Hess 2014 Annual Report Download - page 58

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Fair value measurements based on Level 2 inputs: Measurements derived indirectly from observable inputs or from
quoted prices from markets that are less liquid are considered Level 2. Measurements based on Level 2 inputs include
over-the-counter derivative instruments that are priced on an exchange traded curve but have contractual terms that are not
identical to exchange traded contracts.
Fair value measurements based on Level 3 inputs: Measurements that are least observable are estimated from related
market data determined from sources with little or no market activity for comparable contracts or are positions with longer
durations. Fair values determined using discounted cash flows and other unobservable data are also classified as Level 3.
Environment, Health and Safety
The Corporation’s long term vision and values provide a foundation for how we do business and define our commitment to
meeting the highest standards of corporate citizenship and creating a long lasting positive impact on the communities where
we do business. The Corporation’s strategy is reflected in its environment, health, safety and social responsibility (EHS &
SR) policies and by a management system framework that helps protect the Corporation’s workforce, customers and local
communities. The Corporation’s management systems are intended to promote internal consistency, adherence to policy
objectives and continual improvement in EHS & SR performance. Improved performance may, in the short-term, increase
the Corporation’s operating costs and could also require increased capital expenditures to reduce potential risks to assets,
reputation and license to operate. In addition to enhanced EHS & SR performance, improved productivity and operational
efficiencies may be realized from investments in EHS & SR. The Corporation has programs in place to evaluate regulatory
compliance, audit facilities, train employees, prevent and manage risks and emergencies and to generally meet corporate
EHS & SR goals and objectives.
The Corporation recognizes that climate change is a global environmental concern. The Corporation assesses, monitors
and takes measures to reduce our carbon footprint at existing and planned operations. The Corporation is committed to
complying with all Greenhouse Gas (GHG) emissions mandates and the responsible management of GHG emissions at its
facilities.
The Corporation will have continuing expenditures for environmental assessment and remediation. Sites where corrective
action may be necessary include onshore exploration and production facilities, sites from discontinued operations as to which
the Corporation retained liability and, although not currently significant, “Superfund” sites where the Corporation has been
named a potentially responsible party.
The Corporation accrues for environmental assessment and remediation expenses when the future costs are probable and
reasonably estimable. At year-end 2014, the Corporation’s reserve for estimated remediation liabilities was approximately
$80 million. The Corporation expects that existing reserves for environmental liabilities will adequately cover costs to assess
and remediate known sites. The Corporation’s remediation spending was approximately $12 million in 2014, $16 million in
2013 and $19 million in 2012. The level of other expenditures to comply with federal, state, local and foreign country
environmental regulations is difficult to quantify as such costs are captured as mostly indistinguishable components of the
Corporation’s capital expenditures and operating expenses.
Forward-looking Information
Certain sections of this Annual Report on Form 10-K, including Business and Properties, Management’s Discussion and
Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk,
include references to the Corporation’s future results of operations and financial position, liquidity and capital resources,
capital expenditures, asset sales, oil and gas production, tax rates, debt repayment, hedging, derivative, market risk and
environmental disclosures, off-balance sheet arrangements and contractual obligations and contingencies, which include
forward-looking information. These sections typically include statements with words such as “anticipate”, “estimate”,
“expect”, “forecast”, “guidance”, “could”, “may”, “should”, “would” or similar words, indicating that future outcomes are
uncertain. Forward-looking disclosures are based on the Corporation’s current understanding and assessment of these
activities and reasonable assumptions about the future. Actual results may differ from these disclosures because of changes
in market conditions, government actions and other factors. For more information regarding the factors that may cause the
Corporation’s results to differ from these statements, see Item 1A. Risk Factors Related to Our Business and Operations.