Hess 2014 Annual Report Download - page 80

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65
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
65
9. Asset Retirement Obligations
The following table describes changes to the Corporation’s asset retirement obligations:
2014 2013
(In millions)
Asset retirement obligations at January 1 ........................................................................................................
$ 2,772 $ 2,661
Liabilities incurred ......................................................................................................................................
63 42
Liabilities settled or disposed of .................................................................................................................
(420) (576)
Accretion expense .......................................................................................................................................
136 129
Revisions of estimated liabilities ................................................................................................................
263 573
Foreign currency translation .......................................................................................................................
(91) (57)
Asset retirement obligations at December 31 ..................................................................................................
2,723 2,772
Less: Current obligations .................................................................................................................................
442 523
Long-term obligations at December 31............................................................................................................
$ 2,281 $ 2,249
The revisions in 2014 and 2013 primarily reflect changes in the expected scope of operations and updates to service and equipment
costs. The 2013 revision also reflects increases in the time expected to complete dismantlement activities.
10. Debt and Interest Expense
Long-term debt at December 31 consisted of the following:
2014 2013
(In millions)
Fixed-rate public notes:
7.0% due 2014 ............................................................................................................................................. $
—
$ 250
1.3% due 2017 ............................................................................................................................................. 300
—
8.1% due 2019 ............................................................................................................................................. 999 998
3.5% due 2024 ............................................................................................................................................. 298
—
7.9% due 2029 ............................................................................................................................................. 696 695
7.3% due 2031 ............................................................................................................................................. 747 747
7.1% due 2033 ............................................................................................................................................. 598 598
6.0% due 2040 ............................................................................................................................................. 745 745
5.6% due 2041 ............................................................................................................................................. 1,242 1,242
Total fixed-rate public notes ........................................................................................................................ 5,625 5,275
Financing obligations associated with floating production system ................................................................... 331 296
Other fixed-rate notes, weighted average rate 12.9% .......................................................................................
—
135
Project lease financing, weighted average rate 5.1% ........................................................................................
—
60
Fair value adjustments - interest rate hedging ................................................................................................... 31 30
Other debt .........................................................................................................................................................
—
2
Total debt ..................................................................................................................................................... 5,987 5,798
Less: Short-term debt and current maturities of long-term debt ....................................................................... 68 378
Total long-term debt ..................................................................................................................................... $ 5,919 $ 5,420
At December 31, 2014, the Corporation had a $4 billion syndicated revolving credit facility that is unused and has a maturity date
of April 2016. This facility can be used for borrowings and letters of credit. Borrowings on the facility bear interest at 1.25% above
the London Interbank Offered Rate. A fee of 0.25% 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. In January 2015, the Corporation entered into a new
five-year credit agreement that replaces the previous agreement. See Note 22, Subsequent Events.
In June 2014, the Corporation issued $600 million of unsecured, fixed-rate notes ($598 million net of discount) comprising $300
million with a coupon of 1.3% and scheduled to mature in June 2017 as well as $300 million with a coupon of 3.5% and scheduled to
mature in July 2024. In 2014, the Corporation repaid $590 million of debt, including $250 million of unsecured, fixed-rate notes,
$249 million for the payment of various lease obligations primarily to retire retail gasoline station leases and $74 million assumed in
the acquisition of WilcoHess.
During 2013, the Corporation repaid a net amount of $2,348 million under available credit facilities, which consisted of $758
million from its syndicated revolving credit facility, $990 million from the Corporation’s short-term credit facilities and $600 million
from its asset-backed credit facility. The Corporation recorded capital lease obligations totaling $98 million in conjunction with its
commitment to acquire 50 existing Hess retail gasoline stations that were previously held under operating leases. The Corporation
repaid $136 million of other debt in 2013.
The Corporation recorded a non-cash net increase in debt of $68 million in 2014 and $116 million in 2013 related to progress on
construction of a floating production system for the Tubular Bells Field, which commenced production in the fourth quarter of 2014.