 )
Adjusted Net Income (Loss) Attributable to
Hess Corporation (b)
Exploration and Production
$
(238 )
$
(285 )
$
(825 )
$
(1,009 )
Midstream
22
13
56
40
Corporate, Interest and Other
(108 )
(68 )
(328 )
(215 )
Adjusted net income (loss) attributable to Hess Corporation
$
(324 )
$
(340 )
$
(1,097 )
$
(1,184 )
Adjusted net income (loss) per common share (diluted) (a)
$
(1.07 )
$
(1.12 )
$
(3.60 )
$
(3.93 )
Weighted average number of shares (diluted)
314.5
313.2
314.3
308.7
(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:

Exploration and Production (E&P) net loss in the third quarter of 2017 was $474 million, compared to a net loss of $234 million in the third quarter of 2016. On an adjusted basis, third quarter 2017 net loss was $238 million compared to a net loss of $285 million in the prior-year quarter. The Corporation’s average realized crude oil selling price, including the effect of hedging, was $46.97 per barrel in the third quarter of 2017, up from $41.50 per barrel in the year-ago quarter. The average realized natural gas liquids selling price in the third quarter of 2017 was $17.22 per barrel, versus $9.23 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.35 per mcf, compared with $3.20 per mcf in the third quarter of 2016.

Net production, excluding Libya, was 299,000 boepd in the third quarter of 2017, compared to 314,000 boepd in the prior-year quarter. Lower volumes were due to a reduced drilling program, natural field declines, the effect of hurricane-related downtime and an asset sale, partially offset by the start-up of production from the North Malay Basin and a temporary adjustment to entitlement and higher uptime at the JDA. Our Permian assets, which were sold in August 2017, had production of 3,000 boepd in the third quarter (7,000 boepd in the third quarter of 2016). Fourth quarter 2017 production will be negatively impacted by hurricane-related downtime and expected lower entitlement at the JDA as the temporary adjustment reverses.

Excluding items affecting comparability of earnings between periods, cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $13.67 per barrel of oil equivalent (boe) in the third quarter, down 13 percent from $15.72 per boe in the prior-year quarter. The E&P effective tax rate, excluding items affecting comparability and Libya, was a benefit of 18 percent in the third quarter of 2017, down from a benefit of 41 percent in the third 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 Third Quarter of 2017:

Bakken (Onshore U.S.): Net production from the Bakken of 103,000 boepd was impacted by reduced field availability due to adverse weather and delays in completing new wells. The Corporation operated an average of four rigs in the third quarter, drilling 24 wells and bringing 13 new wells online.

Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 59,000 boepd, compared to 61,000 boepd in the prior-year quarter. At the Stampede development (Hess operated - 25 percent), the second and third production wells were completed. First production from the field is expected in the first quarter of 2018.

North Malay Basin (Offshore Malaysia): At North Malay Basin (Hess operated - 50 percent), first production of natural gas from the full-field development commenced in July and production averaged 86 mmcfd for the third quarter of 2017. The field is currently producing approximately 155 mmcfd.

Guyana (Offshore): At the Stabroek Block (Hess - 30 percent), operated by Esso Exploration and Production Guyana Limited, the Payara-2 well was successfully completed and confirmed a second giant oil field containing gross discovered recoverable resources of approximately 500 million barrels of oil equivalent. In addition, the Operator announced that the Turbot-1 exploration well resulted in a discovery encountering a reservoir of 75 feet of high-quality, oil-bearing sandstone in the primary objective. The well is located approximately 30 miles to the southeast of the Liza phase one project. An exploration well at the Ranger prospect is expected to spud at the end of October. The drilling of an additional well on the Turbot discovery is planned for 2018. Development activities associated with the Liza phase one project are on schedule and first production is expected by 2020.

Midstream:

The Midstream segment, which is comprised primarily of our 50/50 midstream joint venture, Hess Infrastructure Partners, had a net loss of $12 million in the third quarter of 2017, compared to net income of $13 million in the prior-year quarter. Excluding items affecting comparability of earnings between periods, third quarter 2017 net income was $22 million, compared to $13 million in the third quarter of 2016. Third quarter 2017 results attributable to Hess Corporation include a charge of $34 million after income taxes related to the sale of Permian Midstream assets that were wholly-owned by Hess Corporation.

Capital and Exploratory Expenditures:

Exploration and Production capital and exploratory expenditures were $558 million in the third quarter of 2017, up from $433 million in the prior-year quarter, which included increased activity at Bakken and Guyana.

Liquidity:

Net cash provided by operating activities was $88 million in the third quarter of 2017, compared to $332 million in the third quarter of 2016. Net cash provided by operating activities before changes in working capital was $415 million in the third quarter of 2017, up from $309 million in the year-ago quarter. Changes in working capital during the third quarter of 2017 were net outflows of $327 million and primarily related to Norwegian abandonment expenditures, advances to operators, premiums on hedge contracts and the timing of interest payments.

At September 30, 2017, the Corporation had cash and cash equivalents of $2,526 million and total debt, excluding the Midstream segment, of $6,016 million. The Corporation’s debt to capitalization ratio was 31.8 percent at September 30, 2017 and 30.4 percent at December 31, 2016.

In the third quarter of 2017, the Corporation increased its West Texas Intermediate (WTI) crude oil hedging program by 50,000 barrels of oil per day (bopd) to a total of 110,000 bopd for the remainder of 2017. In addition, the Corporation added WTI crude oil collars covering 115,000 bopd for 2018. See hedging summary on page 20.

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)
2017
2016
2017
2016
(In millions)
Exploration and Production
$
(236 )
$
51
$
(236 )
$
(6 )
Midstream
(34 )
--
(34 )
--
Corporate, Interest and Other
(30 )
(50 )
(30 )
(50 )
Total items affecting comparability of earnings between periods
$
(300 )
$
1
$
(300 )
$
(56 )

Third quarter 2017: Results include an after-tax gain attributable to Hess Corporation stockholders of $280 million associated with the sale of our enhanced oil recovery assets in the Permian Basin. This transaction, which included upstream and midstream assets, was allocated to the E&P segment ($314 million after-tax gain) and to the Midstream segment ($34 million after-tax loss). E&P results also include a noncash after-tax charge of $550 million to impair the carrying value of our assets in Norway as a result of the expected sale. Corporate, Interest and Other results include an after-tax charge of $30 million in connection with vacated office space.

Third quarter 2016: Exploration and Production results included a tax benefit of $51 million related to the resolution of certain tax matters, while Corporate, Interest and Other results included an after-tax charge of $50 million related to debt refinancing.

Reconciliation of U.S. GAAP to Non-GAAP measures:

The following table reconciles reported income (loss) before income taxes and adjusted income (loss) before income taxes:

Three Months Ended
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2017
2016
2017
2016
(In millions)
Income (loss) before income taxes
$
(2,567 )
$
(633 )
$
(798 )
$
(2,145 )
Less: Total items affecting comparability of earnings between periods
(2,260 )
(80 )
(2,260 )
(172 )
Adjusted Income (loss) before income taxes
$
(307 )
$
(553 )
$
(1,041 )
$
(1,973 )

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)
2017
2016
2017
2016
(In millions)
Net income (loss) attributable to Hess Corporation
$
(624 )
$
(339 )
$
(1,397 )
$
(1,240 )
Less: Total items affecting comparability of earnings between periods
(300 )
1
(300 )
(56 )
Adjusted net income (loss) attributable to Hess Corporation
$
(324 )
$
(340 )
$
(1,097 )
$
(1,184 )

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

Three Months Ended
Nine Months Ended
September 30,
September 30,
(unaudited)
(unaudited)
2017
2016
2017
2016
(In millions)
Cash provided by operating activities before changes in operating
$
415
$
309
$
1,190
$
714
assets
and liabilities
Changes in operating assets and liabilities
(327 )
23
(588 )
(245 )
Net cash provided by (used in) operating activities
$
88
$
332
$
602
$
469

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 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. "Adjusted income (loss) before income taxes" presented in this release is defined as income (loss) before income taxes excluding items identified as affecting comparability of earnings between periods. "Net cash provided by operating activities before changes in operating assets and liabilities" presented in this release is defined as Cash provided by operating activities excluding changes in operating assets and liabilities. Management uses adjusted net income (loss) and adjusted income (loss) before income taxes to evaluate the Corporation’s operating performance and believes that investors’ understanding of our performance is enhanced by disclosing these measures, 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), a reconciliation of reported income (loss) before income taxes (U.S. GAAP) to adjusted income (loss) before income taxes and 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)
Third
Third
Second
Quarter
Quarter
Quarter
2017
2016
2017
Income Statement
Revenues and non-operating income
Sales and other operating revenues
$
1,370
$
1,177
$
1,216
Gains (losses) on asset sales, net
274
--
2
Other, net
22
19
10
Total revenues and non-operating income
1,666
1,196
1,228
Costs and expenses
Cost of products sold (excluding items shown separately below)
360
222
272
Operating costs and expenses
352
421
375
Production and severance taxes
27
27
30
Exploration expenses, including dry holes and lease impairment
40
78
53
General and administrative expenses
113
106
100
Interest expense
79
84
82
Loss on debt extinguishment
--
80
--
Depreciation, depletion and amortization
759
811
741
Impairment
2,503
--
--
Total costs and expenses
4,233
1,829
1,653
Income (loss) before income taxes
(2,567 )
(633 )
(425 )
Provision (benefit) for income taxes
(1,974 )
(316 )
(8 )
Net income (loss)
(593 )
(317 )
(417 )
Less: Net income (loss) attributable to noncontrolling interests
31
22
32
Net income (loss) attributable to Hess Corporation
(624 )
(339 )
(449 )
Less: Preferred stock dividends
11
12
11
Net income (loss) applicable to Hess Corporation common
$
(635 )
$
(351 )
$
(460 )
stockholders
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Nine Months Ended September 30,
2017
2016
Income Statement
Revenues and non-operating income
Sales and other operating revenues
$
3,863
$
3,374
Gains (losses) on asset sales, net
276
27
Other, net
30
57
Total revenues and non-operating income
4,169
3,458
Costs and expenses
Cost of products sold (excluding items shown separately below)
851
688
Operating costs and expenses
1,086
1,312
Production and severance taxes
88
74
Exploration expenses, including dry holes and lease impairment
151
409
General and administrative expenses
309
310
Interest expense
245
254
Loss on debt extinguishment
--
80
Depreciation, depletion and amortization
2,237
2,476
Impairment
2,503
--
Total costs and expenses
7,470
5,603
Income (loss) before income taxes
(3,301 )
(2,145 )
Provision (benefit) for income taxes
(1,995 )
(967 )
Net income (loss)
(1,306 )
(1,178 )
Less: Net income (loss) attributable to noncontrolling interests
91
62
Net income (loss) attributable to Hess Corporation
(1,397 )
(1,240 )
Less: Preferred stock dividends
34
30
Net income (loss) applicable to Hess Corporation common
$
(1,431 )
$
(1,270 )
stockholders
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
September 30,
December 31,
2017
2016
Balance Sheet Information
Cash and cash equivalents
$
2,526
$
2,732
Other current assets
1,557
1,544
Property, plant and equipment - net
20,279
23,595
Other long-term assets
2,238
750
Total assets
$
26,600
$
28,621
Current maturities of long-term debt
$
122
$
112
Other current liabilities
2,092
2,139
Long-term debt
6,592
6,694
Other long-term liabilities
3,366
4,085
Total equity excluding other comprehensive income (loss)
14,604
16,238
Accumulated other comprehensive income (loss)
(1,472 )
(1,704 )
Noncontrolling interests
1,296
1,057
Total liabilities and equity
$
26,600
$
28,621
September 30,
December 31,
2017
2016
Total Debt
Hess
$
6,016
$
6,073
Midstream (a)
698
733
Hess Consolidated
$
6,714
$
6,806
(a) Midstream debt is non-recourse to Hess Corporation.
September 30,
December 31,
2017
2016
Debt to Capitalization Ratio
Hess Consolidated
31.8 %
30.4 %
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Third
Third
Second
Quarter
Quarter
Quarter
2017
2016
2017
Cash Flow Information
Cash Flows from Operating Activities
Net income (loss)
$
(593 )
$
(317 )
$
(417 )
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating
activities
(Gains) losses on asset sales, net
(274 )
--
(2 )
Depreciation, depletion and amortization
759
811
741
2,503
--
--
Impairment
Exploratory dry hole costs
--
16
--
Exploration lease and other impairment
7
9
8
Stock compensation expense
21
22
22
Provision (benefit) for deferred income taxes and other tax accruals
(2,008 )
(312 )
(20 )
Loss on debt extinguishment
--
80
--
415
309
332
Cash provided by operating activities before changes in operating
assets and
liabilities
Changes in operating assets and liabilities
(327 )
23
(167 )
Net cash provided by (used in) operating activities
88
332
165
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P
(489 )
(461 )
(446 )
Additions to property, plant and equipment - Midstream
(24 )
(68 )
(34 )
Proceeds from asset sales
604
--
79
Other, net
(1 )
3
--
Net cash provided by (used in) investing activities
90
(526 )
(401 )
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or
11
6
(1 )
less
Debt with maturities of greater than 90 days
Borrowings
--
1,496
--
Repayments
(30 )
(771 )
(51 )
Proceeds from issuance of Hess Midstream Partnership LP units
--
--
366
Cash dividends paid
(91 )
(91 )
(90 )
Noncontrolling interests, net
(33 )
--
(175 )
Other, net
(1 )
(12 )
(7 )
Net cash provided by (used in) financing activities
(144 )
628
42
Net Increase (Decrease) in Cash and Cash Equivalents
34
434
(194 )
Cash and Cash Equivalents at Beginning of Period
2,492
3,095
2,686
Cash and Cash Equivalents at End of Period
$
2,526
$
3,529
$
2,492
Additions to Property, Plant and
Equipment included within Investing Activities:
Capital expenditures incurred
$
(553 )
$
(471 )
$
(503 )
Increase (decrease) in related liabilities
40
(58 )
23
Additions to property, plant and equipment
$
(513 )
$
(529 )
$
(480 )
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Nine Months Ended September 30,
2017
2016
Cash Flow Information
Cash flows From Operating Activities
Net income (loss)
$
(1,306 )
$
(1,178 )
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities
(Gains) losses on asset sales, net
(276 )
(27 )
Depreciation, depletion and amortization
2,237
2,476
Impairments
2,503
--
Exploratory dry hole costs
--
234
Exploration lease and other impairment
22
33
Stock compensation expense
65
69
Provision (benefit) for deferred income taxes and other tax accruals
(2,055 )
(973 )
Loss on debt extinguishment
--
80
Cash provided by operating activities before changes in operating
1,190
714
assets and liabilities
Changes in operating assets and liabilities
(588 )
(245 )
Net cash provided by (used in) operating activities
602
469
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P
(1,275 )
(1,575 )
Additions to property, plant and equipment - Midstream
(108 )
(189 )
Proceeds from asset sales
783
80
Other, net
(1 )
18
Net cash provided by (used in) investing activities
(601 )
(1,666 )
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or
15
(14 )
less
Debt with maturities of greater than 90 days
Borrowings
--
1,496
Repayments
(107 )
(806 )
Proceeds from issuance of Hess Midstream Partnership LP units
366
--
Proceeds from issuance of preferred stock
--
557
Proceeds from issuance of common stock
--
1,087
Cash dividends paid
(273 )
(260 )
Noncontrolling interests, net
(208 )
--
Other, net
--
(50 )
Net cash provided by (used in) financing activities
(207 )
2,010
Net Increase (Decrease) in Cash and Cash Equivalents
(206 )
813
Cash and Cash Equivalents at Beginning of Year
2,732
2,716
Cash and Cash Equivalents at End of Period
$
2,526
$
3,529
Additions to Property, Plant and
Equipment included within Investing Activities:
Capital expenditures incurred
$
(1,426 )
$
(1,512 )
Increase (decrease) in related liabilities
43
(252 )
Additions to property, plant and equipment
$
(1,383 )
$
(1,764 )
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
Third
Third
Second
Quarter
Quarter
Quarter
2017
2016
2017
Capital and Exploratory Expenditures
E&P Capital and exploratory expenditures
United States
Bakken
$
186
$
126
$
148
Other Onshore
8
2
9
Total Onshore
194
128
157
Offshore
191
191
191
Total United States
385
319
348
Europe
34
1
42
Africa
13
4
11
Asia and other
126
109
127
E&P Capital and exploratory expenditures
$
558
$
433
$
528
Total exploration expenses charged to income included above
$
32
$
52
$
45
Midstream Capital expenditures
$
27
$
90
$
20
Nine Months Ended September 30,
2017
2016
Capital and Exploratory Expenditures
E&P Capital and exploratory expenditures
United States
Bakken
$
424
$
330
Other Onshore
25
44
Total Onshore
449
374
Offshore
540
564
Total United States
989
938
Europe
91
63
Africa
30
7
Asia and other
369
452
E&P Capital and exploratory expenditures
$ 1,479
$
1,460
Total exploration expenses charged to income included above
$
128
$
142
Midstream Capital expenditures
$
75
$
194
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)
(IN MILLIONS)
Third Quarter 2017
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
923
$
446
$
1,369
Gains (losses) on asset sales, net
330
--
330
Other, net
(5 )
20
15
Total revenues and non-operating income
1,248
466
1,714
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
359
14
373
Operating costs and expenses
148
162
310
Production and severance taxes
26
1
27
Midstream tariffs
140
--
140
Exploration expenses, including dry holes and lease impairment
16
24
40
General and administrative expenses
55
--
55
Depreciation, depletion and amortization
437
272
709
Impairment
--
2,503
2,503
Total costs and expenses
1,181
2,976
4,157
Results of operations before income taxes
67
(2,510 )
(2,443 )
Provision (benefit) for income taxes
2
(1,971 )
(1,969 )
Net income (loss) attributable to Hess Corporation
$
65
(b)
$
(539 ) (c)
$
(474 )
Third Quarter 2016
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
789
$
386
$
1,175
Other, net
(5 )
12
7
Total revenues and non-operating income
784
398
1,182
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
243
(5 )
238
Operating costs and expenses
170
198
368
Production and severance taxes
24
3
27
Midstream tariffs
118
--
118
Exploration expenses, including dry holes and lease impairment
29
49
78
General and administrative expenses
56
4
60
Depreciation, depletion and amortization
517
262
779
Total costs and expenses
1,157
511
1,668
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 Midstream.
(b)
After-tax results from crude oil hedging activities amounted to
realized losses of $7 million and unrealized gains of $8 million.
(c)
After-tax results from crude oil hedging activities amounted to
realized gains of $1 million and unrealized gains of $4 million.
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 )
(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)
Nine Months Ended September 30, 2017
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
2,682
$
1,175
$
3,857
Gains (losses) on asset sales, net
330
--
330
Other, net
(15 )
31
16
Total revenues and non-operating income
2,997
1,206
4,203
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
937
(31 )
906
Operating costs and expenses
493
443
936
Production and severance taxes
86
2
88
Midstream tariffs
399
--
399
Exploration expenses, including dry holes and lease impairment
67
84
151
General and administrative expenses
156
8
164
Depreciation, depletion and amortization
1,366
754
2,120
Impairment
--
2,503
2,503
Total costs and expenses
3,504
3,763
7,267
Results of operations before income taxes
(507 )
(2,557 )
(3,064 )
Provision (benefit) for income taxes
(21 )
(1,982 )
(2,003 )
Net income (loss) attributable to Hess Corporation
$
(486 )
(b)
$
(575 )
(c)
$
(1,061 )
Nine Months Ended September 30, 2016
Income Statement
United States
International
Total
Total revenues and non-operating income
Sales and other operating revenues
$
2,136
$
1,232
$
3,368
Gains (losses) on asset sales, net
27
--
27
Other, net
(4 )
31
27
Total revenues and non-operating income
2,159
1,263
3,422
Costs and expenses
Cost of products sold (excluding items shown separately below) (a)
673
64
737
Operating costs and expenses
605
547
1,152
Production and severance taxes
68
6
74
Midstream tariffs
349
--
349
Exploration expenses, including dry holes and lease impairment
301
108
409
General and administrative expenses
160
15
175
Depreciation, depletion and amortization
1,541
840
2,381
Total costs and expenses
3,697
1,580
5,277
Results of operations before income taxes
(1,538 )
(317 )
(1,855 )
Provision (benefit) for income taxes
(584 )
(256 )
(840 )
Net income (loss) attributable to Hess Corporation
$
(954 )
$
(61 )
$
(1,015 )
(a)
Includes amounts charged from the Midstream.
(b)
After-tax results from crude oil hedging activities amounted to
realized losses of $6 million and unrealized gains of $1 million.
(c)
After-tax results from crude oil hedging activities amounted to
realized gains of $3 million and unrealized losses of $3 million.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
Third
Third
Second
Quarter
Quarter
Quarter
2017
2016
2017
Net Production Per Day (in thousands)
Crude oil - barrels
United States
Bakken
63
67
68
Other Onshore (a)
4
9
9
Total Onshore
67
76
77
Offshore
43
46
38
Total United States
110
122
115
Europe
25
34
28
Africa (b)
39
33
32
Asia
2
1
2
Total
176
190
177
Natural gas liquids - barrels
United States
Bakken
29
29
29
Other Onshore (a)
8
11
8
Total Onshore
37
40
37
Offshore
5
4
4
Total United States
42
44
41
Europe
1
1
1
Total
43
45
42
Natural gas - mcf
United States
Bakken
63
66
66
Other Onshore
85
139
99
Total Onshore
148
205
165
Offshore
69
65
51
Total United States
217
270
216
Europe
29
41
33
Asia
306
161
238
Total
552
472
487
Barrels of oil equivalent
311
314
300
(a)
The Corporation sold its Permian assets in August
2017.
Production was 3,000 boepd in the third quarter of 2017,
7,000 boepd in the third quarter of 2016 and 7,000 boepd in the
second quarter of 2017.
(b)
Production from Libya recommenced in the fourth quarter of
2016.
Production was 12,000 bopd in the third quarter of 2017 and
6,000 bopd in the second quarter of 2017.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
Nine Months Ended September 30,
2017
2016
Net Production Per Day (in thousands)
Crude oil - barrels
United States
Bakken
66
70
Other Onshore (a)
7
9
Total Onshore
73
79
Offshore
43
46
Total United States
116
125
Europe
28
32
Africa (b)
35
34
Asia
2
2
Total
181
193
Natural gas liquids - barrels
United States
Bakken
27
27
Other Onshore (a)
9
12
Total Onshore
36
39
Offshore
4
5
Total United States
40
44
Europe
1
1
Total
41
45
Natural gas - mcf
United States
Bakken
61
64
Other Onshore
97
136
Total Onshore
158
200
Offshore
65
64
Total United States
223
264
Europe
33
42
Asia
252
221
Total
508
527
Barrels of oil equivalent
307
326
(a)
The Corporation sold its Permian assets in August
2017.
Production was 6,000 boepd in the first nine months of 2017
and 8,000 boepd in the first nine months of 2016.
(b)
Production from Libya recommenced in the fourth quarter of
2016.
Production was 7,000 bopd in the first nine months of 2017.
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
Third
Third
Second
Quarter
Quarter
Quarter
2017
2016
2017
Sales Volumes Per Day (in thousands)
Crude oil - barrels
172
190
174
Natural gas liquids - barrels
43
45
42
Natural gas - mcf
552
472
487
Barrels of oil equivalent
307
314
297
Sales Volumes (in thousands)
Crude oil - barrels
15,897
17,528
15,757
Natural gas liquids - barrels
3,920
4,167
3,848
Natural gas - mcf
50,808
43,413
44,390
Barrels of oil equivalent
28,285
28,931
27,003
Nine Months Ended September 30,
2017
2016
Sales Volumes Per Day (in thousands)
Crude oil - barrels
174
201
Natural gas liquids - barrels
41
45
Natural gas - mcf
508
527
Barrels of oil equivalent
300
334
Sales Volumes (in thousands)
Crude oil - barrels
47,398
55,030
Natural gas liquids - barrels
11,391
12,389
Natural gas - mcf
138,742
144,381
Barrels of oil equivalent
81,913
91,483
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
Third
Third
Second
Quarter
Quarter
Quarter
2017
2016
2017
Average Selling Prices
Crude oil - per barrel (including hedging)
United States
Onshore
$
42.14
$
39.19
$
43.83
Offshore
46.11
39.55
44.60
Total United States
43.66
39.33
44.09
Europe
53.89
46.01
50.27
Africa
51.62
44.22
48.81
Asia
--
47.36
41.95
Worldwide
46.97
41.50
45.95
Crude oil - per barrel (excluding hedging)
United States
Onshore
$
42.85
$
39.19
$
43.72
Offshore
46.72
39.55
44.60
Total United States
44.33
39.33
44.01
Europe
53.77
46.01
49.72
Africa
51.51
44.22
48.40
Asia
--
47.36
41.95
Worldwide
47.36
41.50
45.74
Natural gas liquids - per barrel
United States
Onshore
$
16.56
$
8.48
$
14.25
Offshore
20.41
13.94
18.47
Total United States
17.04
9.00
14.64
Europe
26.44
17.68
23.95
Worldwide
17.22
9.23
14.85
Natural gas - per mcf
United States
Onshore
$
1.58
$
1.49
$
2.20
Offshore
2.26
2.24
2.29
Total United States
1.80
1.67
2.22
Europe
4.58
3.74
4.22
Asia
4.34
5.66
3.93
Worldwide
3.35
3.20
3.19
The following is a summary of the Corporation’s outstanding
commodity hedging program by calendar year:
2017
2018
Brent
West Texas
Brent
West Texas
Intermediate
Intermediate
Outstanding average barrels of oil per day
20,000
110,000
--
115,000
Average ceiling price
$75
$68
--
$65
Average floor price
$55
$50
--
$50
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA
Nine Months Ended September 30,
2017
2016
Average Selling Prices
Crude oil - per barrel (including hedging)
United States
Onshore
$
44.20
$
35.16
Offshore
46.04
35.08
Total United States
44.88
35.13
Europe
52.68
40.66
Africa
50.51
39.66
Asia
52.83
43.11
Worldwide
47.16
37.05
Crude oil - per barrel (excluding hedging)
United States
Onshore
$
44.38
$
35.16
Offshore
46.24
35.08
Total United States
45.06
35.13
Europe
52.49
40.66
Africa
50.36
39.66
Asia
52.83
43.11
Worldwide
47.22
37.05
Natural gas liquids - per barrel
United States
Onshore
$
16.22
$
7.89
Offshore
19.95
12.14
Total United States
16.67
8.33
Europe
26.26
17.50
Worldwide
16.89
8.55
Natural gas - per mcf
United States
Onshore
$
2.04
$
1.33
Offshore
2.32
1.74
Total United States
2.12
1.43
Europe
4.24
4.04
Asia
4.12
5.65
Worldwide
3.25
3.41

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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