Hess 2002 Annual Report Download - page 52

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The standardized measure of discounted future net cash flows relat-
ing to proved oil and gas reserves required to be disclosed by FAS
No. 69 is based on assumptions and judgements. As a result, the
future net cash flow estimates are highly subjective and could be
materially different if other assumptions were used. Therefore, cau-
tion should be exercised in the use of the data presented below.
Future net cash flows are calculated by applying year-end oil and
gas selling prices (adjusted for price changes provided by
contractual arrangements) to estimated future production of proved
oil and gas reserves, less estimated future development and produc-
tion costs, which are based on year-end costs and existing economic
assumptions. Future income tax expenses are computed by applying
the appropriate year-end statutory tax rates to the pre-tax net cash
flows relating to the Corporation’s proved oil and gas reserves. Future
net cash flows are discounted at the prescribed rate of 10%. No
recognition is given in the discounted future net cash flow estimates
to depreciation, depletion, amortization and lease impairment, explo-
ration expenses, interest expense, corporate general and administra-
tive expenses and changes in future prices and costs.The selling
prices of crude oil and natural gas have increased during 2002 and
are highly volatile. The year-end prices which are required to be used
for the discounted future net cash flows and do not include the
effects of hedges may not be representative of future selling prices.
Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves
United Africa, Asia
At December 31 (Millions of dollars) Total States Europe and other
2002
Future revenues $27,994 $6,219 $13,203 $8,572
Less:
Future development and production costs 10,133 1,843 4,863 3,427
Future income tax expenses 6,661 1,228 4,042 1,391
16,794 3,071 8,905 4,818
Future net cash flows 11,200 3,148 4,298 3,754
Less: Discount at 10% annual rate 4,115 1,178 1,441 1,496
Standardized measure of discounted future net cash flows $ 7,085 $1,970 $ 2,857 $2,258
Share of equity investees’ standardized measure $ 587 $ — $ 23 $ 564
2001
Future revenues $22,666 $4,884 $10,569 $7,213
Less:
Future development and production costs 10,335 1,817 4,889 3,629
Future income tax expenses 3,989 686 2,495 808
14,324 2,503 7,384 4,437
Future net cash flows 8,342 2,381 3,185 2,776
Less: Discount at 10% annual rate 3,286 809 1,132 1,345
Standardized measure of discounted future net cash flows $ 5,056 $1,572 $ 2,053 $1,431
Share of equity investees’ standardized measure $ 543 $ — $ 28 $ 515
2000
Future revenues $25,889 $9,297 $12,433 $4,159
Less:
Future development and production costs 8,672 1,551 4,808 2,313
Future income tax expenses 6,716 2,568 3,560 588
15,388 4,119 8,368 2,901
Future net cash flows 10,501 5,178 4,065 1,258
Less: Discount at 10% annual rate 3,673 1,923 1,136 614
Standardized measure of discounted future net cash flows $ 6,828 $3,255 $ 2,929 $ 644
Share of equity investees’ standardized measure $ 305 $ — $ 44 $ 261