Hess 2014 Annual Report Download - page 101

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HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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Trade, which included the receivables for the downstream businesses, were concentrated as follows: Integrated Oil Companies —
45%, Refiners — 18%, Financial Institutions — 14% Government Entities — 8%, and Trading Companies — 7%. The Corporation
reduces its risk related to certain counterparties by using master netting arrangements and requiring collateral, generally cash or letters
of credit. The Corporation records the cash collateral received or posted as an offset to the fair value of derivatives executed with the
same counterparty. At December 31, 2014 and December 31, 2013, the Corporation held cash from counterparties of $37 million and
$79 million, respectively. The Corporation posted cash to counterparties at December 31, 2014 and December 31, 2013, of
$302 million and $168 million, respectively.
The Corporation had outstanding letters of credit totaling $397 million and $410 million at December 31, 2014 and December 31,
2013, respectively, primarily issued to satisfy margin requirements (approximately $240 million and $302 million related to
discontinued operations at December 31, 2014 and December 31, 2013, respectively). Certain of the Corporation’s agreements also
contain contingent collateral provisions that could require the Corporation to post additional collateral if the Corporation’s credit
rating declines. As of December 31, 2014 and 2013, the net liability related to both realized and unrealized derivative contracts with
contingent collateral provisions was $130 million and approximately $281 million, respectively. As of December 31, 2014, the cash
collateral posted on those derivatives was $17 million compared to $31 million at December 31, 2013. At December 31, 2014 and
2013, all three major credit rating agencies that rate the Corporation’s debt had assigned an investment grade rating. If one of the
three agencies were to downgrade the Corporation’s rating below investment grade, the Corporation would be required to post
additional collateral of approximately $55 million at December 31, 2014 and approximately $134 million at December 31, 2013.
22. Subsequent Events
In January 2015, the Corporation entered into a new $4 billion syndicated revolving credit facility that matures in January 2020.
The new facility, which replaced the $4 billion facility that was scheduled to mature in April 2016, can be used for borrowings and
letters of credit. Borrowings on the facility bear interest at 1.075% above the London Interbank Offered Rate. A facility fee of 0.175%
per annum is also payable on the amount of the facility. The interest rate and facility fee are subject to adjustment if the Corporation's
credit rating changes. The restrictions on the amount of total borrowings and secured debt are substantially similar to the previous
facility.
In February 2015, the Corporation sold its interest in the energy trading joint venture, HETCO, which was renamed Hartree
Partners, LP. Pursuant to the terms of the sale, Hartree is permitted to continue to utilize the Corporation’s guarantees issued in favor
of Hartree's existing counterparties until November 12, 2015, provided that new trades are for a period of one year or less, comply
with certain credit requirements, and net exposures remain within VAR limits previously applied by the Corporation. The Corporation
has the right to seek reimbursement from Hartree and a separate Hartree credit support facility upon any counterparty draw on the
applicable guarantee from the Corporation.