AMERADA HESS CORP
10-Q, 1994-11-14
PETROLEUM REFINING
Previous: AMDAHL CORP, 10-Q, 1994-11-14
Next: AMERICAN AIRLINES INC, 8-K, 1994-11-14



<PAGE>   1
                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                            ----------------------

                                  FORM 10-Q

            /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the quarter ended September 30, 1994

                                      or
            / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

           For the transition period from           to
                                         -----------   ----------

                        COMMISSION FILE NUMBER 1-1204

                            ----------------------

                           AMERADA HESS CORPORATION
            (Exact name of registrant as specified in its charter)


                                   DELAWARE
        (State or other jurisdiction of incorporation or organization)


                                  13-4921002
                   (I.R.S. employer identification number)

                 1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y.
                   (Address of principal executive offices)
                                    10036
                                  (Zip Code)


    (Registrant's telephone number, including area code is (212) 997-8500)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes    x   No
                                                  ------    -----


  At September 30, 1994, 92,972,355 shares of Common Stock were outstanding.
<PAGE>   2

        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

             AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                        STATEMENT OF CONSOLIDATED INCOME
                     (in thousands, except per share data)




<TABLE>
<CAPTION>
                                                    Three Months                   Nine Months    
                                                 Ended September 30             Ended September 30                             
                                               -----------------------      -------------------------
                                                  1994         1993            1994          1993                                
                                               ---------    ----------      ---------    ------------
<S>                                            <C>          <C>             <C>          <C>
REVENUES                                                                                                                          
  Sales (excluding excise taxes) and                                                                                              
     other operating revenues                  $1,494,042   $1,248,867      $4,839,896   $   4,228,777                            
  Non-operating revenues                           51,042          888          70,328           6,330                            
                                               ----------   ----------       ---------   -------------
               Total revenues                   1,545,084    1,249,755       4,910,224       4,235,107                            
                                               ----------   ----------       ---------   -------------
                                                                                                                                  
COSTS AND EXPENSES                                                                                                                
  Cost of products sold and operating expenses  1,024,745      817,537       3,226,332       3,046,756                            
  Exploration expenses, including dry holes        62,168       78,609         184,542         207,098                            
                                                                                                                                  
  Selling, general and administrative expenses    144,357      141,499         441,064         412,745                            
  Interest expense                                 62,127       36,273         182,421          96,783                            
  Depreciation, depletion and amortization        207,753      169,567         659,793         512,191                            
                                                                                                                                  
  Lease impairment                                 11,305       13,931          36,839          41,092                            
  Provision for income taxes                       34,541       14,749         114,220          82,475                            
                                               ----------   ----------       ---------   -------------
               Total costs and expenses         1,546,996    1,272,165       4,845,211       4,399,140                            
                                               ----------   ----------       ---------   -------------     
INCOME (LOSS) BEFORE CUMULATIVE                                                                                                   
     EFFECT OF ACCOUNTING CHANGE                   (1,912)     (22,410)         65,013        (164,033)                           
                                                                                                                                  
CUMULATIVE EFFECT OF CHANGE IN                                                                                                    
     ACCOUNTING FOR INCOME TAXES                  - -          - -             - -              29,459                            
                                               ----------   ----------       ---------   -------------
NET INCOME (LOSS)                              $   (1,912)  $  (22,410)     $   65,013   $    (134,574)                           
                                               ==========   ==========      ==========   =============
INCOME (LOSS) PER SHARE BEFORE                                                                                                    
     ACCOUNTING CHANGE                         $     (.02)  $     (.24)     $      .70   $       (1.77)                         
                                               ==========   ==========      ==========   =============
                                                                                                                                  
NET INCOME (LOSS) PER SHARE                    $     (.02)  $     (.24)     $      .70   $       (1.45)                         
                                               ==========   ==========      ==========   =============
                                                                                                                                  
WEIGHTED AVERAGE NUMBER OF SHARES                                                                                                 
     OUTSTANDING (FULLY DILUTED BASIS)             92,994       92,591          92,961          92,597                            
                                                                                                                                  
COMMON STOCK DIVIDENDS PER SHARE               $      .15   $      .15      $      .45   $         .45
</TABLE>                                                        


         See accompanying notes to consolidated financial statements.

                                       1


<PAGE>   3

                    PART I - FINANCIAL INFORMATION (CONT'D.)

             AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                           (in thousands of dollars)

                                  A S S E T S
<TABLE>
<CAPTION>
                                                          September 30,    December 31,
                                                              1994             1993
                                                          ------------     ------------
<S>                                                       <C>              <C>
CURRENT ASSETS
  Cash and cash equivalents                               $     36,366     $     79,635
  Accounts receivable                                          477,527          554,987
  Inventories                                                1,009,386          853,393
  Prepaid expenses                                             180,923          200,151
                                                          ------------     ------------
               Total current assets                          1,704,202        1,688,166
                                                          ------------     ------------

INVESTMENTS AND ADVANCES                                       133,898          137,161
                                                          ------------     ------------

PROPERTY, PLANT AND EQUIPMENT
  Total - at cost                                           14,244,286       13,787,240
  Less reserves for depreciation, depletion,
     amortization and lease impairment                       7,750,108        7,052,328
                                                          ------------     ------------
               Property, plant and equipment - net           6,494,178        6,734,912
                                                          ------------     ------------

OTHER ASSETS                                                   101,420           81,307
                                                          ------------     ------------

TOTAL ASSETS                                              $  8,433,698     $  8,641,546
                                                          ============     ============

        L I A B I L I T I E S   A N D   S T O C K H O L D E R S '   E Q U I T Y

CURRENT LIABILITIES
  Accounts payable - trade                                $    284,808     $    329,648
  Accrued liabilities                                          563,361          613,791
  Deferred revenue                                              20,566          128,566
  Notes payable                                                 16,000          117,900
  Taxes payable                                                154,152          106,893
  Current maturities of long-term debt                         179,200          146,342
                                                          ------------     ------------
               Total current liabilities                     1,218,087        1,443,140
                                                          ------------     ------------

LONG-TERM DEBT                                               3,227,892        3,423,680
                                                          ------------     ------------

CAPITALIZED LEASE OBLIGATIONS                                   90,203           91,094
                                                          ------------     ------------

DEFERRED LIABILITIES AND CREDITS
  Deferred income taxes                                        544,285          462,273
  Other                                                        228,904          192,448
                                                          ------------     ------------
               Total deferred liabilities and credits          773,189          654,721
                                                          ------------     ------------

STOCKHOLDERS' EQUITY
  Preferred stock, par value $1.00
     Authorized - 20,000,000 shares for issuance in series     - -              - -
  Common stock, par value $1.00
     Authorized - 200,000,000 shares
     Issued - 92,972,355 shares at September 30, 1994;
        92,586,855 shares at December 31, 1993                  92,972           92,587
  Capital in excess of par value                               742,460          725,443
  Retained earnings                                          2,472,513        2,449,325
  Equity adjustment from foreign currency translation         (183,618)        (238,444)
                                                          ------------     ------------
               Total stockholders' equity                    3,124,327        3,028,911
                                                          ------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $  8,433,698     $  8,641,546
                                                          ============     ============
</TABLE>

         See accompanying notes to consolidated financial statements.
                                       
                                       2

<PAGE>   4

                    PART I - FINANCIAL INFORMATION (CONT'D.)

             AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      STATEMENT OF CONSOLIDATED CASH FLOWS
                         Nine Months Ended September 30
                                 (in thousands)


<TABLE>
<CAPTION>

                                                                               1994           1993     
                                                                           ----------     ------------
<S>                                                                        <C>            <C>          
CASH FLOWS FROM OPERATING ACTIVITIES                                                                   
  Net income (loss)                                                        $   65,013     $  (134,574) 
  Adjustments to reconcile net income (loss) to net cash                                               
     provided by operating activities                                                                  
          Depreciation, depletion, amortization and lease impairment          696,632         553,283  
          Exploratory dry hole costs                                          113,023         127,303  
          Changes in operating assets and liabilities                        (173,961)        (62,743) 
          Deferred income taxes and other items                               (27,245)        (15,685) 
                                                                           ----------     -----------                            
               Net cash provided by operating activities                      673,462         467,584  
                                                                           ----------     -----------                            
                                                                                                       
CASH FLOWS FROM INVESTING ACTIVITIES                                                                   
  Capital expenditures                                                       (398,295)     (1,132,346) 
  Other, including proceeds from sales of property, plant and equipment        53,443           5,982  
                                                                           ----------     -----------                            
               Net cash used in investing activities                         (344,852)     (1,126,364) 
                                                                           ----------     -----------                            
                                                                                                       
                                                                                                       
CASH FLOWS FROM FINANCING ACTIVITIES                                                                   
  Increase (decrease) in notes payable                                       (101,900)        123,902  
  Long-term borrowings                                                        266,795         595,454  
  Repayment of long-term debt and capitalized lease obligations              (483,760)        (93,989) 
  Cash dividends paid                                                         (55,712)        (41,611) 
                                                                           ----------     -----------                            
                                                                                                       
               Net cash provided by (used in) financing activities           (374,577)        583,756  
                                                                           ----------     -----------                            
                                                                                                       
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                         2,698           3,105  
                                                                           ----------     -----------                            
                                                                                                       
NET DECREASE IN CASH AND CASH EQUIVALENTS                                     (43,269)        (71,919) 
                                                                                                       
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                 79,635         141,014  
                                                                           ----------     -----------                            
                                                                                                       
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $   36,366     $    69,095  
                                                                           ==========     ===========
</TABLE> 



         See accompanying notes to consolidated financial statements.



                                       3
<PAGE>   5
                    PART I - FINANCIAL INFORMATION (CONT'D.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (in thousands of dollars)


Note 1  -    The financial statements included in this report reflect all
             normal and recurring adjustments which, in the opinion of
             management, are necessary for a fair presentation of the Company's
             consolidated financial position at September 30, 1994 and December
             31, 1993, and the consolidated results of operations for the three
             and nine-month periods ended September 30, 1994 and 1993, and the
             consolidated cash flows for the nine-month periods ended September
             30, 1994 and 1993.  The unaudited results of operations for the
             interim periods reported are not necessarily indicative of results
             to be expected for the year.

             Certain notes and other information have been condensed or omitted
             from these interim financial statements.  Such statements,
             therefore, should be read in conjunction with the consolidated
             financial statements and related notes included in the 1993 Annual
             Report to Stockholders, which have been incorporated by reference
             in the Corporation's Form 10-K for the year ended December 31,
             1993.

Note 2  -    Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                       September 30,         December 31,
                                                                          1994                  1993      
                                                                       -------------         -------------
                 <S>                                                   <C>                   <C>
                 Crude oil and other charge stocks                     $     308,893         $     299,015
                 Refined and other finished products                         576,015               436,633
                 Materials and supplies                                      124,478               117,745
                                                                       -------------         -------------
                     Total inventories                                 $   1,009,386         $     853,393
                                                                       =============         =============
</TABLE>

Note 3  -    In October 1994, the Corporation reached an agreement in principle
             with its lenders to replace existing revolving credit facilities
             in the United States and the United Kingdom (the "existing
             facilities") with new revolving credit facilities (the "new
             facilities").  The existing facilities have an aggregate capacity
             of $2,451,000 and an outstanding balance of $1,861,000 as of
             September 30, 1994.  A substantial portion of the existing
             facilities was due to be repaid in 1996 and 1997.

             Borrowing capacity under the new facilities consists of $1,400,000
             in the United States which becomes due in November 1999, and
             $800,000 of reducing revolving credit in the United Kingdom which
             begins to decline in 1999 and terminates in 2002.  The new
             facilities bear interest at .5% and .425% over the London
             Interbank Offered Rate on the United States and United Kingdom
             portion of the borrowings, respectively.  Commitment fees of .2%
             and .1875%, respectively, are required on the undrawn balances of
             the United States facility and the United Kingdom facility.
<PAGE>   6

                    PART I - FINANCIAL INFORMATION (CONT'D.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 4  -    The provision for income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                   Three months                             Nine months
                                                 ended Sept. 30                           ended Sept. 30
                                              -------------------------                -------------------------
                                                1994             1993                    1994             1993
                                              --------         --------                --------         --------
                 <S>                          <C>              <C>                     <C>              <C>
                 Current                      $ 49,770         $ 13,394                $ 98,475         $ 78,844
                 Deferred                      (15,229)           1,355                  15,745            3,631
                                              --------         --------                --------         --------
                     Total                    $ 34,541         $ 14,749                $114,220         $ 82,475
                                              ========         ========                ========         ========

</TABLE>

             On January 1, 1993, the Corporation changed its method of
             accounting for income taxes in accordance with FAS No. 109,
             Accounting for Income Taxes.  The cumulative effect of this
             accounting change at January 1, 1993 was to increase net income by
             $29,459 ($.32 per share).

Note 5  -    Foreign currency exchange transactions, reflected in selling,
             general and administrative expenses, amounted to losses of $2,223
             and $5,502, respectively, for the three and nine-month periods
             ended September 30, 1994, compared to a loss of $2,565 and a gain
             of $44 for the corresponding periods of 1993.  The net effect,
             after applicable income taxes, amounted to losses of $1,242 and
             $3,362, respectively, for the three and nine-month periods ended
             September 30, 1994, compared to losses of $2,619 and $1,056 for
             the corresponding periods of 1993.

Note 6 -     Interest cost related to certain long-term construction projects
             has been capitalized in accordance with FAS No. 34.  During the
             three and nine-month periods ended September 30, 1993, interest
             cost of $26,911 and $88,997, respectively, was capitalized.  There
             was no interest capitalized for the corresponding periods of 1994.

Note 7 -     The Corporation uses futures, forward, option and swap contracts
             to reduce the impact of volatility in the prices of crude oil,
             natural gas and refined products.  These contracts correlate to
             movements in the value of inventory and the prices of crude oil
             and natural gas, and as hedges, any gains or losses are recorded
             as part of the transaction hedged.  Net unrealized gains resulting
             from the Corporation's petroleum hedging activities were not
             material at September 30, 1994.


                                       5
<PAGE>   7
                    PART I - FINANCIAL INFORMATION (CONT'D.)


ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
             FINANCIAL CONDITION.


             RESULTS OF OPERATIONS

                   The results of operations for the third quarter of 1994
             amounted to a net loss of $2 million ($.02 per share) compared
             with a net loss of $22 million ($.24 per share) in the third
             quarter of 1993.  In the first nine months of 1994, the
             Corporation had net income of $65 million ($.70 per share)
             compared with a net loss of $135 million ($1.45 per share) in the
             first nine months of 1993.

                   The results for the third quarter of 1994 include a net gain
             of $41 million ($.44 per share) from the sale of the Corporation's
             interest in an undeveloped United Kingdom North Sea natural gas
             field.  The results for the first nine months of 1993 included
             income of $29 million ($.32 per share) from the cumulative effect
             of the change in accounting for income taxes required by Statement
             of Financial Accounting Standards No. 109 and a charge of $11
             million ($.11 per share) from the refinancing of long-term notes.

                   Following is a summary of net income by major operating
             activity (in millions):

<TABLE>
<CAPTION>
                                                                Three months                    Nine months
                                                               ended Sept. 30                 ended Sept. 30  
                                                              -------------------              -----------------
                                                               1994          1993             1994        1993 
                                                              ------        ------           ------       -----
             <S>                                             <C>            <C>              <C>           <C>
             Exploration and production                      $    65       $    12           $  132       $  107
             Refining and marketing                              (14)           (5)              70         (182)
             Corporate administration,
              including interest expense,
              and other operating activities                     (53)          (29)            (137)         (60)
                                                             -------       -------           ------      ------- 
                         Total                               $    (2)       $  (22)          $   65        $(135)
                                                             =======        ======           ======        ===== 

</TABLE>

                   Excluding the gain from the sale of the natural gas field 
             referred to above, earnings from exploration and production
             activities increased by $12 million in the third quarter of 1994
             and decreased by $16 million in the first nine months of 1994,
             compared with the corresponding periods of 1993.  The increase in
             the third quarter of 1994 was primarily due to higher United
             Kingdom crude oil and natural gas sales volumes, partially offset
             by lower crude oil and natural gas selling prices and sales volumes
             in the United States.  The decrease in exploration and production
             earnings in the nine months ended September 30, 1994 was primarily
             due to lower average worldwide crude oil selling prices.  The
             Corporation's average selling prices, including the effects of
             hedging, were as follows:
        




                                       6
<PAGE>   8
                    PART I - FINANCIAL INFORMATION (CONT'D.)


             RESULTS OF OPERATIONS (CONTINUED)


<TABLE>
<CAPTION>
                                                                 Three months                    Nine months
                                                                 ended Sept. 30                 ended Sept. 30  
                                                              --------------------           -------------------
                                                               1994          1993             1994         1993 
                                                              ------        ------           ------       ------
             <S>                                              <C>           <C>              <C>          <C>
             Crude oil and natural gas liquids
               (per barrel)
                  United States                               $15.67        $16.57           $15.06       $17.36
                  Foreign                                      16.20         16.25            15.76        17.58

             Natural gas (per Mcf)
                  United States                                 1.82          2.15             2.02         2.07
                  Foreign                                       1.72          1.54             1.75         1.60
</TABLE>

                   The Corporation's net daily worldwide crude oil and natural
             gas production was as follows:
<TABLE>
<CAPTION>
                                                                    Three months                     Nine months
                                                                   ended Sept. 30                   ended Sept. 30    
                                                               -----------------------          ---------------------
                                                                 1994           1993              1994         1993  
                                                               --------       --------          --------     --------
             <S>                                                <C>            <C>               <C>            <C>
             Crude oil and natural gas liquids
               (barrels per day)
                  United States                                  66,013         71,634            68,807         71,775
                  Foreign                                       167,630        136,954           180,928        135,004
                                                                -------        -------           -------        -------
                       Total                                    233,643        208,588           249,735        206,779
                                                                =======        =======           =======        =======

             Natural gas (Mcf per day)
                  United States                                 384,858        487,317           441,686        502,651
                  Foreign                                       321,793        270,634           402,545        353,405
                                                                -------        -------           -------        -------
                       Total                                    706,651        757,951           844,231        856,056
                                                                =======        =======           =======        =======


</TABLE>
                   The increase in foreign crude oil production resulted
             primarily from the Scott Field in the United Kingdom, which
             commenced production in September 1993.  United States natural gas
             production was lower as a result of natural field decline and
             voluntary production curtailments due to low natural gas prices.
             Natural gas production in Canada and the United Kingdom increased.

                   Increased depreciation, depletion and amortization charges
             and higher production expenses in the third quarter and nine
             months of 1994 were principally due to the increased United
             Kingdom crude oil and natural gas production.  Such charges are
             expected to remain at current levels consistent with the higher
             production.  Exploration expenses were lower in the third quarter
             and nine months of 1994, primarily in the United States,
             reflecting the Corporation's overall objective of restraining
             capital spending.  In the first nine months of 1994, selling,
             general and administrative expenses in the United States were
             higher, largely from expenses related to the further consolidation
             of exploration and production operations in Houston.  For the nine
             months ended September 30, 1994, foreign effective income tax
             rates were higher, principally due to the effect of the Petroleum
             Revenue Tax in the United Kingdom.





                                       7
<PAGE>   9
                    PART I - FINANCIAL INFORMATION (CONT'D.)


             RESULTS OF OPERATIONS (CONTINUED)


                   Future exploration and production earnings will be impacted
             by changes in crude oil and natural gas selling prices,
             exploration expenses, effective income tax rates and other
             factors.

                   Refining and marketing operations had a loss of $14 million
             in the third quarter of 1994 compared with a loss of $5 million in
             the third quarter of 1993.  The change was primarily due to lower
             margins on gasolines and distillates, reflecting competitive
             industry conditions.  In the first nine months of 1994, refining
             and marketing operations had income of $70 million compared with a
             loss of $182 million in the first nine months of 1993.  In spite
             of refined product selling prices that were approximately $1.00
             per barrel lower in the first nine months of 1994 than in the
             comparative period of 1993, refined product margins improved, as
             the cost of crude oil was significantly lower in 1994.  Earnings
             in the first nine months of 1994 benefited from the cold winter
             weather, which strengthened margins for distillates and residual
             fuel oils in the early part of the year.  Income taxes (benefits)
             were not recorded on a substantial portion of the 1994 income and
             1993 loss of refining and marketing operations, reflecting the net
             operating loss carryforward of a refining subsidiary.

                   The operation of the fluid catalytic cracking unit in the
             Virgin Islands has increased the Corporation's production of
             gasoline and contributed to improved operating results over the
             first nine months of 1994.  Total refined product sales volumes
             amounted to 126 million barrels in the first nine months of 1994
             compared with 99 million barrels in the corresponding period of
             1993.  Sales of gasoline were higher because of increased
             production from the Virgin Islands refinery.  Distillate sales
             also increased because of the marketing of premium diesel fuel.
             Refining and marketing earnings will continue to be volatile
             because of competitive industry conditions and supply and demand
             factors, including the effects of weather. 

                   Corporate administration, including interest expense, and
             other operating activities (principally transportation), had net
             expenses of $53 million in the third quarter of 1994 and $137
             million in the first nine months of 1994, compared with $29
             million and $60 million in the corresponding periods of 1993.  The
             results for the first nine months of 1993 include $29 million from
             the cumulative effect of the change in accounting for income taxes
             and a charge of $11 million from the refinancing of long-term
             notes.  The increase in Corporate expenses in 1994 was due to
             higher interest expense, since interest is no longer being
             capitalized on the Corporation's major construction projects,
             which are completed and in operation.

                   Consolidated sales and other operating revenues increased 
             by 20% in the third quarter of 1994 and 14% in the first nine
             months of 1994 compared with the corresponding periods of 1993. 
             The increases were primarily due to higher refined product sales
             volumes and the increased proportion of gasoline sales. The sale of
             the undeveloped natural gas field  in the United Kingdom in the
             third quarter of 1994 is reflected in non-operating revenues in the
             income statement.
        




                                       8
<PAGE>   10
                    PART I - FINANCIAL INFORMATION (CONT'D.)


             LIQUIDITY AND CAPITAL RESOURCES


                   Net cash provided by operating activities, including changes
             in operating assets and liabilities, amounted to $673 million in
             the first nine months of 1994 compared with $468 million in the
             first nine months of 1993.  The increase was primarily due to
             improved operating results.  Cash provided by operating activities
             exceeded capital expenditures of $398 million in the first nine
             months of 1994.  The excess cash flow was primarily used to repay
             debt.  In the first nine months of 1993, capital expenditures of
             $1,132 million exceeded cash flow, primarily because of spending
             on the Corporation's North Sea projects and the upgrading of the
             Virgin Islands refinery.

                   Total debt was $3,423 million at September 30, 1994 compared
             with $3,688 million at December 31, 1993.  The debt to total
             capitalization ratio was 52% at September 30, 1994 compared with
             nearly 55% at year-end 1993.  At September 30, 1994, the
             Corporation has additional borrowing capacity available under
             existing revolving credit agreements, principally in the United
             States and United Kingdom, of $672 million and additional unused
             lines of credit under uncommitted arrangements with banks of $710
             million.

                   The Corporation has reached an agreement in principle with
             lenders in the United States and the United Kingdom to refinance
             its revolving credit facilities.  The existing facilities have a
             capacity of $2,451 million at September 30,1994 ($1,861 million
             outstanding) and will be replaced with new facilities having a
             capacity of $2,200 million.  A substantial portion of the existing
             facilities was due to be repaid in 1996 and 1997.  The new
             facilities are due in 1999 and thereafter.  The borrowing 
             arrangements are more fully described in Note 3 to the financial 
             statements.

                   The Corporation uses futures, forward, option and swap
             contracts to mitigate the effect on its business of volatility in
             the prices of crude oil, natural gas and refined products.  At
             September 30, 1994, the Corporation has open forward sales 
             positions on approximately 13% of its anticipated worldwide crude 
             oil production over the next twelve months and has option 
             contracts, which result in varyiing degrees of protection against 
             declines in market prices, covering an additional 6% of crude oil 
             production.  The Corporation has open forword sales positions on
             approximately 3% of its anticipated United States natural gas 
             production for the next twelve months and has option contracts, 
             with varying degrees of price protection, covering an additonal 
             18% of its natural gas production. The Corporation has also 
             hedged approximately 8% of its annual natural gas purchase 
             requirements.  The Corporation has hedges (primarily short 
             futures and options) covering approximately 18% of its refining 
             and marketing inventories and has short positions covering the 
             sale of an additional 15% of refined products to be manufactured
             in the latter part of 1994 and early 1995.  The Corporation also 
             has hedged approximately 3% of its annual refinery crude oil 
             purchase requirements.  As market conditions change, the 
             Corporation will adjust its hedging strategies.  





                                       9
<PAGE>   11
                    PART I - FINANCIAL INFORMATION (CONT'D.)


             LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)


                   Capital expenditures in the first nine months of 1994
             amounted to $398 million compared with $1,132 million in the first
             nine months of 1993.  Capital expenditures in the first nine
             months of 1993 included $652 million related to the Corporation's
             three major projects.  The three major projects were the
             development of the Scott oil field and the Everest and Lomond
             natural gas fields and related facilities in the United Kingdom
             North Sea and the construction of the fluid catalytic cracking
             complex in the Virgin Islands, all of which were completed in 1993
             and are in operation.

                   Capital expenditures for the remainder of 1994 are estimated
             to be approximately $200 million and will be financed by
             internally generated funds.





                                       10
<PAGE>   12
                          PART II - OTHER INFORMATION



ITEM 1.      LEGAL PROCEEDINGS.

                   As reported in Registrant's Annual Report on Form 10-K for
             the fiscal year ended December 31, 1993, the Registrant is
             currently the subject of an investigation by U.S. Attorneys for
             federal judicial districts in New Jersey and the U.S. Virgin
             Islands and by the United States Environmental Protection Agency
             with respect to possible violations of federal environmental and 
             other laws and regulations in connection with hazardous waste 
             handling at the petroleum refinery in St. Croix, U.S. Virgin 
             Islands owned and operated by Registrant's wholly-owned 
             subsidiary, Hess Oil Virgin Islands Corp. ("HOVIC").
             That investigation apparently focuses on whether or not certain
             spent catalyst generated at the HOVIC refinery should have been
             managed as a hazardous waste under the Resource Conservation and
             Recovery Act ("RCRA"), and, if it should have been managed as a
             hazardous waste, whether or not such catalyst was stored beyond
             the time period permitted under RCRA and whether or not Registrant
             and/or HOVIC failed to comply with certain environmental reporting
             requirements related thereto.  The Registrant is also now the
             subject of an investigation by U.S. Attorneys for the federal
             judicial district in Arizona arising out of the shipment of such
             catalyst to a third party in Arizona.  This investigation
             apparently focuses on whether or not Registrant, HOVIC or such
             third party failed to comply in a timely manner with certain
             reporting obligations in connection with the shipment of such
             catalyst under the Comprehensive Environmental Response,
             Compensation, and Liability Act.  It is not possible at this time
             for Registrant to state what the outcome of these investigations
             will be, or, if any proceedings arising out of the investigations
             were to be commenced against the Registrant or HOVIC, what claims
             would be asserted or what relief would be sought.


ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K.

             (a)  Exhibits

                         None

             (b)  Reports on Form 8-K

                      The Registrant filed no report on Form 8-K during the 
                       three months ended September 30, 1994.
                                          




                                       11
<PAGE>   13
                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      AMERADA HESS CORPORATION
                                      (REGISTRANT)





                                      By /s/ Leon Hess                          
                                         ----------------------------
                                         LEON HESS
                                         CHAIRMAN OF THE BOARD AND
                                         CHIEF EXECUTIVE OFFICER
                                         



                                      By /s/ John Y. Schreyer                 
                                         ----------------------------
                                         JOHN Y. SCHREYER
                                         EXECUTIVE VICE PRESIDENT AND
                                         CHIEF FINANCIAL OFFICER
                                         




Date:  November 10, 1994





                                       12

<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1994
<PERIOD-START>                             JAN-01-1994
<PERIOD-END>                               SEP-30-1994
<CASH>                                         $36,366
<SECURITIES>                                         0
<RECEIVABLES>                                  477,527
<ALLOWANCES>                                         0
<INVENTORY>                                  1,009,386
<CURRENT-ASSETS>                             1,704,202
<PP&E>                                      14,244,286
<DEPRECIATION>                               7,750,108
<TOTAL-ASSETS>                               8,433,698
<CURRENT-LIABILITIES>                        1,218,087
<BONDS>                                      3,227,892
<COMMON>                                        92,972
                                0
                                          0
<OTHER-SE>                                   3,031,355
<TOTAL-LIABILITY-AND-EQUITY>                 8,433,698
<SALES>                                      4,839,896
<TOTAL-REVENUES>                             4,910,224
<CGS>                                        3,226,332
<TOTAL-COSTS>                                3,226,332
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                             182,421
<INCOME-PRETAX>                                179,233
<INCOME-TAX>                                   114,220
<INCOME-CONTINUING>                             65,013
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    65,013
<EPS-PRIMARY>                                     0.70
<EPS-DILUTED>                                     0.70
        

</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission