July 27, 2016 - 7:30 AM EDT
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Hess Reports Estimated Results for the Second Quarter of 2016

Second Quarter Highlights:

  • Net loss was $392 million, or $1.29 per common share, compared with a net loss of $567 million, or $1.99 per common share, in the prior-year quarter
  • Adjusted net loss was $335 million, or $1.10 per common share, compared to an adjusted net loss of $147 million, or $0.52 per common share, in the second quarter of last year
  • E&P capital and exploratory expenditures were $485 million, down 52 percent from $1,006 million in the prior-year quarter
  • Oil and gas production was 313,000 barrels of oil equivalent per day (boepd); Bakken net production was 106,000 boepd
  • Liza-2 well in the Stabroek block, offshore Guyana (Hess 30 percent) was successfully completed; confirms a world-class oil discovery with estimated gross recoverable resource for the Liza discovery of between 800 million and 1.4 billion barrels of oil equivalent
  • Skipjack exploration well, offshore Guyana, which is a separate prospect 25 miles northwest of the Liza discovery, commenced drilling in July
  • Cash and cash equivalents were $3.1 billion at June 30, 2016; debt to capitalization ratio, excluding Bakken Midstream, was 23.5 percent

2016 Revised Full Year Guidance:

  • E&P capital and exploratory expenditures are projected to be $2.1 billion
  • Net production is forecast to be in the range of 315,000 to 325,000 boepd, excluding Libya

Hess Corporation (NYSE: HES) today reported a net loss of $392 million, or $1.29 per common share, in the second quarter of 2016 compared with a net loss of $567 million, or $1.99 per common share, in the second quarter of 2015. On an adjusted basis, the Corporation reported a net loss of $335 million, or $1.10 per common share, in the second quarter of 2016 compared with an adjusted net loss of $147 million, or $0.52 per common share, in the prior-year quarter. Lower production and realized selling prices reduced second quarter 2016 after-tax results by approximately $365 million compared to the second quarter of 2015. Operating costs, general and administrative expenses, and depreciation, depletion and amortization expense decreased compared with the prior-year quarter due to lower production and ongoing cost reduction efforts.

   “We remain confident in our ability to manage through the current environment and deliver strong production and cash flow growth as oil prices recover,” Chief Executive Officer John Hess said. “During the quarter, we continued to pursue further cost reductions and now project our full-year 2016 E&P capital and exploratory expenditures to be about 48 percent below 2015 levels.

   “Our resilient portfolio provides an attractive mix of growth options including an unparalleled position in the Bakken, two significant offshore developments that will come online in 2017 and 2018, and the recent world-class oil discovery in Guyana.”

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

                      Three Months Ended     Six Months Ended
June 30, June 30,
(unaudited) (unaudited)

     2016     

 

     2015     

     2016     

 

     2015     

(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess Corporation

Exploration and Production $ (328 ) $ (502 ) $ (779 ) $ (816 )
Bakken Midstream 11 32 25 59
Corporate, Interest and Other   (75 )   (83 )   (147 )   (172 )
Net income (loss) from continuing operations (392 ) (553 ) (901 ) (929 )
Discontinued operations     (14 )     (27 )
Net income (loss) attributable to Hess Corporation $ (392 ) $ (567 ) $ (901 ) $ (956 )
 
Net income (loss) per common share (diluted) $ (1.29 ) $ (1.99 ) $ (3.00 ) $ (3.37 )
 

Adjusted Net Income (Loss) Attributable to Hess Corporation (a)

Exploration and Production $ (271 ) $ (96 ) $ (722 ) $ (317 )
Bakken Midstream 11 32 25 59
Corporate, Interest and Other   (75 )   (83 )   (147 )   (168 )
Adjusted net income (loss) from continuing operations (335 ) (147 ) (844 ) (426 )
Discontinued operations        

Adjusted net income (loss) attributable to Hess Corporation

$ (335 ) $ (147 ) $ (844 ) $ (426 )
 
Adjusted net income (loss) per common share (diluted) $ (1.10 ) $ (0.52 ) $ (2.81 ) $ (1.50 )
 
Weighted average number of shares (diluted)   313.2   284.3   306.5   283.9

(a)

 

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 7.

 

 

Exploration and Production:

   The Exploration and Production net loss in the second quarter of 2016 was $328 million compared to a net loss of $502 million in the prior-year quarter.  On an adjusted basis, the second quarter 2016 adjusted net loss was $271 million compared to $96 million in the prior-year quarter.

   The Corporation’s average realized crude oil selling price was $41.95 per barrel in the second quarter of 2016, down 25 percent from $55.83 per barrel in the year-ago quarter, including the effect of hedging.  The average realized natural gas liquids selling price in the second quarter of 2016 was $9.03 per barrel compared to $11.06 per barrel in the prior-year quarter while the average realized natural gas selling price was $3.58 per mcf, down from $4.49 per mcf in the second quarter of 2015.

   Net production in the second quarter of 2016 was 313,000 boepd compared to pro forma net production, which excludes assets sold, of 386,000 boepd in the second quarter of 2015.  The decrease in production volumes resulted from unplanned downtime due to subsurface safety valve failures at the Tubular Bells Field and a mechanical issue at one well in the Conger Field, both in the Gulf of Mexico, and planned facility downtime at several offshore fields including the Tubular Bells Field and the Valhall Field in Norway.  In addition, volumes decreased in the Bakken shale play and Equatorial Guinea due to lower investment levels, as well as the Malaysia/Thailand Joint Development Area primarily due to lower entitlement, which were partially offset by production growth from the Utica shale play.

   For the full year 2016, net production is projected to be 315,000 boepd to 325,000 boepd.  The decline from our previous guidance of 330,000 boepd to 350,000 boepd primarily reflects unplanned downtime at two Gulf of Mexico fields.  At the Tubular Bells Field two wells were shut-in for an extended period in the first half of 2016 due to defective subsurface safety valves.  The defective valves have been replaced.  In July at the Tubular Bells Field, a subsurface safety valve in a third well failed and is expected to be remediated in the fourth quarter.  Full year production is also impacted by a mechanical issue at a well at the Conger Field, which is expected to be remediated in the fourth quarter.  The full year impact of these temporary mechanical issues is expected to be approximately 20,000 boepd in 2016.

Operational Highlights for the Second Quarter of 2016:

   Bakken (Onshore U.S.):  Net production from the Bakken was 106,000 boepd compared to 119,000 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 26 gross operated wells on production.  Drilling and completion costs averaged $4.8 million per operated well in the second quarter, down 14 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 54,000 boepd compared to 84,000 boepd in the prior-year quarter primarily as a result of unplanned well downtime and extended planned shut-downs on third-party hosted production facilities at the Tubular Bells Field (Hess 57 percent) and the Conger Field (Hess 38 percent).  Drilling and construction of production facilities at the Hess operated Stampede development project (Hess 25 percent) continued on schedule with first production targeted for 2018.  Due to the current price environment and the limited time remaining on the leases, the Company chose not to pursue the project at the non-operated Sicily exploration prospect (Hess 25 percent) where hydrocarbons were encountered.  Costs of both wells drilled at Sicily were expensed in the quarter.

   Valhall (Offshore Norway):  Net production from the Valhall Field (Hess 64 percent) averaged 19,000 boepd in the second quarter of 2016, down from 35,000 boepd in the year-ago quarter, as a result of a planned maintenance shutdown.

   North Malay Basin (Offshore): Net production from the Early Production System in the North Malay Basin (Hess 50 percent) averaged 6,000 boepd in the second quarter of 2016.  Progress continues on Full Field Development with first gas projected in 2017. During the quarter, three wellhead platforms were installed and the Phase 1 development drilling campaign remains on schedule with eight out of eleven planned wells now drilled.

   Guyana (Offshore):  On the Stabroek Block (Hess 30 percent), the operator, Esso Exploration and Production Guyana Limited, completed drilling of the Liza #2 well.  The well reached a total depth of 17,963 feet and encountered more than 190 feet of oil-bearing sandstone reservoirs in Upper Cretaceous formations.  The results confirm a world-class oil discovery with estimated gross recoverable resource for the Liza discovery of between 800 million and 1.4 billion barrels of oil equivalent.  The operator is currently drilling the Skipjack exploration well, which is a separate prospect 25 miles northwest of the Liza discovery.

Bakken Midstream:

   The Corporation’s share of Bakken Midstream segment net income was $11 million in the second quarter of 2016 compared to $32 million in the prior-year quarter, which primarily reflects the sale of a 50 percent interest in the Bakken Midstream segment on July 1, 2015.

Capital and Exploratory Expenditures:

   Exploration and Production capital and exploratory expenditures were $485 million in the second quarter of 2016 down 52 percent from $1,006 million in the prior-year quarter reflecting reduced activities in response to the weak commodity price environment.  Bakken Midstream capital expenditures were $67 million compared to $65 million in the year-ago quarter.

   Exploration and Production capital and exploratory expenditures are now projected to be approximately $2.1 billion for the full year of 2016, down 48 percent from 2015, and $300 million lower than our previous guidance.  The reduced spending reflects certain deferred activity and the Corporation’s continuing efforts to apply Lean principles to reduce costs and improve operating efficiencies across our portfolio.  Bakken Midstream capital expenditures for 2016 are estimated to be $290 million which is down from previous guidance of $340 million.

Liquidity:

   Net cash provided by operating activities before changes in operating assets and liabilities was $257 million in the second quarter of 2016 compared to $729 million in the year-ago quarter.  At June 30, 2016, the Corporation had cash and cash equivalents of $3,095 million and total debt, excluding the Bakken Midstream, of $5,868 million.  The Corporation’s debt to capitalization ratio, excluding Bakken Midstream, was 23.5 percent at June 30, 2016.

Items Affecting Comparability of Earnings Between Periods:

   The following table reflects the total after-tax income (expense) of items affecting comparability of earnings between periods:

                         

Three Months Ended

   

Six Months Ended

June 30, June 30,
(unaudited) (unaudited)

  2016  

 

  2015  

   2016   

 

   2015   

(In millions)
Exploration and Production $ (57 ) $ (406 ) $ (57 ) $ (499 )
Bakken Midstream
Corporate, Interest and Other (4 )
Discontinued operations     (14 )     (27 )

Total items affecting comparability of earnings between periods

$ (57 ) $ (420 ) $ (57 ) $ (530 )
 

   Second quarter 2016 Exploration and Production results include an after-tax charge of $52 million ($83 million pre-tax) to write-off the Sicily #1 exploration well completed in 2015, based on the Company's decision in the second quarter of 2016 to exit the project. In addition, second quarter 2016 Exploration and Production results include an after-tax charge of $22 million ($36 million pre-tax) associated with the termination of a drilling rig contract and an after-tax gain of $17 million ($27 million pre-tax) related to the sale of undeveloped acreage, onshore United States.

   Second quarter 2015 Exploration and Production results include a nontaxable goodwill impairment charge of $385 million and other after-tax charges totaling $21 million ($21 million pre-tax).

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

   The following table reconciles reported net income (loss) attributable to Hess Corporation and adjusted net income (loss):

                   

Three Months Ended

   

Six Months Ended

June 30, June 30,
(unaudited) (unaudited)

  2016  

 

  2015  

  2016  

 

  2015  

(In millions)
Net income (loss) attributable to Hess Corporation $ (392 ) $ (567 ) $ (901 ) $ (956 )
Less: Total items affecting comparability of earnings between periods   (57 )   (420 )   (57 )   (530 )
Adjusted net income (loss) attributable to Hess Corporation $ (335 ) $ (147 ) $ (844 ) $ (426 )
 

   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     

   

     Six Months Ended     

June 30, June 30,
(unaudited) (unaudited)

  2016  

 

  2015  

  2016  

 

  2015  

(In millions)

Cash provided by continuing operating activities before
changes in operating assets and liabilities

$ 257 $ 729 $ 405 $ 1,211
Changes in operating assets and liabilities   (60 )   (79 )   (268 )   (114 )
Cash provided by (used in) continuing operating activities   197   650   137   1,097
Cash used in discontinued operating activities     (10 )     (21 )
Net cash provided by (used in) operating activities $ 197 $ 640 $ 137 $ 1,076
 

Hess Corporation will review second quarter financial and operating results and other matters on a webcast at 10 a.m. today.  For details about the event, refer to the Investor Relations section of our website at www.hess.com.

Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas.  More information on Hess Corporation is available at www.hess.com.

Forward-looking Statements
Certain statements in this release may constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, uncertainties inherent in the measurement and interpretation of geological, geophysical and other technical data. Estimates and projections contained in this release are based on the 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.

Cautionary Note to Investors
We use certain terms in this release relating to resources other than proved reserves, such as unproved reserves or resources. Investors are urged to consider closely the oil and gas disclosures in Hess’ Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

                                       
Second Second First

    Quarter    

    Quarter    

    Quarter    

2016 2015 2016

Income Statement

 
Revenues and non-operating income
Sales and other operating revenues $ 1,224 $ 1,953 $ 973
Other, net   45   (18 )   20
Total revenues and non-operating income   1,269   1,935   993
 
Costs and expenses
Cost of products sold (excluding items shown separately below) 277 356 189
Operating costs and expenses 455 503 436
Production and severance taxes 28 45 19
Exploration expenses, including dry holes and lease impairment 199 90 132
General and administrative expenses 106 151 98
Interest expense 85 86 85
Depreciation, depletion and amortization 797 1,028 868
Impairments     385  
Total costs and expenses   1,947   2,644   1,827
 
Income (loss) from continuing operations before income taxes (678 ) (709 ) (834 )
Provision (benefit) for income taxes   (305 )   (156 )   (346 )
Income (loss) from continuing operations (373 ) (553 ) (488 )
 
Income (loss) from discontinued operations, net of income taxes     (14 )  
 
Net income (loss) (373 ) (567 ) (488 )
Less: Net income (loss) attributable to noncontrolling interests   19     21
Net income (loss) attributable to Hess Corporation (392 ) (567 ) (509 )
 
Less: Preferred stock dividends   12     6

Net income (loss) applicable to Hess Corporation common
stockholders

$ (404 ) $ (567 ) $ (515 )
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

                   
Six Months Ended June 30,

          2016          

 

          2015          

Income Statement

 
Revenues and non-operating income
Sales and other operating revenues $ 2,197 $ 3,491
Other, net   65   (6 )
Total revenues and non-operating income   2,262   3,485
 
Costs and expenses
Cost of products sold (excluding items shown separately below) 466 634
Operating costs and expenses 891 1,009
Production and severance taxes 47 81
Exploration expenses, including dry holes and lease impairment 331 359
General and administrative expenses 204 298
Interest expense 170 171
Depreciation, depletion and amortization 1,665 1,984
Impairments     385
Total costs and expenses   3,774   4,921
 
Income (loss) from continuing operations before income taxes (1,512 ) (1,436 )
Provision (benefit) for income taxes   (651 )   (507 )
Income (loss) from continuing operations (861 ) (929 )
 
Income (loss) from discontinued operations, net of income taxes     (27 )
 
Net income (loss) (861 ) (956 )
Less: Net income (loss) attributable to noncontrolling interests   40  
Net income (loss) attributable to Hess Corporation (901 ) (956 )
 
Less: Preferred stock dividends   18  
Net income (loss) applicable to Hess Corporation common stockholders $ (919 ) $ (956 )
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

                                                               
June 30,

    December 31,    

2016 2015

Balance Sheet Information

                 
 
Cash and cash equivalents $ 3,095 $ 2,716
Other current assets 1,536 1,688
Property, plant and equipment – net 25,769 26,352
Other long-term assets                     3,834   3,401
Total assets $                   34,234 $ 34,157
 
Current maturities of long-term debt $ 102 $ 86
Other current liabilities 2,037 2,542
Long-term debt 6,450 6,506
Other long-term liabilities 4,471 4,622
Total equity excluding other comprehensive income (loss) 21,618 21,050
Accumulated other comprehensive income (loss) (1,499 ) (1,664 )
Noncontrolling interests                     1,055   1,015
Total liabilities and equity $                   34,234 $ 34,157
 
 
June 30, December 31,
2016 2015

Total Debt

 
Hess $ 5,868 $ 5,888
Bakken Midstream (a)                     684   704
Hess Consolidated $                   6,552 $ 6,592

(a)

 

Bakken Midstream debt is non-recourse to Hess Corporation.

 
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

               
Second Second First

  Quarter  

  Quarter  

  Quarter  

2016 2015   2016

Cash Flow Information

 
Cash Flows from Operating Activities
Net income (loss) $ (373 ) $ (567 ) $ (488 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities

(Gains) losses on asset sales, net (27 )
Depreciation, depletion and amortization 797 1,028 868
Exploratory dry hole costs 133 7 85
Exploration lease impairment 15 24 9
Impairments 385
Stock compensation expense 22 25 25
Provision (benefit) for deferred income taxes and other tax accruals (310 ) (187 ) (351 )
(Income) loss from discontinued operations, net of income taxes     14  

Cash provided by operating activities before changes in operating assets and
liabilities

257 729 148
Changes in operating assets and liabilities   (60 )   (79 )   (208 )
Cash provided by (used in) continuing operating activities 197 650 (60 )
Cash provided by (used in) discontinued operating activities     (10 )  
Net cash provided by (used in) operating activities   197   640   (60 )
 
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P (547 ) (1,063 ) (568 )
Additions to property, plant and equipment - Bakken Midstream (68 ) (49 ) (52 )
Proceeds from asset sales 80
Other, net   8   (3 )   7
Cash provided by (used in) continuing investing activities (527 ) (1,115 ) (613 )
Cash provided by (used in) discontinued investing activities      
Net cash provided by (used in) investing activities   (527 )   (1,115 )   (613 )
 
Cash Flows from Financing Activities
Debt with maturities of greater than 90 days
Borrowings 5
Repayments (43 ) (17 ) (17 )
Proceeds from issuance of preferred stock 557
Proceeds from issuance of common stock 1,087
Common stock acquired and retired (11 )
Cash dividends paid (89 ) (72 ) (80 )
Other, net       (38 )
Cash provided by (used in) continued financing activities (132 ) (100 ) 1,514
Cash provided by (used in) discontinued financing activities      
Net cash provided by (used in) financing activities   (132 )   (100 )   1,514
 
Net Increase (Decrease) in Cash and Cash Equivalents (462 ) (575 ) 841
Cash and Cash Equivalents at Beginning of Period   3,557   1,506   2,716
Cash and Cash Equivalents at End of Period $ 3,095 $ 931 $ 3,557
 

Additions to Property, plant and equipment included within Investing activities:

Capital expenditures incurred $ (501 ) $ (1,013 ) $ (540 )
Increase (decrease) in related liabilities   (114 )   (99 )   (80 )
Additions to Property, plant and equipment $ (615 ) $ (1,112 ) $ (620 )
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

       
Six Months Ended June 30,

 2016 

 

 2015 

Cash Flow Information

 
Cash flows From Operating Activities
Net income (loss) $ (861 ) $ (956 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
(Gains) losses on asset sales, net (27 )
Depreciation, depletion and amortization 1,665 1,984
Exploratory dry hole costs 218 176
Exploration lease impairment 24 78
Impairments 385
Stock compensation expense 47 51
Provision (benefit) for deferred income taxes and other tax accruals (661 ) (534 )
(Income) loss from discontinued operations, net of income taxes     27
Cash provided by operating activities before changes in operating assets and liabilities 405 1,211
Changes in operating assets and liabilities   (268 )   (114 )
Cash provided by (used in) continuing operating activities 137 1,097
Cash provided by (used in) discontinued operating activities     (21 )
Net cash provided by (used in) operating activities   137   1,076
 
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P (1,115 ) (2,314 )
Additions to property, plant and equipment - Bakken Midstream (120 ) (109 )
Proceeds from asset sales 80
Other, net   15   (13 )
Cash provided by (used in) continuing investing activities (1,140 ) (2,436 )
Cash provided by (used in) discontinued investing activities     95
Net cash provided by (used in) investing activities   (1,140 )   (2,341 )
 
Cash Flows from Financing Activities
Debt with maturities of greater than 90 days
Borrowings 5
Repayments (60 ) (34 )
Proceeds from issuance of preferred stock 557
Proceeds from issuance of common stock 1,087
Common stock acquired and retired (78 )
Cash dividends paid (169 ) (144 )
Other, net   (38 )   8
Cash provided by (used in) continued financing activities 1,382 (248 )
Cash provided by (used in) discontinued financing activities    
Net cash provided by (used in) financing activities   1,382   (248 )
 
Net Increase (Decrease) in Cash and Cash Equivalents 379 (1,513 )
Cash and Cash Equivalents at Beginning of Year   2,716   2,444
Cash and Cash Equivalents at End of Period $ 3,095 $ 931
 

Additions to Property, plant and equipment included within Investing activities:

Capital expenditures incurred $ (1,041 ) $ (2,250 )
Increase (decrease) in related liabilities   (194 )   (173 )
Additions to Property, plant and equipment $ (1,235 ) $ (2,423 )
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

                                           
Second Second First

      Quarter      

     Quarter     

     Quarter     

2016 2015 2016

Capital and Exploratory Expenditures

 
E&P Capital and exploratory expenditures
United States
Bakken $ 88 $ 331 $ 116
Other Onshore   22   110   22
Total Onshore 110 441 138
Offshore   168   188   205
Total United States   278   629   343
 
Europe 14 82 48
Africa 58 3
Asia and other   193   237   150
E&P Capital and exploratory expenditures $ 485 $ 1,006 $ 544
 
Total exploration expenses charged to income included above $ 51 $ 58 $ 39
 
Bakken Midstream Capital expenditures $ 67 $ 65 $ 35
                                                 
Six Months Ended June 30,

          2016          

     

           2015          

Capital and Exploratory Expenditures

       
 
E&P Capital and exploratory expenditures
United States
Bakken $ 204 $ 765
Other Onshore       44       190
Total Onshore 248 955
Offshore       373       467
Total United States       621       1,422
 
Europe 62 197
Africa 3 146
Asia and other       343       485
E&P Capital and exploratory expenditures $     1,029 $     2,250
 
Total exploration expenses charged to income included above $     90 $     105
 
Bakken Midstream Capital expenditures $     102 $     105
 
 

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 )
 
 
Second Quarter 2015

 United States 

 International 

Total

Income Statement

 
Total revenues and non-operating income
Sales and other operating revenues $ 1,259 $ 694 $ 1,953
Other, net   (13 )   (4 )             (17 )
  1,246   690             1,936
 
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 382 4 386
Operating costs and expenses 181 254 435
Production and severance taxes 44 1 45
Bakken Midstream tariffs 116 116
Exploration expenses, including dry holes and lease impairment 48 42 90
General and administrative expenses 79 18 97
Depreciation, depletion and amortization 609 395 1,004
Impairments   385               385
Total costs and expenses   1,844   714             2,558
 
Results of operations before income taxes (598 ) (24 ) (622 )
Provision (benefit) for income taxes   (69 )   (51 )             (120 )
Net income (loss) attributable to Hess Corporation $ (529 ) (b) $ 27 (c) $           (502 )
 

(a)

Includes amounts charged from the Bakken Midstream.

(b)

After-tax results from crude oil hedging activities amounted to realized losses of $1 million and unrealized gains of $3 million.

(c)

After-tax results from crude oil hedging activities amounted to realized losses of $8 million and unrealized losses of $16 million.

 
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS DATA (UNAUDITED)

(IN MILLIONS)

                     
First Quarter 2016

 United States 

   

  International  

   

Total

Income Statement

         
 
Total revenues and non-operating income
Sales and other operating revenues $ 599 $ 374 $ 973
Other, net   6   4             10
Total revenues and non-operating income   605   378             983
 
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 184 12 196
Operating costs and expenses 221 170 391
Production and severance taxes 17 2 19
Bakken Midstream tariffs 112 112
Exploration expenses, including dry holes and lease impairment 108 24 132
General and administrative expenses 51 5 56
Depreciation, depletion and amortization   537   305             842
Total costs and expenses   1,230   518             1,748
 
Results of operations before income taxes (625 ) (140 ) (765 )
Provision (benefit) for income taxes   (241 )   (73 )             (314 )
Net income (loss) attributable to Hess Corporation $ (384 ) $ (67 ) $           (451 )
 

(a)

Includes amounts charged from the Bakken Midstream.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS DATA (UNAUDITED)

(IN MILLIONS)

                 
Six Months Ended June 30, 2016

 United States 

  International  

Total

Income Statement

         
 
Total revenues and non-operating income
Sales and other operating revenues $ 1,351 $ 846 $ 2,197
Other, net   28   19             47
Total revenues and non-operating income   1,379   865             2,244
 
Costs and expenses
Cost of products sold (excluding items shown separately below)(a) 414 69 483
Operating costs and expenses 451 349 800
Production and severance taxes 44 3 47
Bakken Midstream tariffs 221 221
Exploration expenses, including dry holes and lease impairment 272 59 331
General and administrative expenses 105 11 116
Depreciation, depletion and amortization   1,034   578             1,612
Total costs and expenses   2,541   1,069             3,610
 
Results of operations before income taxes (1,162 ) (204 ) (1,366 )
Provision (benefit) for income taxes   (444 )   (143 )             (587 )
Net income (loss) attributable to Hess Corporation $ (718 ) $ (61 ) $           (779 )
 
 
Six Months Ended June 30, 2015

 United States 

  International  

Total

Income Statement

 
Total revenues and non-operating income
Sales and other operating revenues $ 2,196 $ 1,295 $ 3,491
Other, net   (20 )   14             (6 )
  2,176   1,309             3,485
 
Costs and expenses
Cost of products sold (excluding items shown separately below)(a) 726 (34 ) 692
Operating costs and expenses 394 484 878
Production and severance taxes 78 3 81
Bakken Midstream tariffs 218 218
Exploration expenses, including dry holes and lease impairment 84 275 359
General and administrative expenses 155 28 183
Depreciation, depletion and amortization 1,137 799 1,936
Impairments   385               385
Total costs and expenses   3,177   1,555             4,732
 
Results of operations before income taxes (1,001 ) (246 ) (1,247 )
Provision (benefit) for income taxes   (211 )   (220 )             (431 )
Net income (loss) attributable to Hess Corporation $ (790 ) (b) $ (26 ) (c) $           (816 )

(a)

 

Includes amounts charged from the Bakken Midstream.

(b)

After-tax results from crude oil hedging activities amounted to realized losses of $1 million and unrealized gains of $3 million.

(c)

After-tax results from crude oil hedging activities amounted to realized losses of $7 million and unrealized losses of $6 million.

 
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                                                                                 
Second Second First

     Quarter     

     Quarter     

     Quarter     

2016 2015 2016

Net Production Per Day (in thousands)

     
Crude oil - barrels
United States
Bakken 69 85 73
Other Onshore   8   11   10
Total Onshore 77 96 83
Offshore   41   61   51
Total United States   118   157   134
 
Europe 26 39 35
Africa (a) 33 48 37
Asia   2   2   2
Total   179   246   208
 
Natural gas liquids - barrels
United States
Bakken 27 22 27
Other Onshore   12   12   13
Total Onshore 39 34 40
Offshore   4   6   6
Total United States   43   40   46
 
Europe   1   2   1
Total   44   42   47
 
Natural gas - mcf
United States
Bakken 59 71 67
Other Onshore   134   95   135
Total Onshore 193 166 202
Offshore   52   98   74
Total United States   245   264   276
 
Europe 40 41 45
Asia   254   312   250
Total   539   617   571
 
Barrels of oil equivalent   313   391   350

(a)

 

The Corporation sold its Algerian operations on December 31, 2015. Production was 5,000 bopd in the second quarter of 2015 in Algeria.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                                                                                                 
Six Months Ended June 30,

          2016          

 

          2015          

Net Production Per Day (in thousands)

   
Crude oil - barrels
United States
Bakken 71 82
Other Onshore   9   11
Total Onshore 80 93
Offshore   46   55
Total United States   126   148
 
Europe 30 38
Africa (a) 35 50
Asia   2   2
Total   193   238
 
Natural gas liquids - barrels
United States
Bakken 27 21
Other Onshore   12   10
Total Onshore 39 31
Offshore   5   6
Total United States   44   37
 
Europe   1   1
Total   45   38
 
Natural gas - mcf
United States
Bakken 63 65
Other Onshore   134   87
Total Onshore 197 152
Offshore   63   82
Total United States   260   234
 
Europe 43 39
Asia   252   324
Total   555   597
 
Barrels of oil equivalent   331   376

(a)

 

The Corporation sold its Algerian operations on December 31, 2015. Production was 5,000 bopd for the six months ended June 30, 2015 in Algeria.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                                                                               
Second Second First

     Quarter     

     Quarter     

     Quarter     

2016 2015 2016

Sales Volumes Per Day (in thousands)

     
 
Crude oil - barrels 198 250 214
Natural gas liquids - barrels 44 42 47
Natural gas - mcf   539   617   571
Barrels of oil equivalent   332   395   356
 

Sales Volumes (in thousands)

 
Crude oil - barrels 18,053 22,729 19,449
Natural gas liquids - barrels 3,968 3,848 4,254
Natural gas - mcf   48,998   56,179   51,970
Barrels of oil equivalent   30,187   35,940   32,365
   
 
Six Months Ended June 30,
2016

          2015          

Sales Volumes Per Day (in thousands)

 
Crude oil - barrels 206 234
Natural gas liquids - barrels 45 38
Natural gas - mcf   555   596
Barrels of oil equivalent   344   372
 

Sales Volumes (in thousands)

 
Crude oil - barrels 37,502 42,436
Natural gas liquids - barrels 8,222 6,967
Natural gas - mcf   100,968   107,820
Barrels of oil equivalent   62,552   67,373
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                                                                         
Second Second First

     Quarter     

     Quarter     

     Quarter     

2016 2015 2016
Average Selling Prices
 
Crude oil - per barrel (including hedging)
United States
Onshore $ 39.96 $ 50.33 $ 26.90
Offshore 40.15 57.82 27.02
Total United States 40.02 53.25 26.94
Europe 45.28 60.88 32.52
Africa 44.66 59.70 28.87
Asia 38.96 59.37 39.13
Worldwide 41.95 55.83 28.50
 
Crude oil - per barrel (excluding hedging)
United States
Onshore $ 39.96 $ 50.54 $ 26.90
Offshore 40.15 57.82 27.02
Total United States 40.02 53.38 26.94
Europe 45.28 62.39 32.52
Africa 44.66 61.00 28.87
Asia 38.96 59.37 39.13
Worldwide 41.95 56.40 28.50
 
Natural gas liquids - per barrel
United States
Onshore $ 8.34 $ 9.47 $ 6.87
Offshore 13.52 15.82 9.66
Total United States 8.84 10.46 7.20
Europe 19.23 27.53 16.24
Worldwide 9.03 11.06 7.44
 
Natural gas - per mcf
United States
Onshore $ 1.30 $ 1.81 $ 1.20
Offshore 1.50 2.13 1.47
Total United States 1.34 1.93 1.27
Europe 3.74 7.35 4.59
Asia and other 5.70 6.27 5.58
Worldwide 3.58 4.49 3.42
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

                                                                                     
Six Months Ended June 30,

          2016          

 

          2015          

Average Selling Prices

 
Crude oil - per barrel (including hedging)
United States
Onshore $ 33.22 $ 44.85
Offshore 32.84 52.11
Total United States 33.08 47.56
Europe 37.39 57.42
Africa 38.31 56.54
Asia 39.11 56.85
Worldwide 34.97 50.99
 
Crude oil - per barrel (excluding hedging)
United States
Onshore $ 33.22 $ 44.97
Offshore 32.84 52.11
Total United States 33.08 47.63
Europe 37.39 58.18
Africa 38.31 57.18
Asia 39.11 56.85
Worldwide 34.97 51.28
 
Natural gas liquids - per barrel
United States
Onshore $ 7.59 $ 11.58
Offshore 11.34 15.77
Total United States 8.00 12.26
Europe 17.40 27.56
Worldwide 8.21 12.78
 
Natural gas - per mcf
United States
Onshore $ 1.25 $ 1.93
Offshore 1.48 2.20
Total United States 1.31 2.03
Europe 4.19 7.63
Asia and other 5.64 6.11
Worldwide 3.50 4.61
 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

BAKKEN MIDSTREAM EARNINGS (UNAUDITED) AND OPERATING DATA

($ IN MILLIONS)

                                                 
Second Second First

     Quarter     

     Quarter     

     Quarter     

2016 2015 2016

Income Statement

 
Revenues and non-operating income
Total revenues and non-operating income $ 119 $ 145 $ 119
 
Costs and expenses
Operating costs and expenses 46 68 45
General and administrative expenses 5 3 4
Depreciation, depletion and amortization 25 22 23
Interest expense   6   1   4
Total costs and expenses   82   94   76
 
Results of operations before income taxes 37 51 43
Provision (benefit) for income taxes   7   19   8
Net income (loss) 30 32 35
Less: Net income attributable to noncontrolling interests (a)   19     21
Net income (loss) attributable to Hess Corporation $ 11 $ 32 $ 14
 

(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.

 
                                                   
Second Second First

     Quarter     

     Quarter     

     Quarter     

2016 2015 2016

Bakken Midstream - Operating Volumes (in thousands)

 
Processing
Tioga gas plant – mcf of natural gas per day 183 202 193
 
Export
Terminal throughput – bopd (a) 64 82 63
Tioga rail terminal crude loading – bopd (b) 39 51 33
Rail services – bopd (c) 30 44 29
 
Pipelines
Oil gathering – bopd 59 35 57
Gas gathering – mcf of natural gas per day 199 227 205
 

(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)

                                                         
Six Months Ended June 30,

          2016          

     

          2015          

Income Statement