Hess 2000 Annual Report Download - page 5

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3
30,000 Mcf of natural gas equivalent per day in 2001. Both acquisitions offer
excellent financial returns, production upside and increased exposure to
United States natural gas markets.
We expect our daily production to increase by about 12% to 420,000 bar-
rels of oil equivalent per day in 2001 as a result of past exploration successes,
field redevelopments and production from these acquisitions. We anticipate
a further production increase in 2002. The per barrel profitability of our pro-
duction, after eliminating the impact of higher crude oil and natural gas
prices, has risen dramatically since we reshaped our upstream asset base.
Management remains committed to enhancing financial returns.
We replaced 129% of our production in 2000. However, we have not been sat-
isfied with the results of our exploration program. During 2000, we brought
in new management for our United States and international exploration pro-
grams. We are confident that the new exploration leadership will improve our
exploration success rate and move us toward our finding cost target.
During 2000, Amerada Hess made an offer for LASMO plc, a United Kingdom
exploration and production company with significant international activities.
We withdrew our offer in the face of a higher bid that would not have met our
financial return standards and, we believe, would not have been in the best
interests of our shareholders. We will continue to be disciplined and pursue
acquisitions that meet our financial standards.
REFINING AND MARKETING
Our challenge in refining and marketing has been to achieve double-digit
returns on capital employed in a business that has traditionally suffered from
low margins and relatively poor financial performance. We successfully met
this challenge in 2000. While returns were enhanced by improved refining
margins, our refining and marketing financial results, relative to competitors,
have improved dramatically since we reshaped our downstream asset base.
Our return on capital employed from refining and marketing operations
exceeded 12% in 2000.
Construction of the 58,000 barrel per day delayed coking unit and related
facilities has begun at the Virgin Islands refinery. The unit, which is sched-
uled to be completed during the second quarter of 2002, will further enhance
financial returns.