Hess 2011 Annual Report Download - page 59

of the Corporation’s existing shelf registration expiring on February 26, 2012, the Corporation anticipates filing a
new shelf registration statement under the Securities Act of 1933, as amended, under which it may issue, among
other things, additional debt securities, warrants, common stock or preferred stock.
The Corporation’s long-term debt agreements contain a financial covenant that restricts the amount of total
borrowings and secured debt. At December 31, 2011, the Corporation is permitted to borrow up to an additional
$24.9 billion for the construction or acquisition of assets. The Corporation has the ability to borrow up to an
additional $4.5 billion of secured debt at December 31, 2011.
The Corporation’s $1.7 billion in letters of credit outstanding at December 31, 2011 were primarily issued to
satisfy margin requirements. See also Note 17, Risk Management and Trading Activities in the notes to the
Consolidated Financial Statements.
Credit Ratings
There are three major credit rating agencies that rate the Corporation’s debt. All three agencies have
currently assigned an investment grade rating with a stable outlook to the Corporation’s debt. The interest rates
and facility fees charged on some of the Corporation’s credit facilities, as well as margin requirements from risk
management and trading counterparties, are subject to adjustment if the Corporation’s credit rating changes.
Contractual Obligations and Contingencies
Following is a table showing aggregated information about certain contractual obligations at December 31,
2011:
Payments Due by Period
Total 2012
2013 and
2014
2015 and
2016 Thereafter
(Millions of dollars)
Totaldebt* ........................... $6,057 $ 52 $ 386 $459 $5,160
Operatingleases ....................... 3,210 531 1,195 320 1,164
Purchase obligations
Supply commitments ................. 8,131 7,187 782 149 13
Capital expenditures and other
investments ....................... 3,045 1,640 873 257 275
Operating expenses ................... 3,039 1,637 829 204 369
Other long-term liabilities .............. 3,327 290 556 463 2,018
* At December 31, 2011, the Corporation’s debt bears interest at a weighted average rate of 6.8%.
Supply commitments include term purchase agreements at market prices for a portion of the gasoline
necessary to supply the Corporation’s retail marketing system and feedstocks for the Port Reading refining
facility. In addition, the Corporation has commitments to purchase refined petroleum products, natural gas and
electricity to supply contracted customers in its energy marketing business. These commitments were computed
based predominately on year-end market prices.
The table also reflects future capital expenditures, including the portion of the Corporation’s planned
$6.8 billion capital investment program for 2012 that was contractually committed at December 31, 2011.
Obligations for operating expenses include commitments for transportation, seismic purchases, oil and gas
production expenses and other normal business expenses. Other long-term liabilities reflect contractually
committed obligations in the Consolidated Balance Sheet at December 31, 2011, including asset retirement
obligations, pension plan liabilities and estimates for uncertain income tax positions.
During 2011, the Corporation entered into a lease agreement for a floating production system and related
support activities for the Tubular Bells Field. Payments under this five year contract, which total approximately
$420 million and are expected to commence by mid-2014, are included in Capital expenditures and other
investments in the contractual obligations table above. The Corporation also has a tolling agreement with
Bayonne Energy Center, LLC (BEC) (Hess 50%), a joint venture formed to generate electricity for sale into the
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