Hess Reports Estimated Results for the Third Quarter of 2009

By: Hess Corporation via Business Wire News Releases

October 28, 2009 at 07:30 AM EDT

Hess Corporation (NYSE: HES) reported net income of $341 million for the third quarter of 2009 compared with net income of $775 million for the third quarter of 2008. The after-tax results by major operating activity were as follows:

	Three Months Ended						Nine Months Ended
	September 30, (unaudited)						September 30, (unaudited)
	2009			2008			2009			2008
	(In millions, except per share amounts)
Exploration and Production	$	397		$	699		$	548		$	2,548
Marketing and Refining		38			161			110			125
Corporate		(33	)		(42	)		(108	)		(114	)
Interest expense		(61	)		(43	)		(168	)		(125	)

Net income attributable to Hess Corporation	$	341		$	775		$	382		$	2,434

Net income per share (diluted)	$	1.05		$	2.37		$	1.17		$	7.47

Weighted average number of shares (diluted)		326.0			327.4			325.8			325.7

Exploration and Production earnings were $397 million in the third quarter of 2009 compared with $699 million in the third quarter of 2008. The Corporation’s oil and gas production was 420,000 barrels of oil equivalent per day in the third quarter of 2009, an increase of 16% from the third quarter of 2008. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $56.07 per barrel in the third quarter of 2009 compared with $93.36 per barrel in the third quarter of 2008. The Corporation’s average worldwide natural gas selling price was $4.60 per Mcf in the third quarter of 2009 compared with $7.60 per Mcf in the third quarter of 2008.

Marketing and Refining earnings were $38 million in the third quarter of 2009 compared with $161 million in the third quarter of 2008. Refining operations generated a loss of $3 million in the third quarter of 2009 compared with income of $46 million in the third quarter of 2008 as a result of lower refining margins. Marketing earnings were $35 million in the third quarter of 2009 compared with $110 million in the third quarter of 2008, primarily due to lower margins. Trading activities produced income of $6 million in the third quarter of 2009 and $5 million in the third quarter of 2008.

The following table reflects the total after-tax impact of items affecting comparability of earnings between periods (in millions):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009			2008
Exploration and Production	$	89	$	-	$	45		$	-
Marketing and Refining		12		-		12			-
Corporate		-		-		(16	)		-
	$	101	$	-	$	41		$	-

In the third quarter of 2009, the Corporation recorded after-tax income of $89 million related to the resolution of a royalty dispute on production from certain leases subject to the U.S. Deep Water Royalty Relief Act. The Corporation also recorded a benefit of $12 million due to an income tax adjustment relating to refining operations.

Net cash provided by operating activities was $534 million in the third quarter of 2009 compared with $1,205 million in the third quarter of 2008. Capital and exploratory expenditures for the third quarter of 2009 amounted to $668 million, of which $646 million related to Exploration and Production operations. Capital and exploratory expenditures for the third quarter of 2008 amounted to $1,368 million, of which $1,338 million related to Exploration and Production operations.

At September 30, 2009, cash and cash equivalents totaled $957 million compared with $908 million at December 31, 2008. Total debt was $4,379 million at September 30, 2009 and $3,955 million at December 31, 2008. The Corporation’s debt to capitalization ratio at September 30, 2009 was 25.2 percent compared with 24.2 percent at the end of 2008.

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

Hess Corporation, with headquarters in New York, is a leading global independent energy company engaged in the exploration for and production of crude oil and natural gas, as well as in refining and marketing refined petroleum products, natural gas and electricity. 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.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS)

	Third			Third			Second
	Quarter			Quarter			Quarter
	2009			2008			2009
Income Statement (*)
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues	$	7,270		$	11,396		$	6,751
Equity in income (loss) of HOVENSA L.L.C.		(49	)		52			(75	)
Other, net		163			(62	)		79

Total revenues and non-operating income		7,384			11,386			6,755

Costs and Expenses
Cost of products sold (excluding items shown separately below)		5,069			8,164			4,705
Production expenses		460			503			444
Marketing expenses		240			266			245
Exploration expenses, including dry holes
and lease impairment		167			157			312
Other operating expenses		43			62			43
General and administrative expenses		148			170			136
Interest expense		97			68			95
Depreciation, depletion and amortization		626			497			558

Total costs and expenses		6,850			9,887			6,538

Income before income taxes		534			1,499			217
Provision for income taxes		182			725			115

Net income		352			774			102
Less: Net income (loss) attributable to noncontrolling interests		11			(1	)		2
Net Income attributable to Hess Corporation	$	341		$	775		$	100

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax	$	3		$	(10	)	$	6
Capitalized interest		1			2			2

Cash Flow Information (*)
Net cash provided by operating activities (**)	$	534		$	1,205		$	616

Capital and Exploratory Expenditures
Exploration and Production
United States	$	198		$	509		$	300
International		448			829			470

Total Exploration and Production		646			1,338			770
Marketing, Refining and Corporate		22			30			15

Total Capital and Exploratory Expenditures	$	668		$	1,368		$	785

Exploration expenses charged to income included above
United States	$	22		$	56		$	52
International		42			35			48

	$	64		$	91		$	100

(*) Reflects the retrospective adoption of a new accounting standard for noncontrolling interests in consolidated subsidiaries
(**) Includes changes in working capital

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS)

	Nine Months
	2009			2008
Income Statement (*)
Revenues and Non-operating Income
Sales (excluding excise taxes) and other operating revenues	$	20,936		$	33,754
Equity in income (loss) of HOVENSA L.L.C.		(165	)		23
Other, net		240			38

Total revenues and non-operating income		21,011			33,815

Costs and Expenses
Cost of products sold (excluding items shown separately below)		14,956			24,206
Production expenses		1,313			1,421
Marketing expenses		742			766
Exploration expenses, including dry holes
and lease impairment		672			467
Other operating expenses		134			154
General and administrative expenses		444			478
Interest expense		269			200
Depreciation, depletion and amortization		1,670			1,431

Total costs and expenses		20,200			29,123

Income before income taxes		811			4,692
Provision for income taxes		374			2,255

Net income		437			2,437
Less: Net income attributable to noncontrolling interests		55			3
Net Income attributable to Hess Corporation	$	382		$	2,434

Supplemental Income Statement Information
Foreign currency gains (losses), after-tax	$	(1	)	$	2
Capitalized interest		4			4

Cash Flow Information (*)
Net cash provided by operating activities (**)	$	1,775		$	4,120

Capital and Exploratory Expenditures
Exploration and Production
United States	$	813		$	1,645
International		1,362			1,836

Total Exploration and Production		2,175			3,481
Marketing, Refining and Corporate		83			97

Total Capital and Exploratory Expenditures	$	2,258		$	3,578

Exploration expenses charged to income included above
United States	$	127		$	162
International		138			134

	$	265		$	296

(*) Reflects the retrospective adoption of a new accounting standard for noncontrolling interests in consolidated subsidiaries
(**) Includes changes in working capital

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) (IN MILLIONS OF DOLLARS)

	September 30,			December 31,
	2009			2008
Balance Sheet Information

Cash and cash equivalents	$	957		$	908
Other current assets		5,969			6,424
Investments		975			1,127
Property, plant and equipment – net		16,646			16,271
Other long-term assets		3,890			3,859
Total assets	$	28,437		$	28,589

Current maturities of long-term debt	$	136		$	143
Other current liabilities		6,332			7,587
Long-term debt		4,243			3,812
Other long-term liabilities		4,719			4,656
Total equity excluding other comprehensive income (loss)		14,834			14,399
Accumulated other comprehensive income (loss)		(1,827	)		(2,008	)
Total liabilities and equity	$	28,437		$	28,589

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED) (IN MILLIONS OF DOLLARS)

	Third Quarter 2009
	United
	States				International			Total
Sales and other operating revenues		$	499		$	1,293		$	1,792
Other, net			137			8			145

Total revenues and non-operating income			636			1,301			1,937
Costs and expenses
Production expenses, including related taxes			106			354			460
Exploration expenses, including dry holes
and lease impairment			56			111			167
General, administrative and other expenses			37			28			65
Depreciation, depletion and amortization			176			426			602

Total costs and expenses			375			919			1,294

Results of operations before income taxes			261			382			643
Provision for income taxes			99			147			246

Results of operations attributable to Hess Corporation		$	162		$	235		$	397

	Third Quarter 2008
	United
	States				International			Total
Sales and other operating revenues		$	460		$	2,201		$	2,661
Other, net			(1	)		(70	)		(71	)

Total revenues and non-operating income			459			2,131			2,590
Costs and expenses
Production expenses, including related taxes			96			407			503
Exploration expenses, including dry holes
and lease impairment			82			75			157
General, administrative and other expenses			41			43			84
Depreciation, depletion and amortization			59			420			479

Total costs and expenses			278			945			1,223

Results of operations before income taxes			181			1,186			1,367
Provision for income taxes			71			597			668

Results of operations attributable to Hess Corporation		$	110		$	589		$	699

	Second Quarter 2009
	United
	States				International			Total
Sales and other operating revenues		$	358		$	1,341		$	1,699
Other, net			(3	)		60			57

Total revenues and non-operating income			355			1,401			1,756
Costs and expenses
Production expenses, including related taxes			109			335			444
Exploration expenses, including dry holes
and lease impairment			139			173			312
General, administrative and other expenses			33			28			61
Depreciation, depletion and amortization			105			433			538

Total costs and expenses			386			969			1,355

Results of operations before income taxes			(31	)		432			401
Provision (benefit) for income taxes			(11	)		197			186

Results of operations attributable to Hess Corporation		$	(20	)	$	235		$	215

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED) (IN MILLIONS OF DOLLARS)

	Nine Months 2009
	United
	States		International			Total
Sales and other operating revenues	$	1,024	$	3,598		$	4,622
Other, net		132		78			210

Total revenues and non-operating income		1,156		3,676			4,832
Costs and expenses
Production expenses, including related taxes		327		986			1,313
Exploration expenses, including dry holes
and lease impairment		306		366			672
General, administrative and other expenses		97		85			182
Depreciation, depletion and amortization		338		1,267			1,605

Total costs and expenses		1,068		2,704			3,772

Results of operations before income taxes		88		972			1,060
Provision for income taxes		35		477			512

Results of operations attributable to Hess Corporation	$	53	$	495		$	548




	Nine Months 2008
	United
	States		International			Total
Sales and other operating revenues	$	1,453	$	6,890		$	8,343
Other, net		9		(11	)		(2	)

Total revenues and non-operating income		1,462		6,879			8,341
Costs and expenses
Production expenses, including related taxes		267		1,154			1,421
Exploration expenses, including dry holes
and lease impairment		227		240			467
General, administrative and other expenses		109		111			220
Depreciation, depletion and amortization		175		1,200			1,375

Total costs and expenses		778		2,705			3,483

Results of operations before income taxes		684		4,174			4,858
Provision for income taxes		263		2,047			2,310

Results of operations attributable to Hess Corporation	$	421	$	2,127		$	2,548

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

	Third		Third		Second
	Quarter		Quarter		Quarter
	2009		2008		2009
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States		73		31		58
Europe		83		80		76
Africa		124		121		124
Asia and other		17		12		16
Total		297		244		274

Natural gas liquids - barrels
United States		12		9		10
Europe		2		4		3
Asia and other		-		-		1
Total		14		13		14

Natural gas - mcf
United States		105		76		92
Europe		120		216		160
Asia and other		429		333		459
Total		654		625		711
Barrels of oil equivalent		420		361		407

Average Selling Price
Crude oil - per barrel (including hedging)*
United States	$	63.79	$	116.14	$	55.53
Europe		47.34		83.23		47.41
Africa		54.97		91.72		47.16
Asia and other		67.49		105.58		55.84
Worldwide		56.07		93.36		49.27

Crude oil - per barrel (excluding hedging)
United States	$	63.79	$	116.14	$	55.53
Europe		47.34		83.23		47.41
Africa		67.27		108.49		57.13
Asia and other		67.49		105.58		55.84
Worldwide		61.42		102.80		54.03

Natural gas liquids - per barrel
United States	$	36.05	$	77.50	$	31.03
Europe		43.53		81.84		36.51
Asia and other		44.74		-		35.92
Worldwide		37.27		78.50		32.97

Natural gas - per mcf (including hedging)*
United States	$	2.65	$	8.57	$	3.26
Europe		4.38		10.12		4.53
Asia and other		5.12		5.77		4.82
Worldwide		4.60		7.60		4.56

Natural gas - per mcf (excluding hedging)
United States	$	2.65	$	8.57	$	3.26
Europe		4.38		10.84		4.53
Asia and other		5.12		5.77		4.82
Worldwide		4.60		7.85		4.56
* The after-tax losses from hedging activities were $84 million in the third quarter of 2009, $138 million in the third quarter of 2008 and $83 million in the second quarter of 2009.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA (UNAUDITED)

	Nine Months
	2009		2008
Operating Data
Net Production Per Day (in thousands)
Crude oil - barrels
United States		54		34
Europe		82		82
Africa		125		123
Asia and other		16		14
Total		277		253

Natural gas liquids - barrels
United States		10		10
Europe		3		4
Asia and other		1		-
Total		14		14

Natural gas - mcf
United States		92		84
Europe		153		260
Asia and other		442		346
Total		687		690
Barrels of oil equivalent		406		382

Average Selling Price
Crude oil - per barrel (including hedging)*
United States	$	56.02	$	109.39
Europe		42.80		90.69
Africa		44.98		89.66
Asia and other		56.63		106.09
Worldwide		47.09		93.62

Crude oil - per barrel (excluding hedging)
United States	$	56.02	$	109.39
Europe		42.80		90.69
Africa		56.59		106.91
Asia and other		56.63		106.09
Worldwide		52.35		102.03

Natural gas liquids - per barrel
United States	$	32.38	$	72.79
Europe		37.86		84.77
Asia and other		38.49		-
Worldwide		33.90		75.96

Natural gas - per mcf (including hedging)*
United States	$	3.19	$	9.35
Europe		5.25		9.75
Asia and other		4.88		5.33
Worldwide		4.74		7.48

Natural gas - per mcf (excluding hedging)
United States	$	3.19	$	9.35
Europe		5.25		10.16
Asia and other		4.88		5.33
Worldwide		4.74		7.64
* The after-tax losses from hedging activities were $249 million for the nine months ended September 30, 2009 and $377 million for the nine months ended September 30, 2008.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)

		Third		Third		Second
		Quarter		Quarter		Quarter
		2009		2008		2009
Financial Information (in millions of dollars)

Marketing and Refining Results
Income (loss) before income taxes		$	29	$	262	$	(56)
Provision (benefit) for income taxes			(9)		101		(26)
Results of operations attributable to Hess Corporation		$	38	$	161	$	(30)

Summary of Marketing and Refining Results
Refining		$	(3)	$	46	$	(26)
Marketing			35		110		(13)
Trading			6		5		9
Results of operations attributable to Hess Corporation		$	38	$	161	$	(30)



Operating Data (barrels and gallons in thousands)

Refined Product Sales (barrels per day)
Gasoline			253		249		223
Distillates			113		122		126
Residuals			51		46		65
Other			26		43		41
Total			443		460		455

Refinery Throughput (barrels per day)
HOVENSA - Crude runs			384		457		442
HOVENSA - Hess 50% share			192		228		221
Port Reading			65		65		65

Refinery Utilization	Refinery Capacity
HOVENSA	(barrels per day)
Crude	500		76.9%		91.3%		88.4%
FCC	150		82.9%		72.8%		71.2%
Coker	58		78.9%		105.4%		91.2%
Port Reading	70		92.2%		92.4%		93.0%

Retail Marketing
Number of retail stations (a)			1,353		1,357		1,355
Convenience store revenue (in millions of dollars) (b)		$	313	$	279	$	300
Average gasoline volume per station (gallons per month) (b)			202		215		209

(a) Includes company operated, Wilco-Hess, dealer and branded retailer.
(b) Company operated only.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES MARKETING AND REFINING SUPPLEMENTAL FINANCIAL AND OPERATING DATA (UNAUDITED)

		Nine Months
		2009		2008
Financial Information (in millions of dollars)

Marketing and Refining Results
Income before income taxes		$	135	$	198
Provision for income taxes			25		73
Results of operations attributable to Hess Corporation		$	110	$	125

Summary of Marketing and Refining Results
Refining		$	(47)	$	46
Marketing			123		102
Trading			34		(23)
Results of operations attributable to Hess Corporation		$	110	$	125


Operating Data (barrels and gallons in thousands)

Refined Product Sales (barrels per day)
Gasoline			234		236
Distillates			129		140
Residuals			67		54
Other			36		40
Total			466		470

Refinery Throughput (barrels per day)
HOVENSA - Crude runs			412		458
HOVENSA - Hess 50% share			206		229
Port Reading			64		63

Refinery Utilization	Refinery Capacity
HOVENSA	(barrels per day)
Crude	500		82.4%		91.5%
FCC	150		75.2%		73.4%
Coker	58		83.6%		98.8%
Port Reading	70		91.1%		90.3%

Retail Marketing
Number of retail stations (a)			1,353		1,357
Convenience store revenue (in millions of dollars) (b)		$	868	$	793
Average gasoline volume per station (gallons per month) (b)			203		210

(a) Includes company operated, Wilco-Hess, dealer and branded retailer.
(b) Company operated only.

Contacts:

Hess Corporation
Investors:
Jay Wilson, 212-536-8940
or
Media:
Jon Pepper, 212-536-8550