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Hess Reports Estimated Results for the Third Quarter of 2017

NEW YORK--(BUSINESS WIRE)--Hess Corporation (NYSE: HES) today reported a net loss of $624 million, or $2.02 per common share, in the third quarter of 2017 compared with a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016. On an adjusted basis, the Corporation reported a net loss of $324 million, or $1.07 per common share, in the third quarter of 2017 compared with an adjusted net loss of $340 million, or $1.12 per common share, in the prior- year quarter. The improved adjusted results reflect higher realized crude oil selling prices and lower operating costs, depreciation, depletion and amortization, and exploration expenses. Third quarter 2017 results were adversely impacted by lower tax benefits compared to the prior-year quarter following a required change in deferred tax accounting. On an adjusted pre-tax basis, the Corporation reported a loss of $307 million in the third quarter of 2017, down from $553 million in the year-ago quarter.

“These actions in turn will lower our cash unit costs, bolster our balance sheet and prefund our world class investment opportunity in Guyana, which will position us to deliver a decade plus of returns-driven growth and increasing cash generation for our shareholders.”

“We are successfully executing our strategic plan to focus our portfolio by investing in our highest return assets and divesting mature higher cost assets,” Chief Executive Officer John Hess said. “These actions in turn will lower our cash unit costs, bolster our balance sheet and prefund our world class investment opportunity in Guyana, which will position us to deliver a decade plus of returns-driven growth and increasing cash generation for our shareholders.”

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

Three Months Ended

Nine Months Ended

September 30, September 30,
(unaudited) (unaudited)

2017

2016

2017

2016

(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess Corporation

Exploration and Production $

(474

)

$ (234 ) $

1,061

) $ (1,015 )
Midstream (12 ) 13 22 40
Corporate, Interest and Other (138 ) (118 ) (358 ) (265 )
Net income (loss) attributable to Hess Corporation $

(624

) $ (339 ) $

(1,397

) $ (1,240 )
Net income (loss) per common share (diluted) (a) $

(2.02

) $ (1.12 ) $

(4.55

) $ (4.11 )

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

Exploration and Production $ (238 ) $ (285 ) $ (825 ) $ (1,009 )
Midstream 22 13 56 40
Corporate, Interest and Other (108 ) (68 ) (328 ) (215 )
Adjusted net income (loss) attributable to Hess Corporation $ (324 ) $ (340 ) $ (1,097 ) $ (1,184 )
Adjusted net income (loss) per common share (diluted) (a) $ (1.07 ) $ (1.12 ) $ (3.60 ) $ (3.93 )
Weighted average number of shares (diluted) 314.5 313.2 314.3 308.7

Exploration and Production:

Exploration and Production (E&P) net loss in the third quarter of 2017 was $474 million, compared to a net loss of $234 million in the third quarter of 2016. On an adjusted basis, third quarter 2017 net loss was $238 million compared to a net loss of $285 million in the prior-year quarter. The Corporation’s average realized crude oil selling price, including the effect of hedging, was $46.97 per barrel in the third quarter of 2017, up from $41.50 per barrel in the year-ago quarter. The average realized natural gas liquids selling price in the third quarter of 2017 was $17.22 per barrel, versus $9.23 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.35 per mcf, compared with $3.20 per mcf in the third quarter of 2016.

Net production, excluding Libya, was 299,000 boepd in the third quarter of 2017, compared to 314,000 boepd in the prior-year quarter. Lower volumes were due to a reduced drilling program, natural field declines, the effect of hurricane-related downtime and an asset sale, partially offset by the start-up of production from the North Malay Basin and a temporary adjustment to entitlement and higher uptime at the JDA. Our Permian assets, which were sold in August 2017, had production of 3,000 boepd in the third quarter (7,000 boepd in the third quarter of 2016). Fourth quarter 2017 production will be negatively impacted by hurricane-related downtime and expected lower entitlement at the JDA as the temporary adjustment reverses.

Excluding items affecting comparability of earnings between periods, cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $13.67 per barrel of oil equivalent (boe) in the third quarter, down 13 percent from $15.72 per boe in the prior-year quarter. The E&P effective tax rate, excluding items affecting comparability and Libya, was a benefit of 18 percent in the third quarter of 2017, down from a benefit of 41 percent in the third quarter of 2016. Commencing in 2017, we do not recognize deferred tax benefit or expense in the U.S., Denmark (hydrocarbon tax only), and Malaysia until deferred tax assets are re-established in these jurisdictions. This financial reporting requirement has no cash flow or economic impact.

Operational Highlights for the Third Quarter of 2017:

Bakken (Onshore U.S.): Net production from the Bakken of 103,000 boepd was impacted by reduced field availability due to adverse weather and delays in completing new wells. The Corporation operated an average of four rigs in the third quarter, drilling 24 wells and bringing 13 new wells online.

Gulf of Mexico (Offshore U.S.): Net production from the Gulf of Mexico was 59,000 boepd, compared to 61,000 boepd in the prior-year quarter. At the Stampede development (Hess operated - 25 percent), the second and third production wells were completed. First production from the field is expected in the first quarter of 2018.

North Malay Basin (Offshore Malaysia): At North Malay Basin (Hess operated - 50 percent), first production of natural gas from the full-field development commenced in July and production averaged 86 mmcfd for the third quarter of 2017. The field is currently producing approximately 155 mmcfd.

Guyana (Offshore): At the Stabroek Block (Hess - 30 percent), operated by Esso Exploration and Production Guyana Limited, the Payara-2 well was successfully completed and confirmed a second giant oil field containing gross discovered recoverable resources of approximately 500 million barrels of oil equivalent. In addition, the Operator announced that the Turbot-1 exploration well resulted in a discovery encountering a reservoir of 75 feet of high-quality, oil-bearing sandstone in the primary objective. The well is located approximately 30 miles to the southeast of the Liza phase one project. An exploration well at the Ranger prospect is expected to spud at the end of October. The drilling of an additional well on the Turbot discovery is planned for 2018. Development activities associated with the Liza phase one project are on schedule and first production is expected by 2020.

Midstream:

The Midstream segment, which is comprised primarily of our 50/50 midstream joint venture, Hess Infrastructure Partners, had a net loss of $12 million in the third quarter of 2017, compared to net income of $13 million in the prior-year quarter. Excluding items affecting comparability of earnings between periods, third quarter 2017 net income was $22 million, compared to $13 million in the third quarter of 2016. Third quarter 2017 results attributable to Hess Corporation include a charge of $34 million after income taxes related to the sale of Permian Midstream assets that were wholly-owned by Hess Corporation.

Capital and Exploratory Expenditures:

Exploration and Production capital and exploratory expenditures were $558 million in the third quarter of 2017, up from $433 million in the prior-year quarter, which included increased activity at Bakken and Guyana.

Liquidity:

Net cash provided by operating activities was $88 million in the third quarter of 2017, compared to $332 million in the third quarter of 2016. Net cash provided by operating activities before changes in working capital was $415 million in the third quarter of 2017, up from $309 million in the year-ago quarter. Changes in working capital during the third quarter of 2017 were net outflows of $327 million and primarily related to Norwegian abandonment expenditures, advances to operators, premiums on hedge contracts and the timing of interest payments.

At September 30, 2017, the Corporation had cash and cash equivalents of $2,526 million and total debt, excluding the Midstream segment, of $6,016 million. The Corporation’s debt to capitalization ratio was 31.8 percent at September 30, 2017 and 30.4 percent at December 31, 2016.

In the third quarter of 2017, the Corporation increased its West Texas Intermediate (WTI) crude oil hedging program by 50,000 barrels of oil per day (bopd) to a total of 110,000 bopd for the remainder of 2017. In addition, the Corporation added WTI crude oil collars covering 115,000 bopd for 2018. See hedging summary on page 20.

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

Nine Months Ended

September 30, September 30,
(unaudited) (unaudited)

2017

2016

2017

2016

(In millions)
Exploration and Production $

(236

)

$ 51 $

(236

)

$ (6 )
Midstream (34

)

(34

)

Corporate, Interest and Other (30

)

(50 ) (30

)

(50 )
Total items affecting comparability of earnings between periods $

(300

)

$ 1 $

(300

)

$ (56 )

Third quarter 2017: Results include an after-tax gain attributable to Hess Corporation stockholders of $280 million associated with the sale of our enhanced oil recovery assets in the Permian Basin. This transaction, which included upstream and midstream assets, was allocated to the E&P segment ($314 million after-tax gain) and to the Midstream segment ($34 million after-tax loss). E&P results also include a noncash after-tax charge of $550 million to impair the carrying value of our assets in Norway as a result of the expected sale. Corporate, Interest and Other results include an after-tax charge of $30 million in connection with vacated office space.

Third quarter 2016: Exploration and Production results included a tax benefit of $51 million related to the resolution of certain tax matters, while Corporate, Interest and Other results included an after-tax charge of $50 million related to debt refinancing.

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

The following table reconciles reported income (loss) before income taxes and adjusted income (loss) before income taxes:

Three Months Ended

Nine Months Ended

September 30, September 30,
(unaudited) (unaudited)

2017

2016

2017

2016

(In millions)
Income (loss) before income taxes $

(2,567

)

$ (633 ) $ (798

)

$ (2,145 )
Less: Total items affecting comparability of earnings between periods

(2,260

)

(80 )

(2,260

)

(172 )
Adjusted Income (loss) before income taxes $ (307 ) $ (553 ) $ (1,041 ) $ (1,973 )

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

Three Months Ended

Nine Months Ended

September 30, September 30,
(unaudited) (unaudited)

2017

2016

2017

2016

(In millions)
Net income (loss) attributable to Hess Corporation $

(624

)

$ (339 ) $

(1,397

) $ (1,240 )
Less: Total items affecting comparability of earnings between periods

(300

)

1

(300

)

(56 )
Adjusted net income (loss) attributable to Hess Corporation $ (324 ) $ (340 ) $ (1,097 ) $ (1,184 )

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

Three Months Ended

Nine Months Ended

September 30, September 30,
(unaudited) (unaudited)

2017

2016

2017

2016

(In millions)

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

$ 415 $ 309 $ 1,190 $ 714
Changes in operating assets and liabilities (327 ) 23 (588 ) (245 )
Net cash provided by (used in) operating activities $ 88 $ 332 $ 602 $ 469

Hess Corporation will review third 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 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. “Adjusted income (loss) before income taxes” presented in this release is defined as income (loss) before income taxes excluding items identified as affecting comparability of earnings between periods. “Net cash provided by operating activities before changes in operating assets and liabilities” presented in this release is defined as Cash provided by operating activities excluding changes in operating assets and liabilities. Management uses adjusted net income (loss) and adjusted income (loss) before income taxes to evaluate the Corporation’s operating performance and believes that investors’ understanding of our performance is enhanced by disclosing these measures, 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 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), a reconciliation of reported income (loss) before income taxes (U.S. GAAP) to adjusted income (loss) before income taxes and 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)

Third Third Second

Quarter

Quarter

Quarter

2017

2016

2017

Income Statement

Revenues and non-operating income
Sales and other operating revenues $ 1,370 $ 1,177 $ 1,216
Gains (losses) on asset sales, net 274 2
Other, net 22 19 10
Total revenues and non-operating income 1,666 1,196 1,228
Costs and expenses
Cost of products sold (excluding items shown separately below) 360 222 272
Operating costs and expenses 352 421 375
Production and severance taxes 27 27 30
Exploration expenses, including dry holes and lease impairment 40 78 53
General and administrative expenses 113 106 100
Interest expense 79 84 82
Loss on debt extinguishment 80
Depreciation, depletion and amortization 759 811 741
Impairment

2,503

Total costs and expenses

4,233

1,829 1,653
Income (loss) before income taxes

(2,567

) (633 ) (425 )
Provision (benefit) for income taxes

(1,974

) (316 ) (8 )
Net income (loss)

(593

) (317 ) (417 )
Less: Net income (loss) attributable to noncontrolling interests 31 22 32
Net income (loss) attributable to Hess Corporation

(624

) (339 ) (449 )
Less: Preferred stock dividends 11 12 11
Net income (loss) applicable to Hess Corporation common stockholders $

(635

) $ (351 ) $ (460 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

Nine Months Ended September 30,

2017 2016

Income Statement

Revenues and non-operating income
Sales and other operating revenues $ 3,863 $ 3,374
Gains (losses) on asset sales, net 276 27
Other, net 30 57
Total revenues and non-operating income 4,169 3,458
Costs and expenses
Cost of products sold (excluding items shown separately below) 851 688
Operating costs and expenses 1,086 1,312
Production and severance taxes 88 74
Exploration expenses, including dry holes and lease impairment 151 409
General and administrative expenses 309 310
Interest expense 245 254
Loss on debt extinguishment 80
Depreciation, depletion and amortization 2,237 2,476
Impairment

2,503

Total costs and expenses

7,470

5,603
Income (loss) before income taxes

(3,301

) (2,145 )
Provision (benefit) for income taxes

(1,995

) (967 )
Net income (loss)

(1,306

) (1,178 )
Less: Net income (loss) attributable to noncontrolling interests 91 62
Net income (loss) attributable to Hess Corporation

(1,397

) (1,240 )
Less: Preferred stock dividends 34 30
Net income (loss) applicable to Hess Corporation common stockholders $

(1,431

) $ (1,270 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

September 30,

December 31,

2017 2016

Balance Sheet Information

Cash and cash equivalents $ 2,526 $ 2,732
Other current assets 1,557 1,544
Property, plant and equipment – net

20,279

23,595
Other long-term assets

2,238

750
Total assets $

26,600

$ 28,621
Current maturities of long-term debt $ 122 $ 112
Other current liabilities 2,092 2,139
Long-term debt 6,592 6,694
Other long-term liabilities

3,366

4,085
Total equity excluding other comprehensive income (loss)

14,604

16,238
Accumulated other comprehensive income (loss) (1,472 ) (1,704 )
Noncontrolling interests 1,296 1,057
Total liabilities and equity $

26,600

$ 28,621

September 30,

December 31,
2017 2016

Total Debt

Hess $ 6,016 $ 6,073
Midstream (a) 698 733
Hess Consolidated $ 6,714 $ 6,806

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

September 30, December 31,
2017 2016

Debt to Capitalization Ratio

Hess Consolidated

31.8

% 30.4 %

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

Third Third Second

Quarter

Quarter

Quarter

2017 2016 2017

Cash Flow Information

Cash Flows from Operating Activities
Net income (loss) $

(593

) $ (317 ) $ (417 )

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

(Gains) losses on asset sales, net (274 ) (2 )
Depreciation, depletion and amortization 759 811 741

Impairment

2,503

Exploratory dry hole costs 16
Exploration lease and other impairment 7 9 8
Stock compensation expense 21 22 22
Provision (benefit) for deferred income taxes and other tax accruals

(2,008

) (312 ) (20 )
Loss on debt extinguishment 80

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

415 309 332
Changes in operating assets and liabilities (327 ) 23 (167 )
Net cash provided by (used in) operating activities 88 332 165
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P (489 ) (461 ) (446 )
Additions to property, plant and equipment - Midstream (24 ) (68 ) (34 )
Proceeds from asset sales 604 79
Other, net (1 ) 3
Net cash provided by (used in) investing activities 90 (526 ) (401 )
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less 11 6 (1 )
Debt with maturities of greater than 90 days
Borrowings 1,496
Repayments (30 ) (771 ) (51 )
Proceeds from issuance of Hess Midstream Partnership LP units 366
Cash dividends paid (91 ) (91 ) (90 )
Noncontrolling interests, net (33 ) (175 )
Other, net (1 ) (12 ) (7 )
Net cash provided by (used in) financing activities (144 ) 628 42
Net Increase (Decrease) in Cash and Cash Equivalents 34 434 (194 )
Cash and Cash Equivalents at Beginning of Period 2,492 3,095 2,686
Cash and Cash Equivalents at End of Period $ 2,526 $ 3,529 $ 2,492

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

Capital expenditures incurred $ (553 ) $ (471 ) $ (503 )
Increase (decrease) in related liabilities 40 (58 ) 23
Additions to property, plant and equipment $ (513 ) $ (529 ) $ (480 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

Nine Months Ended September 30,
2017 2016

Cash Flow Information

Cash flows From Operating Activities
Net income (loss) $

(1,306

) $ (1,178 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
(Gains) losses on asset sales, net (276 ) (27 )
Depreciation, depletion and amortization 2,237 2,476
Impairments

2,503

Exploratory dry hole costs 234
Exploration lease and other impairment 22 33
Stock compensation expense 65 69
Provision (benefit) for deferred income taxes and other tax accruals

(2,055

) (973 )
Loss on debt extinguishment 80
Cash provided by operating activities before changes in operating assets and liabilities 1,190 714
Changes in operating assets and liabilities (588 ) (245 )
Net cash provided by (used in) operating activities 602 469
Cash Flows from Investing Activities
Additions to property, plant and equipment - E&P (1,275 ) (1,575 )
Additions to property, plant and equipment - Midstream (108 ) (189 )
Proceeds from asset sales 783 80
Other, net (1 ) 18
Net cash provided by (used in) investing activities (601 ) (1,666 )
Cash Flows from Financing Activities
Net borrowings (repayments) of debt with maturities of 90 days or less 15 (14 )
Debt with maturities of greater than 90 days
Borrowings 1,496
Repayments (107 ) (806 )
Proceeds from issuance of Hess Midstream Partnership LP units 366
Proceeds from issuance of preferred stock 557
Proceeds from issuance of common stock 1,087
Cash dividends paid (273 ) (260 )
Noncontrolling interests, net (208 )
Other, net

(50

)
Net cash provided by (used in) financing activities (207 ) 2,010
Net Increase (Decrease) in Cash and Cash Equivalents (206 ) 813
Cash and Cash Equivalents at Beginning of Year 2,732 2,716
Cash and Cash Equivalents at End of Period $ 2,526 $ 3,529

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

Capital expenditures incurred $ (1,426 ) $ (1,512 )
Increase (decrease) in related liabilities 43 (252 )
Additions to property, plant and equipment $ (1,383 ) $ (1,764 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

(IN MILLIONS)

Third Third Second

Quarter

Quarter

Quarter

2017 2016 2017

Capital and Exploratory Expenditures

E&P Capital and exploratory expenditures
United States
Bakken $ 186 $ 126 $ 148
Other Onshore 8 2 9
Total Onshore 194 128 157
Offshore 191 191 191
Total United States 385 319 348
Europe 34 1 42
Africa 13 4 11
Asia and other 126 109 127
E&P Capital and exploratory expenditures $ 558 $ 433 $ 528
Total exploration expenses charged to income included above $ 32 $ 52 $ 45
Midstream Capital expenditures $ 27 $ 90 $ 20

Nine Months Ended September 30,

2017 2016

Capital and Exploratory Expenditures

E&P Capital and exploratory expenditures
United States
Bakken $ 424 $ 330
Other Onshore 25 44
Total Onshore 449 374
Offshore 540 564
Total United States 989 938
Europe 91 63
Africa 30 7
Asia and other 369 452
E&P Capital and exploratory expenditures $ 1,479 $ 1,460
Total exploration expenses charged to income included above $ 128 $ 142
Midstream Capital expenditures $ 75 $ 194

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

Third Quarter 2017

Income Statement

United States

International

Total

Total revenues and non-operating income
Sales and other operating revenues $ 923 $ 446 $ 1,369
Gains (losses) on asset sales, net 330 330
Other, net (5 ) 20 15
Total revenues and non-operating income 1,248 466 1,714
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 359 14 373
Operating costs and expenses 148 162 310
Production and severance taxes 26 1 27
Midstream tariffs 140 140
Exploration expenses, including dry holes and lease impairment 16 24 40
General and administrative expenses 55 55
Depreciation, depletion and amortization 437 272 709
Impairment

2,503

2,503

Total costs and expenses 1,181

2,976

4,157

Results of operations before income taxes 67

(2,510

)

(2,443

)

Provision (benefit) for income taxes 2

(1,971

)

(1,969

)

Net income (loss) attributable to Hess Corporation $ 65 (b) $

(539

)

(c) $

(474

)

Third Quarter 2016

Income Statement

United States International Total
Total revenues and non-operating income
Sales and other operating revenues $ 789 $ 386 $ 1,175
Other, net (5 ) 12 7
Total revenues and non-operating income 784 398 1,182
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 243 (5 ) 238
Operating costs and expenses 170 198 368
Production and severance taxes 24 3 27
Midstream tariffs 118 118
Exploration expenses, including dry holes and lease impairment 29 49 78
General and administrative expenses 56 4 60
Depreciation, depletion and amortization 517 262 779
Total costs and expenses 1,157 511 1,668
Results of operations before income taxes (373 ) (113 ) (486 )
Provision (benefit) for income taxes (139 ) (113 ) (252 )
Net income (loss) attributable to Hess Corporation $ (234 ) $ $ (234 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

Second Quarter 2017

Income Statement

United States

International

Total

Total revenues and non-operating income
Sales and other operating revenues $ 837 $ 376 $ 1,213
Other, net (5 ) 11 6
Total revenues and non-operating income 832 387 1,219
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 283 8 291
Operating costs and expenses 171 146 317
Production and severance taxes 29 1 30
Midstream tariffs 135 135
Exploration expenses, including dry holes and lease impairment 29 24 53
General and administrative expenses 50 3 53
Depreciation, depletion and amortization 484 224 708
Total costs and expenses 1,181 406 1,587
Results of operations before income taxes (349 ) (19 ) (368 )
Provision (benefit) for income taxes (9 ) (5 ) (14 )
Net income (loss) attributable to Hess Corporation $ (340 ) (b) $ (14 ) (c) $ (354 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION EARNINGS (UNAUDITED)

(IN MILLIONS)

Nine Months Ended September 30, 2017

Income Statement

United States

International

Total

Total revenues and non-operating income
Sales and other operating revenues $ 2,682 $ 1,175 $ 3,857
Gains (losses) on asset sales, net 330 330
Other, net (15 ) 31 16
Total revenues and non-operating income 2,997 1,206 4,203
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 937 (31 ) 906
Operating costs and expenses 493 443 936
Production and severance taxes 86 2 88
Midstream tariffs 399 399
Exploration expenses, including dry holes and lease impairment 67 84 151
General and administrative expenses 156 8 164
Depreciation, depletion and amortization 1,366 754 2,120
Impairment

2,503

2,503

Total costs and expenses 3,504

3,763

7,267

Results of operations before income taxes (507 )

(2,557

)

(3,064

)
Provision (benefit) for income taxes (21 )

(1,982

)

(2,003

)
Net income (loss) attributable to Hess Corporation $ (486 ) (b) $

(575

) (c) $

(1,061

)
Nine Months Ended September 30, 2016

Income Statement

United States

International

Total
Total revenues and non-operating income
Sales and other operating revenues $ 2,136 $ 1,232 $ 3,368
Gains (losses) on asset sales, net 27 27
Other, net (4 ) 31 27
Total revenues and non-operating income 2,159 1,263 3,422
Costs and expenses
Cost of products sold (excluding items shown separately below) (a) 673 64 737
Operating costs and expenses 605 547 1,152
Production and severance taxes 68 6 74
Midstream tariffs 349 349
Exploration expenses, including dry holes and lease impairment 301 108 409
General and administrative expenses 160 15 175
Depreciation, depletion and amortization 1,541 840 2,381
Total costs and expenses 3,697 1,580 5,277
Results of operations before income taxes (1,538 ) (317 ) (1,855 )
Provision (benefit) for income taxes (584 ) (256 ) (840 )
Net income (loss) attributable to Hess Corporation $ (954 ) $ (61 ) $ (1,015 )

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA

Third

Third

Second

Quarter

Quarter

Quarter

2017 2016 2017

Net Production Per Day (in thousands)

Crude oil - barrels
United States
Bakken 63 67 68
Other Onshore (a) 4 9 9
Total Onshore 67 76 77
Offshore 43 46 38
Total United States 110 122 115
Europe 25 34 28
Africa (b) 39 33 32
Asia 2 1 2
Total 176 190 177
Natural gas liquids - barrels
United States
Bakken 29 29 29
Other Onshore (a) 8 11 8
Total Onshore 37 40 37
Offshore 5 4 4
Total United States 42 44 41
Europe 1 1 1
Total 43 45 42
Natural gas - mcf
United States
Bakken 63 66 66
Other Onshore 85 139 99
Total Onshore 148 205 165
Offshore 69 65 51
Total United States 217 270 216
Europe 29 41 33
Asia 306 161 238
Total 552 472 487
Barrels of oil equivalent 311 314 300

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA

Nine Months Ended September 30,

2017

2016

Net Production Per Day (in thousands)

Crude oil - barrels
United States
Bakken 66 70
Other Onshore (a) 7 9
Total Onshore 73 79
Offshore 43 46
Total United States 116 125
Europe 28 32
Africa (b) 35 34
Asia 2 2
Total 181 193
Natural gas liquids - barrels
United States
Bakken 27 27
Other Onshore (a) 9 12
Total Onshore 36 39
Offshore 4 5
Total United States 40 44
Europe 1 1
Total 41 45
Natural gas - mcf
United States
Bakken 61 64
Other Onshore 97 136
Total Onshore 158 200
Offshore 65 64
Total United States 223 264
Europe 33 42
Asia 252 221
Total 508 527
Barrels of oil equivalent 307 326

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA

Third

Third

Second

Quarter

Quarter

Quarter

2017 2016 2017

Sales Volumes Per Day (in thousands)

Crude oil - barrels 172 190 174
Natural gas liquids - barrels 43 45 42
Natural gas - mcf 552 472 487
Barrels of oil equivalent 307 314 297

Sales Volumes (in thousands)

Crude oil - barrels 15,897 17,528 15,757
Natural gas liquids - barrels 3,920 4,167 3,848
Natural gas - mcf 50,808 43,413 44,390
Barrels of oil equivalent 28,285 28,931 27,003

Nine Months Ended September 30,

2017

2016

Sales Volumes Per Day (in thousands)

Crude oil - barrels 174 201
Natural gas liquids - barrels 41 45
Natural gas - mcf 508 527
Barrels of oil equivalent 300 334

Sales Volumes (in thousands)

Crude oil - barrels 47,398 55,030
Natural gas liquids - barrels 11,391 12,389
Natural gas - mcf 138,742 144,381
Barrels of oil equivalent 81,913 91,483

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA

Third Third Second

Quarter

Quarter

Quarter

2017 2016 2017

Average Selling Prices

Crude oil - per barrel (including hedging)
United States
Onshore $ 42.14 $ 39.19 $ 43.83
Offshore 46.11 39.55 44.60
Total United States 43.66 39.33 44.09
Europe 53.89 46.01 50.27
Africa 51.62 44.22 48.81
Asia 47.36 41.95
Worldwide 46.97 41.50 45.95
Crude oil - per barrel (excluding hedging)
United States
Onshore $ 42.85 $ 39.19 $ 43.72
Offshore 46.72 39.55 44.60
Total United States 44.33 39.33 44.01
Europe 53.77 46.01 49.72
Africa 51.51 44.22 48.40
Asia 47.36 41.95
Worldwide 47.36 41.50 45.74
Natural gas liquids - per barrel
United States
Onshore $ 16.56 $ 8.48 $ 14.25
Offshore 20.41 13.94 18.47
Total United States 17.04 9.00 14.64
Europe 26.44 17.68 23.95
Worldwide 17.22 9.23 14.85
Natural gas - per mcf
United States
Onshore $ 1.58 $ 1.49 $ 2.20
Offshore 2.26 2.24 2.29
Total United States 1.80 1.67 2.22
Europe 4.58 3.74 4.22
Asia 4.34 5.66 3.93
Worldwide 3.35 3.20 3.19

The following is a summary of the Corporation’s outstanding commodity hedging program by calendar year:

2017

2018

Brent

West Texas
Intermediate

Brent

West Texas
Intermediate

Outstanding average barrels of oil per day 20,000 110,000 115,000
Average ceiling price $75 $65
Average floor price $55 $50 $50

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

EXPLORATION AND PRODUCTION SUPPLEMENTAL OPERATING DATA

Nine Months Ended September 30,

2017

2016

Average Selling Prices

Crude oil - per barrel (including hedging)
United States
Onshore $ 44.20 $ 35.16
Offshore 46.04 35.08
Total United States 44.88 35.13
Europe 52.68 40.66
Africa 50.51 39.66
Asia 52.83 43.11
Worldwide 47.16 37.05
Crude oil - per barrel (excluding hedging)
United States
Onshore $ 44.38 $ 35.16
Offshore 46.24 35.08
Total United States 45.06 35.13
Europe 52.49 40.66
Africa 50.36 39.66
Asia 52.83 43.11
Worldwide 47.22 37.05
Natural gas liquids - per barrel
United States
Onshore $ 16.22 $ 7.89
Offshore 19.95 12.14
Total United States 16.67 8.33
Europe 26.26 17.50
Worldwide 16.89 8.55
Natural gas - per mcf
United States
Onshore $ 2.04 $ 1.33
Offshore 2.32 1.74
Total United States 2.12 1.43
Europe 4.24 4.04
Asia 4.12 5.65
Worldwide 3.25 3.41

Contacts

For Hess Corporation
Investors:
Jay Wilson, (212) 536-8940
or
Media:
Sard Verbinnen & Co
Michael Henson/Patrick Scanlan
(212) 687-8080


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