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2009 Annual Report

Table of contents

  • Page 1
    2009 Annual Report

  • Page 2
    ...and in marketing refined petroleum products, natural gas and electricity. Our strategy is to build a company that will sustain profitable growth and create significant shareholder value. We are committed to meeting the highest standards of corporate citizenship by protecting the health and safety of...

  • Page 3
    ... Debt to capitalization ratio(a) Common stock price $ 29,465 $ 4,467 $ 13,528 24.8% $ 60.50 $ 28,589 $ 3,955 $ 12,391 24.2% $ 53.64 OPERATING - FOR THE YEAR Production - net Crude oil and natural gas liquids (thousands of barrels per day) United States International Total Natural gas (thousands of...

  • Page 4
    ... year. Retail Marketing had reduced margins and gasoline volumes, but these were partially offset by an 11 percent increase in convenience store sales. 2 by strong volumes from the Shenzi Field in the deepwater Gulf of Mexico, a full year of Phase 2 natural gas sales at the Malaysia/Thailand JDA...

  • Page 5
    ... design for the Tioga Gas Plant expansion in North Dakota and development options for the Pony Field in the deepwater Gulf of Mexico. In exploration, we strengthened our future growth options with continued success at our 100 percent owned WA-390-P Block offshore Australia, where in 2009 we drilled...

  • Page 6
    EXPLORATION AND PRODUCTION

  • Page 7
    Malaysia/Thailand Joint Development Area

  • Page 8
    Okume Complex, Equatorial Guinea

  • Page 9
    ...end engineering and design (FEED) for the Tioga gas plant expansion associated with the Bakken oil shale development in the Williston Basin in North Dakota. At the Hess operated Pony Field (Hess 100%), in the deepwater Gulf of Mexico, we completed FEED for the topsides, hull and subsea equipment and...

  • Page 10
    ... license is planned in 2010. In addition, exploitation drilling continued in 2010 with successful activity in the United Kingdom, Russia and onshore Libya. EXPLORATION In 2009, Hess acquired new acreage in the United States, Indonesia, Australia and Norway which builds upon existing positions and...

  • Page 11
    Exploration drilling in Australia

  • Page 12
    MARKETING AND REFINING HESS EXPRESS, Clearwater, Florida

  • Page 13

  • Page 14
    Hess fuel oil truck, New York City

  • Page 15
    ...Port Reading, New Jersey FCC facility located near New York Harbor produces gasoline and fuel oil primarily for markets in the Northeast United States. The facility averaged feedstock runs of about 63,000 barrels per day in 2009 versus 64,000 barrels per day in 2008. SUPPLY & TERMINALS Hess operates...

  • Page 16
    CORPORATE AND SOCIAL RESPONSIBILITY Hess model school, Equatorial Guinea

  • Page 17

  • Page 18
    Hess supported school, Thailand

  • Page 19
    .... In Libya, the company together with the National Oil Corporation and Partners Harvard Medical International conducted a study to develop a plan for a diabetes prevention, treatment and training program. In Indonesia, community programs are providing new water wells and distribution networks for...

  • Page 20
    ... President, Worldwide Exploration & Production (2) Chairman, Ridgeway Farm LLC; Former Managing Director, Dillon, Read & Co., Inc. (1) Member of Executive Committee (2) Member of Audit Committee (3) Member of Compensation and Management Development Committee (4) Member of Corporate Governance and...

  • Page 21
    ANNUAL REPORT FORM 10-K

  • Page 22
    ...Hess Corporation (Exact name of Registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 13-4921002 (I.R.S. Employer Identification Number) 1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y. (Address of principal executive offices) 10036 (Zip Code...

  • Page 23
    ..., Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accounting Fees and Services ...PART IV...

  • Page 24
    ..., markets and trades, refined petroleum products, natural gas and electricity. The Corporation owns 50% of a refinery joint venture in the United States Virgin Islands. An additional refining facility, terminals and retail gasoline stations, most of which include convenience stores, are located on...

  • Page 25
    ... oil, natural gas liquids and natural gas production was as follows: 2009 2008 2007 Crude oil (thousands of barrels per day) United States Onshore ...Offshore ...Europe United Kingdom ...Norway ...Denmark ...Russia ...Africa Equatorial Guinea ...Algeria ...Gabon ...Libya...Asia and other Azerbaijan...

  • Page 26
    ... 2009. The operator plans on drilling additional production wells at Shenzi in 2010. In North Dakota, the Corporation holds a net acreage position in the Bakken shale play of approximately 510,000 acres. In 2009, the Corporation sanctioned a development program for the Bakken. The Corporation plans...

  • Page 27
    ...development investment is planned in all 14 license areas. Africa At December 31, 2009, 23% of the Corporation's total proved reserves were located in Africa (Equatorial Guinea 8%, Algeria 2%, Libya 11% and Gabon 2%). During 2009, 41% of the Corporation's crude oil and natural gas liquids production...

  • Page 28
    ... located in the Asia and other region (JDA 11%, Indonesia 9%, Thailand 3%, Azerbaijan 2% and Malaysia 1%). During 2009, 6% of the Corporation's crude oil and natural gas liquids production and 65% of its natural gas production were from Asia and other operations. Joint Development Area of Malaysia...

  • Page 29
    ... changes in commodity prices or other indices. Average selling prices and average production costs 2009 2008 2007 Average selling prices* Crude oil (per barrel) United States ...Europe ...Africa ...Asia and other ...Worldwide ...Natural gas liquids (per barrel) United States ...Europe ...Worldwide...

  • Page 30
    ... 15 net wells. Number of net exploratory and development wells drilled Net Exploratory Wells 2009 2008 2007 Net Development Wells 2009 2008 2007 Productive wells United States ...Europe ...Africa ...Asia and other ...Dry holes United States ...Europe ...Africa ...Asia and other ... ... - 7 1 8 16...

  • Page 31
    ...2009 - 1 Marketing and Refining Refining The Corporation owns a 50% interest in HOVENSA L.L.C. (HOVENSA), a refining joint venture in the United States Virgin Islands with a subsidiary of Petroleos de Venezuela S.A. (PDVSA). In addition, it owns and operates a refining facility in Port Reading, New...

  • Page 32
    ... operated stations, 94% have convenience stores on the sites. Most of the Corporation's gasoline stations are in New York, New Jersey, Pennsylvania, Florida, Massachusetts, North Carolina and South Carolina. The table below summarizes marketing sales volumes: 2009* 2008* 2007* Refined Product sales...

  • Page 33
    ...markets. The commodities trading markets may also influence the selling prices of crude oil, natural gas and refined petroleum products. To the extent that we engage in hedging activities to mitigate commodity price volatility, we may not realize the benefit of price increases above the hedged price...

  • Page 34
    ... capital intensive. We encounter competition from numerous companies in each of our activities, including acquiring rights to explore for crude oil and natural gas, and in purchasing and marketing of refined products, natural gas and electricity. Many competitors, including national oil companies...

  • Page 35
    ... and NJDEP is also seeking natural resource damages. The directive, insofar as it affects the Corporation, relates to alleged releases from a petroleum bulk storage terminal in Newark, New Jersey now owned by the Corporation. The Corporation and over 70 companies entered into an Administrative Order...

  • Page 36
    ... to natural resources arising from releases of hazardous substances from the "HOVENSA Oil Refinery." HOVENSA currently owns and operates a petroleum refinery on the south shore of St. Croix, United States Virgin Islands, which had been operated by HOVIC until October 1998. An action was filed on...

  • Page 37
    ...Registrant's Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Market Information The common stock of Hess Corporation is traded principally on the New York Stock Exchange (ticker symbol: HES). High and low sales prices were as follows: 2009 Quarter Ended High...

  • Page 38
    ...'s equity compensation plan. ** The Corporation has a Stock Award Program pursuant to which each non-employee director receives approximately $150,000 in value of the Corporation's common stock each year. These awards are made from shares purchased by the Corporation in the open market. See...

  • Page 39
    ... and natural gas liquids ...$ 5,665 Natural gas (including sales of purchased gas) ...5,894 Refined petroleum products ...12,931 Electricity ...3,408 Convenience store sales and other operating revenues...1,716 Total ...Net income attributable to Hess Corporation ...Less: preferred stock dividends...

  • Page 40
    ... and Results of Operations Overview The Corporation is a global integrated energy company that operates in two segments, Exploration and Production (E&P) and Marketing and Refining (M&R). The E&P segment explores for, develops, produces, purchases, transports and sells crude oil and natural gas. The...

  • Page 41
    ... the end of 2008. Capital and exploratory expenditures were as follows for the years ended December 31: 2009 2008 (Millions of dollars) Exploration and Production United States ...$1,200 International ...1,927 Total Exploration and Production...Marketing, Refining and Corporate ...3,127 118 $2,164...

  • Page 42
    ... The after-tax results by major operating activity are summarized below: 2009 2008 2007 (Millions of dollars, except per share data) Exploration and Production ...Marketing and Refining...Corporate ...Interest expense ... ...$1,042 ...127 ...(205) ...(224) $2,423 277 (173) (167) $2,360 $ 7.24...

  • Page 43
    ... Corporation's average selling prices were as follows: 2009 2008 2007 Crude oil-per barrel (including hedging) United States ...Europe ...Africa ...Asia and other ...Worldwide ...Crude oil-per barrel (excluding hedging) United States ...Europe ...Africa ...Asia and other ...Worldwide ...Natural gas...

  • Page 44
    The Corporation's net daily worldwide production was as follows (in thousands): 2009 2008 2007 Crude oil (barrels per day) United States ...Europe...Africa ...Asia and other ...Total ...Natural gas liquids (barrels per day) United States ...Europe...Total ...Natural gas (mcf per day) United States ...

  • Page 45
    ... (33) $ (74) 2009: In October 2009, the U.S. Supreme Court decided it would not review the decision of the 5th Circuit Court of Appeals against the U.S. Minerals Management Service relating to royalty relief under the Deep Water Royalty Relief Act of 1995. As a result, the Corporation recognized an...

  • Page 46
    ...day) Refinery Utilization 2009 2008 2007 HOVENSA Crude ...Fluid catalytic cracker ...Coker ...Port Reading ... 500 150 58 70 80.3% 70.2% 81.6% 90.2% 88.2% 72.7% 92.4% 90.7% 90.8% 87.1% 83.4% 93.2% Marketing: Marketing operations, which consist principally of retail gasoline and energy marketing...

  • Page 47
    ... reflects higher margins on refined product sales, including sales of retail gasoline operations. The table below summarizes marketing sales volumes: 2009 2008 2007 Refined product sales (thousands of barrels per day) ...Natural gas (thousands of mcf per day) ...Electricity (megawatts round the...

  • Page 48
    ...product selling prices. The change in cost of goods sold in each year principally reflects the change in sales volumes and prices of refined products and purchased natural gas and electricity. Liquidity and Capital Resources The following table sets forth certain relevant measures of the Corporation...

  • Page 49
    ... States and $210 million for the acquisition of the remaining 22.5% interest in the Corporation's Gabonese subsidiary. In 2008, the Corporation also selectively expanded its energy marketing business by acquiring fuel oil, natural gas, and electricity customer accounts, and a terminal and related...

  • Page 50
    ...an investment grade rating 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. 28

  • Page 51
    ... 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 products, natural gas and electricity to supply contracted customers in its energy marketing business...

  • Page 52
    ... statements. Foreign Operations The Corporation conducts exploration and production activities outside the United States, principally in Algeria, Australia, Azerbaijan, Brazil, Colombia, Denmark, Egypt, Equatorial Guinea, Gabon, Ghana, Indonesia, Libya, Malaysia, Norway, Peru, Russia, Thailand...

  • Page 53
    ... projected production volumes from oil and gas fields decrease, crude oil and natural gas selling prices decline significantly for an extended period or future estimated capital and operating costs increase significantly. The Corporation's goodwill is tested for impairment at a reporting unit level...

  • Page 54
    ... of oil and gas reserves and selling prices that are consistent with the Corporation's internal business forecasts. Additionally, the Corporation has income taxes which have been deferred on intercompany transactions eliminated in consolidation related to transfers of property, plant and equipment...

  • Page 55
    ... or are positions with longer durations. For example, in its energy marketing business, the Corporation sells natural gas and electricity to customers and offsets the price exposure by purchasing forward contracts. The fair value of these sales and purchases may be based on specific prices at less...

  • Page 56
    ..., originally issued as FAS 161, Disclosures about Derivative Instruments and Hedging Activities ). See Note 14, Risk Management and Trading Activities, for these disclosures. Effective January 1, 2009, the Corporation also adopted the FASB staff position that requires the application of the fair...

  • Page 57
    ... a strategy to control our carbon emissions. The Corporation will have continuing expenditures for environmental assessment and remediation. Sites where corrective action may be necessary include gasoline stations, terminals, onshore exploration and production facilities, refineries (including solid...

  • Page 58
    ... also exposed to commodity risks primarily related to the prices of crude oil, natural gas and refined products. The following describes how these risks are controlled and managed. Controls: The Corporation maintains a control environment under the direction of its chief risk officer and through its...

  • Page 59
    ... include energy related equity or debt securities issued by a company or government or related derivatives on these securities. Risk Management Activities Energy marketing activities: In its energy marketing activities, the Corporation sells refined petroleum products, natural gas and electricity...

  • Page 60
    ... The following table summarizes the sources of fair values of derivatives used in the Corporation's trading activities at December 31, 2009: Total 2010 2011 2012 (Millions of dollars) 2013 and Beyond Source of fair value Level 1 ...$ Level 2 ...Level 3 ...Total ...$ (86) 147 49 110 $ (97) 103...

  • Page 61
    ...HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULE Page Number Management's Report on Internal Control over Financial Reporting ...Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheet at December 31, 2009 and 2008 ...Statement...

  • Page 62
    ...effectiveness of the Corporation's internal control over financial reporting as of December 31, 2009, as stated in their report, which is included herein. By John P. Rielly Senior Vice President and Chief Financial Officer February 26, 2010 By John B. Hess Chairman of the Board and Chief Executive...

  • Page 63
    ... In our opinion, Hess Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009 based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the...

  • Page 64
    ... Statements (codified in FASB Accounting Standards Codification Topic 810, Consolidation), effective January 1, 2009. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hess Corporation's internal control over financial reporting...

  • Page 65
    ... liabilities ...EQUITY Common stock, par value $1.00 Authorized: 600,000 shares Issued: 2009 - 327,229 shares; 2008 - 326,133 shares ...Capital in excess of par value ...Retained earnings ...Accumulated other comprehensive income (loss)...Total Hess Corporation stockholders' equity ...Noncontrolling...

  • Page 66
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME Years Ended December 31, 2009 2008 2007 (Millions of dollars, except per share data) REVENUES AND NON-OPERATING INCOME Sales (excluding excise taxes) and other operating revenues ...Equity in income (loss) of HOVENSA ...

  • Page 67
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOWS 2009 Years Ended December 31, 2008 2007 (Millions of dollars) CASH FLOWS FROM OPERATING ACTIVITIES Net income ...Adjustments to reconcile net income to net cash provided by operating activities Depreciation, ...

  • Page 68
    ...flow hedges ...Change in post retirement plan liabilities, after tax...Change in foreign currency translation adjustment and other...Total Comprehensive Income ...Activity related to restricted common stock awards, net . Employee stock options, including income tax benefits . Cash dividends declared...

  • Page 69
    ... (the Corporation) engage in the exploration for and the development, production, purchase, transportation and sale of crude oil and natural gas. These activities are conducted principally in Algeria, Australia, Azerbaijan, Brazil, Colombia, Denmark, Egypt, Equatorial Guinea, Gabon, Ghana, Indonesia...

  • Page 70
    ... and proved oil and gas leasehold acreage, including lease bonuses, brokers' fees and other related costs, are capitalized. Annual lease rentals, exploration expenses and exploratory dry hole costs are expensed as incurred. Costs of drilling and equipping productive wells, including development dry...

  • Page 71
    ... projections and other externally reported information. Oil and gas prices used for determining asset impairments will generally differ from the average prices used in the standardized measure of discounted future net cash flows. Impairment of Equity Investees: The Corporation reviews equity method...

  • Page 72
    ... or are positions with longer durations. For example, in its energy marketing business, the Corporation sells natural gas and electricity to customers and offsets the price exposure by purchasing forward contracts. The fair value of these sales and purchases may be based on specific prices at less...

  • Page 73
    ..., originally issued as FAS 161, Disclosures about Derivative Instruments and Hedging Activities ). See Note 14, Risk Management and Trading Activities, for these disclosures. Effective January 1, 2009, the Corporation also adopted the FASB staff position that requires the application of the fair...

  • Page 74
    ... energy marketing business by acquiring fuel oil, natural gas, and electricity customer accounts, and a terminal and related assets, for an aggregate of approximately $100 million. 2007: The Corporation completed the acquisition of a 28% interest in the Genghis Khan oil and gas development located...

  • Page 75
    ... to $121 million at December 31, 2009. 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. 53

  • Page 76
    ...2009 2008 (Millions of dollars) Exploration and Production Unproved properties ...Proved properties ...Wells, equipment and related facilities ...Marketing, Refining and Corporate ...Total - at cost ...Less: reserves for depreciation, depletion, amortization and lease impairment . . Property, plant...

  • Page 77
    ... relate to projects where further drilling is planned or development planning and other assessment activities are ongoing to determine the economic and operating viability of the projects. 6. Asset Retirement Obligations The following table describes changes to the Corporation's asset retirement...

  • Page 78
    ... the facility. 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...

  • Page 79
    ... 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...

  • Page 80
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Corporation's stock option and restricted stock activity consisted of the following: Stock Options WeightedAverage Exercise Price per Share Options (Thousands) Restricted Stock WeightedShares ...

  • Page 81
    ...) related to foreign currency translation were reductions in stockholders' equity of $18 million at December 31, 2009 and $123 million at December 31, 2008. 10. Retirement Plans The Corporation has funded noncontributory defined benefit pension plans for a significant portion of its employees. In...

  • Page 82
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table summarizes the Corporation's benefit obligations and the fair value of plan assets and shows the funded status of the pension and postretirement medical plans: Funded Pension ...

  • Page 83
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The accumulated benefit obligation for the funded defined benefit pension plans was $1,229 million at December 31, 2009 and $1,032 million at December 31, 2008. The accumulated benefit obligation ...

  • Page 84
    ..., including hedge funds, real estate and private equity. Investment managers are prohibited from investing in securities issued by the Corporation unless indirectly held as part of an index strategy. The majority of plan assets are highly liquid, providing ample liquidity for benefit payment...

  • Page 85
    ... values reflect the NAV per fund share and are classified as Level 2 or 3. Private equity and real estate limited partnership values reflect information reported by the fund managers, which include inputs such as cost, operating results, discounted future cash flows, market based comparable data and...

  • Page 86
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) contributions. The Corporation recorded expense of $24 million in 2009, $22 million in 2008, and $19 million in 2007 for contributions to these plans. 11. Income Taxes The provision for (benefit ...

  • Page 87
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A summary of the components of deferred tax liabilities, deferred tax assets and taxes deferred at December 31 follows: 2009 2008 (Millions of dollars) Deferred tax liabilities Property, plant ...

  • Page 88
    ... The following table provides the changes in the Corporation's outstanding common shares: 2009 2008 2007 (Thousands of shares) Balance at January 1 ...Activity related to restricted common stock awards, net ...Employee stock options ...Conversion of preferred stock ...Balance at December 31 ... 326...

  • Page 89
    ... certain of its subsidiaries lease gasoline stations, drilling rigs, tankers, office space and other assets for varying periods under contractual obligations accounted for as operating leases. Certain operating leases provide an option to purchase the related property at fixed prices. At December 31...

  • Page 90
    ... commodity price risks primarily related to the prices of crude oil, natural gas and refined products. The Corporation maintains a control environment under the direction of its chief risk officer and through its corporate risk policy, which the Corporation's senior management has approved. Controls...

  • Page 91
    ... products sold. Net realized and unrealized pre-tax gains on derivative contracts not designated as hedges amounted to $102 million in 2009. Corporate Risk Management: Corporate risk management activities include transactions designed to reduce risk in the selling prices of crude oil or natural gas...

  • Page 92
    ...takes trading positions for its own account. The table below shows the gross volume of the Corporation's trading derivative instruments outstanding at December 31, 2009: Commodity Contracts Crude oil and refined products (millions of barrels) ...Natural gas (millions of mcf) ...Electricity (millions...

  • Page 93
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) hierarchy. The following table provides the fair value of the Corporation's financial assets and (liabilities) based on this hierarchy: Level 1 Level 2 Collateral and counterparty Level 3 netting ...

  • Page 94
    ... domestic and international customer base. The Corporation's net receivables at December 31, 2009 are concentrated with counterparties as follows: oil and gas companies - 14%, US government entities - 13%, manufacturers - 12% and domestic and foreign trading companies - 11%. The Corporation reduces...

  • Page 95
    ... expenditures to install emissions control equipment over a three to eight year time period and (ii) changes to operations which resulted in increased operating costs. The capital expenditures, penalties and supplemental environmental projects for individual refineries covered by the settlements...

  • Page 96
    ... refined petroleum products and purchases, trades and markets refined petroleum products, natural gas and electricity. The following table presents financial data by operating segment for each of the three years ended December 31, 2009: Exploration and Production Marketing Corporate and Refining...

  • Page 97
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Exploration and Production Marketing Corporate and Refining and Interest (Millions of dollars) Consolidated(a) 2008 Operating revenues Total operating revenues(b) ...Less: Transfers between ...

  • Page 98
    HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Financial information by major geographic area for each of the three years ended December 31, 2009: United States Asia and Europe Africa Other (Millions of dollars) Consolidated 2009 Operating ...

  • Page 99
    ...changes therein. The Corporation produces crude oil, natural gas liquids and/or natural gas principally in Algeria, Azerbaijan, Denmark, Equatorial Guinea, Gabon, Indonesia, Libya, Malaysia, Norway, Russia, Thailand, the United Kingdom and the United States. Exploration activities are also conducted...

  • Page 100
    ... Exploration and Production operations reported in management's discussion and analysis of results of operations and in Note 16, Segment Information, in the notes to the financial statements. For the Years Ended December 31 Total United States Europe Africa (Millions of dollars) Asia and Other 2009...

  • Page 101
    ... United States Europe Africa (Millions of dollars) Asia and Other 2007 Sales and other operating revenues Unaffiliated customers ...$7,297 Inter-company ...201 Total revenues ...Costs and expenses Production expenses, including related taxes ...Exploration expenses, including dry holes and lease...

  • Page 102
    ... to internal technical audits and reviews. In addition, an independent third party reserve engineer reviews and audits a significant portion of the Corporation's reported reserves (see below). Reserve estimates are reviewed by senior management and the Board of Directors. Qualifications The person...

  • Page 103
    ... to satisfy long-term gas sales contracts and an oil project in Azerbaijan that is still under development. Following are the Corporation's proved reserves for the three years ended December 31, 2009: Crude Oil, Condensate and Natural Gas Liquids United States Asia and Europe Africa Other (Millions...

  • Page 104
    ... of carbon dioxide gas for sale or use in company operations. Production sharing contracts The Corporation's proved reserves include crude oil and natural gas reserves relating to long-term supply agreements with governments or authorities in which the Corporation has the legal right to produce or...

  • Page 105
    ... include the effects of hedges and may not be representative of future selling prices. The future net cash flow estimates could be materially different if other assumptions were used. At December 31 Total United States Europe Africa (Millions of dollars) Asia and Other 2009 Future revenues ...Less...

  • Page 106
    ... in prices and production costs applicable to future production ...Net change in estimated future development costs ...Extensions and discoveries (including improved recovery) of oil and gas reserves, less related costs ...Revisions of previous oil and gas reserve estimates ...Net purchases (sales...

  • Page 107
    ... in Equatorial Guinea and the United States. (d) Includes after-tax gains of $101 million primarily relating to the resolution of a royalty dispute. (e) Includes after- tax charges of $34 million for the repurchase of bonds and $10 million for pension plan settlements related to employee retirements...

  • Page 108
    ...'s definitive proxy statement for the annual meeting of stockholders to be held on May 5, 2010. Information regarding executive officers is included in Part I hereof. The Corporation has adopted a Code of Business Conduct and Ethics applicable to the Corporation's directors, officers (including...

  • Page 109
    .... Item 14. Principal Accounting Fees and Services Information relating to this item is incorporated by reference to "Ratification of Selection of Independent Auditors" from the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 5, 2010. PART IV Item 15...

  • Page 110
    ...Awards under Registrant's 2008 Long Term Incentive Plan. Compensation program description for non-employee directors, incorporated by reference to Item 1.01 of Form 8-K of Registrant dated January 1, 2007. Amended and Restated Change of Control Termination Benefits Agreement dated as of May 29, 2009...

  • Page 111
    ... Mr. Walker's participation in the Hess Corporation Pension Restoration Plan incorporated by reference to Exhibit 10(16) of Form 10-K of Registrant for the fiscal year ended December 31, 2001. Agreement between Registrant and Gregory P. Hill relating to his compensation and other terms of employment...

  • Page 112
    ... this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ JOHN B. HESS John B. Hess Director, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Director February...

  • Page 113
    ... HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2009, 2008 and 2007 Additions Charged Deductions Charged to Costs from to Other and Reserves Accounts Expenses (In millions) Description Balance January 1, Balance December 31, 2009...

  • Page 114
    ...to the Commission a copy of any instruments defining the rights of holders of long-term debt of Registrant and its subsidiaries upon request. Extension and Amendment Agreement between the Government of the Virgin Islands and Hess Oil Virgin Islands Corp. incorporated by reference to Exhibit 10(4) of...

  • Page 115
    ...Awards under Registrant's 2008 Long Term Incentive Plan. Compensation program description for non-employee directors, incorporated by reference to Item 1.01 of Form 8-K of Registrant dated January 1, 2007. Amended and Restated Change of Control Termination Benefits Agreement dated as of May 29, 2009...

  • Page 116
    ... or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350). Letter report of DeGolyer and MacNaughton, Independent Petroleum Engineering Consulting Firm, dated January 15, 2010, on proved reserves audit as of December 31, 2009 of...

  • Page 117
    ... Name of Company Jurisdiction Hess Energy Exploration Limited ...Hess Limited ...Amerada Hess Production Gabon ...Hess (Thailand) Limited ...Hess Oil and Gas Holdings Inc...Hess Oil Company of Thailand (JDA) Limited ...Hess Equatorial Guinea Inc...Hess International Holdings Limited...Hess...

  • Page 118
    ... consolidated financial statements and schedule of Hess Corporation and consolidated subsidiaries and the effectiveness of internal control over financial reporting of Hess Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2009. New York, New York February 26...

  • Page 119
    ..., summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By John B. Hess Chairman of the Board and Chief Executive Officer Date...

  • Page 120
    ...31(2) I, John P. Rielly, certify that: 1. I have reviewed this annual report on Form 10-K of Hess Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the...

  • Page 121
    ... Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. By John B. Hess Chairman of the Board and Chief Executive Officer Date: February 26 , 2010

  • Page 122
    ... with the Annual Report of Hess Corporation (the Corporation) on Form 10-K for the period ending December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John P. Rielly, Senior Vice President and Chief Financial Officer of the Corporation, certify...

  • Page 123
    ...its 2009 Form 10-K. OPERATING OFFICES Exploration and Production Hess Corporation One Allen Center 500 Dallas Street Houston, Texas 77002 Hess Limited The Adelphi Building 1-11 John Adam Street London WC2N 6AG England Marketing and Refining Hess Corporation 1 Hess Plaza Woodbridge, New Jersey 07095...

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    1185 Avenue of the Americas New York, New York 10036 www.hess.com