Hess 2008 Annual Report Download - page 74

At December 31, 2008, the Corporation’s fixed rate debentures have a principal amount of $2,816 million
($2,803 million net of unamortized discount). Interest rates on the outstanding fixed rate debentures have a
weighted average rate of 7.3%.
The Corporation has a $3.0 billion syndicated revolving credit facility (the facility), which can be used for
borrowings and letters of credit, substantially all of which is committed through May 2012. At December 31, 2008,
the Corporation has available capacity on the facility of $2,474 million. Current borrowings under the facility bear
interest at 0.4% above the London Interbank Offered Rate and a facility fee of 0.1% per annum is payable on the
amount of the credit line. The interest rate and facility fee are subject to adjustment if the Corporation’s credit rating
changes.
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.
The Corporation’s long-term debt agreements contain a financial covenant that restricts the amount of total
borrowings and secured debt. At December 31, 2008, the Corporation is permitted to borrow up to an additional
$16.6 billion for the construction or acquisition of assets. The Corporation has the ability to borrow up to an
additional $2.8 billion of secured debt at December 31, 2008.
Outstanding letters of credit at December 31 were as follows:
2008 2007
(Millions of dollars)
Revolving credit facility ........................................... $ 176 $—
Asset-backed credit facility ......................................... —534
Committed lines* ................................................ 1,973 995
Uncommitted short-term lines ....................................... 1,686 1,510
Total ....................................................... $3,835 $3,039
* Committed lines have expiration dates ranging from 2009 through 2011.
Of the total letters of credit outstanding at December 31, 2008, $126 million relates to contingent liabilities and
the remaining $3,709 million relates to liabilities recorded on the balance sheet.
The total amount of interest paid (net of amounts capitalized) was $266 million, $257 million and $200 million
in 2008, 2007 and 2006, respectively. The Corporation capitalized interest of $7 million, $50 million and
$100 million in 2008, 2007, and 2006, respectively.
8. Share-Based Compensation
The Corporation awards restricted common stock and stock options under its 2008 Long-Term Incentive Plan.
Generally, stock options vest in one to three years from the date of grant, have a 10-year option life, and the exercise
price equals or exceeds the market price on the date of grant. Outstanding restricted common stock generally vests
in three years from the date of grant.
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HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)