Hess 2014 Annual Report Download - page 30

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business, or legal interests or goals that are inconsistent with ours, and therefore decisions may be made which are not what
we believe is in our best interest. Moreover, parties to these agreements may be unable to meet their economic or other
obligations and we may be required to fulfill those obligations alone. In either case, the value of our investment may be
adversely affected.
We are subject to changing laws and regulations and other governmental actions that can significantly and
adversely affect our business. Federal, state, local, territorial and foreign laws and regulations relating to tax increases and
retroactive tax claims, disallowance of tax credits and deductions, expropriation or nationalization of property, mandatory
government participation, cancellation or amendment of contract rights, imposition of capital controls or blocking of funds,
changes in import and export regulations, limitations on access to exploration and development opportunities, anti-bribery or
anti-corruption laws, as well as other political developments may affect our operations. We transport some of our crude oil
production, particularly from the Bakken shale oil play, by rail. Recent rail accidents have raised public awareness of rail
safety and resulted in heightened regulatory scrutiny. We own our own fleet of tank cars that exceed the current federal
standards for construction and safety. We expect that in 2015, the Department of Transportation will issue new standards for
tank car design which may require us to retrofit our existing tank cars. Depending on the requirements of the regulation,
changes in tank car design and limitations on the availability of shop capacity to undertake retrofits, as well as other possible
regulations aimed at increasing rail safety, may lead to a significant increase in the costs of transporting crude oil and other
hydrocarbons by rail and otherwise adversely affect our operations.
Political instability in areas where we operate can adversely affect our business. Some of the international areas in
which we operate, and the partners with whom we operate, are politically less stable than other areas and partners and may be
subject to civil unrest, conflict, insurgency, corruption, security risks and labor unrest. Political and civil unrest in North
Africa and the Middle East has affected and may affect our operations in these areas as well as oil and gas markets generally.
The threat of terrorism around the world also poses additional risks to the operations of the oil and gas industry.
Our oil and gas operations are subject to environmental risks and environmental laws and regulations that can
result in significant costs and liabilities. Our oil and gas operations, like those of the industry, are subject to environmental
risks such as oil spills, produced water spills, gas leaks and ruptures and discharges of substances or gases that could expose
us to substantial liability for pollution or other environmental damage. Our operations are also subject to numerous U.S.
federal, state, local and foreign environmental laws and regulations. Non-compliance with these laws and regulations may
subject us to administrative, civil or criminal penalties, remedial clean-ups and natural resource damages or other liabilities.
In addition, increasingly stringent environmental regulations have resulted and will likely continue to result in higher capital
expenditures and operating expenses for us and the oil and gas industry in general. Similarly, the Corporation has material
legal obligations to dismantle, remove and abandon production facilities and wells that will occur many years in the future, in
most cases. These estimates may be impacted by future changes in regulations and other uncertainties.
Concerns have been raised in certain jurisdictions where we have operations concerning the safety and environmental
impact of the drilling and development of shale oil and gas resources, particularly hydraulic fracturing, water usage, flaring of
associated natural gas and air emissions. While we believe that these operations can be conducted safely and with minimal
impact on the environment, regulatory bodies are responding to these concerns and may impose moratoriums and new
regulations on such drilling operations that would likely have the effect of prohibiting or delaying such operations and
increasing their cost.
Climate change initiatives may result in significant operational changes and expenditures, reduced demand for our
products and adversely affect our business. We recognize that climate change is a global environmental concern.
Continuing political and social attention to the issue of climate change has resulted in both existing and pending international
agreements and national, regional or local legislation and regulatory measures to limit greenhouse gas emissions. These
agreements and measures may require significant equipment modifications, operational changes, taxes, or purchase of
emission credits to reduce emission of greenhouse gases from our operations, which may result in substantial capital
expenditures and compliance, operating, maintenance and remediation costs. In addition, our production is used to produce
petroleum fuels, which through normal customer use may result in the emission of greenhouse gases. Regulatory initiatives
to reduce the use of these fuels may reduce our sales of crude oil and other hydrocarbons. The imposition and enforcement of
stringent greenhouse gas emissions reduction targets could severely and adversely impact the oil and gas industry and
significantly reduce the value of our business.
Our industry is highly competitive and many of our competitors are larger and have greater resources than we
have. The petroleum industry is highly competitive and very capital intensive. We encounter competition from numerous
companies in each of our activities, including acquiring rights to explore for crude oil and natural gas. Many competitors,