Hess 2014 Annual Report Download - page 52

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Future Capital Requirements and Resources
The Corporation anticipates investing approximately $4.7 billion in capital and exploratory expenditures in 2015 compared
to $5.6 billion in 2014. Based on current strip crude oil prices, the Corporation forecasts in 2015 a significant net loss and net
cash flow deficit after funding planned capital expenditures, dismantlement obligations, pension contributions, dividends and
any share repurchases under its Board authorized plan. The Corporation expects to fund its 2015 net cash flow deficit with
existing cash on hand of $2.4 billion at December 31, 2014 and, if necessary, borrowings under its long-term credit facility.
Crude oil and natural gas prices are volatile and difficult to predict. In addition, unplanned increases in the Corporation’s
capital expenditure program could occur. The Corporation plans to preserve its financial flexibility and to improve its cash
flow by pursuing cost reductions from vendors, significantly moderating stock repurchases compared with 2014, and
depending on where crude oil prices trend, potentially further reducing its planned capital program. In addition, should
needs dictate, the Corporation may also access other sources of liquidity by utilizing other existing uncommitted credit
facilities, issuing debt and equity securities, and/or pursuing further asset sales.
The Corporation held $1.1 billion of its year-end 2014 total cash and cash equivalents of $2.4 billion outside of the U.S.
and has the ability to bring its December 31, 2014 international cash balance back to the U.S. without triggering a U.S. cash
tax liability.
The table below summarizes the capacity, usage, and available capacity of the Corporation’s borrowing and letter of credit
facilities at December 31, 2014:
Expiration Date Capacity Borrowings
Letters of
Credit
Issued Total Used
Available
Capacity
(In millions)
Revolving credit facility ................................... January 2020 $ 4,000 $
—
$
—
$
—
$ 4,000
Committed lines ............................................... Various* 1,175
—
25 25 1,150
Uncommitted lines ........................................... Various* 372
—
372 372
—
Total .............................................................. $ 5,547 $
—
$ 397 $ 397 $ 5,150
* Committed and uncommitted lines have expiration dates through 2020.
The Corporation’s $397 million in letters of credit outstanding at December 31, 2014 were primarily issued to satisfy
margin requirements. See also Note 21, Financial Risk Management and Trading Activities in the Notes to the Consolidated
Financial Statements.
At December 31, 2014, the Corporation had a $4 billion syndicated revolving credit facility with a maturity date of April
2016. In January 2015, the Corporation entered into a new $4 billion five-year credit agreement with a maturity date of
January 2020. This facility can be used for borrowings and letters of credit. Borrowings on the new facility bear interest at
1.075% above the London Interbank Offered Rate. A 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 Corporation’s long-term debt agreements, including the revolving credit facility, contain financial covenants that
restrict the amount of total borrowings and secured debt. The most restrictive of these covenants allow the Corporation to
borrow up to an additional $5.6 billion of secured debt at December 31, 2014.
The Corporation also has a shelf registration under which it may issue additional debt securities, warrants, common stock
or preferred stock. Promptly after filing this Annual Report on Form 10-K, as a result of the Corporation’s existing shelf
registration statement expiring on February 27, 2015, the Corporation anticipates filing a new shelf registration statement
under the Securities Act of 1933, as amended, under which it may issue, among other things, additional debt securities,
warrants, common stock or preferred stock.
Credit Ratings
There are three major credit rating agencies that rate the Corporation’s debt. All three agencies have currently assigned an
investment grade rating with a stable outlook 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 financial risk management counterparties, are
subject to adjustment if the Corporation’s credit rating changes.