Hess Reports USD 131 Million Net Loss (USA)

Hess Corporation reported a net loss of $131 million for the fourth quarter of 2011 compared with net income of $58 million for the fourth quarter of 2010.

Fourth Quarter Highlights:

• Net loss was $131 million, compared with net income of $58 million in the fourth quarter of 2010

• Net income excluding items affecting comparability between periods was $394 million, compared with $398 million in the fourth quarter of 2010

• Results included a previously announced after-tax charge of $525 million related to the shutdown of the HOVENSA L.L.C. refinery

• Oil and gas production was 367,000 barrels of oil equivalent per day, compared with 420,000 in the fourth quarter of 2010

• Year end total proved reserves were 1,573 million barrels; reserve replacement for 2011 was 147 percent

Exploration and Production earnings were $527 million in the fourth quarter of 2011 compared with $420 million in the fourth quarter of 2010. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $89.70 per barrel, up from $71.73 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.32 per Mcf in the fourth quarter of 2011, up from $5.30 per Mcf in the fourth quarter of 2010. Fourth quarter oil and gas production was 367,000 barrels of oil equivalent per day, compared with 420,000 barrels of oil equivalent per day in the fourth quarter a year ago, largely due to production interruptions and asset sales. Fourth quarter 2011 results included higher exploration expenses reflecting total dry hole costs of $236 million ($143 million after-tax), primarily associated with two exploration wells on the Semai V Block, offshore Indonesia.

Oil and gas proved reserves were 1,573 million barrels of oil equivalent at the end of 2011, compared with 1,537 million barrels at the end of 2010. During 2011, the Corporation added 203 million barrels of oil equivalent to proved reserves. These additions, which are subject to final review, replaced approximately 147 percent of the Corporation’s 2011 production, resulting in a reserve life of 11.4 years.

Marketing and Refining generated a loss of $561 million in the fourth quarter of 2011 compared with a loss of $261 million in the same period in 2010. Refining operations incurred a loss of $598 million in the fourth quarter of 2011, including the HOVENSA L.L.C. shutdown charge discussed below, and a loss of $308 million in the fourth quarter a year ago. Marketing earnings were $48 million compared with $37 million in the same quarter of 2010. Trading activities generated a loss of $11 million in the fourth quarter of 2011 and income of $10 million in the fourth quarter of last year.

Fourth quarter 2011 results included an after-tax charge of $525 million related to the Corporation’s investment in HOVENSA L.L.C. and the shutdown of the refinery in St. Croix, U.S. Virgin Islands.

Net cash provided by operating activities was $1,138 million in the fourth quarter of 2011, compared with $1,478 million in the same quarter of 2010. Capital and exploratory expenditures were $2,236 million, of which $2,185 million related to Exploration and Production operations. Capital and exploratory expenditures for the fourth quarter of 2010 were $2,464 million, of which $2,438 million related to Exploration and Production operations.

At December 31, 2011, cash and cash equivalents totaled $351 million compared with $1,608 million at December 31, 2010. Total debt was $6,057 million at December 31, 2011 and $5,583 million at December 31, 2010. The Corporation’s debt to capitalization ratio at December 31, 2011 was 24.6 percent compared with 24.9 percent at the end of 2010.

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LNG World News Staff, January 25, 2012