Hess Q3 Profit Down (USA)

Hess Corporation reported net income of $298 million for the third quarter of 2011 compared with $1,154 million for the third quarter of 2010.

Exploration and Production earnings were $422 million in the third quarter of 2011 compared with $1,277 million in the third quarter of 2010. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $85.81 per barrel, up from $64.81 per barrel in the third quarter of 2010. The average worldwide natural gas selling price of $5.74 per Mcf in the third quarter of 2011 was comparable with the selling price for the same quarter a year ago. Third quarter oil and gas production was 344,000 barrels of oil equivalent per day, down from 413,000 barrels of oil equivalent per day in the third quarter a year ago, due to production interruptions in Libya and at the Valhall and Llano fields, the sale of certain natural gas assets in the United Kingdom North Sea in February and natural field declines, partially offset by higher production from the Bakken oil shale play in North Dakota.

Marketing and Refining generated a loss of $23 million in the third quarter of 2011 compared with a loss of $38 million in the same period in 2010. Refining operations incurred a loss of $38 million in the third quarter of 2011 compared with a loss of $50 million in the year ago quarter. Marketing earnings of $41 million were comparable to the earnings for the third quarter of 2010. Trading activities generated a loss of $26 million in the third quarter of 2011 and a loss of $28 million in the third quarter of last year.

Third quarter 2011 results include after-tax impairment charges of $140 million that resulted from increases to the Corporation’s abandonment liabilities, primarily for non-producing properties. A charge of $44 million was also recorded as a result of the third quarter enactment of an additional 12 percent supplementary tax on petroleum operations in the United Kingdom with an effective date of March 24, 2011. The charge consists of incremental income tax of $15 million on earnings from the effective date to the end of the second quarter and a charge of $29 million to increase the United Kingdom deferred tax liability. The results also include after-tax gains of $103 million from the sales of the Corporation’s interests in the Snorre Field, offshore Norway, and the Cook Field in the United Kingdom North Sea.

Net cash provided by operating activities was $1,022 million in the third quarter of 2011, compared with $1,246 million in the same quarter of 2010. Capital and exploratory expenditures were $2,550 million, of which $2,517 million related to Exploration and Production operations, including $902 million for acreage acquisitions in the Utica Shale play in eastern Ohio and in the Kurdistan region of Iraq. Capital and exploratory expenditures for the third quarter of 2010 were $1,567 million, of which $1,548 million related to Exploration and Production operations.

At September 30, 2011, cash and cash equivalents totaled $827 million compared with $1,608 million at December 31, 2010. Total debt was $5,592 million at September 30, 2011 and $5,583 million at December 31, 2010. The Corporation’s debt to capitalization ratio at September 30, 2011 was 22.8 percent compared with 24.9 percent at the end of 2010.

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Source: Hess, October 27, 2011