Hess 2014 Annual Report Download - page 45

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Africa: Crude oil production in Africa was lower in 2014 compared to 2013, and from 2013 to 2012, primarily due to
the shutdown of the Es Sider terminal in Libya in the third quarter of 2013, following civil unrest in the country. In
December 2014 the Libyan National Oil Company declared force majeure with respect to the Waha fields and production is
currently shut-in. The decline from 2013 compared to 2012 was also due to lower production from the Okume Complex in
offshore Equatorial Guinea, which was partially offset by new production from the Ceiba Field.
Asia and Other: Crude oil production was lower in 2014 compared to 2013, largely as a result of the divestiture of the
Corporation’s interests in the Pangkah Field in Indonesia in January 2014 and the Corporation’s interest in the Azeri-Chirag-
Guneshli (ACG) fields, Azerbaijan in March 2013. Natural gas production was lower in 2014 compared to 2013 following
the Corporation’s divestiture of its interests in Indonesia and Thailand in 2014 and lower production from the Joint
Development Area of Malaysia/Thailand (JDA), which was partially offset by a full year of production from the North Malay
Basin. Crude oil production was lower in 2013 compared to 2012 mainly due to the sale in March 2013 of the Corporation’s
interest in the ACG fields. Natural gas production was lower in 2013 compared to 2012, mainly due to lower production
entitlement at the JDA together with lower production at the Pangkah Field in Indonesia.
Sales Volumes: The Corporation’s worldwide sales volumes were as follows:
2014 2013 2012
(In thousands)
Crude oil - barrels ............................................................................................. 80,869 82,402 101,770
N
atural gas liquids - barrels .............................................................................. 8,793 6,244 7,138
N
atural gas - mcf .............................................................................................. 187,381 206,122 225,607
Barrels of oil equivalent* .................................................................................. 120,892 123,000 146,510
Crude oil - barrels per day ................................................................................ 222 226 278
N
atural gas liquids - barrels per day ................................................................. 24 17 19
N
atural gas - mcf per day .................................................................................. 513 565 616
Barrels of oil equivalent per day* ..................................................................... 331 337 400
* Reflects natural gas production converted on the basis of relative energy content (six mcf equals one barrel). Barrel of oil equivalence does not
necessarily result in price equivalence as the equivalent price of natural gas on a barrel of oil equivalent basis has been substantially lower than the
corresponding price for crude oil over the recent past. In addition, natural gas liquids do not sell at prices equivalent to crude oil. See the average
selling prices on page 28.
Cost of Products Sold: Cost of products sold is mainly comprised of costs relating to the purchases of crude oil, natural
gas liquids and natural gas from the Corporation’s partners in Hess operated wells or other third parties. Cost of products
sold in 2014 was comparable to 2013 as a result of increased volumes purchased from partners in wells operated by the
Corporation being offset by lower purchases from third parties. The increase in Cost of products sold in 2013 compared with
2012 principally reflected higher volumes of crude oil purchases from third parties.
Cash Operating Costs: Cash operating costs, consisting of Operating costs and expenses, Production and severance taxes
and General and administrative expenses, decreased by approximately $330 million in 2014 compared with 2013 and
decreased by approximately $200 million in 2013 compared with 2012. The decrease in 2014 compared to 2013 primarily
reflects lower production taxes and operating costs following the divestitures of Indonesia and Thailand assets in early 2014
and the Corporation’s interests in Russia in April 2013, as well as lower employee costs. The decrease in 2013 was due to
lower production taxes following the sale of the Corporation’s Russian operations, and reductions in transportation costs,
lease operating expenses and employee costs, which were partially offset by severance charges and other exit costs incurred
as part of the Corporation’s transformation to a more focused E&P company.
Depreciation, Depletion and Amortization: Depreciation, depletion and amortization charges increased by approximately
$540 million in 2014 and decreased by $182 million in 2013, compared with the corresponding amounts in prior years. The
increase in 2014 was primarily associated with higher production volumes from the Bakken, Utica, Valhall, and North Malay
Basin, each of which had a DD&A rate higher than the portfolio average in 2014. The decrease in 2013 largely reflects asset
sales and the mix of production volumes.
Excluding items affecting comparability of earnings between periods in the table below, cash operating costs per barrel of
oil equivalent (boe) were $21.03 in 2014, $22.63 in 2013 and $20.63 in 2012 and depreciation, depletion and amortization
costs per boe were $26.68 in 2014, $21.61 in 2013 and $19.20 in 2012. Total production unit costs were $47.71 per boe in
2014, $44.24 per boe in 2013 and $39.83 per boe in 2012.