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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 Fee Required
For the fiscal year ended December 31, 1995
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 No Fee Required
For the transition period from to
COMMISSION FILE NUMBER 1-1204
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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. 10036
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code, is (212) 997-8500)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
ON WHICH REGISTERED
Common Stock (par value $1.00) New York Stock Exchange
Toronto Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of voting stock held by non-affiliates of the
Registrant amounted to $4,097,000,000 as of February 29, 1996.
At February 29, 1996, 92,998,755 shares of Common Stock were outstanding.
Certain items in Parts I and II incorporate information by reference from
the 1995 Annual Report to Stockholders and Part III is incorporated by reference
from the Proxy Statement for the annual meeting of stockholders to be held on
May 1, 1996.
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PART I
ITEM 1. BUSINESS
Amerada Hess Corporation (the "Registrant") was incorporated in 1920 in the
State of Delaware. The Registrant and its subsidiaries (collectively referred to
herein as the "Corporation") engage in the exploration for and the production,
purchase, transportation and sale of crude oil and natural gas. The Corporation
also manufactures, purchases, transports and markets refined petroleum products.
EXPLORATION AND PRODUCTION
The Corporation's exploration and production activities are located
primarily in the United States, Canada, the United Kingdom, Norway and Gabon.
The Corporation also conducts exploration and/or production activities in Abu
Dhabi, Denmark, Namibia, Thailand and Indonesia. Of the Company's proved
reserves (on a barrel of oil equivalent basis), 34% are located in the United
States, 51% are located in the United Kingdom and Norwegian sectors of the North
Sea, 10% are located in Canada and the remainder are located in Gabon, Abu Dhabi
and Thailand. Worldwide crude oil and natural gas liquids production amounted to
260,460 barrels per day in 1995 compared with 250,520 barrels per day in 1994.
Worldwide natural gas production was 884,131 Mcf per day in 1995 compared with
846,118 Mcf per day in 1994.
At December 31, 1995, the Corporation has 695 million barrels of proved
crude oil and natural gas liquids reserves compared with 644 million barrels at
the end of 1994. Proved natural gas reserves are 2,481 million Mcf at December
31, 1995 compared with 2,581 million Mcf at December 31, 1994. The Corporation
has an inventory of drillable prospects primarily in the United States, Canada
and the United Kingdom and Norwegian sectors of the North Sea.
The Corporation is currently offering for sale its wholly-owned subsidiary,
Amerada Hess Canada Ltd., as well as certain United States properties
representing approximately 20% of United States production and 15% of proved
United States crude oil and natural gas reserves. The Corporation also
anticipates the sale of its remaining interest in Abu Dhabi in the first half of
1996 and expects that certain non-core North Sea properties may be sold.
UNITED STATES. The Corporation operates principally offshore in the Gulf
of Mexico and onshore in the states of Texas, Louisiana and North Dakota. During
1995, 24% of the Corporation's crude oil and natural gas liquids production and
45% of its natural gas production were from United States operations.
The table below sets forth the Corporation's average daily net production
by area in the United States:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
CRUDE OIL, INCLUDING CONDENSATE AND
NATURAL GAS LIQUIDS (BARRELS PER DAY)
Texas........................................................ 23,256 26,237
North Dakota................................................. 12,414 13,158
Gulf of Mexico............................................... 12,114 14,349
Louisiana.................................................... 3,592 2,331
Alaska*...................................................... 3,133 3,735
Other........................................................ 8,497 7,792
------- -------
Total................................................ 63,006 67,602
======= =======
* Sold in the fourth quarter of 1995.
NATURAL GAS (MCF PER DAY)
Gulf of Mexico............................................... 186,427 217,203
Louisiana.................................................... 54,387 51,727
North Dakota................................................. 48,228 46,530
Texas........................................................ 37,077 39,973
New Mexico................................................... 23,297 23,276
Oklahoma..................................................... 21,491 20,986
California................................................... 15,144 19,623
Other........................................................ 15,530 7,785
------- -------
Total................................................ 401,581 427,103
======= =======
</TABLE>
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CANADA. The Corporation, through its wholly-owned Canadian subsidiary,
Amerada Hess Canada Ltd., conducts operations in the Provinces of Alberta and
British Columbia. The Corporation's net crude oil and natural gas liquids
production in Canada amounted to 11,396 barrels per day in 1995 compared to
12,390 barrels per day in 1994, and its natural gas production increased to
215,500 Mcf per day in 1995 from 185,856 Mcf per day in 1994.
UNITED KINGDOM. The Corporation's activities in the United Kingdom are
conducted by its wholly-owned British subsidiary, Amerada Hess Limited. During
1995, 55% of the Corporation's crude oil and natural gas liquids production and
27% of its natural gas production were from United Kingdom operations.
The table below sets forth the Corporation's average daily net production
in the United Kingdom by field and the Corporation's interest in each at
December 31, 1995:
<TABLE>
<CAPTION>
PRODUCING FIELD INTEREST 1995 1994
---------- -------
<S> <C> <C> <C>
CRUDE OIL, INCLUDING CONDENSATE AND
NATURAL GAS LIQUIDS (BARRELS PER DAY)
Scott.................................. 34.95% 64,209 59,161
Beryl/Ness............................. 20.00 18,442 18,687
Ivanhoe/Rob Roy/Hamish................. 42.08 18,227 24,913
Fife................................... 85.00 13,123 --
Arbroath/Montrose...................... 28.21 10,484 9,823
Hudson................................. 28.46 9,813 8,413
Other.................................. Various 8,031 7,802
------- -------
Total............................. 142,329 128,799
======= =======
NATURAL GAS (MCF PER DAY)
Beryl/Ness............................. 20.00% 46,725 43,329
Leman.................................. 21.74 46,241 28,663
Everest/Lomond......................... 18.67/16.67 42,491 41,685
Scott.................................. 34.95 28,913 26,092
Indefatigable.......................... 23.08 27,409 20,855
Anglia................................. 29.29 18,601 19,538
Davy/Bessemer.......................... 27.78/23.08 11,812 --
Other.................................. Various 17,115 28,580
------- -------
Total............................. 239,307 208,742
======= =======
</TABLE>
Crude oil production commenced from the Fife Field in the third quarter of
1995. Natural gas production commenced from the Davy and Bessemer Fields in the
fourth quarter of 1995.
NORWAY. The Corporation's activities in Norway are conducted through its
wholly-owned Norwegian subsidiary, Amerada Hess Norge A/S. The Corporation's
Norwegian operations accounted for crude oil and natural gas liquids production
of 26,990 and 25,599 net barrels per day in 1995 and 1994, respectively.
Approximately 60% of this production is from the Corporation's 28.09% interest
in the Valhall Field.
GABON. The Corporation has a 5.5% interest in the Rabi Kounga oil field
onshore Gabon. The Corporation's share of production from Gabon averaged 9,468
and 8,746 net barrels of crude oil per day in 1995 and 1994, respectively.
REFINING AND MARKETING
The Corporation's refining facilities are located in St. Croix, United
States Virgin Islands and Port Reading, New Jersey. Total crude runs averaged
377,000 barrels per day in 1995 and 388,000 barrels per day in 1994. The
Corporation's production supplied approximately 7% of its crude runs. The
balance came from various suppliers under contracts of one year or less and
through spot purchases on the open market. Approximately 78% of the refined
products marketed in 1995 was obtained from the Corporation's refineries. The
Corporation purchased the balance from others under short-term supply contracts
and by spot purchases
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from various sources. Sales of refined products averaged 487,000 barrels per day
in 1995 compared with 468,000 barrels per day in 1994.
HESS OIL VIRGIN ISLANDS REFINERY. The Corporation owns and operates a
petroleum refinery in St. Croix, United States Virgin Islands through its
wholly-owned subsidiary, Hess Oil Virgin Islands Corp. ("HOVIC"). In 1995,
refined products produced were approximately 68% gasoline and distillates, 13%
refinery feedstocks and the remainder principally residual fuel oil. In addition
to crude distillation capacity, the refinery has a fluid catalytic cracking
unit, which is currently operated at 110,000 barrels per day. The Corporation
expects to increase the production capacity of the catcracker to 125,000 barrels
per day in late 1996 or early 1997. The refinery also has catalytic reforming
units, vacuum distillation capacity, visbreakers, a sulfolane unit, a penex
unit, distillate desulfurizers, vacuum gas oil desulfurizers and sulfur recovery
facilities. HOVIC has approximately 31 million barrels of storage capacity.
The refinery has the capability to process a variety of crude oils,
including high-sulfur crudes. The refinery has a 60-foot-deep harbor and docking
facilities for ten ocean-going tankers. The refinery's harbor accommodates very
large crude carriers after a portion of their crude oil cargo is lightered at
the Corporation's storage and transshipment facility in Saint Lucia, which has a
90-foot-deep harbor. The Saint Lucia facility has approximately 9 million
barrels of storage capacity.
PORT READING FACILITY. The Corporation owns and operates a fluid catalytic
cracking facility in Port Reading, New Jersey, which processes vacuum gas oil
and operates at a rate of approximately 54,000 barrels per day. The Port Reading
facility primarily produces gasoline and heating oil.
MARKETING. The Corporation markets refined petroleum products principally
on the East and Gulf Coasts of the United States to the motoring public,
wholesale distributors, industrial and commercial users, other petroleum
companies, commercial airlines, governmental agencies and public utilities.
At December 31, 1995, the Corporation has 551 HESS(R) gasoline stations of
which approximately 82% are operated by the Corporation. Most of the
Corporation's stations are concentrated in highly-populated, urban areas,
principally in New York, New Jersey and Florida. Of the Corporation's stations,
166 have HESS MART(R) convenience stores. The Corporation owns in fee
approximately 75% of the properties on which its stations are located. The
Corporation also has 42 terminals located throughout its marketing area, with
aggregate storage capacity of approximately 47 million barrels.
COMPETITION AND MARKET CONDITIONS
The petroleum industry is highly competitive. The Corporation encounters
competition from numerous companies in each of its activities, particularly in
acquiring rights to explore for crude oil and natural gas and in the purchasing
and marketing of refined products. Many competitors are larger and have
substantially greater resources than the Corporation. The Corporation is also in
competition with producers and marketers of other forms of energy.
The petroleum business involves large-scale capital expenditures and
risk-taking. In the search for new oil and gas reserves, long lead times are
often required from successful exploration to subsequent production. Operations
in the petroleum industry depend on a depleting natural resource. The number of
areas where it can be expected that hydrocarbons will be discovered in
commercial quantities is constantly diminishing and exploration risks are high.
Areas where hydrocarbons may be found are often in remote locations or offshore
where exploration and development activities are capital intensive and operating
costs are high. In addition, low crude oil prices have reduced the number of
areas from which hydrocarbons can be economically produced.
The major foreign oil producing countries, including members of the
Organization of Petroleum Exporting Countries ("OPEC"), exert considerable
influence over the supply and price of crude oil and refined petroleum products.
Their ability or inability to agree on a common policy on rates of production,
oil prices, and other matters has a significant impact on the oil market and the
Corporation. The derivatives markets are also important in influencing the
prices of crude oil, natural gas and refined products. The Corporation cannot
predict the extent to which future market conditions may be affected by OPEC,
the derivatives markets or other external influences.
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Market conditions continue to affect the Corporation's earnings. The
Corporation's refining and marketing operations incurred a loss in 1995 after
realizing a profit in 1994. While gasoline margins improved in 1995, this
improvement was more than offset by lower distillate and residual fuel oil
margins. While the average refined product selling price increased in 1995, the
cost of purchased crude oil and refined products increased by a greater amount.
The selling prices of all refined products, particularly gasolines, continue to
be subject to competitive industry conditions. Supply and demand factors,
including the effects of weather, will continue to affect all refined product
markets.
The Corporation's exploration and production operations were profitable in
1995, but continue to be impacted by volatility in the selling prices of crude
oil and natural gas. Average worldwide crude oil selling prices increased in
1995. The available supply of natural gas in the United States continued to
exceed demand in 1995, resulting in lower average selling prices. Natural gas
selling prices recovered somewhat in late 1995 and early 1996, but the
Corporation is unable to predict how long this trend will continue.
OTHER ITEMS
The Corporation's operations may be affected by federal, state, local,
territorial and foreign laws and regulations relating to tax increases and
retroactive tax claims, expropriation of property, cancellation of contract
rights, and changes in import regulations, as well as other political
developments. The Corporation has been affected by certain of these events in
various countries in which it operates. The Corporation markets motor fuels
through lessee-dealers and wholesalers in certain states where legislation
prohibits producers or refiners of crude oil from directly engaging in retail
marketing of motor fuels. Similar legislation is periodically proposed in the
U.S. Congress and in various other states. The Corporation, at this time, cannot
predict the effect of any of the foregoing on its future operations.
Compliance with the various environmental and pollution control regulations
imposed by federal, state and local governments is not expected to have a
materially adverse effect on the Corporation's earnings and competitive position
within the industry. However, the cost of such compliance is expected to
increase in the future. Capital expenditures for facilities, primarily to comply
with federal, state and local environmental standards, were $15 million in 1995
and the Corporation anticipates comparable capital expenditures in 1996. In
addition, the Corporation expended $15 million in 1995 for environmental
remediation, with a comparable amount anticipated for 1996.
The number of persons employed by the Corporation averaged 9,574 in 1995
and 9,858 in 1994.
Additional operating and financial information relating to the business and
properties of the Corporation appears in the text on pages 6 and 9 under the
heading "United States Exploration and Production," on pages 10, 13 and 14 under
the heading "International Exploration and Production," on pages 17 and 18 under
the heading "Refining and Marketing," on pages 21 through 25 under the heading
"Financial Review" and on pages 26 through 51 of the accompanying 1995 Annual
Report to Stockholders, which information is incorporated herein by reference.*
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* Except as to information specifically incorporated herein by reference under
Items 1, 2, 5, 6, 7 and 8, no other information or data appearing in the 1995
Annual Report to Stockholders is deemed to be filed with the Securities and
Exchange Commission (SEC) as part of this Annual Report on Form 10-K, or
otherwise subject to the SEC's regulations or the liabilities of Section 18 of
the Securities Exchange Act of 1934, as amended.
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ITEM 2. PROPERTIES
Reference is made to Item 1 and the operating and financial information
relating to the business and properties of the Corporation, which is
incorporated in Item 1 by reference.
Additional information relating to the Corporation's oil and gas operations
follows.
1. OIL AND GAS RESERVES
The Corporation's net proved oil and gas reserves at the end of 1995, 1994
and 1993 are presented under Supplementary Oil and Gas Data in the accompanying
1995 Annual Report to Stockholders, which has been incorporated herein by
reference.
During 1995, the Corporation provided oil and gas reserve estimates for
1994 to the Department of Energy. Such estimates are compatible with the
information furnished to the SEC on Form 10-K, although not necessarily directly
comparable due to the requirements of the individual requests. There were no
differences in excess of 5%.
The Corporation has no long-term contracts or agreements to supply fixed
quantities of its crude oil production. Approximately 65% of the Corporation's
1995 natural gas sales were made under long-term contracts to various
purchasers. Contractual commitments in 1996 (which are expected to be comparable
to 1995) will be filled from the Corporation's production and from contractual
purchases.
2. AVERAGE SELLING PRICES AND AVERAGE PRODUCTION COSTS
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
Average selling prices (Note A)
Crude oil, including condensate and natural
gas liquids (per barrel)
United States.......................... $ 15.82 $ 15.43 $ 17.40
Canada................................. 15.77 15.94 16.30
Europe................................. 17.05 15.96 17.04
Other areas............................ 16.79 15.45 16.41
Average................................ 16.68 15.78 17.05
Natural gas (per Mcf)
United States.......................... $ 1.70 $ 1.91 $ 2.11
Canada................................. 1.02 1.36 1.43
Europe................................. 2.05 2.04 1.83
Average................................ 1.67 1.86 1.98
</TABLE>
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Note A: Includes inter-company transfers valued at approximate market
prices and the effect of the Corporation's hedging activities.
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<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
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Average production (lifting) costs per barrel of
production (Note B)
United States.......................... $ 4.29 $ 4.10 $ 4.06
Canada................................. 2.65 2.98 3.21
Europe................................. 4.34 4.37 4.89
Other areas............................ 3.41 3.08 4.15
Average................................ 4.09 4.06 4.31
</TABLE>
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Note B: Production (lifting) costs consist of amounts incurred to operate
and maintain the Corporation's producing oil and gas wells and related equipment
and facilities, including severance and other related production taxes. The
average production (lifting) costs per barrel of production reflect the crude
oil equivalent of natural gas production converted on the basis of relative
energy content.
The foregoing tabulation does not include substantial costs and charges
applicable to finding and developing proved oil and gas reserves, nor does it
reflect significant outlays for related general and administrative expenses,
interest expense and income taxes.
3. GROSS AND NET DEVELOPED ACREAGE AND PRODUCTIVE WELLS AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
DEVELOPED
ACREAGE PRODUCTIVE WELLS (NOTE A)
APPLICABLE TO -------------------------------------
PRODUCTIVE WELLS
(IN THOUSANDS) OIL GAS
----------------- ----------------
- ------------------------------------------------------------------------------------------------
GROSS NET GROSS NET GROSS NET
------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
United States...................... 3,013 712 13,486 1,604 1,955 786
Canada............................. 727 324 1,949 483 1,047 345
Europe............................. 586 125 335 48 142 29
Other areas........................ 82 23 146 19 - -
------ ------ ------- ------ ------ ------
Total.................... 4,408 1,184 15,916 2,154 3,144 1,160
===== ===== ====== ===== ===== =====
</TABLE>
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Note A: Includes multiple completion wells (wells producing from different
formations in the same bore hole) totaling 173 gross wells and 109 net wells.
4. GROSS AND NET UNDEVELOPED ACREAGE AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
UNDEVELOPED
ACREAGE
(IN THOUSANDS)
-----------------
GROSS NET
<S> <C> <C>
United States................................ 2,186 1,440
Canada....................................... 1,359 799
Europe....................................... 8,112 2,702
Other areas.................................. 9,920 2,370
------ ------
Total.............................. 21,577 7,311
====== =====
</TABLE>
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5. NUMBER OF NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
<TABLE>
<CAPTION>
NET EXPLORATORY WELLS NET DEVELOPMENT WELLS
---------------------- ----------------------
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------
Productive wells
United States................. 20 10 25 25 27 43
Canada........................ 3 9 9 12 13 10
Europe........................ 3 5 6 10 6 3
Other areas................... - 1 - 1 1 1
---- ---- ---- ---- ---- ----
Total.................... 26 25 40 48 47 57
---- ---- ---- ---- ---- ----
Dry holes
United States................. 24 17 23 3 - 1
Canada........................ 14 5 10 2 1 2
Europe........................ 6 1 1 - - -
Other areas................... 1 - - - - -
---- ---- ---- ---- ---- ----
Total.................... 45 23 34 5 1 3
---- ---- ---- ---- ---- ----
Total.............................. 71 48 74 53 48 60
==== ==== ==== ==== ==== ====
</TABLE>
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6. NUMBER OF WELLS IN PROCESS OF DRILLING AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
GROSS NET
WELLS WELLS
<S> <C> <C>
</TABLE>
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<TABLE>
<S> <C> <C>
United States.................................... 30 10
Canada........................................... 14 10
Europe........................................... 10 2
Other areas...................................... 1 -
----- -----
Total.................................. 55 22
==== ====
</TABLE>
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7. NUMBER OF WATERFLOODS AND PRESSURE MAINTENANCE PROJECTS IN PROCESS OF
INSTALLATION AT
DECEMBER 31, 1995 -- Five (four in the United States and one in Canada)
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ITEM 3. LEGAL PROCEEDINGS
The Registrant is under investigation by a grand jury in, and by the United
States Attorney's Office for, the District of New Jersey, and is also under
investigation by a grand jury in, and by the United States Attorney's Office
for, the District of Arizona and by the Environmental Crimes Unit of the United
States Department of Justice. The focus of these investigations concerns the
storage and shipment of allegedly hazardous waste. The waste at issue was
shipped from the HOVIC refinery to various locations in the United States,
including Arizona. One question in the investigation is whether criminal
violations of the Resource Conservation and Recovery Act resulted from the
transportation of hazardous waste without designating the waste as hazardous and
from the transportation of that waste to a site that did not have a permit to
receive hazardous waste. Another subject of the investigation is whether the
Registrant and others failed to report promptly the release of a hazardous
substance as required by law. The investigation also includes whether false
statements regarding the catalyst were made by representatives of the Registrant
to government officials. It is not possible at this time for Registrant to state
what the outcome of these investigations will be, or, if an indictment of
Registrant and HOVIC were to be returned or any other proceedings arising out of
the investigations were to be commenced against the Registrant or HOVIC, what
other claims would be asserted or what relief would be sought.
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On April 27, 1993, the Texas Natural Resource Conservation Commission
("TNRCC", then known as the Texas Water Commission) notified the Registrant of
alleged violation of the Texas Water Code as a result of alleged discharges of
hydrocarbon compounds into the groundwater in the vicinity of the Registrant's
terminal in Corpus Christi, Texas. Penalties provided for these violations
include administrative penalties not to exceed $10,000 per day. The Registrant
has undertaken a groundwater assessment, an interim correction measures program
and other appropriate responses to these allegations. On December 9, 1994, the
Executive Director of the TNRCC forwarded a Notice of Executive Director's
Preliminary Report and Petition for a TNRCC Order Assessing Administrative
Penalties and Requiring Certain Actions of Amerada Hess Corporation. This Notice
recommended a $542,400 penalty be assessed and the Registrant be ordered to
undertake remedial actions at the Corpus Christi terminal. The Registrant is
engaging in settlement discussions with the TNRCC regarding this matter.
On June 21, 1994, Region II of the EPA commenced an administrative
proceeding under Section 325 of the Emergency Planning and Community
Right-to-Know Act ("EPCRA") against HOVIC, alleging violations of Section 313 of
EPCRA arising out of HOVIC's alleged failure to comply with certain reporting
requirements relating to toxic chemicals manufactured or otherwise used at
HOVIC's refinery. The proceeding seeks civil penalties totaling $252,000 for the
alleged violations. HOVIC is engaging in settlement discussions with the EPA
regarding this matter.
The Corporation periodically receives notices from the EPA that the
Corporation is a "potentially responsible party" under the Superfund legislation
with respect to various waste disposal sites. Under this legislation, all
potentially responsible parties are jointly and severally liable. For certain
sites, EPA's claims or assertions of liability against the Corporation relating
to these sites have not been fully developed. With respect to the remaining
sites, EPA's claims have been settled, or a proposed settlement is under
consideration, in all cases for amounts which are not material. The ultimate
impact of these proceedings, and of any related proceedings by private parties,
on the business or accounts of the Corporation cannot be predicted at this time
due to the large number of other potentially responsible parties and the
speculative nature of clean-up cost estimates, but is not expected to be
material.
The Corporation is from time to time involved in other judicial and
administrative proceedings, including proceedings relating to other
environmental matters. Although the ultimate outcome of these proceedings cannot
be ascertained at this time and some of them may be resolved adversely to the
Corporation, no such proceeding is required to be disclosed under applicable
rules of the Securities and Exchange Commission. In management's opinion, based
upon currently known facts and circumstances, such proceedings in the aggregate
will not have a material adverse effect on the financial condition of the
Corporation.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1995, no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table presents information as of February 1, 1996 regarding
executive officers of the Registrant:
<TABLE>
<CAPTION>
YEAR
INDIVIDUAL
BECAME AN
EXECUTIVE
NAME AGE OFFICE HELD* OFFICER
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
John B. Hess............ 41 Chairman of the Board, Chief Executive 1983
Officer and Director
W. S. H. Laidlaw........ 40 President, Chief Operating Officer and 1986
Director
Leon Hess............... 81 Chairman of the Executive Committee and 1969
Director
H. W. McCollum.......... 82 Chairman of the Finance Committee and 1969
Director
J. Barclay Collins II... 51 Executive Vice President, General Counsel and 1986
Director
Michael W. Press........ 48 Executive Vice President and Director 1994
John Y. Schreyer........ 56 Executive Vice President, Chief Financial 1990
Officer and Director
Alan A. Bernstein....... 51 Senior Vice President 1987
Marco B. Bianchi........ 56 Senior Vice President and Director 1986
F. Lamar Clark.......... 62 Senior Vice President 1990
Neal Gelfand............ 51 Senior Vice President 1980
Daniel F. McCarthy...... 51 Senior Vice President 1995
Charles H. Norz......... 58 Senior Vice President 1982
Benedict J. O'Bryan..... 58 Senior Vice President 1991
Lawrence H. Ornstein.... 44 Senior Vice President 1995
Rene L. Sagebien........ 55 Senior Vice President 1990
Gerald A. Jamin......... 54 Treasurer 1985
</TABLE>
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* All officers referred to herein hold office in accordance with the
By-Laws until the first meeting of the Directors following the annual meeting of
stockholders of the Registrant, and until their successors shall have been duly
chosen and qualified. Each of said officers was elected to the office set forth
opposite his name on May 3, 1995, except that Mr. Ornstein was elected to his
present office by the Board of Directors at its regular meeting on December 6,
1995. The first meeting of Directors following the next annual meeting of
stockholders of the Registrant is scheduled to be held May 1, 1996.
Except for Mr. Press, each of the above officers has been employed by the
Registrant in various managerial and executive capacities for more than five
years. Prior to his employment with the Registrant in October 1994, Mr. Press
was a Senior Vice President of BP Oil Company, a unit of The British Petroleum
Company p.l.c.
9
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Information pertaining to the market for the Registrant's Common Stock,
high and low sales prices of the Common Stock in 1995 and 1994, dividend
payments and restrictions thereon and the number of holders of Common Stock is
presented on page 25 (Financial Review), page 33 (Long-Term Debt) and on page 48
(Ten-Year Summary of Financial Data) of the accompanying 1995 Annual Report to
Stockholders, which has been incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
A Ten-Year Summary of Financial Data is presented on pages 46 through 49 of
the accompanying 1995 Annual Report to Stockholders, which has been incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is presented on pages 21 through 25
of the accompanying 1995 Annual Report to Stockholders, which has been
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, including the Report of Ernst &
Young LLP, Independent Auditors, the Supplementary Oil and Gas Data (unaudited)
and the Quarterly Financial Data (unaudited) are presented on pages 25 through
45 of the accompanying 1995 Annual Report to Stockholders, which has been
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
------------------------
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to Directors is incorporated herein by reference to
"Election of Directors" from the Registrant's definitive proxy statement for the
annual meeting of stockholders to be held on May 1, 1996.
Information regarding executive officers is included in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is incorporated herein by
reference to "Election of Directors-Executive Compensation and Other
Information," other than information under "Compensation Committee Report on
Executive Compensation" and "Performance Graph" included therein, from the
Registrant's definitive proxy statement for the annual meeting of stockholders
to be held on May 1, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information pertaining to security ownership of certain beneficial owners
and management is incorporated herein by reference to "Election of
Directors-Ownership of Voting Securities by Certain Beneficial Owners" and
"Election of Directors-Ownership of Equity Securities by Management" from the
Registrant's definitive proxy statement for the annual meeting of stockholders
to be held on May 1, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to this item is incorporated herein by reference to
"Election of Directors" from the Registrant's definitive proxy statement for the
annual meeting of stockholders to be held on May 1, 1996.
------------------------
10
<PAGE> 12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. AND 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The financial statements filed as part of this Annual Report on
Form 10-K are listed in the accompanying index to financial statements
and schedules.
3. EXHIBITS
<TABLE>
<S><C> <C>
3(1) -Restated Certificate of Incorporation of Registrant incorporated by
reference to Exhibit 19 of Form 10-Q of Registrant for the three
months ended September 30, 1988.
3(2) -By-Laws of Registrant incorporated by reference to Exhibit 3(2) of
Form 10-K of Registrant for the fiscal year ended December 31,
1985.
4(1) -Note and Warrant Purchase Agreement, dated June 27, 1991 (including
the form of the Common Stock Purchase Warrant expiring June 27,
2001, included as Exhibit B thereof) incorporated by reference to
Exhibit 4 of Form 10-Q of Registrant for the three months ended
June 30, 1991.
4(2) -Amendment, dated as of May 15, 1992 to the Note and Warrant
Purchase Agreement, dated June 27, 1991 (including the form of the
common stock purchase warrant expiring June 27, 2001, included as
Exhibit B thereof), incorporated by reference to Exhibit 19 of
Form 10-Q of Registrant for the three months ended June 30, 1992.
-Other instruments defining the rights of holders of long-term debt
of Registrant and its consolidated subsidiaries are not being
filed since the total amount of securities authorized under each
such instrument does not exceed 10 percent of the total assets of
Registrant and its subsidiaries on a consolidated basis.
Registrant agrees to furnish to the Commission a copy of any
instruments defining the rights of holders of long-term debt of
Registrant and its subsidiaries upon request.
10(1) -Extension and Amendment Agreement between the Government of the
Virgin Islands and Hess Oil Virgin Islands Corp. incorporated by
reference to Exhibit 10(4) of Form 10-Q of Registrant for the
three months ended June 30, 1981.
10(2) -Restated Second Extension and Amendment Agreement dated July 27,
1990 between Hess Oil Virgin Islands Corp. and the Government of
the Virgin Islands incorporated by reference to Exhibit 19 of Form
10-Q of Registrant for the three months ended September 30, 1990.
10(3) -Technical Clarifying Amendment dated as of November 17, 1993 to
Restated Second Extension and Amendment Agreement between the
Government of the Virgin Islands and Hess Oil Virgin Islands Corp.
incorporated by reference to Exhibit 10(3) of Form 10-K of
Registrant for the fiscal year ended December 31, 1993.
10(4)* -Incentive Compensation Award Plan for Key Employees of Amerada Hess
Corporation and its subsidiaries incorporated by reference to
Exhibit 10(2) of Form 10-K of Registrant for the fiscal year ended
December 31, 1980.
10(5)* -Financial Counseling Program description incorporated by reference
to Exhibit 10(3) of Form 10-K of Registrant for the fiscal year
ended December 31, 1980.
</TABLE>
11
<PAGE> 13
3. EXHIBITS (continued)
<TABLE>
<S><C> <C>
10(6)* -Executive Long-Term Incentive Compensation and Stock Ownership Plan
of Registrant dated June 3, 1981 incorporated by reference to
Exhibit 10(5) of Form 10-Q of Registrant for the three months
ended June 30, 1981.
10(7)* -Amendment dated as of December 5, 1990 to the Executive Long-Term
Incentive Compensation and Stock Ownership Plan of Registrant
incorporated by reference to Exhibit 10(9) of Form 10-K of
Registrant for the fiscal year ended December 31, 1990.
10(8)* -Amerada Hess Corporation Pension Restoration Plan dated January 19,
1990 incorporated by reference to Exhibit 10(9) of Form 10-K of
Registrant for the fiscal year ended December 31, 1989.
10(9)* -Letter Agreement dated August 8, 1990 between Registrant and Mr.
John Y. Schreyer relating to Mr. Schreyer's participation in the
Amerada Hess Corporation Pension Restoration Plan incorporated by
reference to Exhibit 10(11) of Form 10-K of Registrant for the
fiscal year ended December 31, 1991.
10(10)* -Letter Agreement dated November 2, 1994 between Registrant and Mr.
Michael W. Press relating to Mr. Press's participation in the
Amerada Hess Corporation Pension Restoration Plan and his
severance benefits incorporated by reference to Exhibit 10(10) of
Form 10-K of Registrant for the fiscal year ended December 31,
1994.
10(11)* -1995 Long-Term Incentive Plan, as amended, incorporated by
reference to Appendix A of Registrant's definitive proxy statement
for the annual meeting of stockholders to be held on May 1,
1996.**
13 -1995 Annual Report to Stockholders of Registrant.
21 -Subsidiaries of Registrant.
23 -Consent of Ernst & Young LLP, Independent Auditors, dated March 22,
1996, to the incorporation by reference in Registrant's
Registration Statements on Form S-8 (Nos. 33-39816 and 33-65115)
of its report relating to Registrant's financial statements, which
consent appears on page F-2 herein.
27 -Financial Data Schedule (for electronic filing only).
</TABLE>
- --------------------------------------------------------------------------------
* These exhibits relate to executive compensation plans and arrangements.
** This plan was adopted by the Board of Directors of Registrant, subject to
stockholder approval of the plan at the next annual meeting of stockholders
scheduled to be held on May 1, 1996.
(b) REPORTS ON FORM 8-K
During the fourth quarter of 1995, the Registrant filed a report on Form
8-K, dated December 6, 1995. Such report covered Item 5 -- Other Events, and
dealt with the issuance of a press release reporting that the Registrant will
take a charge to earnings in connection with the adoption of Financial
Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of.
12
<PAGE> 14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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, ON THE 22ND DAY OF
MARCH 1996.
AMERADA HESS CORPORATION
(REGISTRANT)
By /s/ JOHN Y. SCHREYER
....................................
(JOHN Y. SCHREYER)
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Director, Chairman of
the Board and
Chief Executive Officer
/s/ JOHN B. HESS (Principal Executive Officer) March 22, 1996
......................................
(JOHN B. HESS)
Director, President and Chief
/s/ W.S.H. LAIDLAW Operating Officer March 22, 1996
......................................
(W.S.H. LAIDLAW)
Director March 22, 1996
......................................
(MARCO B. BIANCHI)
/s/ NICHOLAS F. BRADY Director March 22, 1996
.....................................
(NICHOLAS F. BRADY)
/s/ J. BARCLAY COLLINS II Director March 22, 1996
.....................................
(J. BARCLAY COLLINS II)
/s/ BERNARD T. DEVERIN Director March 22, 1996
.....................................
(BERNARD T. DEVERIN)
/s/ PETER S. HADLEY Director March 22, 1996
.....................................
(PETER S. HADLEY)
/s/ LEON HESS Director March 22, 1996
.....................................
(LEON HESS)
/s/ EDITH E. HOLIDAY Director March 22, 1996
.....................................
(EDITH E. HOLIDAY)
/s/ THOMAS H. KEAN Director March 22, 1996
.....................................
(THOMAS H. KEAN)
/s/ H. W. MCCOLLUM Director March 22, 1996
.....................................
(H. W. MCCOLLUM)
/s/ ROGER B. ORESMAN Director March 22, 1996
.....................................
(ROGER B. ORESMAN)
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Director March 22, 1996
.........................................
(WILLIAM A. POGUE)
/s/ MICHAEL W. PRESS Director March 22, 1996
.........................................
(MICHAEL W. PRESS)
Director, Executive Vice
President
and Chief Financial Officer
(Principal Accounting and
/s/ JOHN Y. SCHREYER Financial Officer) March 22, 1996
.........................................
(JOHN Y. SCHREYER)
/s/ RICHARD B. SELLARS Director March 22, 1996
.........................................
(RICHARD B. SELLARS)
/s/ WILLIAM I. SPENCER Director March 22, 1996
.........................................
(WILLIAM I. SPENCER)
Director March 22, 1996
.........................................
(ROBERT F. WRIGHT)
- ----------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 16
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
- ------------------------------------------------------------------------------------------
Consolidated Balance Sheet at December 31, 1995 and 1994......................... *
Statement of Consolidated Income for each of the three years in the period ended
December 31, 1995.............................................................. *
Statement of Consolidated Retained Earnings for each of the three years in the
period ended December 31, 1995................................................. *
Statement of Consolidated Cash Flows for each of the three years in the period
ended December 31, 1995........................................................ *
Statement of Consolidated Changes in Common Stock and Capital in Excess of Par
Value for each of the three years in the period ended December 31, 1995........ *
Notes to Consolidated Financial Statements....................................... *
Report of Ernst & Young LLP, Independent Auditors................................ *
Quarterly Financial Data......................................................... *
Supplementary Oil and Gas Data................................................... *
Consent of Independent Auditors.................................................. F-2
Schedules........................................................................ **
</TABLE>
- --------------------------------------------------------------------------------
* The financial statements and notes thereto together with the Report of
Ernst & Young LLP, Independent Auditors, on pages 26 through 40, the Quarterly
Financial Data (unaudited) on page 25, and the Supplementary Oil and Gas Data
(unaudited) on pages 41 through 45 of the accompanying 1995 Annual Report to
Stockholders are incorporated herein by reference.
** All schedules have been omitted because of the absence of the conditions
under which they are required or because the required information is presented
in the financial statements or the notes thereto.
F-1
<PAGE> 17
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Amerada Hess Corporation of our report dated February 15, 1996,
included in the 1995 Annual Report to Stockholders of Amerada Hess Corporation.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8, Nos. 33-39816 and 33-65115) pertaining to the Amerada Hess
Corporation Employees' Savings and Stock Bonus Plan and the 1995 Long-Term
Incentive Plan, of our report dated February 15, 1996, with respect to the
consolidated financial statements incorporated herein by reference.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, N.Y.
March 22, 1996
F-2
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------ ----------------------------------------------------------
<S> <C> <C>
3(1) -- Restated Certificate of Incorporation of Registrant
incorporated by reference to Exhibit 19 of Form 10-Q of
Registrant for the three months ended September 30, 1988.
3(2) -- By-Laws of Registrant incorporated by reference to Exhibit
3(2) of Form 10-K of Registrant for the fiscal year ended
December 31, 1985.
4(1) -- Note and Warrant Purchase Agreement, dated June 27, 1991
(including the form of the Common Stock Purchase Warrant
expiring June 27, 2001, included as Exhibit B thereof)
incorporated by reference to Exhibit 4 of Form 10-Q of
Registrant for the three months ended June 30, 1991.
4(2) -- Amendment, dated as of May 15, 1992 to the Note and
Warrant Purchase Agreement, dated June 27, 1991 (including
the form of the common stock purchase warrant expiring
June 27, 2001, included as Exhibit B thereof),
incorporated by reference to Exhibit 19 of Form 10-Q of
Registrant for the three months ended June 30, 1992.
-- Other instruments defining the rights of holders of
long-term debt of Registrant and its consolidated
subsidiaries are not being filed since the total amount of
securities authorized under each such instrument does not
exceed 10 percent of the total assets of Registrant and
its subsidiaries on a consolidated basis. Registrant
agrees to furnish to the Commission a copy of any
instruments defining the rights of holders of long-term
debt of Registrant and its subsidiaries upon request.
10(1) -- Extension and Amendment Agreement between the Government
of the Virgin Islands and Hess Oil Virgin Islands Corp.
incorporated by reference to Exhibit 10(4) of Form 10-Q of
Registrant for the three months ended June 30, 1981.
10(2) -- Restated Second Extension and Amendment Agreement dated
July 27, 1990 between Hess Oil Virgin Islands Corp. and
the Government of the Virgin Islands incorporated by
reference to Exhibit 19 of Form 10-Q of Registrant for the
three months ended September 30, 1990.
10(3) -- Technical Clarifying Amendment dated as of November 17,
1993 to Restated Second Extension and Amendment Agreement
between the Government of the Virgin Islands and Hess Oil
Virgin Islands Corp. incorporated by reference to Exhibit
10(3) of Form 10-K of Registrant for the fiscal year ended
December 31, 1993.
10(4)* -- Incentive Compensation Award Plan for Key Employees of
Amerada Hess Corporation and its subsidiaries incorporated
by reference to Exhibit 10(2) of Form 10-K of Registrant
for the fiscal year ended December 31, 1980.
10(5)* -- Financial Counseling Program description incorporated by
reference to Exhibit 10(3) of Form 10-K of Registrant for
the fiscal year ended December 31, 1980.
10(6)* -- Executive Long-Term Incentive Compensation and Stock
Ownership Plan of Registrant dated June 3, 1981
incorporated by reference to Exhibit 10(5) of Form 10-Q of
Registrant for the three months ended June 30, 1981.
10(7)* -- Amendment dated as of December 5, 1990 to the Executive
Long-Term Incentive Compensation and Stock Ownership Plan
of Registrant incorporated by reference to Exhibit 10(9)
of Form 10-K of Registrant for the fiscal year ended
December 31, 1990.
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------ ----------------------------------------------------------
<S> <C> <C>
10(8)* -- Amerada Hess Corporation Pension Restoration Plan dated
January 19, 1990 incorporated by reference to Exhibit
10(9) of Form 10-K of Registrant for the fiscal year ended
December 31, 1989.
10(9)* -- Letter Agreement dated August 8, 1990 between Registrant
and Mr. John Y. Schreyer relating to Mr. Schreyer's
participation in the Amerada Hess Corporation Pension
Restoration Plan incorporated by reference to Exhibit
10(11) of Form 10-K of Registrant for the fiscal year
ended December 31, 1991.
10(10)* -- Letter Agreement dated November 2, 1994 between Registrant
and Mr. Michael W. Press relating to Mr. Press's
participation in the Amerada Hess Corporation Pension
Restoration Plan and his severance benefits incorporated
by reference to Exhibit 10(10) of Form 10-K of Registrant
for the fiscal year ended December 31, 1994.
10(11)* -- 1995 Long-Term Incentive Plan, as amended, incorporated by
reference to Appendix A of Registrant's definitive proxy
statement for the annual meeting of stockholders to be
held on May 1, 1996.**
13 -- 1995 Annual Report to Stockholders of Registrant.
21 -- Subsidiaries of Registrant.
23 -- Consent of Ernst & Young LLP, Independent Auditors, dated
March 22, 1996, to the incorporation by reference in
Registrant's Registration Statements on Form S-8 (Nos.
33-39816 and 33-65115) of its report relating to
Registrant's financial statements, which consent appears
on page F-2 herein.
27 -- Financial Data Schedule (for electronic filing only).
</TABLE>
- --------------------------------------------------------------------------------
* These exhibits relate to executive compensation plans and arrangements.
** This plan was adopted by the Board of Directors of Registrant, subject to
stockholder approval of the plan at the next annual meeting of stockholders
scheduled to be held on May 1, 1996.
<PAGE> 1
6 UNITED STATES EXPLORATION AND PRODUCTION
Amerada Hess replaced 130% of its crude oil production and 124% of its
natural gas production in the United States during 1995. This success
resulted primarily from discoveries in the Garden Banks area of the
Gulf of Mexico.
Amerada Hess, as operator with a 50% interest, has begun developing its
Baldpate prospect located in the Garden Banks Blocks 215/216/259/260
area of the Gulf of Mexico. The Corporation will install a compliant
tower in 1,650 feet of water. It will have the capacity to process
40,000 barrels of oil per day and 150,000 Mcf of natural gas per day.
First production is expected in mid-1998.
Subsequent to commencing development of the Baldpate prospect, Amerada
Hess drilled a well into a separate structure on Garden Banks Block
216, about three miles northeast of the Baldpate platform location.
That well encountered a significant hydrocarbon accumulation. Amerada
Hess is studying the feasibility of tying this discovery back to the
Baldpate production facilities.
North of the Baldpate prospect, the Enchilada prospect was discovered
on Garden Banks Blocks 172 (AHC 60%), 127 (AHC 25%) and 128 (AHC 25%).
Development has commenced, with first production expected late in 1997.
On Mustang Island Block A-86 (AHC 53.33%), Amerada Hess drilled two
wells that proved extensions to a producing field on Mustang Island
Block A-85 (AHC 53.33%). These wells currently are producing a total of
30,000 Mcf of natural gas per day.
Two major developments are under way in
[PHOTO OF the Garden Banks area of the Gulf of
AMERADA HESS Mexico. Production facilities will be
CORPORATION EMPLOYEE] installed on Block 260 to develop the
Baldpate prospect which is primarily an
oil field. To the north, a natural gas
and condensate field is being developed
on Blocks 127, 128 and 172.
<PAGE> 2
7
PHOTO OF GARDEN BANKS 172
Gulf of Mexico
<PAGE> 3
8
PHOTO OF SALT DOME PROSPECT
Mississippi
<PAGE> 4
9
On West Cameron Block 498 (AHC 57.43%), Amerada Hess drilled two
delineation wells that encountered prospective sections of crude oil
and natural gas pay with limited areal extent. Two previous discovery
wells have been drilled on West Cameron Block 498. A development plan
is being formulated.
On Galveston Block 300 (AHC 50%), an exploration well tested at a rate
of 11,400 Mcf of natural gas per day and 300 barrels of condensate per
day. A successful delineation well has been drilled on Galveston Block
301 (AHC 50%) and a third well is currently being drilled. Development
of these discoveries is scheduled for 1996.
At the Gulf of Mexico lease sales in 1995, Amerada Hess acquired
interests in 18 blocks in Federal waters and 15 blocks in State of
Texas waters.
Onshore, Amerada Hess continued its successful drilling in the
Mississippi Salt Dome trend, where it has 75% interests in the Carson
Dome, Dry Creek Dome and the Prentiss Dome Fields. Combined gross
production from these three fields is averaging 27,000 Mcf of natural
gas per day and 850 barrels of oil per day. Two wells are being
completed in the Midway Dome Field (AHC 75%) that should add gross
production of 9,000 Mcf of natural gas per day and 500 barrels of oil
per day.
In South Louisiana, three successful natural gas wells tested at a
combined rate of 22,000 Mcf of natural gas per day and 700 barrels of
oil per day. Amerada Hess has working interests in these wells ranging
from 50 to 55%.
The Corporation participated in two successful Lodgepole Reef wells in
North Dakota that tested at a combined rate of 3,325 barrels of oil per
day. Amerada Hess has working interests in these two wells of 25% and
65%. Additional drilling is planned.
Production is increasing from
discoveries by Amerada Hess on its
Mississippi Salt Dome prospects. The [PHOTO OF AMERADA HESS
Corporation is intensifying drilling to CORPORATION EMPLOYEES]
exploit recent discoveries on the
Lodgepole Reef trend in North Dakota.
<PAGE> 5
10
INTERNATIONAL EXPLORATION AND PRODUCTION
UNITED KINGDOM Amerada Hess Limited, the Corporation's British
subsidiary, achieved record levels of hydrocarbon production in 1995.
Crude oil and natural gas liquids production averaged 142,329 barrels
per day compared with 128,799 barrels per day in 1994. Natural gas
production increased to 239,307 Mcf per day from 208,742 Mcf per day in
1994.
Contributing to the 1995 crude oil and liquids production was the
tie-in by Amerada Hess Limited of South Scott to the Scott Field (AHL
34.95%), continued excellent performance from the Ivanhoe/Rob Roy
Fields (AHL 42.08%) and the commencement of production in August from
the Fife Field (AHL 85%). The Davy (AHL 27.78%) and Bessemer (AHL
23.08%) natural gas fields also came on stream in 1995.
As a result of previous exploration successes, seven new oil fields
currently are being developed. As operator, Amerada Hess Limited is
tying the Telford Field (AHL 31.42%), a satellite of the Scott Field,
into the Scott production facilities. This field is expected to come on
stream early in 1997 at a gross rate of 30,000 barrels of oil per day.
Amerada Hess Limited is in the process of developing the Durward and
Dauntless Fields (AHL 28%), with first oil anticipated early in 1997 at
a gross rate of 55,000 barrels per day. The Fergus Field (AHL 65%) is
being tied into the Fife Field, with first oil production expected late
in 1996. This is expected to keep gross production through the Fife
facilities at the current level of 40,000 barrels of oil per day.
The Telford Field is being developed and
[PHOTO OF AMERADA HESS will be produced through the nearby
CORPORATION EMPLOYEE] Scott facilities. Gross production from
the Scott Field has been running at a
rate in excess of 180,000 barrels of oil
per day.
<PAGE> 6
11
PHOTO OF TELFORD FIELD
United Kingdom
<PAGE> 7
12
Photo of
FIFE FIELD
United Kingdom
<PAGE> 8
13
West of Shetlands, Amerada Hess Limited is participating in the
development of the Schiehallion Field. Subject to obtaining necessary
governmental consent, first oil is anticipated as early as October
1997. The Nevis Field (AHL 22.72%) is being tied to the Beryl Field and
will be brought on stream in the fourth quarter of 1996 at an estimated
gross rate of 13,500 barrels of oil per day. Development of the
Arkwright Field (AHL 28.21%), a satellite of the Montrose and Arbroath
Fields, is proceeding with first production expected late in 1996 at a
gross rate of about 12,000 barrels of oil per day.
Natural gas was discovered in several areas in 1995. Well 21/20a-5 (AHL
28.46%) was drilled on the Bligh prospect and discovered natural gas
and condensate that flowed at rates of 14,500 Mcf per day and 2,400
barrels per day, respectively. On Block 49/18 (AHL 23.08%) a potential
satellite for the Indefatigable Field was discovered and a gas bearing
structure (AHL 6.48%) was discovered on Block 47/14a. Further
evaluation of these discoveries is planned.
In the Sixteenth Round of United Kingdom License Awards, Amerada Hess
Limited received a substantial number of exploration blocks and also
received an award in the first Isle of Man License Round.
NORWAY Amerada Hess Norge A/S, the Corporation's Norwegian subsidiary,
completed a successful year in 1995. Amerada Hess Norge replaced 250%
of its crude oil and natural gas liquids production and 170% of its
natural gas production.
In the Valhall Field (AHN 28.09%), a new platform is expected to come
on stream in mid-1996 and significantly increase production by 1998. In
the Hod Field (AHN 25%), an appraisal well extended the field and has
been brought into production.
The Fife Field came on stream in 1995
and is being produced through the [Photo of Amerada Hess
floating production, storage and Corporation employees]
offloading vessel, the Uisge Gorm. The
Fergus Field also will be produced
through the Uisge Gorm.
<PAGE> 9
14
An extension of the Elli Field on Block 25/7 (AHN 12.50%) was confirmed
by an appraisal well. Unitization discussions have begun with the
owners of the adjacent block, with the intent of submitting a
development plan in 1996.
In the Norwegian Fifteenth Round of License Awards early in 1996,
Amerada Hess Norge received 20% interests in Blocks 24/9, 24/11 and
24/12 and a 15% interest in Block 6710/10.
DENMARK Amerada Hess A/S, the Corporation's Danish subsidiary, drilled
its first well in 1995 on the South Arne Field (AH A/S 65.69%) and
discovered oil that tested at a rate of 2,341 barrels per day.
Development options are being assessed.
In the Danish Fourth Round of Licensing, Amerada Hess A/S received
interests in 10 offshore blocks. It also is participating in a study of
the possibility of building a new natural gas pipeline system in the
Danish sector of the North Sea.
GABON The Corporation's share of production from the Rabi Kounga Field
in Gabon averaged 9,468 barrels per day in 1995 compared with 8,746
barrels per day in 1994.
Amerada Hess, as operator with a 55% interest, completed an extensive
gravity and magnetic survey on its Mazoumbel exploration permit during
1995. A 150 mile seismic program covering the 573,534 acre permit is
under way for 1996.
SOUTHEAST ASIA The Corporation continues to develop its upstream
activities in Southeast Asia and during 1995 farmed into Block 11/27
offshore Thailand (AHC 15%), Block M-10 in the Andaman Sea (AHC 15%)
and the Lematang Field in Indonesia (AHC 50%). Gas sales negotiations
for the Pailin Field (AHC 15%) are continuing.
A potentially significant oil discovery
[Photo of Amerada Hess was made in the South Arne Field
Corporation employees] offshore Denmark. Additional drilling is
planned in the South Arne Field and on
several other properties offshore
Denmark.
<PAGE> 10
15
PHOTO OF SOUTH ARNE FIELD
Denmark
<PAGE> 11
16
PHOTO OF FLUID CATALYTIC CRACKING UNIT
St. Croix, Virgin Islands
<PAGE> 12
17
REFINING AND MARKETING
REFINING Hess Oil Virgin Islands Corp., the Corporation's Virgin
Islands subsidiary (HOVIC), conducted an engineering study in 1995
which concluded that the capacity of its fluid catalytic cracking unit
can be increased to about 125,000 barrels per day with minor
modifications to current equipment. Modifications are scheduled to be
made during the next maintenance turnaround, which is likely to occur
late this year. The fluid catalytic cracking unit, which came on stream
in October 1993 at 90,000 barrels per day, currently is operating at a
rate of 110,000 barrels per day.
The strategic location of the Virgin Islands refinery enables it to
effectively supply markets outside its traditional markets along the
East and Gulf Coasts of the United States. HOVIC is seeking to use this
advantage to capitalize on the growing demand for gasoline and
distillates in South America.
In order to improve financial results in refining, HOVIC has undertaken
a number of initiatives to reduce costs, increase use of computers to
optimize refinery operations and improve operating procedures.
Additional changes are expected to be made during 1996.
Refinery runs averaged 377,000 barrels per day in 1995 compared with
388,000 barrels per day in 1994. During the fourth quarter of 1995,
refinery runs increased to 406,000 barrels per day in order to meet
demand created by the colder winter weather.
HOVIC will be upgrading the capacity of
the fluid catalytic cracking unit at its [Photo of Amerada Hess
Virgin Islands refinery from the current Corporation employee]
level of about 110,000 barrels per day
to approximately 125,000 per day late in
1996 or early in 1997.
<PAGE> 13
18
MARKETING Amerada Hess will concentrate its retail gasoline marketing
in states in which it has, or can establish, a significant presence.
The Corporation also plans to expand its retail gasoline marketing
business. The Corporation will continue its emphasis on establishing
relationships with new contract dealers. This ongoing program is
increasing the amount of the Corporation's gasoline marketed under the
HESS brand name without requiring significant capital expenditures.
Amerada Hess also is taking steps to increase non-gasoline revenues and
further strengthen the HESS brand. Future convenience stores will be
designed to accommodate new sources of revenue. In 1996 the Corporation
will test several new concepts related to food and other non-fuel
services.
During 1995 Amerada Hess introduced a proprietary HESS fleet credit
card and reached agreement with two universal fleet card providers.
These cards will be accepted at all HESS company-operated gasoline
stations. In 1996 the Corporation will begin to introduce credit card
readers at fuel dispensers.
As part of its effort to enhance financial returns from its terminal
operations, thruput arrangements with third parties are being
consummated and several terminals have been closed. Additional actions
will be considered in 1996.
Total refined product sales averaged 487,000 barrels per day in 1995
compared with 468,000 barrels per day in 1994. Gasoline sales increased
to 207,000 barrels per day, the most ever sold by the Corporation,
compared with 182,000 barrels per day in 1994.
[Photo of Amerada Hess At HESS gasoline stations, HESS MART
Corporation employee convenience stores are being upgraded to
and customer] offer additional products to customers.
Other services will be made available at
a number of HESS gasoline stations.
<PAGE> 14
19
Photo of HESS STATION
New York
<PAGE> 15
21
FINANCIAL REVIEW
Amerada Hess Corporation and Consolidated Subsidiaries
Management's Discussion and Analysis of Results of Operations and Financial
Condition
Consolidated Results of Operations
The results of operations for 1995 amounted to a net loss of $394 million
($4.24 per share), compared with net income of $74 million ($.79 per share) in
1994 and a net loss of $268 million ($2.90 per share) in 1993.
The results for 1995 included an after-tax charge of $416 million ($4.47 per
share) resulting from the adoption of Financial Accounting Standard (FAS) No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of. This noncash charge to earnings related primarily to
the Corporation's Port Reading refinery, United States flag ships and certain
domestic exploration and production properties. The 1995 results also include
net gains of approximately $68 million from asset sales, principally from a
United States crude oil pipeline and gathering system and an interest in an
undeveloped United Kingdom natural gas field. The Corporation also had income
from a refund of Windfall Profits Taxes (and related interest) and an insurance
recovery and recorded charges for costs associated with Hurricane Marilyn and
staff reductions. The after-tax effects of special items in 1995, 1994 and 1993,
summarized by major operating activity, are as follows (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Exploration Refining Corporate
and and and
Total Production Marketing Other
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Net income (loss) $(394) $ 142 $(207) $(329)
Less special items--
FAS No. 121 asset
impairment (416) (69) (175) (172)
Gain on asset sales 68 40 3 25
Tax refund 44 44 -- --
Insurance recovery 8 8 -- --
Hurricane Marilyn costs (19) -- (19) --
Staff-reduction costs (14) -- -- (14)
- -----------------------------------------------------------------------------
Income (loss), excluding
special items $ (65) $ 119 $ (16) $(168)
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Exploration Refining Corporate
and and and
Total Production Marketing Other
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Net income (loss) $ 74 $ 157 $ 95 $(178)
Less special item--
Gain on asset sales 41 41 -- --
- -----------------------------------------------------------------------------
Income (loss), excluding
special item $ 33 $ 116 $ 95 $(178)
- -----------------------------------------------------------------------------
1993
Net income (loss) $(268) $ 116 $(293) $ (91)
Less special items--
Consolidation of offices,
refinery closing and
asset writedowns (55) (40) (15) --
Change in accounting
for income taxes 29 -- -- 29
- -----------------------------------------------------------------------------
Income (loss), excluding
special items $(242) $ 156 $(278) $(120)
=============================================================================
</TABLE>
Sales and other operating revenues amounted to $7,302 million in 1995, an
increase of $700 million, or 11%, from 1994. Approximately one-half of the
increase was due to higher gasoline selling prices and sales volumes. The
remainder was largely due to increased foreign crude oil production and the
higher average selling price for crude oil in 1995. Sales and other operating
revenues in 1994 were 12% higher than in 1993. The increase was primarily due to
higher refined product sales volumes, including an increased proportion of
gasoline sales. Foreign crude oil sales volumes were also higher.
Non-operating revenues reflected pre-tax gains from asset sales of $96
million and $42 million in 1995 and 1994, respectively. Non-operating revenues
in 1995 also included $68 million before income taxes from the refund of
Windfall Profits Taxes, including interest.
Selling, general and administrative expenses in 1995 included pre-tax,
staff-reduction costs amounting to approximately $24 million, primarily
severance and enhanced pension expenses. In each of the three years in the
period ended December 31, 1995, the Corporation's effective income tax rate
exceeded the U.S. statutory rate primarily because of higher taxes on foreign
exploration and production earnings, including special petroleum taxes in Norway
and on certain fields in the United Kingdom.
<PAGE> 16
22
Comparison of Results
Exploration and Production: Excluding special items, exploration and production
earnings increased by $3 million in 1995 and decreased by $40 million in 1994
compared with the results of the prior year. The change in 1995 was largely due
to higher average worldwide crude oil selling prices and increased foreign crude
oil and natural gas production, offset by lower average natural gas selling
prices and increased exploration expenses. The earnings decline in 1994 was
primarily due to lower average worldwide crude oil and domestic natural gas
selling prices. The Corporation's average selling prices, including the effects
of hedging, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Crude oil and natural gas
liquids (per barrel)
United States $ 15.82 $ 15.43 $ 17.40
Foreign 16.95 15.91 16.89
Natural gas (per Mcf)
United States 1.70 1.91 2.11
Foreign 1.60 1.75 1.66
===================================================================================================
The Corporation's net
daily worldwide production
was as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Crude oil and natural gas
liquids (barrels per day)
United States 63,006 67,602 71,971
Foreign 197,454 182,918 143,419
- ---------------------------------------------------------------------------------------------------
Total 260,460 250,520 215,390
===================================================================================================
Natural gas (Mcf per day)
United States 401,581 427,103 502,459
Foreign 482,550 419,015 384,850
- ---------------------------------------------------------------------------------------------------
Total 884,131 846,118 887,309
===================================================================================================
</TABLE>
United States crude oil production was lower in 1995 and 1994, principally
reflecting natural decline. The increase in foreign crude oil production in 1995
was largely due to the commencement of production from the Fife Field in the
United Kingdom in August 1995. The increase in foreign production in 1994 was
primarily due to a full year of production from the Scott Field, which came on
stream in September 1993. United States natural gas production decreased in 1995
and 1994 reflecting natural decline, however, these decreases were offset by
increased production in the United Kingdom and Canada. In November 1995, the
Corporation announced that it would offer for sale its wholly-owned Canadian
subsidiary, which had net daily production of 11,396 barrels of crude oil and
natural gas liquids and 215,500 Mcf of natural gas during 1995. Certain
additional United States and international producing properties are expected to
be sold in 1996.
Depreciation, depletion, amortization and lease impairment charges were lower
in 1995, principally reflecting lower production volumes and positive oil and
gas reserve revisions in the United States, partially offset by the effect of
increased production in the United Kingdom. Higher depreciation and related
charges in 1994 were largely due to increased United Kingdom production.
Exploration expenses were higher in 1995 than in 1994, due to increased
exploration activity in the United Kingdom and Denmark, partially offset by
reduced United States expenses. Selling, general and administrative expenses
were higher in 1995, primarily reflecting expanded international activities and
increased marketing of natural gas in the United Kingdom. The overall effective
income tax rate on exploration and production earnings continued to be impacted
by high foreign tax rates, principally the Petroleum Revenue Tax on certain
fields in the United Kingdom and the Special Tax in Norway.
Excluding the effect of planned asset sales, the Corporation's production of
crude oil and natural gas in 1996 is expected to be comparable to 1995 levels.
However, future exploration and production earnings may be affected by changes
in crude oil and natural gas selling prices, the level of exploration spending,
income tax rates in the various countries in which the Corporation operates and
other factors.
<PAGE> 17
23
Refining and Marketing: Excluding special items, refining and marketing
operations had a loss of $16 million in 1995 compared with income of $95 million
in 1994 and a loss of $278 million in 1993. Gasoline margins improved somewhat
in 1995, however, this improvement was more than offset by lower distillate and
residual fuel oil margins, largely reflecting the warmer weather during the
winter of 1994-1995. Overall, the Corporation's average refined product selling
prices increased by approximately $1.00 per barrel in 1995, however, the
increased cost of purchased crude oil and refined products exceeded the increase
in selling prices.
The improvement in 1994 compared with 1993 was due to higher average refined
product margin, the first full year of operation of the fluid catalytic cracking
unit in the Virgin Islands and increased refinery runs. Average refined product
selling prices were comparable in 1994 and 1993 but the cost of crude oil
declined significantly in 1994.
Income taxes or benefits have not been recorded on the results of operations
of a refining subsidiary because of a net operating loss carryforward. A
substantial portion of the increase in refining and marketing earnings in 1994
related to the refining subsidiary.
Total refined product sales volumes amounted to 178 million barrels in 1995,
171 million barrels in 1994 and 141 million barrels in 1993, reflecting higher
gasoline sales in each period. The fluid catalytic cracking unit in the Virgin
Islands operated at a rate in excess of 100,000 barrels per day in 1995, an
increase of more than 10% over 1994. The increase in sales volume in 1994 over
1993 largely reflects the start-up of the Virgin Islands catcracker. The
Corporation expects to further increase the production capacity of the
catcracker in late 1996 or early 1997.
Refining and marketing industry conditions are extremely competitive and
earnings may continue to be volatile. The 1995 FAS No. 121 asset impairment
charges will reduce the amount of fixed costs affecting refining and marketing
operations in the future. The future role of certain refining and marketing
assets in the Corporation's operations is under review.
Corporate and Other: Excluding special items, corporate administration and other
operating activities had net expenses as follows (in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate administrative expenses $ 33 $ 33 $ 51
Income tax expense (benefit) (14) 5 (14)
- -----------------------------------------------------------------------------
19 38 37
Interest 193 191 113
Shipping and pipeline income (44) (51) (30)
- -----------------------------------------------------------------------------
Total corporate and other (after tax) $ 168 $ 178 $ 120
=============================================================================
</TABLE>
Corporate administrative expenses were comparable in 1995 and 1994, but
included a charge for refinancing long-term debt in 1993. The fluctuation in
income taxes in each year reflects the impact of foreign source earnings on
United States income taxes. Income from shipping and pipelines in 1994 included
an insurance recovery and the reversal into income of accrued maintenance costs
on a ship that was sold. Corporate-wide interest expense was comparable in 1995
and 1994, but higher than in 1993, as interest was capitalized on major
construction projects in 1993. Interest expense is expected to be lower in 1996
because of debt repayments in 1995 and anticipated further debt reductions in
1996 from cash generated by ongoing operations and asset sales.
Liquidity and Capital Resources
Net cash provided by operating activities, including changes in operating
assets and liabilities, amounted to $1,241 million in 1995 compared with $957
million in 1994 and $819 million in 1993. The 1995 FAS No. 121 asset impairment
charge did not affect cash provided by operations. The increase in 1995 was
primarily due to changes in working capital components and an advance sale of
future production of $151 million, and in 1994, the increase reflects improved
operating results. Cash provided by operating activities exceeded capital
expenditures of $692 million in 1995 and $596 million in 1994. The remaining
cash flow in each period was used principally to repay debt. In 1993, capital
expenditures exceeded net cash provided by operating activities, reflecting
major construction activity in the North Sea and at the Virgin Islands refinery.
<PAGE> 18
24
Total debt was $2,718 million at December 31, 1995 compared with $3,340
million at December 31, 1994. The debt to total capitalization ratio was 50.5%
at December 31, 1995 compared with 51.9% at the end of 1994. In 1995, the
Corporation sold forward $151 million of future crude oil production, which
contributed to debt reduction during the year. In addition, the proceeds from
asset sales amounted to $161 million in 1995 and $49 million in 1994. At
December 31, 1995, floating rate debt amounted to 37% of total debt, including
the effect of interest rate conversion agreements. The Corporation had borrowing
capacity available under existing revolving credit agreements at December 31,
1995 of $985 million and additional unused lines of credit under uncommitted
arrangements with banks of $655 million. The Corporation's borrowing
arrangements, including restrictive covenants, are more fully described in Note
5 to the financial statements.
The Corporation is presently offering for sale its wholly- owned Canadian
subsidiary, Amerada Hess Canada Ltd., as well as certain United States
exploration and production properties representing approximately 20% of current
United States production. In addition, the Corporation expects to sell certain
non-core North Sea producing properties and anticipates that the sale of its
interest in a non-operated offshore Abu Dhabi oil field will be completed in the
first half of 1996. See the Supplementary Oil and Gas Data beginning on page 41
for information on oil and gas activities by geographic area.
The Corporation uses futures, forwards, options and swaps to reduce the
effects of fluctuations in the prices of crude oil, natural gas and refined
products. These instruments are used to set the selling and purchase prices of
crude oil, natural gas and refined products and the related gains or losses are
an integral part of the Corporation's selling prices and costs. At December 31,
1995, the Corporation had open hedge positions equal to approximately 35% of its
estimated 1996 worldwide crude oil production and approximately 5% of 1997
production. In certain circumstances, hedge counterparties may elect to purchase
up to an additional 5% of 1996 and 1997 production. In addition, the Corporation
had open option contracts, providing varying degrees of protection against
declines in market prices, covering 10% of 1996 crude oil production. The
Corporation also had open contracts equal to approximately 25% of its estimated
1996 United States natural gas production. In certain circumstances, hedge
counterparties may elect to purchase up to an additional 20% of this production.
The Corporation had hedges covering approximately 70% of its refining and
marketing inventories and had additional short positions, principally crack
spreads, approximating 15% of refined products to be manufactured in the next
twelve months. As market conditions change, the Corporation will adjust its
hedging positions.
At December 31, 1995, the Corporation also had outstanding interest rate
conversion agreements that reduce the percentage of floating rate debt and
decrease exposure to rising interest rates. The Corporation also may hedge a
portion of its exposure to fluctuating foreign exchange rates, principally the
Pound Sterling. Generally, these exchange rates are fixed by purchasing currency
forward to correspond with crude oil sales commitments. See Note 11 to the
financial statements for additional information on the Corporation's hedging
activities.
The Corporation conducts foreign exploration and production activities,
principally in the United Kingdom, Norway, Canada and Gabon and intends to
increase its exploration activities in other international areas. Therefore, the
Corporation is subject to business risks associated with foreign operations.
Such risks may include the effect of foreign currency gains and losses on
reported earnings. However, the effect of foreign currency transactions and the
translation of foreign currency financial statements on the Corporation's
earnings and stockholders' equity has not been material and has not affected the
Corporation's liquidity or ability to raise capital.
Capital Expenditures
The following table summarizes the Corporation's capital expenditures in 1995,
1994 and 1993 (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Exploration and production
Intangible drilling costs and equipment
United States $ 195 $ 216 $ 241
Foreign 383 294 458
Lease acquisitions 44 18 40
Purchases of oil and gas reserves 4 3 16
- --------------------------------------------------------------------------------
626 531 755
Refining and marketing 63 62 591
Transportation and other 3 3 2
- --------------------------------------------------------------------------------
Total $ 692 $ 596 $1,348(*)
================================================================================
</TABLE>
(*)Includes expenditures of $722 million for major projects in the North Sea and
at the Virgin Islands refinery.
Capital expenditures in 1996 are expected to be approximately $850 million
and will be financed by internally generated funds.
<PAGE> 19
25
Environment, Health and Safety
The Corporation's awareness of its environmental responsibilities, along with
increasing environmental regulations at the federal, state and local levels,
have led to programs requiring higher operating costs and capital investments by
the Corporation. The Corporation believes that it has made the necessary
expenditures to comply with laws currently being implemented and that it is well
positioned to meet proposed regulations.
The Corporation continues to improve its environment, health and safety
programs. These programs include pollution control and reduction, waste
minimization and treatment, compliance evaluation, facility auditing and
employee training to monitor operational activities and conditions and to
prevent non-compliant activities that might threaten the environment. The
Corporation continues to produce gasolines that meet the requirements for
oxygenated and reformulated gasolines under the Clean Air Act of 1990.
Reformulated gasolines decrease emissions of volatile and toxic organic
compounds. The Corporation's production of reformulated gasolines from the
Virgin Islands and Port Reading facilities exceeds the total requirements at its
gasoline stations. The Corporation has the capabilities to meet the more
restrictive requirements for reformulated gasoline that take effect in 1998 and
2000. The Corporation's Virgin Islands refinery also has desulfurization
capabilities enabling it to produce low-sulfur diesel fuel that meets the
requirements of the Clean Air Act. The Corporation will continue upgrading its
facilities to meet regulatory changes.
The Corporation expects continuing expenditures for environmental assessment
and remediation. Sites where corrective action may be necessary include gasoline
stations, terminals, refineries (including solid waste management units under
permits issued pursuant to the Resource Conservation and Recovery Act) and,
although not significant, Superfund sites where the Corporation has been named a
potentially responsible party under the Superfund legislation. The Corporation
expects that existing reserves for environmental liabilities will adequately
cover costs of assessing and remediating known environmental sites.
The Corporation expended $15 million in 1995, $16 million in 1994 and $14
million in 1993 for remediation, mostly in its refining and marketing activity.
In addition, capital expenditures for facilities, primarily to comply with
federal, state and local environmental standards, were $15 million in 1995, $8
million in 1994 and $28 million in 1993.
Dividends
Cash dividends on common stock totaled $.60 per share ($.15 per quarter) during
1995 and 1994.
Stock Market Information
The common stock of Amerada Hess Corporation is traded principally on the New
York Stock Exchange (ticker symbol: AHC). High and low sales prices in 1995 and
1994 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1995 1994
-------------------- --------------------
Quarter Ended High Low High Low
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31 50-1/2 43-3/4 49-7/8 44-5/8
June 30 53-1/8 47-1/2 52-1/4 44
September 30 51-3/4 45-3/4 52-5/8 45-1/8
December 31 53-5/8 43-1/4 50-1/4 43-7/8
================================================================================
</TABLE>
Quarterly Financial Data
Quarterly results of operations for the years ended December 31, 1995 and 1994
follow (millions of dollars, except per share data):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Sales Net
and other Net income
operating Gross income (loss)
Quarter revenues profit(a) (loss) per share
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
First $1,892 $ 310 $ 25(b) $ .27
Second 1,773 294 (40) (.43)
Third 1,642 223 (104)(c) (1.13)
Fourth 1,995 362 (275)(d,e) (2.95)
- ------------------------------------------------------------------------
Total $7,302 $1,189 $ (394) $(4.24)
========================================================================
1994
First $1,858 $ 409 $ 84 $ .90
Second 1,488 257 (17) (.18)
Third 1,494 250 (2)(f) (.02)
Fourth 1,762 308 9 .09
- ------------------------------------------------------------------------
Total $6,602 $1,224 $ 74 $ .79
========================================================================
</TABLE>
(a) Gross profit represents sales and other operating revenues less cost of
products sold and operating expenses and depreciation, depletion,
amortization and lease impairment.
(b) Includes income of $44 million from the refund of Windfall Profits Taxes and
related interest.
(c) Includes net charges of $14 million and $19 million for costs associated
with staff reductions and Hurricane Marilyn, respectively. Also includes
income of $8 million from an insurance recovery.
(d) Reflects an after-tax charge for asset impairment of $416 million resulting
from the adoption of FAS No. 121.
(e) Includes a net gain on asset sales of $68 million and a benefit of $23
million from the recognition, as a result of fourth quarter events, of
foreign tax credits relating to the first nine months of the year.
(f) Includes a net gain on asset sales of $41 million.
The results of operations for the periods reported herein should not be
considered as indicative of future operating results.
<PAGE> 20
26
CONSOLIDATED BALANCE SHEET
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
At December 31
-----------------------------
Thousands of dollars 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 56,071 $ 53,135
Accounts receivable
Trade 760,947 546,341
Other 37,384 24,184
Inventories 838,770 945,635
Other current assets 269,372 152,366
- --------------------------------------------------------------------------------
Total current assets 1,962,544 1,721,661
- --------------------------------------------------------------------------------
Investments and Advances 185,522 140,300
- --------------------------------------------------------------------------------
Property, Plant and Equipment
Exploration and production 9,257,851 9,656,923
Refining 2,619,721 3,005,198
Marketing 832,191 887,526
Transportation 314,607 715,407
Other 39,842 39,772
- --------------------------------------------------------------------------------
Total--at cost 13,064,212 14,304,826
Less reserves for depreciation, depletion,
amortization and lease impairment 7,694,496 7,938,824
- --------------------------------------------------------------------------------
Property, plant and equipment--net 5,369,716 6,366,002
- --------------------------------------------------------------------------------
Deferred Income Taxes and Other Assets 238,588 109,977
- --------------------------------------------------------------------------------
Total Assets $ 7,756,370 $ 8,337,940
================================================================================
</TABLE>
<PAGE> 21
27
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
At December 31
-----------------------
1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable--trade $ 443,513 $ 291,571
Accrued liabilities 575,886 533,640
Deferred revenue 151,416 21,723
Taxes payable 239,080 168,927
Notes payable 90,000 63,747
Current maturities of long-term debt 104,685 121,806
- -----------------------------------------------------------------------------------------------------
Total current liabilities 1,604,580 1,201,414
- -----------------------------------------------------------------------------------------------------
Long-Term Debt 2,523,181 3,154,235
- -----------------------------------------------------------------------------------------------------
Capitalized Lease Obligations 64,202 80,928
- -----------------------------------------------------------------------------------------------------
Deferred Liabilities and Credits
Deferred income taxes 602,792 547,537
Other 301,219 254,197
- -----------------------------------------------------------------------------------------------------
Total deferred liabilities and credits 904,011 801,734
- -----------------------------------------------------------------------------------------------------
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--93,011,255 shares in 1995; 92,995,755 shares in 1994 93,011 92,996
Capital in excess of par value 744,252 743,537
Retained earnings 2,017,064 2,467,267
Equity adjustment from foreign currency translation (193,931) (204,171)
- -----------------------------------------------------------------------------------------------------
Total stockholders' equity 2,660,396 3,099,629
- -----------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 7,756,370 $ 8,337,940
=====================================================================================================
</TABLE>
The consolidated financial statements reflect the successful efforts method of
accounting for oil and gas exploration and producing activities.
See accompanying notes to consolidated financial statements.
<PAGE> 22
28
STATEMENT OF CONSOLIDATED INCOME
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31
-------------------------------------------------
Thousands of dollars, except per share data 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Sales (excluding excise taxes) and other operating revenues $ 7,302,307 $ 6,601,984 $ 5,879,521
Non-operating revenues 222,482 96,809 21,153
- ---------------------------------------------------------------------------------------------------------------------
Total revenues 7,524,789 6,698,793 5,900,674
- ---------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of products sold and operating expenses 5,220,657 4,449,819 4,287,139
Exploration expenses, including dry holes 297,817 249,433 258,826
Selling, general and administrative expenses 634,271 590,647 596,919
Interest expense 247,465 245,149 156,615
Depreciation, depletion, amortization and lease impairment 893,067 927,933 824,651
Asset impairment 584,161 -- --
Provision for income taxes 41,764 162,098 74,186
- ---------------------------------------------------------------------------------------------------------------------
Total costs and expenses 7,919,202 6,625,079 6,198,336
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Cumulative Effect of Accounting Change (394,413) 73,714 (297,662)
Cumulative Effect of Change in Accounting for Income Taxes -- -- 29,459
- ---------------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ (394,413) $ 73,714 $ (268,203)
- ---------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share Before Accounting Change $ (4.24) $ .79 $ (3.22)
- ---------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share $ (4.24) $ .79 $ (2.90)
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CONSOLIDATED RETAINED EARNINGS
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31
-------------------------------------------------
Thousands of dollars, except per share data 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Year $ 2,467,267 $ 2,449,325 $ 2,773,018
Net income (loss) (394,413) 73,714 (268,203)
Dividends declared--common stock
($.60 per share in 1995, 1994 and 1993) (55,790) (55,772) (55,490)
- ---------------------------------------------------------------------------------------------------------------------
Balance at End of Year $ 2,017,064 $ 2,467,267 $ 2,449,325
=====================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 23
29
STATEMENT OF CONSOLIDATED CASH FLOWS
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31
-------------------------------------------------
Thousands of dollars 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (394,413) $ 73,714 $ (268,203)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Depreciation, depletion, amortization and lease impairment 893,067 927,933 824,651
Asset impairment 584,161 -- --
Exploratory dry hole costs 178,883 152,971 155,725
(Increase) decrease in accounts receivable (226,790) (15,927) 201,290
(Increase) decrease in inventories 106,357 (90,258) 127,990
Increase (decrease) in accounts payable, accrued liabilities and
deferred revenue 328,457 (191,282) (154,257)
Increase (decrease) in taxes payable 67,229 62,437 (8,980)
Changes in deferred income taxes and other (295,944) 37,430 (58,793)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,241,007 957,018 819,423
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Capital expenditures
Exploration and production (625,679) (531,409) (754,876)
Refining and marketing (63,070) (62,238) (591,545)
Transportation and other (3,362) (2,637) (1,620)
- ------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures (692,111) (596,284) (1,348,041)
Investment in affiliate (31,552) -- --
Proceeds from sales of property, plant and equipment and other 177,344 72,804 12,436
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (546,319) (523,480) (1,335,605)
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Issuance (repayment) of notes 26,247 (54,153) 117,791
Long-term borrowings 25,000 289,843 547,704
Repayment of long-term debt and capitalized lease obligations (689,355) (642,112) (167,769)
Cash dividends paid (55,788) (55,711) (41,603)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (693,896) (462,133) 456,123
- ------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash 2,144 2,095 (1,320)
- ------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 2,936 (26,500) (61,379)
Cash and Cash Equivalents at Beginning of Year 53,135 79,635 141,014
- ------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 56,071 $ 53,135 $ 79,635
==============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 24
30
STATEMENT OF CONSOLIDATED CHANGES IN
COMMON STOCK AND CAPITAL IN EXCESS OF PAR VALUE
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Common stock Capital in
-----------------------------
Number of excess of
Thousands of dollars shares Amount par value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 92,583,702 $ 92,584 $ 725,668
Cancellations under executive incentive
compensation and stock ownership plan (net) (17,000) (17) (589)
Employee stock options exercised 20,153 20 364
- -----------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 92,586,855 92,587 725,443
Distribution to trustee under executive incentive
compensation and stock ownership plan (net) 408,900 409 18,094
- -----------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 92,995,755 92,996 743,537
Distribution to trustee under executive incentive
compensation and stock ownership plan (net) 15,500 15 715
- -----------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 93,011,255 $ 93,011 $ 744,252
===========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 25
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amerada Hess Corporation and Consolidated Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Amerada Hess Corporation and subsidiaries (the
"Corporation") engage in the exploration for and the production, purchase,
transportation and sale of crude oil and natural gas. These activities are
conducted primarily in the United States, Canada, United Kingdom, Norway and
Gabon. The Corporation also manufactures, purchases, transports and markets
refined petroleum products. The Corporation markets refined products principally
on the East and Gulf Coasts of the United States. In preparing financial
statements, management makes estimates and assumptions that affect the reported
amounts of assets and liabilities in the Consolidated Balance Sheet and revenues
and expenses in the Statement of Consolidated Income. Actual results could
differ from those estimates. Estimates made by management include: oil and gas
reserves, inventory valuations, pension and postemployment liabilities,
environmental obligations, depreciation and dismantlement and income taxes.
Principles of Consolidation: The consolidated financial statements include the
accounts of Amerada Hess Corporation and subsidiaries. The Corporation's
interests in oil and gas exploration and production ventures are proportionately
consolidated.
Investments in affiliated companies, owned 20% to 50% inclusive, are stated
at cost of acquisition plus the Corporation's equity in undistributed net income
since acquisition. The change in the equity in net income of these companies is
included in non-operating revenues in the Statement of Consolidated Income.
Intercompany transactions and accounts are eliminated in consolidation.
Cash and Cash Equivalents: Cash equivalents consist of highly liquid
investments, which are readily convertible into cash and have maturities of
three months or less.
Inventories: Crude oil and refined product inventories are valued at the lower
of cost or market value. Cost is determined on the first-in, first-out method
for approximately 60% of the inventories and the average cost method for the
remainder.
Inventories of materials and supplies are valued at or below cost.
Exploration and Development Costs: Oil and gas exploration and production
activities are accounted for on the successful efforts method. Costs of
acquiring undeveloped oil and gas leasehold acreage, including lease bonuses,
brokers' fees and other related costs, are capitalized. Provisions for
impairment of undeveloped oil and gas leases are based on periodic evaluations
and other factors.
Annual lease rentals and exploration expenses, including geological and
geophysical expenses and exploratory dry hole costs, are charged against income
as incurred.
Costs of drilling and equipping productive wells, including development dry
holes, and related production facilities are capitalized.
Depreciation, Depletion and Amortization: Depreciation, depletion and
amortization of oil and gas production equipment, properties and wells are
determined on the unit-of-production method based on estimated recoverable oil
and gas reserves. Depreciation of refinery facilities is determined on the
unit-of-production method based on estimated thruput volumes. Depreciation of
all other plant and equipment is determined on the straight-line method based on
estimated useful lives.
The estimated costs of dismantlement, restoration and abandonment, less
estimated salvage values, of offshore oil and gas production platforms and
certain other facilities are taken into account in determining depreciation.
Retirement of Property, Plant and Equipment: Costs of property, plant and
equipment retired or otherwise disposed of, less accumulated reserves, are
reflected in net income.
Maintenance and Repairs: The estimated costs of major maintenance, including
turnarounds at refineries, are accrued. Other expenditures for maintenance and
repairs are charged against income as incurred. Renewals and improvements are
treated as additions to property, plant and equipment, and items replaced are
treated as retirements.
<PAGE> 26
32
Environmental Expenditures: The Corporation capitalizes environmental
expenditures that increase the life or efficiency of property or that reduce or
prevent environmental contamination. The Corporation accrues for environmental
expenses resulting from existing conditions that relate to past operations when
the costs are probable and reasonably estimable.
Foreign Currency Translation: The local currency is the functional currency
(primary currency in which business is conducted) for the Corporation's North
Sea and Canadian operations. The U.S. dollar is the functional currency for
other foreign operations. Adjustments resulting from translating foreign
functional currency assets and liabilities into U.S. dollars are recorded in a
separate component of stockholders' equity entitled "Equity adjustment from
foreign currency translation." Gains or losses resulting from transactions in
other than the functional currency are reflected in net income.
Hedging: The Corporation uses futures, forwards, options and swaps to hedge the
effects of fluctuations in the prices of crude oil, natural gas and refined
products, interest rates and the exchange rates of foreign currencies. These
transactions meet the requirements for hedge accounting, including designation
and correlation. The resulting gains or losses, measured by quoted market
prices, termination values or other methods, are accounted for as part of the
transactions being hedged, except that losses not expected to be recovered upon
the completion of hedged transactions are expensed. On the balance sheet,
deferred gains are included in deferred revenue and deferred losses in other
current assets. Oil and gas trading activity is marked to market, with gains and
losses recorded in income.
Income Taxes: Deferred income taxes are determined on the liability method. No
provision is made for U.S. income taxes applicable to undistributed earnings of
foreign subsidiaries that are indefinitely reinvested in foreign operations.
2. ASSET IMPAIRMENT AND ASSET SALES
In the fourth quarter of 1995, the Corporation adopted Statement of Financial
Accounting Standards (FAS) No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. As required by this
standard, the Corporation recorded losses on long-lived assets where events or
circumstances indicated that the assets were impaired and the estimated future
net cash flows from the assets, without interest and undiscounted, were less
than the carrying amounts of the assets. The impairment charge was the
difference between the carrying value and the estimated fair value of the
assets. The Corporation estimated fair values based on sales prices for
comparable assets or discounted future cash flows. Impairment indicators and the
fair value estimates used by the Corporation may change in the future as
circumstances change.
The total impairment of long-lived assets and a long-term operating lease
was $584,161,000 ($415,542,000 after income taxes). Of the after-tax amount,
$174,850,000 related to refining and marketing operations, principally for a
refining facility, $69,146,000 related to oil and gas producing properties, and
the remainder was for ocean going vessels and was recorded as a charge in the
operating activity "Corporate and other."
In 1995, the Corporation sold a crude oil pipeline and gathering system in
the southeastern United States, an interest in an undeveloped United Kingdom
natural gas field and various other assets. The net gain from asset sales in
1995 was approximately $68,100,000. In 1994, the Corporation also sold an
interest in a United Kingdom natural gas field for a gain of $41,200,000. The
Corporation is also offering for sale its wholly-owned Canadian subsidiary and
certain United States and international exploration and production properties.
These asset sales are expected to be completed in 1996.
In 1993, the Corporation recorded special charges, including asset
write-downs, amounting to $78,900,000 ($54,500,000 after income taxes). Of the
after-tax amount, $40,000,000 related to consolidating U.S. exploration and
production activities and offices, reducing the carrying value of certain North
Sea oil properties and surrendering an operated joint venture in Abu Dhabi. The
remainder represented costs associated with mothballing the Purvis, Mississippi
refinery. In total, fixed assets were reduced by $39,200,000. The charges other
than fixed asset reductions were primarily for relocation, severance, and
related expenses, substantially all of which were included in selling, general
and administrative expenses.
<PAGE> 27
33
3. INVENTORIES
Inventories at December 31 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Crude oil and other charge stocks $240,425 $250,291
Refined and other finished products 492,613 582,696
- --------------------------------------------------------------------------------
733,038 832,987
Materials and supplies 105,732 112,648
- --------------------------------------------------------------------------------
Total $838,770 $945,635
================================================================================
</TABLE>
4. SHORT-TERM NOTES PAYABLE AND RELATED LINES OF CREDIT
Short-term notes payable to banks at December 31, 1995 amount to $90,000,000
compared to $63,747,000 at December 31, 1994. The weighted average interest
rates on these borrowings were 6.4% and 6.2% at December 31, 1995 and 1994,
respectively. At December 31, 1995, the Corporation has unused lines of credit
under uncommitted arrangements with several banks aggregating approximately
$655,000,000. No compensating balances or fees are required for such lines of
credit.
5. LONG-TERM DEBT
Long-term debt at December 31 consists of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
6.1% Marine Terminal Revenue Bonds--
Series 1994--City of Valdez, Alaska,
due 2024
$ 20,000 $ 20,000
Pollution Control Revenue Bonds with
sinking fund requirements, weighted
average rate 6.6%,* due through 2022 52,557 52,541
Fixed rate notes, payable principally to
insurance companies, weighted average
rate 8.7%, due through 2014 1,285,491 1,461,815
Revolving Credit Agreement with banks,
weighted average rate 6.8%,* due 1999 760,928 1,043,749
Revolving Credit Agreement with banks,
weighted average rate 6.4%,* due
through 2002 414,090 547,222
Revolving Credit Agreement with banks,
weighted average rate 6.7%, due
through 1998 90,000 112,000
Other loans, at 8.0%, due 2007 4,800 38,714
- --------------------------------------------------------------------------------
2,627,866 3,276,041
Less amount included in current maturities 104,685 121,806
- --------------------------------------------------------------------------------
Total $2,523,181 $3,154,235
================================================================================
</TABLE>
*Includes effect of interest rate conversion agreements.
The aggregate long-term debt maturing during the next five years is as
follows (in thousands): 1996--$104,685 (included in current liabilities);
1997--$229,686; 1998--$114,686; 1999--$900,613 and 2000--$400.
The Corporation's long-term debt agreements contain various restrictions and
conditions, including the requirement to maintain a ratio of current assets to
current liabilities of not less than 1 to 1. There are also limitations on total
borrowings under the agreements. In addition, the cumulative amount of cash
dividends and stock distributions (as defined), under the most restrictive
covenant, may not exceed consolidated net income (as defined) subsequent to
December 31, 1990, plus $600,000,000. At December 31, 1995, the ratio of current
assets to current liabilities is 1.2 to 1 and the Corporation has additional
allowable borrowing capacity for the construction or acquisition of assets of
$985,000,000. Retained earnings free of restrictions at December 31, 1995 amount
to $210,000,000.
At December 31, 1995, the Corporation has a Revolving Credit Agreement with
banks aggregating $1,400,000,000 ($760,928,000 outstanding at December 31,
1995), which is due to be repaid in 1999. Borrowings bear interest based on
various money market rates chosen by the Corporation. Commitment fees of .2% per
annum are payable on the unused portion of the credit lines.
A wholly-owned subsidiary of the Corporation operating in the United Kingdom
has a multi-currency Revolving Credit Agreement (the "United Kingdom Facility")
with banks aggregating $800,000,000 ($414,090,000 outstanding at December 31,
1995), which declines each year from 1999 through 2002. The United Kingdom
Facility bears interest at .425% above the London Interbank Offered Rate
(LIBOR). Commitment fees of .188% per annum are payable on the unused portion of
the credit lines.
A wholly-owned subsidiary of the Corporation operating in Canada has a
dual-currency Revolving Credit Agreement (the "Canada Facility") with banks
aggregating $110,000,000 ($90,000,000 outstanding at December 31, 1995). The
amount available under the Canada Facility declines ratably each year through
1998. Borrowings bear interest at .75% above LIBOR. Commitment fees of .25% per
annum are payable on the unused portion of the credit lines.
<PAGE> 28
34
In the latter part of 1995, the Corporation sold forward a portion of its
1996 domestic crude oil production for $151,073,000 and used the proceeds to
repay revolving credit debt. This amount is included in deferred revenue on the
Consolidated Balance Sheet.
At December 31, 1995, the Corporation has interest rate conversion
agreements, which are accounted for by the accrual method, that effectively
reduce the percentage of its floating rate debt from 53% to 37%.
No interest was capitalized in 1995 or 1994. Capitalized interest amounted
to $92,228,000 in 1993. The total amount of interest paid (net of amounts
capitalized), principally on short-term and long-term debt, in 1995, 1994 and
1993 was $254,760,000, $248,595,000 and $169,277,000, respectively.
6. STOCKHOLDERS' EQUITY
At December 31, 1995, the number of shares of common stock reserved for issuance
is as follows:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Future distributions under the following plans
Executive Long-Term Incentive Compensation and
Stock Ownership Plan 217,000
1995 Long-Term Incentive Plan* 4,500,000
Warrants** 1,044,354
- --------------------------------------------------------------------------------
Total 5,761,354
================================================================================
</TABLE>
*Subject to stockholder approval.
**Exercisable through June 27, 2001 at $65.11 per share.
In December 1995, the Corporation's Board of Directors approved the 1995
Long-Term Incentive Plan (the "Plan") and the Corporation registered 4,500,000
shares for issuance thereunder. Pursuant to the Plan, the Corporation awarded
rights to receive 202,500 shares of restricted common stock and 872,000 stock
options with exercise prices ranging from $49.75 to $64.75 per share. The Plan
is subject to stockholder approval at the 1996 Annual Meeting of Stockholders.
7. FOREIGN CURRENCY TRANSLATION
Foreign currency exchange transactions reflected in net income (after income tax
effect) amounted to a gain of $1,475,000 in 1995 and losses of $931,000 in 1994
and $1,788,000 in 1993.
The equity adjustment from foreign currency translation, included as a
component of stockholders' equity, reflected gains of $10,240,000 in 1995 and
$34,273,000 in 1994. The cumulative translation adjustments at December 31
consist of:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Working capital $ 42,281 $ 36,424
Property, plant and equipment, net (385,066) (392,586)
Long-term debt 77,105 77,967
Deferred income taxes 16,530 23,569
Other items 55,219 50,455
- --------------------------------------------------------------------------------
Total $(193,931) $(204,171)
================================================================================
</TABLE>
8. PENSION PLANS
The Corporation has noncontributory, defined benefit pension plans covering
substantially all employees, except those covered by union pension plans.
Retirement benefits are based on credited service and final average
compensation. The Corporation's policy is to fund pension costs accrued, except
where funding limitations are imposed under income tax regulations.
Pension expense consisted of:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Thousands of dollars 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of benefits earned $ 27,270 $ 24,119 $ 21,540
Accrued interest on projected benefit obligation 26,149 24,080 21,859
Loss (return) on plan assets (67,063) 9,326 (35,053)
Net amortization and deferral 39,707 (36,860) 10,082
- ----------------------------------------------------------------------------------------------------------------
Total $ 26,063 $ 20,665 $ 18,428
================================================================================================================
</TABLE>
<PAGE> 29
35
Plan assets include fixed income and equity securities, including
investments in commingled funds. A summary of the funded status of the
Corporation's pension plans at December 31 follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Thousands of dollars 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Market value of plan assets $ 343,782 $ 289,294
Book reserves 53,347 34,197
- ------------------------------------------------------------------------------
Total assets and reserves 397,129 323,491
- ------------------------------------------------------------------------------
Actuarial present value of benefit obligation
Vested 338,920 279,374
Non-vested 3,849 3,585
- ------------------------------------------------------------------------------
Total 342,769 282,959
Effects of projected future salary increases 61,813 53,063
- ------------------------------------------------------------------------------
Projected benefit obligation 404,582 336,022
- ------------------------------------------------------------------------------
Projected benefit obligation in excess of
assets and reserves $ (7,453) $ (12,531)
==============================================================================
Components of projected benefit obligation
in excess of assets and reserves
Unrecognized prior service costs $ (5,569) $ (4,923)
Unrecognized net experience losses (6,200) (15,748)
Unrecognized net transitional asset 4,316 8,140
- ------------------------------------------------------------------------------
Total $ (7,453) $ (12,531)
==============================================================================
</TABLE>
The discount rate and assumed rate of future salary increases used in
determining the actuarial present value of the projected benefit obligation were
7% and 5.5%, respectively, in 1995 and 8% and 6%, respectively, in 1994. The
expected long-term rate of return on plan assets was 8.5% in 1995 and 8% in
1994.
The Corporation has nonqualified supplemental pension plans covering certain
employees, which provide for incremental pension payments from the Corporation's
funds so that total pension payments equal amounts that would have been payable
from the Corporation's principal pension plans if it were not for limitations
imposed by income tax regulations. The projected benefit obligation related to
these unfunded plans totaled $21,330,000 at December 31, 1995, and $17,979,000
at December 31, 1994. Pension expense for the plans was $3,706,000 in 1995,
$3,871,000 in 1994 and $1,823,000 in 1993. At December 31, 1995, the Corporation
has accrued $11,700,000 for these plans.
9. PROVISION FOR INCOME TAXES
The provision for income taxes consisted of:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Thousands of dollars 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
United States Federal
Current $ 4,411 $ (350) $ 15,380
Deferred (190,512) (39,948)(a) (72,040)
State 2,796 1,666 1,552
- -------------------------------------------------------------------------------
(183,305) (38,632) (55,108)
- -------------------------------------------------------------------------------
Foreign
Current 190,609 131,107 93,895
Deferred 34,460 69,623 41,272
- -------------------------------------------------------------------------------
225,069 200,730 135,167
- -------------------------------------------------------------------------------
Adjustment of deferred tax
liability for income tax
rate changes -- -- (5,873)
- -------------------------------------------------------------------------------
Total $ 41,764 $ 162,098 $ 74,186(b)
===============================================================================
</TABLE>
(a) Includes benefit of operating loss of $43,121.
(b) Excludes benefit of $29,459 as of January 1, 1993, from the cumulative
effect of the change in accounting for income taxes required by FAS No. 109.
Income (loss) before income taxes consisted of the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Thousands of dollars 1995 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C> <C>
United States $(656,190) $(170,813) $(190,726)
Foreign* 303,541 406,625 (32,750)
- ----------------------------------------------------------------------
Total $(352,649) $ 235,812 $(223,476)
======================================================================
</TABLE>
* Foreign income includes the Corporation's Virgin Islands, shipping and other
operations located outside of the United States.
<PAGE> 30
36
Deferred income taxes arise from temporary differences between the tax basis
of assets and liabilities and their reported amounts in the financial
statements. A summary of the components of deferred tax liabilities and assets
at December 31 follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Thousands of dollars 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities
Fixed assets $ 388,994 $ 580,651
Foreign petroleum taxes 239,218 184,033
Other items 74,551 84,254
- -------------------------------------------------------------------------------
Total deferred tax liabilities 702,763 848,938
- -------------------------------------------------------------------------------
Deferred tax assets
Accrued liabilities 169,250 123,619
Net operating and
other loss carryforwards 400,839 390,430
Tax credit carryforwards 104,516 111,117
Other items 17,636 29,261
- -------------------------------------------------------------------------------
Total deferred tax assets 692,241 654,427
Valuation allowance (325,739) (281,529)
- -------------------------------------------------------------------------------
Net deferred tax assets 366,502 372,898
- -------------------------------------------------------------------------------
Net deferred tax liabilities $ 336,261 $ 476,040
===============================================================================
</TABLE>
The difference between the Corporation's effective income tax rate and the
United States statutory rate is reconciled below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
United States statutory rate (35.0)% 35.0% (35.0)%
Effect of foreign operations,
including foreign tax credits 46.7 33.4 71.6
State income taxes, net of Federal
income tax benefit .5 .5 .5
Alternative minimum tax -- (1.8) (2.9)
Tax credits (.6) -- (2.6)
Other items .2 1.6 1.6
- ------------------------------------------------------------------------------
Total 11.8% 68.7% 33.2%
==============================================================================
</TABLE>
The Corporation has not recorded deferred income taxes applicable to
undistributed earnings of foreign subsidiaries that are indefinitely reinvested
in foreign operations. Undistributed earnings amounted to approximately $950
million at December 31, 1995, excluding amounts which, if remitted, generally
would not result in any additional U.S. income taxes because of available
foreign tax credits. If the earnings of such foreign subsidiaries were not
indefinitely reinvested, a deferred tax liability of approximately $200 million
would have been required.
For income tax reporting at December 31, 1995, the Corporation has general
business credit carryforwards of approximately $20 million, expiring in 1999
through 2001. In addition, the Corporation has alternative minimum tax credit
carryforwards of approximately $74 million, which can be carried forward
indefinitely. A refining subsidiary of the Corporation also has a net operating
loss carryforward of approximately $850 million, expiring through 2010.
Income taxes paid (net of refunds) in 1995, 1994 and 1993 amounted to
$101,066,000, $66,569,000 and $117,849,000, respectively.
10. NET INCOME PER SHARE
Net income per share was computed on the weighted average number of shares of
common stock and common stock equivalents outstanding during each year
(93,001,601 shares in 1995, 92,968,993 shares in 1994 and 92,594,871 shares in
1993).
11. FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The Corporation uses futures, forwards, options and swaps, individually or in
combinations, to reduce the effects of fluctuations in crude oil, natural gas
and refined product prices. In addition, the Corporation uses interest rate
conversion agreements to fix the interest rates on a portion of its long-term,
floating-rate debt. Foreign currency contracts are used to protect the
Corporation from fluctuations in exchange rates.
Commodity Hedging: At December 31, 1995, the Corporation's hedging activities
included commodity and financial contracts maturing mostly through 1996,
covering 92,000,000 barrels of crude oil and refined products (56,000,000
barrels in 1994) and 38,900,000 Mcf of natural gas (195,000,000 Mcf in 1994). Of
the crude oil and refined product hedges, 49,000,000 barrels related to
exploration and production activities (26,500,000 barrels in 1994), and the
remainder related to refining and marketing operations.
<PAGE> 31
37
The Corporation produced 95,000,000 barrels of crude oil and natural gas liquids
and 323,000,000 Mcf of natural gas in 1995 and had approximately 34,000,000
barrels of crude oil and refined products in its refining and marketing
inventories at December 31, 1995. Since the contracts described above are
designated as hedges and correlate to price movements of crude oil, natural gas
and refined products, any gains or losses resulting from market changes will be
offset by losses or gains on the Corporation's hedged inventory or production.
Net unrealized hedging losses were $34,000,000 at December 31, 1995. Net
unrealized gains were $20,000,000 at December 31, 1994. Deferred gains or losses
related to anticipated transactions are not material.
Financial Instruments: At December 31, 1995, the Corporation has $490,000,000 of
notional value interest rate conversion agreements with a weighted average
maturity of approximately eight years ($225,000,000 at December 31, 1994),
$430,000,000 of notional value foreign currency forward and purchased option
contracts maturing in 1996 ($155,000,000 at December 31, 1994) and $36,300,000
in letters of credit outstanding ($117,000,000 at December 31, 1994). Notional
amounts do not quantify risk or represent assets or liabilities of the
Corporation, but are used in the calculation of cash settlements under the
contracts.
Fair Value Disclosure: The Corporation values financial instruments as required
by FAS No. 107, Disclosures about Fair Values of Financial Instruments. The
carrying amounts of cash and cash equivalents, short-term debt and long-term,
variable-rate debt approximate fair value. The Corporation estimates the fair
value of its long-term, fixed-rate debt generally using discounted cash flow
analysis based on the Corporation's current borrowing rates for debt with
similar maturities. Interest rate conversion agreements and foreign currency
exchange contracts are valued based on current termination values or quoted
market prices of comparable contracts. The Corporation's valuation of commodity
contracts considers quoted market prices, time value, volatility of the
underlying commodities and other factors.
The carrying amounts of the Corporation's financial instruments and
commodity contracts, including those used in the Corporation's hedging
activities, generally approximate their fair values at December 31, except as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
1995 1994
---------------------- ----------------------
Balance Balance
Millions of dollars, Sheet Fair Sheet Fair
asset (liability) Amount Value Amount Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-term, fixed-rate debt $(1,363) $(1,528) $(1,548) $(1,519)
Interest rate conversion
agreements -- (23) -- (2)
Foreign currency exchange
agreements and options -- (2) -- (2)
=====================================================================================
</TABLE>
At times, the Corporation uses oil and gas futures, forwards, options and
swaps for trading activities, which are not related to the hedging program
discussed above. This activity and its results are not material.
The Corporation's financial instruments with off-balance-sheet risks are
with major financial institutions and, along with cash and cash equivalents and
accounts receivable, expose the Corporation to market and credit risks and may
at times be concentrated with certain counterparties or groups of
counterparties. The credit worthiness of counterparties is subject to continuing
review, however, full performance is anticipated.
<PAGE> 32
38
12. LEASED ASSETS
The Corporation and certain of its subsidiaries lease floating production
systems, tankers, gasoline stations, office space and other assets for varying
periods. Leases that expire generally are expected to be renewed or replaced by
other leases. At December 31, 1995, the Corporation had net capital lease assets
of $88,121,000, representing natural gas production and transportation
facilities in the United Kingdom, which are included in property, plant and
equipment in the Consolidated Balance Sheet.
At December 31, 1995, future minimum rental payments applicable to capital
and noncancelable operating leases (other than oil and gas leases) are as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Operating Capital
Thousands of dollars Leases Leases
- --------------------------------------------------------------------------------
<S> <C> <C>
1996 $129,266 $20,038
1997 118,825 21,130
1998 73,332 22,305
1999 56,383 26,063
2000 54,809 --
Remaining years 391,867 --
- --------------------------------------------------------------------------------
Total minimum lease payments 824,482 89,536
Less: Imputed interest -- 9,485
Income from subleases 17,343 --
- --------------------------------------------------------------------------------
Net minimum lease payments $807,139 $80,051
================================================================================
Capitalized lease obligations--
Current $15,849
Long-term 64,202
- --------------------------------------------------------------------------------
Total $80,051
================================================================================
</TABLE>
Rental expense for all operating leases, other than rentals applicable to
oil and gas leases, was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total rental expense $179,255 $164,395 $180,459
Less income from subleases 1,748 3,443 855
- --------------------------------------------------------------------------------
Net rental expense $177,507 $160,952 $179,604
================================================================================
</TABLE>
13. INFORMATION ON MAJOR OPERATING ACTIVITIES
Financial data by major geographic area for each of the three years ended
December 31, 1995 follow:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Consol-
Millions of dollars United States(a) Europe Other idated(b)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Operating revenues
Unaffiliated customers $ 5,750 $ 1,320 $ 232 $ 7,302
Intergeographic transfers -- 71 96
Operating profit (loss) (536) 309 122 (105)
Identifiable assets 4,804 2,308 644 7,756
Net assets 1,236 869 555 2,660
==================================================================================
1994
Operating revenues
Unaffiliated customers $ 5,437 $ 907 $ 258 $ 6,602
Intergeographic transfers -- 247 77
Operating profit 66 303 112 481
Identifiable assets 5,293 2,316 729 8,338
Net assets 1,804 796 500 3,100
==================================================================================
1993
Operating revenues
Unaffiliated customers $ 4,743 $ 929 $ 208 $ 5,880
Intergeographic transfers -- -- 147
Operating profit (loss) (330) 147 116 (67)
Identifiable assets 5,401 2,412 829 8,642
Net assets 1,808 743 478 3,029
==================================================================================
</TABLE>
(a) Includes U.S. Virgin Islands and shipping operations.
(b) After elimination of transactions between affiliates, which are valued at
approximate market prices.
<PAGE> 33
39
Financial data by major operating activity for each of the three years ended
December 31, 1995 follow:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Exploration and Refining and Corporate
Millions of dollars Production Marketing and Other Consolidated(a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Operating revenues
Total operating revenues $ 2,858 $ 4,556 $ 542
Less: Transfers between affiliates 248 48 358
- -------------------------------------------------------------------------------------------------------------------------
Operating revenues from unaffiliated customers $ 2,610 $ 4,508 $ 184 $ 7,302
- -------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) $ 386 $ (327) $ (164) $ (105)
Interest expense -- -- (247) (247)
(Provision) benefit for income taxes (244) 120 82 (42)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 142 $ (207) $ (329) $ (394)
- -------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion, amortization and lease impairment $ 719 $ 144 $ 30 $ 893
Asset impairment 106 269 209 584
Identifiable assets 3,873 3,294 589 7,756
Capital expenditures 626 63 3 692
=========================================================================================================================
1994
Operating revenues
Total operating revenues $ 2,665 $ 4,205 $ 527
Less: Transfers between affiliates 402 51 342
- -------------------------------------------------------------------------------------------------------------------------
Operating revenues from unaffiliated customers $ 2,263 $ 4,154 $ 185 $ 6,602
- -------------------------------------------------------------------------------------------------------------------------
Operating profit $ 368 $ 83 $ 30 $ 481
Interest expense -- -- (245) (245)
(Provision) benefit for income taxes (211) 12 37 (162)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 157 $ 95 $ (178) $ 74
- -------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion, amortization and lease impairment $ 746 $ 150 $ 32 $ 928
Identifiable assets 4,117 3,617 604 8,338
Capital expenditures 531 62 3 596
=========================================================================================================================
1993
Operating revenues
Total operating revenues $ 2,541 $ 3,540 $ 578
Less: Transfers between affiliates 248 59 472
- -------------------------------------------------------------------------------------------------------------------------
Operating revenues from unaffiliated customers $ 2,293 $ 3,481 $ 106 $ 5,880
- -------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) $ 260 $ (318) $ (9) $ (67)
Interest expense -- -- (156) (156)
(Provision) benefit for income taxes (144) 25 74 (b) (45)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 116 $ (293) $ (91) $ (268)
- -------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion, amortization and lease impairment $ 695 $ 101 $ 29 $ 825
Identifiable assets 4,446 3,576 620 8,642
Capital expenditures 755 591 2 1,348
=========================================================================================================================
</TABLE>
(a) After elimination of transactions between affiliates, which are valued at
approximate market prices.
(b) Includes a benefit of $29 million from the cumulative effect of the change
in accounting for income taxes required by FAS No. 109.
<PAGE> 34
40
REPORT OF MANAGEMENT
Amerada Hess Corporation and Consolidated Subsidiaries
The consolidated financial statements of Amerada Hess Corporation and
consolidated subsidiaries were prepared by and are the responsibility of
management. These financial statements conform with generally accepted
accounting principles and are, in part, based on estimates and judgements of
management. Other information included in this Annual Report is consistent with
that in the consolidated financial statements.
The Corporation maintains a system of internal controls designed to provide
reasonable assurance that assets are safeguarded and that transactions are
properly executed and recorded. Judgements are required to balance the relative
costs and benefits of this system of internal controls.
The Corporation's consolidated financial statements have been audited by
Ernst & Young LLP, independent auditors, who have been selected by the Audit
Committee of the Board of Directors and approved by the stockholders. Ernst &
Young LLP assesses the Corporation's system of internal controls and performs
tests and procedures that they consider necessary to arrive at an opinion on the
fairness of the consolidated financial statements.
The Audit Committee of the Board of Directors, which consists solely of
nonemployee directors, meets periodically with the independent auditors,
internal auditors and management to review and discuss the Corporation's
financial information, the system of internal controls and the results of
internal and external audits. Ernst & Young LLP and the Corporation's internal
auditors have unrestricted access to the Audit Committee to discuss audit
findings and other financial matters.
/s/ JOHN B. HESS
- ----------------------------
John B. Hess
Chairman of the Board and
Chief Executive Officer
/s/ JOHN Y. SCHREYER
- ----------------------------
John Y. Schreyer
Executive Vice President and
Chief Financial Officer
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Amerada Hess Corporation
We have audited the accompanying consolidated balance sheet of Amerada Hess
Corporation and consolidated subsidiaries as of December 31, 1995 and 1994 and
the related consolidated statements of income, retained earnings, changes in
common stock and capital in excess of par value and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amerada Hess
Corporation and consolidated subsidiaries at December 31, 1995 and 1994 and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in 1995 the
Corporation adopted Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of.
/s/ ERNST & YOUNG LLP
- ---------------------
Ernst & Young LLP
New York, NY
February 15, 1996
<PAGE> 35
41
SUPPLEMENTARY OIL AND GAS DATA
Amerada Hess Corporation and Consolidated Subsidiaries
The supplementary oil and gas data that follows is presented in accordance with
Statement of Financial Accounting Standards (FAS) No. 69, Disclosures about Oil
and Gas Producing Activities, and includes (1) costs incurred, capitalized costs
and results of operations relating to oil and gas producing activities, (2) net
proved oil and gas reserves, and (3) a standardized measure of discounted future
net cash flows relating to proved oil and gas reserves, including a
reconciliation of changes therein.
The Corporation is offering for sale its wholly-owned Canadian subsidiary
and certain United States exploration and production properties. In addition,
the Corporation expects to sell certain non-core North Sea producing properties
and anticipates the sale of its interest in Abu Dhabi in the first half of 1996.
COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
United Other
For the Years Ended December 31 (Millions of dollars) Total States Canada Europe Areas
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Property acquisitions $ 48 $ 36 $ 8 $ 2 $ 2
Exploration 320 137 28 145 10
Development 377 107 18 242 10
1994
Property acquisitions $ 21 $ 14 $ 5 $-- $ 2
Exploration 274 139 31 99 5
Development 333 120 31 170 12
1993
Property acquisitions $ 56 $ 48 $ 5 $ 2 $ 1
Exploration 274 147 27 98 2
Development 527 151 22 345 9
============================================================================================================
</TABLE>
CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
At December 31 (Millions of dollars) 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unproved properties $ 407 $ 439
Proved properties 1,763 2,071
Wells, equipment and related facilities 7,088 7,147
- -------------------------------------------------------------------------------------------------------
Total costs 9,258 9,657
Less: Reserves for depreciation, depletion, amortization and lease impairment 6,032 5,988
- -------------------------------------------------------------------------------------------------------
Net capitalized costs $3,226 $3,669
=======================================================================================================
</TABLE>
<PAGE> 36
42
The results of operations for oil and gas producing activities shown below
exclude sales of purchased crude oil and natural gas, non-operating revenues
(including gains on sales of oil and gas properties), interest expense and gains
and losses resulting from foreign currency exchange transactions. Therefore,
these results differ from the net income from exploration and production
operations in Note 13 to the financial statements.
RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
United Other
For the Years Ended December 31 (Millions of dollars) Total States Canada Europe Areas
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Sales and other operating revenues
Unaffiliated customers $1,956 $ 508 $ 148 $1,247 $ 53
Inter-company 241 102 8 67 64
- --------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,197 610 156 1,314 117
- --------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Production expenses, including related taxes 623 204 46 350 23
Exploration expenses, including dry holes 298 113 24 151 10
Other operating expenses 222 66 13 126 17
Depreciation, depletion, amortization and lease impairment 719 224 48 415 32
Asset impairment 106 106 -- -- --
Provision for income taxes 191 (36) 13 207 7
- --------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 2,159 677 144 1,249 89
- --------------------------------------------------------------------------------------------------------------------------------
Results of operations $ 38 $ (67) $ 12 $ 65 $ 28
- --------------------------------------------------------------------------------------------------------------------------------
1994
Sales and other operating revenues
Unaffiliated customers $1,687 $ 576 $ 172 $ 879 $ 60
Inter-company 385 98 2 237 48
- --------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,072 674 174 1,116 108
- --------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Production expenses, including related taxes 593 210 47 318 18
Exploration expenses, including dry holes 250 128 18 99 5
Other operating expenses 187 70 11 92 14
Depreciation, depletion, amortization and lease impairment 746 293 57 368 28
Provision for income taxes 197 (10) 22 167 18
- --------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,973 691 155 1,044 83
- --------------------------------------------------------------------------------------------------------------------------------
Results of operations $ 99 $ (17) $ 19 $ 72 $ 25
- --------------------------------------------------------------------------------------------------------------------------------
1993
Sales and other operating revenues
Unaffiliated customers $1,790 $ 704 $ 176 $ 890 $ 20
Inter-company 227 119 -- -- 108
- --------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,017 823 176 890 128
- --------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Production expenses, including related taxes 607 233 49 294 31
Exploration expenses, including dry holes 259 150 18 89 2
Other operating expenses 218 79 12 109 18
Depreciation, depletion, amortization and lease impairment 694 332 54 271 37
Provision for income taxes 133 9 23 82 19
- --------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,911 803 156 845 107
- --------------------------------------------------------------------------------------------------------------------------------
Results of operations $ 106 $ 20 $ 20 $ 45 $ 21
================================================================================================================================
</TABLE>
<PAGE> 37
43
The Corporation's net oil and gas reserves have been estimated by DeGolyer and
MacNaughton, independent consultants. The Corporation is offering for sale its
Canadian operations and approximately 15% of its December 31, 1995 United States
reserves on a barrel of oil equivalent basis. Reserves in Abu Dhabi, which the
Corporation anticipates selling in the first half of 1996, represent
approximately 60% of crude oil reserves in Other Areas. The reserves in the
tabulation below include proved undeveloped crude oil and natural gas reserves
that will require substantial future development expenditures. The estimates of
the Corporation's proved reserves of crude oil and natural gas (after deducting
royalties and operating interests owned by others) follow:
OIL AND GAS RESERVES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
United Other
Total States Canada Europe Areas
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Proved Developed and Undeveloped Reserves
Crude Oil, Including Condensate and Natural Gas
Liquids (Millions of Barrels)
At January 1, 1993 652 203 40 371 38
Revisions of previous estimates 66 16 -- 43 7
Extensions, discoveries and other additions 28 5 3 20 --
Purchases of minerals in-place 3 -- 1 2 --
Production (79) (26) (5) (41) (7)
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 1993 670 198 39 395 38
Revisions of previous estimates 49 13 (2) 35 3
Extensions, discoveries and other additions 12 8 2 2 --
Purchases of minerals in-place 8 4 -- -- 4
Sales of minerals in-place (3) -- -- (3) --
Production (92) (25) (5) (56) (6)
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 1994 644 198 34 373 39
Revisions of previous estimates 68 11 -- 44 13
Extensions, discoveries and other additions 95 30 3 61 1
Sales of minerals in-place (17) (11) (2) (4) --
Production (95) (23) (4) (62) (6)
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 1995 695 205 31 412 47
=======================================================================================================================
Natural Gas (Millions of Mcf)
At January 1, 1993 2,640 1,009 597 1,034 --
Revisions of previous estimates 127 30 (5) 102 --
Extensions, discoveries and other additions 189 82 65 42 --
Purchases of minerals in-place 20 11 4 5 --
Production (323) (183) (61) (79) --
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 1993 2,653 949 600 1,104 --
Revisions of previous estimates 142 105 (1) 38 --
Extensions, discoveries and other additions 167 101 50 16 --
Purchases of minerals in-place 4 3 -- 1 --
Sales of minerals in-place (76) -- -- (76) --
Production (309) (156) (68) (85) --
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 1994 2,581 1,002 581 998 --
Revisions of previous estimates 53 6 (10) 57 --
Extensions, discoveries and other additions 270 200 10 7 53
Sales of minerals in-place (100) (23) (39) (38) --
Production (323) (147) (79) (97) --
- -----------------------------------------------------------------------------------------------------------------------
At December 31, 1995 2,481 1,038* 463 927 53
=======================================================================================================================
Net Proved Developed Reserves
Crude Oil, Including Condensate and Natural Gas
Liquids (Millions of barrels)
At January 1, 1993 436 173 40 191 32
At December 31, 1993 514 169 38 271 36
At December 31, 1994 505 171 33 263 38
At December 31, 1995 540 157 31 310 42
Natural Gas (Millions of Mcf)
At January 1, 1993 2,002 851 576 575 --
At December 31, 1993 2,260 794 579 887 --
At December 31, 1994 2,210 838 558 814 --
At December 31, 1995 2,036 755 458 823 --
=======================================================================================================================
</TABLE>
*Excludes 527 million Mcf of carbon dioxide gas for sale or use in company
operations.
<PAGE> 38
44
The standardized measure of discounted future net cash flows relating to proved
oil and gas reserves required to be disclosed by FAS No. 69 is based on
assumptions and judgements. As a result, the future net cash flow estimates are
highly subjective and could be materially different if other assumptions were
used. Therefore, caution should be exercised in the use of the data presented
below.
Future net cash flows are calculated by applying year-end oil and gas
selling prices (adjusted for price changes provided by contractual arrangements,
including hedges) to estimated future production of proved oil and gas reserves,
less estimated future development and production costs and future income tax
expenses. Future net cash flows are discounted at the prescribed rate of 10%. No
recognition is given in the discounted future net cash flow estimates to
depreciation, depletion, amortization and lease impairment, exploration
expenses, interest expense, general and administrative expenses and changes in
future prices and costs. The selling prices of crude oil and natural gas are
highly volatile.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
United Other
At December 31 (Millions of dollars) Total States Canada Europe Areas
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Future revenues $17,201 $ 5,343 $ 1,093 $ 9,857 $ 908
- -------------------------------------------------------------------------------------------------------------------
Less:
Future development and production costs 7,352 2,289 539 4,273 251
Future income tax expenses 4,034 921 142 2,631 340
- -------------------------------------------------------------------------------------------------------------------
11,386 3,210 681 6,904 591
- -------------------------------------------------------------------------------------------------------------------
Future net cash flows 5,815 2,133 412 2,953 317
Less: Discount at 10% annual rate 2,057 899 143 952 63
- -------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net
cash flows $ 3,758 $ 1,234 $ 269 $ 2,001 $ 254
- -------------------------------------------------------------------------------------------------------------------
1994
Future revenues $14,545 $ 4,267 $ 1,266 $ 8,236 $ 776
- -------------------------------------------------------------------------------------------------------------------
Less:
Future development and production costs 6,874 2,317 667 3,696 194
Future income tax expenses 2,789 465 152 1,910 262
- -------------------------------------------------------------------------------------------------------------------
9,663 2,782 819 5,606 456
- -------------------------------------------------------------------------------------------------------------------
Future net cash flows 4,882 1,485 447 2,630 320
Less: Discount at 10% annual rate 1,622 577 168 787 90
- -------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net
cash flows $ 3,260 $ 908 $ 279 $ 1,843 $ 230
- -------------------------------------------------------------------------------------------------------------------
1993
Future revenues $13,484 $ 4,135 $ 1,714 $ 7,059 $ 576
- -------------------------------------------------------------------------------------------------------------------
Less:
Future development and production costs 6,505 2,258 704 3,360 183
Future income tax expenses 2,235 407 308 1,380 140
- -------------------------------------------------------------------------------------------------------------------
8,740 2,665 1,012 4,740 323
- -------------------------------------------------------------------------------------------------------------------
Future net cash flows 4,744 1,470 702 2,319 253
Less: Discount at 10% annual rate 1,705 556 266 797 86
- -------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net
cash flows $ 3,039 $ 914 $ 436 $ 1,522 $ 167
===================================================================================================================
</TABLE>
<PAGE> 39
45
CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET
CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
For the years ended December 31 (Millions of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Standardized measure of discounted future net cash flows at beginning of year $ 3,260 $ 3,039 $ 3,496
- -------------------------------------------------------------------------------------------------------------------------
Changes during the year
Sales and transfers of oil and gas produced during year, net of
production costs (1,574) (1,479) (1,410)
Development costs incurred during year 377 333 527
Net changes in prices and production costs applicable to future production 1,195 604 (1,569)
Net change in estimated future development costs (118) (264) (68)
Extensions and discoveries (including improved recovery) of oil and
gas reserves, less related costs 451 135 167
Revisions of previous oil and gas reserve estimates 277 314 288
Purchases (sales) of minerals in-place (165) (2) 23
Accretion of discount 498 437 539
Net change in income taxes (758) (380) 547
Revision in rate or timing of future production and other changes 315 523 499
- -------------------------------------------------------------------------------------------------------------------------
Total 498 221 (457)
- -------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows at end of year $ 3,758 $ 3,260 $ 3,039
=========================================================================================================================
</TABLE>
<PAGE> 40
46
TEN-YEAR SUMMARY OF FINANCIAL DATA
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statement of Consolidated Income
Revenues
Sales (excluding excise taxes) and other operating revenues
Crude oil (including sales of purchased oil) $ 1,565,310 $ 1,228,045 $ 1,219,750
Natural gas (including sales of purchased gas) 1,120,450 1,063,560 1,020,563
Petroleum products 4,311,082 3,980,563 3,348,900
Other operating revenues 305,465 329,816 290,308
- -------------------------------------------------------------------------------------------------------------------------
Total 7,302,307 6,601,984 5,879,521
Non-operating revenues 222,482 96,809 21,153
- -------------------------------------------------------------------------------------------------------------------------
Total revenues 7,524,789 6,698,793 5,900,674
- -------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold and operating expenses 5,220,657 4,449,819 4,287,139
Exploration expenses, including dry holes 297,817 249,433 258,826
Selling, general and administrative expenses 634,271 590,647 596,919
Interest expense 247,465 245,149 156,615
Depreciation, depletion, amortization and lease impairment 893,067 927,933 824,651
Asset impairment 584,161(*) -- --
Provision for income taxes 41,764 162,098 44,727(**)
- -------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 7,919,202 6,625,079 6,168,877
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (394,413) $ 73,714 $ (268,203)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share(***) $ (4.24) $ .79 $ (2.90)
- -------------------------------------------------------------------------------------------------------------------------
Dividends Per Share of Common Stock $ .60 $ .60 $ .60
Weighted Average Number of Shares Outstanding
(in thousands) 93,002 92,969 92,595
=========================================================================================================================
</TABLE>
(*)Reflects a charge for impairment of long-lived assets on adoption of FAS
No. 121. The net effect, after income taxes, was $415,542 ($4.47 per
share). See Note 2 to financial statements.
(**)Includes a benefit of $29,459 ($.32 per share) from the cumulative effect
of the change in accounting for income taxes required by FAS No. 109.
(***)For a description of the basis of computing earnings per share, see Note 10
to financial statements.
<PAGE> 41
47
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Consolidated Income
Revenues
Sales (excluding excise taxes) and other operating revenues
Crude oil (including sales of purchased oil) $ 1,362,118 $ 1,448,793 $ 1,248,193 $ 904,233
Natural gas (including sales of purchased gas) 787,996 574,004 458,615 315,578
Petroleum products 3,428,702 3,897,748 4,587,646 4,107,770
Other operating revenues 279,541 346,300 653,051 261,373
- -----------------------------------------------------------------------------------------------------------------------------------
Total 5,858,357 6,266,845 6,947,505 5,588,954
Non-operating revenues 95,352 149,496 133,593 90,373
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues 5,953,709 6,416,341 7,081,098 5,679,327
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold and operating expenses 4,039,180 4,409,832 4,708,925 3,837,800
Exploration expenses, including dry holes 228,998 301,183 276,200 164,925
Selling, general and administrative expenses 581,542 582,549 512,805 422,491
Interest expense 147,099 177,850 224,200 187,811
Depreciation, depletion, amortization and lease impairment 833,405 828,765 743,467 545,934
Asset impairment -- -- -- --
Provision for income taxes 115,940 31,854 132,788 44,017
- -----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 5,946,164 6,332,033 6,598,385 5,202,978
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 7,545 $ 84,308 $ 482,713 $ 476,349
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share(***) $ .09 $ 1.04 $ 5.96 $ 5.87
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share of Common Stock .60 $ .60 $ .60 $ .60
Weighted Average Number of Shares Outstanding
(in thousands) 87,317 81,088 81,023 81,147
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1988 1987 1986
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statement of Consolidated Income
Revenues
Sales (excluding excise taxes) and other operating revenues
Crude oil (including sales of purchased oil) $ 872,757 $ 886,504 $ 806,927
Natural gas (including sales of purchased gas) 288,915 284,610 284,533
Petroleum products 2,864,342 3,347,242 2,649,197
Other operating revenues 179,997 195,209 270,525
- -------------------------------------------------------------------------------------------------------------------
Total 4,206,011 4,713,565 4,011,182
Non-operating revenues 57,533 71,024 51,073
- -------------------------------------------------------------------------------------------------------------------
Total revenues 4,263,544 4,784,589 4,062,255
- -------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold and operating expenses 2,964,534 3,521,552 3,155,868
Exploration expenses, including dry holes 182,205 106,440 148,506
Selling, general and administrative expenses 380,169 328,118 315,199
Interest expense 145,439 144,147 164,275
Depreciation, depletion, amortization and lease impairment 441,414 431,482 468,244
Asset impairment -- -- --
Provision for income taxes 25,566 22,990 (7,267)
- -------------------------------------------------------------------------------------------------------------------
Total costs and expenses 4,139,327 4,554,729 4,244,825
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 124,217 $ 229,860 $ (182,570)
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) per share(***) $ 1.51 $ 2.73 $ (2.16)
- -------------------------------------------------------------------------------------------------------------------
Dividends Per Share of Common Stock $ .60 $ .45 --
Weighted Average Number of Shares Outstanding
(in thousands) 82,031 84,136 84,440
===================================================================================================================
</TABLE>
<PAGE> 42
48
TEN-YEAR SUMMARY OF FINANCIAL DATA
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED BALANCE SHEET DATA AT YEAR-END
Cash and cash equivalents $ 56,071 $ 53,135 $ 79,635
Working capital 357,964 520,247 245,026
Property, plant and equipment
Exploration and production $ 9,257,851 $ 9,656,923 $ 9,227,937
Refining and marketing 3,451,912 3,892,724 3,834,674
Transportation and other 354,449 755,179 724,629
- --------------------------------------------------------------------------------------------------------------------
Total--at cost 13,064,212 14,304,826 13,787,240
Less reserves 7,694,496 7,938,824 7,052,328
- --------------------------------------------------------------------------------------------------------------------
Property, plant and equipment--net $ 5,369,716 $ 6,366,002 $ 6,734,912
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 7,756,370 $ 8,337,940 $ 8,641,546
Total debt 2,717,866 3,339,788 3,687,922
Stockholders' equity 2,660,396 3,099,629 3,028,911
Stockholders' equity per share $ 28.60 $ 33.33 $ 32.71
- --------------------------------------------------------------------------------------------------------------------
SUMMARIZED STATEMENT OF CASH FLOWS
Net cash provided by operating activities $ 1,241,007 $ 957,018 $ 819,423
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Capital expenditures
Exploration and production (625,679) (531,409) (754,876)
Refining and marketing (63,070) (62,238) (591,545)
Transportation and other (3,362) (2,637) (1,620)
- --------------------------------------------------------------------------------------------------------------------
Total capital expenditures (692,111) (596,284) (1,348,041)
Proceeds from sales of property,
plant and equipment and other 145,792 72,804 12,436
- --------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (546,319) (523,480) (1,335,605)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Issuance (repayment) of notes 26,247 (54,153) 117,791
Long-term borrowings 25,000 289,843 547,704
Repayment of long-term debt and
capitalized lease obligations (689,355) (642,112) (167,769)
Issuance of common stock -- -- --
Cash dividends paid (55,788) (55,711) (41,603)
Common and preferred stock retired -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (693,896) (462,133) 456,123
- --------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 2,144 2,095 (1,320)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ 2,936 $ (26,500) $ (61,379)
- --------------------------------------------------------------------------------------------------------------------
STOCKHOLDER DATA AT YEAR-END
Number of common shares outstanding (in thousands) 93,011 92,996 92,587
Number of stockholders (based on number of
holders of record) 11,294 11,506 12,000
Market price of common stock $ 53.00 $ 45.63 $ 45.13
====================================================================================================================
</TABLE>
<PAGE> 43
49
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA AT YEAR-END
Cash and cash equivalents $ 141,014 $ 120,170 $ 129,914 $ 120,300
Working capital 551,459 625,370 603,244 493,168
Property, plant and equipment
Exploration and production $ 9,071,396 $ 9,174,705 $ 8,210,531 $ 6,403,799
Refining and marketing 3,294,958 2,632,026 2,230,000 2,053,018
Transportation and other 724,411 723,101 717,452 710,439
- --------------------------------------------------------------------------------------------------------------------------------
Total--at cost 13,090,765 12,529,832 11,157,983 9,167,256
Less reserves 6,646,801 6,339,232 5,594,399 4,688,142
- --------------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment--net $ 6,443,964 $ 6,190,600 $ 5,563,584 $ 4,479,114
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $ 8,721,756 $ 8,841,435 $ 9,056,636 $ 6,867,411
Total debt 3,186,199 3,266,195 2,925,285 2,697,184
Stockholders' equity 3,387,599 3,131,982 3,106,029 2,560,628
Stockholders' equity per share $ 36.59 $ 38.63 $ 38.34 $ 31.69
- --------------------------------------------------------------------------------------------------------------------------------
SUMMARIZED STATEMENT OF CASH FLOWS
Net cash provided by operating activities $ 1,137,707 $ 1,364,268 $ 1,326,444 $ 805,848
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Capital expenditures
Exploration and production (915,476) (1,292,935) (1,265,168) (1,729,357)
Refining and marketing (639,365) (410,645) (182,090) (86,645)
Transportation and other (2,953) (8,735) (14,169) (12,667)
- --------------------------------------------------------------------------------------------------------------------------------
Total capital expenditures (1,557,794) (1,712,315) (1,461,427) (1,828,669)
Proceeds from sales of property,
plant and equipment and other 25,423 37,788 (12,012) 6,644
- --------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,532,371) (1,674,527) (1,473,439) (1,822,025)
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Issuance (repayment) of notes (159,756) (183,351) 46,744 13,823
Long-term borrowings 675,016 786,280 461,413 1,203,994
Repayment of long-term debt and
capitalized lease obligations (524,384) (269,414) (287,531) (194,870)
Issuance of common stock 497,360 -- -- --
Cash dividends paid (64,194) (36,468) (60,681) (48,785)
Common and preferred stock retired -- -- (6,213) (43,632)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 424,042 297,047 153,732 930,530
- --------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (8,534) 3,468 2,877 (7,237)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ 20,844 $ (9,744) $ 9,614 $ (92,884)
- --------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDER DATA AT YEAR-END
Number of common shares outstanding (in thousands) 92,584 81,068 81,019 80,804
Number of stockholders (based on number of
holders of record) 13,088 13,732 14,669 16,638
Market price of common stock $ 46.00 $ 47.50 $ 46.38 $ 48.75
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED BALANCE SHEET DATA AT YEAR-END
Cash and cash equivalents $ 213,184 $ 226,513 $ 92,681
Working capital 285,074 161,764 231,602
Property, plant and equipment
Exploration and production $ 5,360,817 $ 5,010,724 $ 4,508,499
Refining and marketing 1,973,782 1,922,620 1,900,919
Transportation and other 703,862 680,257 721,743
- ----------------------------------------------------------------------------------------------------------------
Total--at cost 8,038,461 7,613,601 7,131,161
Less reserves 4,358,765 4,064,227 3,601,978
- ----------------------------------------------------------------------------------------------------------------
Property, plant and equipment--net $ 3,679,696 $ 3,549,374 $ 3,529,183
- ----------------------------------------------------------------------------------------------------------------
Total assets $ 5,371,979 $ 5,304,808 $ 4,904,710
Total debt 1,672,329 1,631,345 1,528,367
Stockholders' equity 2,215,154 2,158,544 1,938,793
Stockholders' equity per share $ 27.02 $ 26.30 $ 22.97
- ----------------------------------------------------------------------------------------------------------------
SUMMARIZED STATEMENT OF CASH FLOWS
Net cash provided by operating activities $ 747,393 $ 452,158 $ 560,063
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Capital expenditures
Exploration and production (652,600) (304,462) (207,374)
Refining and marketing (60,084) (36,018) (7,511)
Transportation and other (17,245) (7,663) (2,545)
- ----------------------------------------------------------------------------------------------------------------
Total capital expenditures (729,929) (348,143) (217,430)
Proceeds from sales of property,
plant and equipment and other 16,401 4,845 13,895
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (713,528) (343,298) (203,535)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Issuance (repayment) of notes (205,414) 398,889 (95,314)
Long-term borrowings 416,161 63,000 21,102
Repayment of long-term debt and
capitalized lease obligations (191,159) (372,115) (336,224)
Issuance of common stock -- -- --
Cash dividends paid (49,248) (25,857) (23,757)
Common and preferred stock retired (7,420) (62,138) --
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (37,080) 1,779 (434,193)
- ----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (10,114) 23,193 (728)
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ (13,329) $ 133,832 $ (78,393)
- ----------------------------------------------------------------------------------------------------------------
STOCKHOLDER DATA AT YEAR-END
Number of common shares outstanding (in thousands) 81,979 82,089 84,408
Number of stockholders (based on number of
holders of record) 18,031 19,343 23,696
Market price of common stock $ 31.50 $ 24.88 $ 23.75
================================================================================================================
</TABLE>
<PAGE> 44
50
TEN-YEAR SUMMARY OF OPERATING DATA
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Production Per Day (net)
Crude oil (barrels)
United States 52,284 55,638 60,173
Canada 9,749 10,581 11,536
United Kingdom 135,429 122,043 80,019
Norway 25,576 24,279 26,388
Abu Dhabi 7,227 7,273 10,004
Africa(*) 9,512 8,857 8,301
- ---------------------------------------------------------------------------------------------------------
Total 239,777 228,671 196,421
- ---------------------------------------------------------------------------------------------------------
Natural gas liquids (barrels)
United States 10,722 11,964 11,798
Canada 1,647 1,809 1,956
United Kingdom 6,900 6,756 3,783
Norway 1,414 1,320 1,432
- ---------------------------------------------------------------------------------------------------------
Total 20,683 21,849 18,969
- ---------------------------------------------------------------------------------------------------------
Natural gas (Mcf)
United States 401,581 427,103 502,459
Canada 215,500 185,856 167,839
United Kingdom 239,307 208,742 188,024
Norway 27,743 24,417 28,987
- ---------------------------------------------------------------------------------------------------------
Total 884,131 846,118 887,309
- ---------------------------------------------------------------------------------------------------------
Well Completions (net)
Oil wells 33 28 48
Gas wells 41 44 49
Dry holes 50 24 37
Productive Wells at Year-End (net)
Oil wells 2,154 2,160 2,189
Gas wells 1,160 1,146 1,115
- ---------------------------------------------------------------------------------------------------------
Total 3,314 3,306 3,304
- ---------------------------------------------------------------------------------------------------------
Undeveloped Net Acreage (held at end of year)
United States 1,440,000 1,685,000 1,854,000
Canada 799,000 743,000 788,000
Other international 5,072,000 3,827,000 3,522,000
- ---------------------------------------------------------------------------------------------------------
Total 7,311,000 6,255,000 6,164,000
- ---------------------------------------------------------------------------------------------------------
Shipping
Vessels owned or under charter at year-end 16 17 15
Total deadweight tons 2,010,000 2,265,000 2,398,000
Refining (barrels daily)
Refinery crude runs 377,000 388,000 351,000
Petroleum Products Sold (barrels daily)
Gasoline, distillates and other light products 401,000 375,000 291,000
Residual fuel oils 86,000 93,000 95,000
- ---------------------------------------------------------------------------------------------------------
Total 487,000 468,000 386,000
- ---------------------------------------------------------------------------------------------------------
Storage Capacity at Year-End (barrels) 89,165,000 94,597,000 94,380,000
Number of Employees (average) 9,574 9,858 10,173
=========================================================================================================
</TABLE>
(*)Principally production from Gabon after 1990 and from Libya prior to June 30,
1986, when the Corporation ceased operations in accordance with United
States Government regulations.
<PAGE> 45
51
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Production Per Day (net)
Crude oil (barrels)
United States 62,517 66,063 62,434 60,992
Canada 11,528 11,966 9,494 9,178
United Kingdom 86,265 59,979 56,027 38,707
Norway 29,598 28,619 24,351 24,135
Abu Dhabi 11,150 9,866 8,475 7,230
Africa(*) 6,910 8,952 -- --
- --------------------------------------------------------------------------------------------------------------------
Total 207,968 185,445 160,781 140,242
- --------------------------------------------------------------------------------------------------------------------
Natural gas liquids (barrels)
United States 11,063 10,047 9,436 9,986
Canada 1,981 1,997 1,704 1,732
United Kingdom 1,468 766 805 466
Norway 1,707 1,752 2,004 2,016
- --------------------------------------------------------------------------------------------------------------------
Total 16,219 14,562 13,949 14,200
- --------------------------------------------------------------------------------------------------------------------
Natural gas (Mcf)
United States 601,824 583,740 457,042 335,112
Canada 137,680 104,151 76,768 72,855
United Kingdom 153,599 128,014 145,921 126,643
Norway 31,858 26,947 25,656 24,371
- --------------------------------------------------------------------------------------------------------------------
Total 924,961 842,852 705,387 558,981
- --------------------------------------------------------------------------------------------------------------------
Well Completions (net)
Oil wells 33 45 17 19
Gas wells 20 41 33 19
Dry holes 22 36 38 31
Productive Wells at Year-End (net)
Oil wells 2,082 2,103 2,111 2,048
Gas wells 966 927 905 714
- --------------------------------------------------------------------------------------------------------------------
Total 3,048 3,030 3,016 2,762
- --------------------------------------------------------------------------------------------------------------------
Undeveloped Net Acreage (held at end of year)
United States 1,819,000 1,802,000 1,716,000 1,589,000
Canada 840,000 842,000 835,000 582,000
Other international 2,328,000 2,638,000 2,494,000 2,501,000
- --------------------------------------------------------------------------------------------------------------------
Total 4,987,000 5,282,000 5,045,000 4,672,000
- --------------------------------------------------------------------------------------------------------------------
Shipping
Vessels owned or under charter at year-end 21 21 23 22
Total deadweight tons 3,223,000 2,825,000 3,012,000 3,081,000
Refining (barrels daily)
Refinery crude runs 335,000 320,000 383,000 397,000
Petroleum Products Sold (barrels daily)
Gasoline, distillates and other light products 275,000 285,000 296,000 299,000
Residual fuel oils 102,000 128,000 132,000 171,000
- --------------------------------------------------------------------------------------------------------------------
Total 377,000 413,000 428,000 470,000
- --------------------------------------------------------------------------------------------------------------------
Storage Capacity at Year-End (barrels) 95,199,000 94,879,000 93,867,000 91,794,000
Number of Employees (average) 10,263 10,317 9,645 8,740
====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
1988 1987 1986
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Production Per Day (net)
Crude oil (barrels)
United States 60,782 62,635 65,877
Canada 9,251 8,592 8,548
United Kingdom 32,223 27,709 32,955
Norway 21,782 20,937 17,088
Abu Dhabi 9,374 6,903 9,673
Africa(*) -- -- 15,375
- --------------------------------------------------------------------------------------------------
Total 133,412 126,776 149,516
- --------------------------------------------------------------------------------------------------
Natural gas liquids (barrels)
United States 7,183 5,913 2,944
Canada 1,529 1,306 1,627
United Kingdom 295 402 734
Norway 1,884 1,847 1,690
- --------------------------------------------------------------------------------------------------
Total 10,891 9,468 6,995
- --------------------------------------------------------------------------------------------------
Natural gas (Mcf)
United States 283,114 282,906 228,827
Canada 61,653 49,229 46,248
United Kingdom 141,139 180,594 168,926
Norway 20,389 18,771 15,230
- --------------------------------------------------------------------------------------------------
Total 506,295 531,500 459,231
- --------------------------------------------------------------------------------------------------
Well Completions (net)
Oil wells 39 35 23
Gas wells 8 13 6
Dry holes 35 28 25
Productive Wells at Year-End (net)
Oil wells 2,014 2,058 2,056
Gas wells 612 620 616
- --------------------------------------------------------------------------------------------------
Total 2,626 2,678 2,672
- --------------------------------------------------------------------------------------------------
Undeveloped Net Acreage (held at end of year)
United States 1,556,000 1,566,000 1,949,000
Canada 786,000 787,000 851,000
Other international 3,936,000 3,875,000 3,626,000
- --------------------------------------------------------------------------------------------------
Total 6,278,000 6,228,000 6,426,000
- --------------------------------------------------------------------------------------------------
Shipping
Vessels owned or under charter at year-end 21 21 22
Total deadweight tons 2,719,000 2,903,000 2,953,000
Refining (barrels daily)
Refinery crude runs 296,000 371,000 293,000
Petroleum Products Sold (barrels daily)
Gasoline, distillates and other light products 222,000 257,000 207,000
Residual fuel oils 157,000 154,000 151,000
- --------------------------------------------------------------------------------------------------
Total 379,000 411,000 358,000
- --------------------------------------------------------------------------------------------------
Storage Capacity at Year-End (barrels) 90,798,000 88,047,000 87,746,000
Number of Employees (average) 8,151 7,890 7,776
==================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 21
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Organized under
Name of Subsidiary the laws of
------------------ ---------------
<S> <C>
AH 1980 Program, Inc. (*) ........................ Delaware
A.H. Shipping Guaranty Corporation ............... Delaware
Amerada Hess Canada Ltd. ......................... Canada
Amerada Hess Limited ............................. United Kingdom
Amerada Hess Norge A/S ........................... Norway
Amerada Hess Oil Corporation of Abu Dhabi ........ Delaware
Amerada Hess Pipeline Corporation ................ Delaware
Amerada Hess Production Gabon .................... Gabon
Amerada Hess Shipping Corporation ................ Liberia
Hess Oil St. Lucia Limited ....................... St. Lucia
Hess Oil Virgin Islands Corp. .................... U.S. Virgin Islands
Hess Pipeline Company (*) ........................ Delaware
Jamestown Insurance Company Limited .............. Bermuda
Tug New York Company ............................. Delaware
</TABLE>
(*) Principal assets sold in 1995.
Other subsidiaries (names omitted because such unnamed subsidiaries, considered
in the aggregate as a single subsidiary, would not constitute a significant
subsidiary)
Each of the foregoing subsidiaries conducts business under the name listed, and
is 100% owned by the Registrant, except for Amerada Hess Production Gabon,
which is 55% owned by the Registrant.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 56,071
<SECURITIES> 0
<RECEIVABLES> 798,331
<ALLOWANCES> 0
<INVENTORY> 838,770
<CURRENT-ASSETS> 1,962,544
<PP&E> 13,064,212
<DEPRECIATION> 7,694,496
<TOTAL-ASSETS> 7,756,370
<CURRENT-LIABILITIES> 1,604,580
<BONDS> 2,523,181
0
0
<COMMON> 93,011
<OTHER-SE> 2,567,385
<TOTAL-LIABILITY-AND-EQUITY> 7,756,370
<SALES> 7,302,307
<TOTAL-REVENUES> 7,524,789
<CGS> 5,220,657
<TOTAL-COSTS> 5,220,657
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 247,465
<INCOME-PRETAX> (352,649)
<INCOME-TAX> 41,764
<INCOME-CONTINUING> (394,413)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (394,413)
<EPS-PRIMARY> (4.24)
<EPS-DILUTED> (4.24)
</TABLE>
