Hess 2008 Annual Report Download - page 71

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4. Refining Joint Venture
The Corporation has an investment in HOVENSA L.L.C., a 50% joint venture with Petroleos de Venezuela,
S.A. (PDVSA), which is accounted for using the equity method. HOVENSA owns and operates a refinery in the
U.S. Virgin Islands. Summarized financial information for HOVENSA as of December 31 and for the years then
ended follows:
2008 2007 2006
(Millions of dollars)
Summarized Balance Sheet, at December 31
Cash and cash equivalents ........................... $75$ 279 $ 290
Other current assets ................................ 664 1,183 943
Net fixed assets ................................... 2,136 2,181 2,123
Other assets ...................................... 58 62 32
Current liabilities .................................. (679) (1,459) (1,013)
Long-term debt ................................... (356) (356) (252)
Deferred liabilities and credits ........................ (104) (75) (70)
Partners’ equity ................................. $ 1,794 $ 1,815 $ 2,053
Summarized Income Statement, for the years ended
December 31
Total revenues .................................... $ 17,480 $ 13,396 $ 11,788
Costs and expenses................................. (17,385) (13,039) (11,381)
Net income..................................... $95$ 357 $ 407
Hess Corporation’s share* .......................... $44$ 176 $ 201
Summarized Cash Flow Statement, for the years ended
December 31
Net cash provided by (used in):
Operating activities................................. $ (20) $ 654 $ 484
Investing activities ................................. (85) (165) (10)
Financing activities................................. (99) (500) (796)
Net decrease in cash and cash equivalents .............. $ (204) $ (11) $ (322)
* Before Virgin Islands income taxes, which were recorded in the Corporation’s income tax provision.
The Corporation received cash distributions from HOVENSA of $50 million, $300 million and $400 million
during 2008, 2007 and 2006, respectively. The Corporation’s share of HOVENSA’s undistributed income
aggregated $206 million at December 31, 2008.
The Corporation guarantees the payment of up to 50% of the value of HOVENSA’s crude oil purchases from
certain suppliers other than PDVSA. The guarantee amounted to $78 million at December 31, 2008. This amount
fluctuates based on the volume of crude oil purchased and the related crude oil prices. In addition, the Corporation
has agreed to provide funding up to $15 million to the extent HOVENSA does not have funds to meet its senior debt
obligations.
At formation of the joint venture in 1999, PDVSA V.I., a wholly-owned subsidiary of PDVSA, purchased a
50% interest in the fixed assets of the Corporation’s Virgin Islands refinery for $62.5 million in cash and a 10-year
note from PDVSA V.I. for $562.5 million bearing interest at 8.46% per annum and requiring principal payments
over its term. The principal balance of the note was $15 million and $76 million at December 31, 2008 and 2007,
respectively, which was fully repaid in February 2009.
55
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)