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14
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
Consolidated Results of Operations
The Corporation had a loss of $218 million in 2002 compared with
net income of $914 million in 2001 and $1,023 million in 2000. In
2002, the Corporation recorded significant non-cash impairment
charges to reduce the carrying value of a producing field in Equator-
ial Guinea and producing properties and exploration acreage in the
United States. These charges and certain other items are further
discussed under the caption “Special Items” on page 17. The earn-
ings for the operating segments in the table below exclude these
special items and the comparison of results which follows is based
on operating earnings. Operating earnings amounted to $551 million
in 2002, $945 million in 2001 and $987 million in 2000.
The after-tax results by major operating activity for 2002, 2001 and
2000 are summarized below:
Millions of dollars, except per share data 2002 2001 2000
Exploration and production $ 752 $ 923 $ 868
Refining and marketing 40 235 288
Corporate (63) (78) (43)
Interest (178) (135) (126)
Operating earnings 551 945 987
Special items (769) (31) 36
Net income (loss) $ (218) $ 914 $1,023
Net income (loss) per share $(2.48) $10.25 $11.38
Comparison of Results
Exploration and Production: Operating earnings from exploration
and production activities decreased by $171 million in 2002, primar-
ily due to higher after-tax depreciation, depletion and amortization
expenses of approximately $230 million, partially offset by increased
crude oil sales volumes, which improved earnings by $120 million.
The remainder of the decrease was due to lower natural gas selling
prices and higher income taxes. Operating earnings increased by
$55 million in 2001 largely due to higher crude oil and natural gas
sales volumes.
The Corporation’s average selling prices, including the effects of
hedging, were as follows:
2002 2001 2000
Crude oil (per barrel)
United States $24.06 $23.29 $23.97
Foreign 24.94 24.58 25.53
Natural gas liquids (per barrel)
United States 16.10 18.64 22.30
Foreign 18.99 18.91 23.41
Natural gas (per Mcf)
United States 3.65 3.99 3.74
Foreign 2.26 2.54 2.20
The Corporation’s net daily worldwide production was as follows:
2002 2001 2000
Crude oil
(thousands of barrels per day)
United States 54 63 55
Foreign 250 212 185
Total 304 275 240
Natural gas liquids
(thousands of barrels per day)
United States 12 14 12
Foreign 999
Total 21 23 21
Natural gas
(thousands of Mcf per day)
United States 373 424 288
Foreign 381 388 391
Total 754 812 679
Barrels of oil equivalent*
(thousands of barrels per day) 451 433 374
*Reflects natural gas production converted on the basis of relative energy content
(six Mcf equals one barrel).
The Corporation’s oil and gas production, on a barrel of oil equivalent
basis, increased by 4% in 2002 and 16% in 2001. Amounts produced
in 2002 and 2001 included production from fields acquired in
Equatorial Guinea, Colombia and the United States. Production from
these fields amounted to 83,000 and 43,000 barrels of oil equivalent
per day in 2002 and 2001, respectively.
FINANCIAL REVIEW
Amerada Hess Corporation and Consolidated Subsidiaries