Hess Corporation (NYSE: HES) today reported a net loss of $4 million, or $0.05 per common share, in the fourth quarter of 2018, compared to a net loss of $2,677 million, or $8.57 per common share, in the fourth quarter of 2017. On an adjusted basis, the Corporation reported a net loss of $77 million, or $0.31 per common share, in the fourth quarter of 2018, compared with an adjusted net loss of $304 million, or $1.01 per common share, in the prior-year quarter. Fourth quarter 2018 results benefitted from higher U.S. crude oil production, reduced operating costs, and lower depreciation, depletion and amortization expense, compared with the prior-year quarter.

“Our company enters 2019 with a great deal of momentum,” Chief Executive Officer John Hess said. “With our strong execution in 2018, our portfolio is well positioned to deliver approximately 20 percent compound annual cash flow growth and more than 10 percent compound annual production growth through 2025, with a portfolio breakeven of less than $40 per barrel Brent by 2025.”

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

        Three Months Ended           Year Ended
December 31, December 31,
(unaudited) (unaudited)
2018           2017 2018           2017
(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess Corporation

                                                
Exploration and Production $ (5 ) $ (2,592 ) $ 51 $ (3,653 )
Midstream 32 20 120 42
Corporate, Interest and Other               (31 )               (105 )               (453 )               (463 )
Net income (loss) attributable to Hess Corporation $             (4 ) $             (2,677 ) $             (282 ) $             (4,074 )
 
Net income (loss) per common share (diluted) (a) $             (0.05 ) $             (8.57 ) $             (1.10 ) $             (13.12 )
 

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

Exploration and Production $ (5 ) $ (219 ) $ 137 $ (1,044 )
Midstream 32 20 120 76
Corporate, Interest and Other               (104 )               (105 )               (433 )               (433 )
Adjusted net income (loss) attributable to Hess Corporation $             (77 ) $             (304 ) $             (176 ) $             (1,401 )
 
Adjusted net income (loss) per common share (diluted) (a) $             (0.31 ) $             (1.01 ) $             (0.74 ) $             (4.61 )
 
Weighted average number of shares (diluted)               291.5               313.6               298.2               314.1

(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 of earnings between periods summarized on page 7. 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:

Exploration and Production (E&P) net loss was $5 million in the fourth quarter of 2018, compared to a net loss of $2,592 million, or a net loss of $219 million on an adjusted basis, in the fourth quarter of 2017. The Corporation’s average realized crude oil selling price, excluding the effect of hedging, was $58.11 per barrel in the fourth quarter of 2018, versus $57.32 per barrel in the year-ago quarter. Noncash losses on crude oil hedging contracts reduced fourth quarter 2018 after-tax results by $48 million, compared to a $54 million reduction in the fourth quarter of 2017. The average realized natural gas liquids selling price in the fourth quarter of 2018 was $21.19 per barrel, versus $22.78 per barrel in the prior-year quarter, while the average realized natural gas selling price was $4.82 per mcf, compared to $3.69 per mcf in the fourth quarter of 2017.

Net production, excluding Libya, was 267,000 boepd in the fourth quarter of 2018, down from 282,000 boepd in the prior-year quarter, which included 58,000 boepd from divested assets. Growth in 2018 production was driven by the Bakken and the Gulf of Mexico. Libya net production was 22,000 boepd in the fourth quarter of 2018, compared with 18,000 boepd in the year-ago quarter.

Cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $12.60 per boe in the fourth quarter, down 14 percent from $14.58 per boe in the prior-year quarter. This improvement is due to higher production from lower cost Gulf of Mexico assets and cost reduction initiatives. The E&P effective tax rate, excluding items affecting comparability of earning between periods and Libya, was a benefit of 57 percent in the fourth quarter of 2018, compared to an expense of 21 percent in the prior-year period.

Oil and Gas Reserve Estimates:

Oil and gas proved reserves at December 31, 2018, which are subject to final review, were 1,192 million boe, compared with 1,154 million boe at December 31, 2017. Proved reserve additions and revisions in 2018 were 172 million boe, and primarily related to the Bakken. Additions resulting from asset acquisitions totaled 4 million boe, while asset sales reduced proved reserves by 35 million boe. Excluding asset sales, the Corporation replaced 170 percent of its 2018 production at a finding, development and acquisition cost of approximately $11.75 per boe, which resulted in a year-end 2018 reserve life of 11.5 years.

Operational Highlights for the Fourth Quarter of 2018:

Bakken (Onshore U.S.): Net production from the Bakken increased 15 percent to 126,000 boepd from 110,000 boepd in the year-ago quarter, due to increased drilling activity and improved well performance. The Corporation operated an average of six rigs in the fourth quarter, drilling 36 wells and bringing 35 new wells online.

Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 68,000 boepd, compared to 40,000 boepd in the prior-year quarter, primarily reflecting higher production from the Penn State and Conger fields which were impacted by the shutdown of the third-party operated Enchilada platform in the year-ago quarter, and the Stampede Field which commenced production in 2018.

Guyana (Offshore): At the Stabroek Block (Hess - 30 percent), the operator, Esso Exploration and Production Guyana Limited, announced a tenth discovery, the Pluma-1 exploration well which encountered approximately 121 feet of high-quality, hydrocarbon-bearing sandstone reservoir and is located approximately 17 miles south of the Turbot-1 well. As a result of this new discovery and further evaluation of previous discoveries, the estimate of gross discovered recoverable resources for the Stabroek Block was increased to more than 5 billion boe, which further reinforces the potential for at least five FPSOs producing over 750,000 gross bopd by 2025.

Earlier this month the Stena Carron drillship began drilling the Haimara-1 well, located 19 miles east of the Pluma-1 discovery in the southeastern part of the Stabroek Block, and the Noble Tom Madden drillship began drilling the Tilapia-1 prospect, located approximately 3 miles west of the Longtail-1 discovery, in the Turbot area.

Development activities are progressing as follows:

Liza Phase 1: The operator has moved into its peak execution phase ahead of the expected startup in early 2020. Liza Phase 1 will use the Liza Destiny FPSO to produce up to 120,000 gross bopd. Drilling of development wells in the Liza Field is continuing using the Noble Bob Douglas drillship, subsea equipment is being prepared for installation, and the topside facilities modules are being installed on the Liza Destiny FPSO in Singapore, which is expected to arrive offshore Guyana in the third quarter of 2019. Preparations are also underway for the installation of subsea umbilicals, risers and flowlines at the Liza Field in the spring.

Liza Phases 2 and 3: Phase 2 of the Liza development, which will use a second FPSO designed to produce up to 220,000 gross bopd, is expected to be producing by mid-2022. Pending government and regulatory approvals, project sanction is expected in the first quarter of 2019. Development of the Payara Field is expected to be sanctioned in 2019 with first production expected to start up as early as 2023.

Canada (Offshore): In Nova Scotia (Hess – 50 percent), the operator, BP Canada, completed drilling of the Aspy exploration well. The well did not encounter commercial quantities of hydrocarbons. Well costs of $26 million were incurred and expensed in the fourth quarter. The operator is evaluating the data from the Aspy well and determining next steps.

Midstream:

The Midstream segment, comprised primarily of Hess Infrastructure Partners LP, our 50/50 midstream joint venture, had net income of $32 million in the fourth quarter of 2018, compared to net income of $20 million in the prior-year quarter. The improved fourth quarter 2018 results primarily reflect higher throughput volumes.

Corporate, Interest and Other:

Net results for Corporate, Interest and Other were an after-tax expense of $31 million in the fourth quarter of 2018, compared to an after-tax expense of $105 million in the fourth quarter of 2017. On an adjusted basis, fourth quarter 2018 after-tax expense was $104 million. Adjusted corporate expenses were $20 million in the fourth quarter of 2018, down $13 million from the year-ago quarter, primarily as a result of lower employee related costs and professional fees. Fourth quarter 2018, interest expense of $84 million was $12 million higher than the year-ago quarter primarily due to lower capitalized interest.

Capital and Exploratory Expenditures:

E&P capital and exploratory expenditures were $618 million in the fourth quarter of 2018, compared to $568 million in the prior-year quarter, reflecting increased drilling in the Bakken, greater development activity in Guyana, and higher exploration spend, partially offset by reduced development spend in the Gulf of Mexico and the impact of 2017 asset sales.

Midstream capital expenditures were $67 million in the fourth quarter of 2018, up from $46 million in the year-ago quarter primarily due to expansion of gathering systems and compression capacity to support Hess and third-party production growth.

Liquidity:

Excluding the Midstream segment, the Corporation had cash and cash equivalents of $2.6 billion and total debt of $5.7 billion at December 31, 2018. The Midstream segment had cash and cash equivalents of $109 million and total debt of $981 million at December 31, 2018. The Corporation’s debt to capitalization ratio was 38.0 percent at December 31, 2018 and 36.1 percent at December 31, 2017.

Net cash provided by operating activities was $881 million in the fourth quarter of 2018, up from $343 million in the fourth quarter of 2017. Net cash provided by operating activities before changes in working capital was $584 million in the fourth quarter of 2018 compared with $492 million in the year-ago quarter. Changes in working capital during the fourth quarter of 2018 was a net inflow of $297 million due to an increase in accounts payable and a reduction in accounts receivable.

In the fourth quarter of 2018, the Corporation purchased a total of $250 million of common shares to complete its previously announced $1.5 billion share repurchase program.

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         Year Ended
December 31, December 31,
(unaudited) (unaudited)
2018           2017 2018         2017
(In millions)
Exploration and Production $               — $               (2,373 ) $               (86 ) $               (2,609 )
Midstream — — — (34 )
Corporate, Interest and Other                 73                 —                 (20 )                 (30 )
Total items affecting comparability of earnings between periods $               73 $               (2,373 ) $               (106 ) $               (2,673 )

Fourth Quarter 2018: Corporate, Interest and Other results include an allocation of noncash income tax benefit of $73 million, as required by accounting standards, to offset the recognition of a noncash income tax expense recorded in other comprehensive income resulting from changes in fair value of our 2019 crude oil hedging program.

Fourth Quarter 2017: E&P results included an after-tax gain of $486 million ($486 million pre-tax) from the sale of our interests in Equatorial Guinea, and an after-tax loss of $857 million ($857 million pre-tax) from the sale of our interests in Norway. In addition, E&P results included after-tax impairment charges totaling $1,980 million ($1,980 million pre-tax) to reduce the carrying value of our interests in the Stampede and Tubular Bells Fields in the Gulf of Mexico and to fully impair the carrying value of our former interests in Ghana. Fourth quarter results also included a noncash after-tax charge of $22 million ($22 million pre-tax) related to de-designated crude oil hedging contracts.

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 Year Ended
December 31, December 31,
(unaudited)   (unaudited)

    2018    

 

    2017    

 

    2018    

 

     2017    

(In millions)
Net income (loss) attributable to Hess Corporation $   (4 ) $   (2,677 ) $   (282 ) $   (4,074 )
Less: Total items affecting comparability of earnings between periods     73     (2,373 )       (106 )     (2,673 )
Adjusted net income (loss) attributable to Hess Corporation $   (77 ) $   (304 )   $   (176 ) $   (1,401 )
 

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

         
Three Months Ended Year Ended
December 31, December 31,
(unaudited) (unaudited)

  2018  

   

  2017  

  2018  

 

  2017  

(In millions)
Cash provided by (used in) operating activities before changes in operating assets and liabilities $   584 $   492 $   2,125 $   1,725
Changes in operating assets and liabilities     297     (149 )     (186 )     (780 )
Net cash provided by (used in) operating activities $   881 $   343 $   1,939 $   945
 

Hess Corporation will review fourth quarter financial and operating results and other matters on a webcast at 10 a.m. today (EDT). 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 atwww.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. “Cash provided by (used in) operating activities before changes in operating assets and liabilities” presented in this release is defined as Cash provided by (used in) 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 cash provided by (used in) 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), and a reconciliation of net cash provided by (used in) operating activities (U.S. GAAP) to cash provided by (used in) 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)

 
                                            Fourth     Fourth     Third

   Quarter   

   Quarter   

   Quarter   

2018 2017 2018

Income Statement

      
 
Revenues and non-operating income
Sales and other operating revenues $ 1,653 $ 1,663 $ 1,793
Gains (losses) on asset sales, net — (362 ) 14
Other, net     29     (10 )     21
Total revenues and non-operating income     1,682     1,291     1,828
 
Costs and expenses
Marketing, including purchased oil and gas 472 476 491
Operating costs and expenses 292 358 266
Production and severance taxes 43 31 47
Exploration expenses, including dry holes and lease impairment 91 356 169
General and administrative expenses 91 121 143
Interest expense 99 80 99
Depreciation, depletion and amortization 533 646 489
Impairment     —     1,700     —
Total costs and expenses     1,621     3,768     1,704
 
Income (loss) before income taxes 61 (2,477 ) 124
Provision (benefit) for income taxes     27     158     121
Net income (loss) 34 (2,635 ) 3
Less: Net income (loss) attributable to noncontrolling interests     38     42     45
Net income (loss) attributable to Hess Corporation (4

)

 

(2,677 ) (42 )
Less: Preferred stock dividends     12     12     11
Net income (loss) attributable to Hess Corporation common stockholders $   (16

)

 

$   (2,689 ) $   (53 )
 
 

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

 
                                                Year Ended December 31,
2018   2017

Income Statement

                                        
 
Revenues and non-operating income
Sales and other operating revenues $ 6,326 $ 5,466
Gains (losses) on asset sales, net 32 (86 )
Other, net                       108                       11
Total revenues and non-operating income                       6,466                       5,391
 
Costs and expenses
Marketing, including purchased oil and gas 1,771 1,267
Operating costs and expenses 1,134 1,443
Production and severance taxes 171 119
Exploration expenses, including dry holes and lease impairment 362 507
General and administrative expenses 473 422
Interest expense 399 325
Loss on debt extinguishment 53 —
Depreciation, depletion and amortization 1,883 2,883
Impairment                       —                       4,203
Total costs and expenses                       6,246                       11,169
 
Income (loss) before income taxes 220 (5,778 )
Provision (benefit) for income taxes                       335                       (1,837 )
Net income (loss) (115 ) (3,941 )
Less: Net income (loss) attributable to noncontrolling interests                       167                       133
Net income (loss) attributable to Hess Corporation (282 ) (4,074 )
Less: Preferred stock dividends                       46                       46
Net income (loss) attributable to Hess Corporation common stockholders $                     (328 ) $                     (4,120 )
 
 

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

 
                                                                      December 31,
2018         2017

Balance Sheet Information

                                            
 
Cash and cash equivalents $ 2,694 $ 4,847
Other current assets 1,765 1,310
Property, plant and equipment – net 16,083 16,192
Other long-term assets                         891                         763
Total assets $                       21,433 $                       23,112
 
Current maturities of long-term debt $ 67 $ 580
Other current liabilities 2,136 1,855
Long-term debt 6,605 6,397
Other long-term liabilities 1,737 1,926
Total equity excluding other comprehensive income (loss) 9,935 11,737
Accumulated other comprehensive income (loss) (306 ) (686 )
Noncontrolling interests                         1,259                         1,303
Total liabilities and equity $                       21,433 $                       23,112
 
 
December 31,
2018 2017

Total Debt

 
Hess Corporation $ 5,691 $ 5,997
Midstream (a)                         981                         980
Hess Consolidated $                       6,672 $                       6,977
 

(a)  Midstream debt is non-recourse to Hess Corporation.

 
 
 
December 31,
2018 2017

Debt to capitalization ratio

 
Hess Consolidated 38.0 % 36.1 %
 
                                                               
Three Months Ended Year Ended
December 31, December 31,

   2018   

         

   2017   

   2018   

         

   2017   

Interest Expense

                                                        
 
Gross interest expense – Hess Corporation $ 90 $ 97 $ 359 $ 385
Less: Capitalized interest – Hess Corporation                   (6 )               (25 )                   (20 )               (86 )
Interest expense – Hess Corporation 84 72 339 299
Interest expense – Midstream (a)                   15               8                   60               26
Interest expense – Consolidated $                 99 $             80 $                 399 $             325
 

(a)

  

Midstream interest expense is reported in the Midstream operating segment.

 
 

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

 
    Fourth   Fourth   Third

   Quarter   

   Quarter   

   Quarter   

2018 2017 2018

Cash Flow Information

      
 
Cash Flows from Operating Activities
Net income (loss) $ 34 $ (2,635 ) $ 3
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
(Gains) losses on asset sales, net — 362 (14 )
Depreciation, depletion and amortization 533 646 489
Impairment — 1,700 —
Exploratory dry hole costs 33 268 119
Exploration lease and other impairment 9 22 8
Stock compensation expense 19 21 21
Noncash (gains) losses on commodity derivatives, net 48 54 49
Provision (benefit) for deferred income taxes and other tax accruals     (92 )     54     6
Cash provided by (used in) operating activities before changes in operating assets and liabilities 584 492 681
Changes in operating assets and liabilities     297     (149 )     (258 )
Net cash provided by (used in) operating activities     881     343     423
 
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P (589 ) (513 ) (472 )
Additions to property, plant and equipment - Midstream (75 ) (41 ) (68 )
Payments for Midstream equity investments — — (26 )
Proceeds from asset sales, net of cash sold — 2,513 574
Other, net     (1 )     —     (3 )
Net cash provided by (used in) investing activities     (665 )     1,959     5
 
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less — (168 ) —
Debt with maturities of greater than 90 days
Borrowings — 800 —
Repayments (23 ) (352 ) (19 )
Common stock acquired and retired (245 ) (110 ) (230 )
Cash dividends paid (83 ) (90 ) (86 )
Noncontrolling interests, net (175 ) (35 ) (13 )
Other, net     —     (26 )     16
Net cash provided by (used in) financing activities     (526 )     19     (332 )
 
Net Increase (Decrease) in Cash and Cash Equivalents (310 ) 2,321 96
Cash and Cash Equivalents at Beginning of Period     3,004     2,526     2,908
Cash and Cash Equivalents at End of Period $   2,694 $   4,847 $   3,004
 
 
 

Additions to Property, Plant and Equipment included within Investing Activities:

Capital expenditures incurred $ (636 ) $ (547 ) $ (583 )
Increase (decrease) in related liabilities     (28 )     (7 )     43
Additions to property, plant and equipment $   (664 ) $   (554 ) $   (540 )
 
 

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

 
            Year Ended December 31,

        2018        

     

        2017        

Cash Flow Information

           
Cash Flows from Operating Activities
Net income (loss) $ (115 ) $ (3,941 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
(Gains) losses on asset sales, net (32 ) 86
Depreciation, depletion and amortization 1,883 2,883
Impairment — 4,203
Exploratory dry hole costs 165 268
Exploration lease and other impairment 37 44
Stock compensation expense 72 86
Noncash (gains) losses on commodity derivatives, net 182 97
Provision (benefit) for deferred income taxes and other tax accruals (120 ) (2,001 )
Loss on debt extinguishment         53         —
Cash provided by (used in) operating activities before changes in operating assets and liabilities 2,125 1,725
Changes in operating assets and liabilities         (186 )         (780 )
Net cash provided by (used in) operating activities         1,939         945
 
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P (1,854 ) (1,788 )
Additions to property, plant and equipment - Midstream (243 ) (149 )
Payments for Midstream equity investments (67 ) —
Proceeds from asset sales, net of cash sold 607 3,296
Other, net         (9 )         (1 )
Net cash provided by (used in) investing activities         (1,566 )         1,358
 
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less — (153 )
Debt with maturities of greater than 90 days
Borrowings — 800
Repayments (633 ) (459 )
Proceeds from issuance of Hess Midstream Partnership LP units — 366
Common stock acquired and retired (1,365 ) (110 )
Cash dividends paid (345 ) (363 )
Noncontrolling interests, net (211 ) (243 )
Other, net         28         (26 )
Net cash provided by (used in) financing activities         (2,526 )         (188 )
 
Net Increase (Decrease) in Cash and Cash Equivalents (2,153 ) 2,115
Cash and Cash Equivalents at Beginning of Year         4,847         2,732
Cash and Cash Equivalents at End of Year $       2,694 $       4,847
 
 
 

Additions to Property, Plant and Equipment included within Investing Activities:

Capital expenditures incurred $ (2,180 ) $ (1,973 )
Increase (decrease) in related liabilities         83         36
Additions to property, plant and equipment $       (2,097 ) $       (1,937 )
 
 

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

 
                    Fourth                   Fourth                   Third
Quarter Quarter Quarter
2018 2017 2018

Capital and Exploratory Expenditures

                                                
 
E&P Capital and exploratory expenditures
United States
Bakken $ 314 $ 200 $ 245
Other Onshore                   2                   5                   6
Total Onshore 316 205 251
Offshore                   105                   162                   88
Total United States                   421                   367                   339
South America 139 81 136
Europe 2 51 1
Asia and other                   56                   69                   66
E&P Capital and exploratory expenditures $                 618 $                 568 $                 542
 
Total exploration expenses charged to income included above $                 49 $                 67 $                 42
 
Midstream Capital expenditures $                 67 $                 46 $                 83
 
 
Year Ended December 31,
2018 2017

Capital and Exploratory Expenditures

 
E&P Capital and exploratory expenditures
United States
Bakken $ 967 $ 624
Other Onshore                   43                   30
Total Onshore 1,010 654
Offshore                   368                   702
Total United States                   1,378                   1,356
South America 423 242
Europe 8 142
Asia and other                   260                   307
E&P Capital and exploratory expenditures $                 2,069 $                 2,047
 
Total exploration expenses charged to income included above $                 160 $                 195
 
Midstream Capital expenditures $                 271 $                 121
 

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

 
                Fourth Quarter 2018

Income Statement

 United States             International             Total
                                               
Total revenues and non-operating income
Sales and other operating revenues $ 1,273 $ 377 $ 1,650
Other, net                   9                   8                   17
Total revenues and non-operating income                   1,282                   385                   1,667
 
Costs and expenses
Marketing, including purchased oil and gas (a) 478 12 490
Operating costs and expenses 173 65 238
Production and severance taxes 40 3 43
Midstream tariffs 165 — 165
Exploration expenses, including dry holes and lease impairment 27 64 91
General and administrative expenses 46 9 55
Depreciation, depletion and amortization                   370                   129                   499
Total costs and expenses                   1,299                   282                   1,581
 
Results of operations before income taxes (17 ) 103 86
Provision (benefit) for income taxes                   (24 )                   115                   91
Net income (loss) attributable to Hess Corporation $                 7 (b) $                 (12 ) $                 (5 )
 
Fourth Quarter 2017

Income Statement

 United States International Total
 
Total revenues and non-operating income
Sales and other operating revenues $ 1,064 $ 599 $ 1,663
Gains (losses) on asset sales, net (5 ) (364 ) (369 )
Other, net                   (7 )                   (11 )                   (18 )
Total revenues and non-operating income                   1,052                   224                   1,276
 
Costs and expenses
Marketing, including purchased oil and gas (a) 477 12 489
Operating costs and expenses 158 155 313
Production and severance taxes 30 1 31
Midstream tariffs 144 — 144
Exploration expenses, including dry holes and lease impairment 39 317 356
General and administrative expenses 50 8 58
Depreciation, depletion and amortization 453 163 616
Impairments                   1,700                   —                   1,700
Total costs and expenses                   3,051                   656                   3,707
 
Results of operations before income taxes (1,999 ) (432 ) (2,431 )
Provision (benefit) for income taxes                   (10 )                   171                   161
Net income (loss) attributable to Hess Corporation $                 (1,989 ) (c) $                 (603 ) (d) $                 (2,592 )

(a)

  

Includes amounts charged from the Midstream segment.

(b)

After-tax losses from realized crude oil hedging activities totaled $44 million (noncash premium amortization: $48 million; cash received: $4 million).

(c)

After-tax losses from realized crude oil hedging activities totaled $25 million (noncash premium amortization: $25 million). After-tax losses from unrealized crude oil hedging activities totaled $27 million.

(d)

After-tax losses from realized crude oil hedging activities totaled $5 million (noncash premium amortization: $5 million). After-tax gains from unrealized crude oil hedging activities totaled $3 million.

 
 

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

 
                  Third Quarter 2018

Income Statement

 United States                 International                   Total
                                               
Total revenues and non-operating income
Sales and other operating revenues $ 1,394 $ 399 $ 1,793
Gains (losses) on asset sales, net 14 — 14
Other, net                   5                   7                   12
Total revenues and non-operating income                   1,413                   406                   1,819
 
Costs and expenses
Marketing, including purchased oil and gas (a) 490 16 506
Operating costs and expenses 153 62 215
Production and severance taxes 46 1 47
Midstream tariffs 169 — 169
Exploration expenses, including dry holes and lease impairment 33 136 169
General and administrative expenses 100 6 106
Depreciation, depletion and amortization                   343                   114                   457
Total costs and expenses                   1,334                   335                   1,669
 
Results of operations before income taxes 79 71 150
Provision (benefit) for income taxes                   (21 )                   121                   100
Net income (loss) attributable to Hess Corporation $                 100 (b) $                 (50 ) $                 50

(a)

  

Includes amounts charged from the Midstream segment.

(b)

After-tax losses from realized crude oil hedging activities totaled $49 million (noncash premium amortization: $49 million).

 
 

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

 
              Year Ended December 31, 2018

Income Statement

 United States               International               Total
                                         
Total revenues and non-operating income
Sales and other operating revenues $ 4,842 $ 1,481 $ 6,323
Gains (losses) on asset sales, net 14 13 27
Other, net                 25                 28                 53
Total revenues and non-operating income                 4,881                 1,522                 6,403
 
Costs and expenses
Marketing, including purchased oil and gas (a) 1,777 56 1,833
Operating costs and expenses 697 244 941
Production and severance taxes 165 6 171
Midstream tariffs 648 — 648
Exploration expenses, including dry holes and lease impairment 119 243 362
General and administrative expenses 230 28 258
Depreciation, depletion and amortization                 1,297                 451                 1,748
Total costs and expenses                 4,933                 1,028                 5,961
 
Results of operations before income taxes (52 ) 494 442
Provision (benefit) for income taxes                 (63 )                 454                 391
Net income (loss) attributable to Hess Corporation $               11 (b) $               40 $               51
 
Year Ended December 31, 2017

Income Statement

 United States International Total
 
Total revenues and non-operating income
Sales and other operating revenues $ 3,686 $ 1,774 $ 5,460
Gains (losses) on asset sales, net 325 (364 ) (39 )
Other, net                 (36 )                 35                 (1 )
Total revenues and non-operating income                 3,975                 1,445                 5,420
 
Costs and expenses
Marketing, including purchased oil and gas (a) 1,354 (19 ) 1,335
Operating costs and expenses 650 598 1,248
Production and severance taxes 116 3 119
Midstream tariffs 543 — 543
Exploration expenses, including dry holes and lease impairment 106 401 507
General and administrative expenses 193 31 224
Depreciation, depletion and amortization 1,819 917 2,736
Impairments                 1,700                 2,503                 4,203
Total costs and expenses                 6,481                 4,434                 10,915
 
Results of operations before income taxes (2,506 ) (2,989 ) (5,495 )
Provision (benefit) for income taxes                 (31 )                 (1,811 )                 (1,842 )
Net income (loss) attributable to Hess Corporation $               (2,475 ) (c) $               (1,178 ) (d) $               (3,653 )

(a)

  

Includes amounts charged from the Midstream segment.

(b)

After-tax losses from realized crude oil hedging activities totaled $173 million (noncash premium amortization: $172 million; cash paid: $1 million). After-tax non-cash losses from de-designated crude oil contracts totaled $10 million.

(c)

After-tax losses from realized crude oil hedging activities totaled $31 million (noncash premium amortization: $55 million; cash received: $24 million). After-tax losses from unrealized crude oil hedging activities totaled $26 million.

(d)

After-tax losses from realized crude oil hedging activities totaled $2 million (noncash premium amortization: $16 million; cash received: $14 million).

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION OPERATING DATA

 
                                                            Fourth                     Fourth                     Third
Quarter Quarter Quarter
2018 2017 2018

Net Production Per Day (in thousands)

                                                                        
 
Crude oil - barrels
United States
Bakken 83 69 76
Other Onshore (a)                         1                         2                         2
Total Onshore 84 71 78
Offshore                         48                         30                         50
Total United States                         132                         101                         128
Europe (b) 6 27 7
Africa (c) (d) 20 35 16
Asia                         3                         3                         4
Total                         161                         166                         155
 
Natural gas liquids - barrels
United States
Bakken 31 30 30
Other Onshore (a)                         1                         6                         4
Total Onshore 32 36 34
Offshore                         5                         4                         6
Total United States                         37                         40                         40
Europe (b)                         —                         1                         —
Total                         37                         41                         40
 
Natural gas - mcf
United States
Bakken 74 66 72
Other Onshore (a)                         5                         77                         47
Total Onshore 79 143 119
Offshore                         90                         34                         89
Total United States                         169                         177                         208
Europe (b) 9 30 8
Asia and other (d)                         367                         349                         395
Total                         545                         556                         611
 
Barrels of oil equivalent                         289                         300                         297

(a)

  

The Corporation sold its Utica assets in August 2018. Production was 10,000 boepd in the third quarter of 2018, and 17,000 boepd in the fourth quarter of 2017.

(b)

The Corporation sold its Norway assets in December 2017. Production was 24,000 boepd in the fourth quarter of 2017.

(c)

The Corporation sold its Equatorial Guinea assets in November 2017. Production was 17,000 boepd in the fourth quarter of 2017.

(d)

Production from Libya was 22,000 boepd in the fourth quarter of 2018, 18,000 boepd in the fourth quarter of 2017 and 18,000 boepd in the third quarter of 2018.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION OPERATING DATA

 
                                                                                                                      Year Ended December 31,
2018                       2017

Net Production Per Day (in thousands)

                                        
 
Crude oil - barrels
United States
Bakken 76 67
Other Onshore (a)                     1                     6
Total Onshore 77 73
Offshore                     41                     39
Total United States                     118                     112
Europe (b) 6 28
Africa (c) (d) 18 35
Asia                     4                     2
Total                     146                     177
 
Natural gas liquids - barrels
United States
Bakken 29 28
Other Onshore (a)                     5                     8
Total Onshore 34 36
Offshore                     5                     5
Total United States                     39                     41
Europe (b)                     —                     1
Total                     39                     42
 
Natural gas - mcf
United States
Bakken 70 62
Other Onshore (a)                     44                     92
Total Onshore 114 154
Offshore                     67                     57
Total United States                     181                     211
Europe (b) 8 33
Asia and other (d)                     364                     276
Total                     553                     520
 
Barrels of oil equivalent                     277                     306

(a)

  

The Corporation sold its Utica assets in August 2018. Production was 9,000 boepd for the year ended December 31, 2018 and 19,000 boepd for the year ended December 31, 2017. The Corporation sold its Permian assets in August 2017. Production was 4,000 boepd for the year ended December 31, 2017.

(b)

The Corporation sold its Norway assets in December 2017. Production was 24,000 boepd for the year ended December 31, 2017.

(c)

The Corporation sold its Equatorial Guinea assets in November 2017. Production was 25,000 boepd for the year ended December 31, 2017.

(d)

Production from Libya was 20,000 boepd for the year ended December 31, 2018 and 10,000 boepd for the year ended December 31, 2017.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION OPERATING DATA

 
                                                    Fourth                       Fourth                       Third
Quarter Quarter Quarter
2018 2017 2018

Sales Volumes Per Day (in thousands) (a)

                            

 

                       
 
Crude oil - barrels 158 173 153
Natural gas liquids - barrels 37 41 40
Natural gas - mcf                   545                   556                   611
Barrels of oil equivalent                   286                   307                   295
 

Sales Volumes (in thousands) (a)

 
Crude oil - barrels 14,587 15,969 14,085
Natural gas liquids - barrels 3,395 3,760 3,696
Natural gas - mcf                   50,095                   51,346                   56,251
Barrels of oil equivalent                   26,331                   28,287                   27,156
                                                                                                Year Ended December 31,
2018                       2017

Sales Volumes Per Day (in thousands) (a)

                                        
 
Crude oil - barrels 144 173
Natural gas liquids - barrels 39 42
Natural gas - mcf                     553                     520
Barrels of oil equivalent                     275                     302
 

Sales Volumes (in thousands) (a)

 
Crude oil - barrels 52,742 63,367
Natural gas liquids - barrels 14,019 15,152
Natural gas - mcf                     202,041                     190,089
Barrels of oil equivalent                     100,435                     110,201

(a)

  

Sales volumes from purchased crude oil, natural gas liquids, and natural gas are not included in the sales volumes reported.

 
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION OPERATING DATA

 
                                              Fourth                       Fourth                       Third
Quarter Quarter Quarter
2018 2017 2018

Average Selling Prices

                                                      
 
Crude oil - per barrel (including hedging)
United States
Onshore $ 49.95 $ 51.66 $ 62.92
Offshore 58.46 52.73 66.62
Total United States 53.02 51.98 64.38
Europe 65.48 62.10 74.71
Africa 65.91 58.98 73.34
Asia 61.58 61.26 73.67
Worldwide 55.24 55.44 66.08
 
Crude oil - per barrel (excluding hedging)
United States
Onshore $ 53.44 $ 54.06 $ 66.76
Offshore 61.93 56.07 70.44
Total United States 56.51 54.66 68.22
Europe 65.48 63.13 74.71
Africa 65.91 59.58 73.34
Asia 61.58 61.26 73.67
Worldwide 58.11 57.32 69.22
 
Natural gas liquids - per barrel
United States
Onshore $ 21.34 $ 21.98 $ 22.99
Offshore 20.23 26.32 31.27
Total United States 21.19 22.42 24.29
Europe — 36.98 —
Worldwide 21.19 22.78 24.29
 
Natural gas - per mcf
United States
Onshore $ 3.02 $ 1.70 $ 1.99
Offshore 3.66 1.67 2.22
Total United States 3.36 1.69 2.09
Europe 3.93 4.99 3.55
Asia and other 5.51 4.59 5.22
Worldwide 4.82 3.69 4.11
 

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
EXPLORATION AND PRODUCTION OPERATING DATA

 
                                                                                            Year Ended December 31,
2018                         2017

Average Selling Prices

                                        
 
Crude oil - per barrel (including hedging)
United States
Onshore $ 56.90 $ 46.04
Offshore 62.02 47.34
Total United States 58.69 46.50
Europe 70.08 55.03
Africa 69.64 53.17
Asia 70.42 56.99
Worldwide 60.77 49.23
 
Crude oil - per barrel (excluding hedging)
United States
Onshore $ 60.64 $ 46.76
Offshore 65.73 48.15
Total United States 62.41 47.25
Europe 70.08 55.14
Africa 69.64 53.25
Asia 70.42 56.99
Worldwide 63.80 49.75
 
Natural gas liquids - per barrel
United States
Onshore $ 21.29 $ 17.67
Offshore 25.58 21.34
Total United States 21.81 18.10
Europe — 29.04
Worldwide 21.81 18.35
 
Natural gas - per mcf
United States
Onshore $ 2.29 $ 1.96
Offshore 2.68 2.22
Total United States 2.43 2.03
Europe 3.61 4.42
Asia and other 5.07 4.27
Worldwide 4.18 3.37

The following is a summary of the Corporation’s outstanding West Texas Intermediate hedging program:

                                                                                                                                                                                    2019
Barrels of oil per day 95,000
Monthly floor price of put options $60
Start date January 1
Finish date December 31