Hess 2008 Annual Report Download - page 46

represents a decrease of approximately $1.6 billion from 2008, primarily as a result of lower crude oil selling prices.
The Corporation also has maturities of long-term debt of $143 million in 2009. The Corporation anticipates that it
can fund its 2009 operations, including planned capital expenditures, dividends, pension contributions and required
debt repayments, with existing cash on-hand, projected cash flow from operations and available credit facilities.
Crude oil and natural gas prices are volatile and difficult to predict in the near term as a result of the recent global
economic recession. In addition, unplanned increases in the Corporation’s capital expenditure program could occur.
The Corporation will take steps as necessary to protect its financial flexibility, and may pursue other sources of
liquidity, including the issuance of debt or equity securities, or asset sales.
The table below summarizes the capacity, usage, and remaining availability of the Corporation’s borrowing
and letter of credit facilities at December 31, 2008 (in millions):
Expiration
Date Capacity Borrowings
Letters of
Credit Issued Total Used
Remaining
Capacity
Revolving credit facility . . May 2012* $3,000 $350 $ 176 $ 526 $2,474
Asset backed credit
facility ............. October 2009 500 500 — 500 —
Committed lines........ Various** 1,993 — 1,973 1,973 20
Uncommitted lines ...... Various 1,686 — 1,686 1,686 —
Total ................ $7,179 $850 $3,835 $4,685 $2,494
* $75 million of capacity expires in May 2011.
** Committed lines have expiration dates ranging from 2009 through 2011.
The Corporation maintains a $3.0 billion syndicated, revolving credit facility (the facility), of which
$2,925 million is committed through May 2012. The facility can be used for borrowings and letters of credit.
At December 31, 2008, additional available capacity under the facility was $2,474 million.
The Corporation has a 364-day asset-backed credit facility securitized by certain accounts receivable from its
Marketing and Refining operations. Under the terms of this financing arrangement, the Corporation has the ability
to borrow or issue letters of credit up to $500 million, subject to the availability of sufficient levels of eligible
receivables. At December 31, 2008, outstanding borrowings under this facility were collateralized by
$1,249 million of accounts receivable, which are held by a wholly-owned subsidiary. These receivables are not
available to pay the general obligations of the Corporation before repayment of outstanding borrowings under the
asset-backed facility. At December 31, 2008, $500 million of outstanding borrowings under the asset-backed credit
facility are classified as long-term based on the Corporation’s available capacity under the committed revolving
credit facility.
In February 2009, the Corporation issued $250 million of 5 year senior unsecured notes with a coupon of 7%
and $1 billion of 10 year senior unsecured notes with a coupon of 8.125%. The majority of the proceeds were used to
repay revolving credit debt and outstanding borrowings on other credit facilities. The remainder of the proceeds is
available for working capital and other corporate purposes.
The Corporation also has a shelf registration under which it may issue additional debt securities, warrants,
common stock or preferred stock.
A loan agreement covenant based on the Corporation’s debt to equity ratio allows the Corporation to borrow up
to an additional $16.6 billion for the construction or acquisition of assets at December 31, 2008. The Corporation
has the ability to borrow up to an additional $2.8 billion of secured debt at December 31, 2008 under the loan
agreement covenants.
In order to reduce credit risk, the Corporation has agreements with counterparties to exchange collateral which
is determined based on the fair values of positions held under these agreements. The Corporation’s $3.8 billion of
letters of credit outstanding at December 31, 2008 were primarily issued to satisfy collateral requirements.
Additionally, the Corporation has posted cash collateral of approximately $394 million and has received cash
30