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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
For the fiscal year ended December 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 1-1204
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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)
------------------------
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. [X]
The aggregate market value of voting stock held by non-affiliates of the
Registrant amounted to $4,237,000,000 as of February 28, 1997.
At February 28, 1997, 92,920,305 shares of Common Stock were outstanding.
Certain items in Parts I and II incorporate information by reference from
the 1996 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 7, 1997.
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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, United Kingdom, Norway and Gabon. The
Corporation also conducts exploration and/or production activities in Denmark,
Thailand, Indonesia and other parts of the world. Of the Company's proved
reserves (on a barrel of oil equivalent basis), 35% are located in the United
States, 61% are located in the United Kingdom, Norwegian and Danish sectors of
the North Sea and the remainder are located in Gabon, Indonesia and Thailand.
Worldwide crude oil and natural gas liquids production amounted to 236,797
barrels per day in 1996 compared with 260,460 barrels per day in 1995. Worldwide
natural gas production was 684,666 Mcf per day in 1996 compared with 884,131 Mcf
per day in 1995.
At December 31, 1996, the Corporation had 578 million barrels of proved
crude oil and natural gas liquids reserves compared with 695 million barrels at
the end of 1995. Proved natural gas reserves were 1,866 million Mcf at December
31, 1996 compared with 2,481 million Mcf at December 31, 1995. The Corporation
also has an inventory of drillable prospects in the United States, the North Sea
and in other parts of the world.
In 1996, the Corporation sold its wholly-owned subsidiary, Amerada Hess
Canada Ltd., certain United States and United Kingdom producing properties and
Abu Dhabi assets. Reserves sold consisted of 98 million barrels of crude oil and
natural gas liquids and 598 million Mcf of natural gas, which generated proceeds
of approximately $1 billion. As a result of the asset sales in the second and
third quarters of 1996, worldwide production was reduced by approximately 35,000
barrels of crude oil and natural gas liquids per day and 275,000 Mcf of natural
gas per day. Of that amount, 12,500 barrels of crude oil per day and 85,000 Mcf
of natural gas per day related to United States operations.
UNITED STATES. The Corporation operates principally offshore in the Gulf
of Mexico and onshore in the states of Texas, Louisiana and North Dakota. During
1996, 21% of the Corporation's crude oil and natural gas liquids production and
49% 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>
1996 1995
------- -------
<S> <C> <C>
CRUDE OIL, INCLUDING CONDENSATE AND
NATURAL GAS LIQUIDS (BARRELS PER DAY)
Texas........................................................ 19,204 23,256
North Dakota................................................. 12,366 12,414
Gulf of Mexico............................................... 10,642 12,114
Louisiana.................................................... 2,155 3,592
Alaska....................................................... -- 3,133
Other........................................................ 5,758 8,497
------- -------
Total................................................ 50,125 63,006
======= =======
NATURAL GAS (MCF PER DAY)
Gulf of Mexico............................................... 133,878 186,427
North Dakota................................................. 46,934 48,228
Louisiana.................................................... 46,713 54,387
Texas........................................................ 30,632 37,077
New Mexico................................................... 22,253 23,297
Mississippi.................................................. 17,341 8,898
California................................................... 16,870 15,144
Oklahoma..................................................... 5,906 21,491
Other........................................................ 17,126 6,632
------- -------
Total................................................ 337,653 401,581
======= =======
</TABLE>
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UNITED KINGDOM. The Corporation's activities in the United Kingdom are
conducted by its wholly-owned subsidiary, Amerada Hess Limited. During 1996, 60%
of the Corporation's crude oil and natural gas liquids production and 37% 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, 1996:
<TABLE>
<CAPTION>
PRODUCING FIELD INTEREST 1996 1995
---------- -------
<S> <C> <C> <C>
CRUDE OIL, INCLUDING CONDENSATE AND
NATURAL GAS LIQUIDS (BARRELS PER DAY)
Scott.................................. 34.95% 51,877 64,209
Fife/Fergus............................ 85.00/65.00 31,430 13,123
Beryl/Ness............................. 20.00 19,037 18,442
Ivanhoe/Rob Roy/Hamish................. 42.08 14,163 18,227
Arbroath/Montrose/Arkwright............ 28.21 9,320 10,484
Hudson................................. 28.00 8,343 9,813
Other.................................. Various 7,184 8,031
------- -------
Total............................. 141,354 142,329
======= =======
NATURAL GAS (MCF PER DAY)
Beryl/Ness............................. 20.00% 45,581 46,725
Everest/Lomond......................... 18.67/16.67 44,591 42,491
Davy/Bessemer.......................... 27.78/23.08 40,551 11,812
Leman.................................. 21.74 37,967 46,241
Indefatigable.......................... 23.08 32,736 27,409
Scott.................................. 34.95 22,760 28,913
Other.................................. Various 29,797 35,716
------- -------
Total............................. 253,983 239,307
======= =======
</TABLE>
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 29,188 and 26,990 net barrels per day in 1996 and 1995, 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 9,725
and 9,468 net barrels of crude oil per day in 1996 and 1995, 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
396,000 barrels per day in 1996 and 377,000 barrels per day in 1995. The
Corporation's Virgin Islands refinery was supplied principally under contracts
of one year or less with third parties and through spot purchases on the open
market. In 1996, the Corporation's production supplied less than 5% of its crude
runs. Approximately 80% of the refined products marketed in 1996 was obtained
from the Corporation's refineries. The Corporation purchased the balance from
others under short-term supply contracts and by spot purchases from various
sources. Sales of refined products averaged 495,000 barrels per day in 1996
compared with 487,000 barrels per day in 1995.
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 1996,
refined products produced were approximately 69% gasoline and distillates, 10%
refinery feedstocks and the remainder principally residual fuel oil. In addition
to crude distillation capacity, the refinery has a fluid catalytic cracking
unit, which has a current operating rate of approximately 125,000 barrels per
day.
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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 58,000 barrels per day. The Port Reading
facility primarily produces gasoline and heating oil.
MARKETING. The Corporation markets refined petroleum products principally
on the East Coast 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, 1996, the Corporation had 548 HESS(R) gasoline stations of
which approximately 80% were 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,
178 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 41 terminals located throughout its marketing area, with
aggregate storage capacity of approximately 45 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.
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 oil markets 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.
Selling prices and margins of refined products are subject to changing
market conditions. Supply and demand factors, including the effects of weather,
will continue to affect refined product markets. As a result, the Corporation's
earnings will continue to be volatile.
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
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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 has been 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 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. Capital expenditures for facilities, primarily to comply
with federal, state and local environmental standards, were $7 million in 1996
and the Corporation anticipates comparable capital expenditures in 1997. In
addition, the Corporation expended $13 million in 1996 for environmental
remediation, with a comparable amount anticipated for 1997.
The number of persons employed by the Corporation averaged 9,085 in 1996
and 9,574 in 1995.
Additional operating and financial information relating to the business and
properties of the Corporation appears in the text on page 6 under the heading
"United States Exploration and Production," on pages 9 and 10 under the heading
"International Exploration and Production," on pages 13 and 14 under the heading
"Refining and Marketing," on pages 17 through 21 under the heading "Financial
Review" and on pages 22 through 47 of the accompanying 1996 Annual Report to
Stockholders, which information is incorporated herein by reference.*
- --------------------------------------------------------------------------------
* 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 1996
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 1996, 1995
and 1994 are presented under Supplementary Oil and Gas Data in the accompanying
1996 Annual Report to Stockholders, which has been incorporated herein by
reference.
During 1996, the Corporation provided oil and gas reserve estimates for
1995 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 sell fixed
quantities of its crude oil production. Approximately 60% of the Corporation's
1996 natural gas sales were made under long-term contracts to various
purchasers. Contractual commitments in 1997 (which are expected to be comparable
to 1996) will be filled from the Corporation's production and from contractual
purchases.
2. AVERAGE SELLING PRICES AND AVERAGE PRODUCTION COSTS
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Average selling prices (Note A)
Crude oil, including condensate and natural
gas liquids (per barrel)
United States.......................... $ 16.49 $ 15.82 $ 15.43
Europe................................. 20.23 17.05 15.96
Canada................................. 17.83 15.77 15.94
Other areas............................ 20.18 16.79 15.45
Average................................ 19.41 16.68 15.78
Natural gas (per Mcf)
United States (Note B)................. $ 2.43 $ 1.70 $ 1.91
Europe................................. 2.05 2.05 2.04
Canada................................. 1.35 1.02 1.36
Average................................ 2.31 1.67 1.86
</TABLE>
- --------------------------------------------------------------------------------
Note A: Includes inter-company transfers valued at approximate market
prices and the effect of the Corporation's hedging activities.
Note B: Includes sales of purchased gas.
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<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Average production (lifting) costs per barrel of
production (Note C)
United States.......................... $ 4.56 $ 4.29 $ 4.10
Europe................................. 5.30 4.34 4.37
Canada................................. 2.74 2.65 2.98
Other areas............................ 2.81 3.41 3.08
Average................................ 4.88 4.09 4.06
</TABLE>
- --------------------------------------------------------------------------------
Note C: Production (lifting) costs consist of amounts incurred to operate
and maintain the Corporation's producing oil and gas wells, related equipment
and facilities (including lease costs of floating production and storage
facilities) and production and severance taxes. The average production costs per
barrel 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, 1996
<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...................... 1,880 544 2,761 797 790 426
Europe............................. 637 141 346 51 143 29
Other areas........................ 55 8 103 6 - -
------ ------ ------- ------ ------ ------
Total.................... 2,572 693 3,210 854 933 455
===== ===== ====== ===== ===== =====
</TABLE>
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Note A: Includes multiple completion wells (wells producing from different
formations in the same bore hole) totaling 84 gross wells and 47 net wells.
4. GROSS AND NET UNDEVELOPED ACREAGE AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNDEVELOPED
ACREAGE
(IN THOUSANDS)
-----------------
GROSS NET
- --------------------------------------------------------------------------------
<S> <C> <C>
United States................................ 1,314 891
Europe....................................... 8,107 2,779
Other areas.................................. 16,712 4,676
------- ------
Total.............................. 26,133 8,346
====== =====
</TABLE>
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5. NUMBER OF NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
<TABLE>
<CAPTION>
NET EXPLORATORY WELLS NET DEVELOPMENT WELLS
---------------------- ----------------------
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------
Productive wells
United States................. 8 20 10 22 25 27
Europe........................ 6 3 5 12 10 6
Canada........................ 7 3 9 8 12 13
Other areas................... - - 1 1 1 1
---- ---- ---- ---- ---- ----
Total.................... 21 26 25 43 48 47
---- ---- ---- ---- ---- ----
Dry holes
United States................. 22 24 17 - 3 -
Europe........................ 8 6 1 2 - -
Canada........................ 5 14 5 1 2 1
Other areas................... 2 1 - - - -
---- ---- ---- ---- ---- ----
Total.................... 37 45 23 3 5 1
---- ---- ---- ---- ---- ----
Total.............................. 58 71 48 46 53 48
==== ==== ==== ==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
6. NUMBER OF WELLS IN PROCESS OF DRILLING AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
GROSS NET
WELLS WELLS
<S> <C> <C>
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
United States.................................... 13 7
Europe........................................... 13 2
Other areas...................................... 2 -
----- -----
Total.................................. 28 9
==== ====
</TABLE>
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7. NUMBER OF WATERFLOODS AND PRESSURE MAINTENANCE PROJECTS IN PROCESS OF
INSTALLATION AT
DECEMBER 31, 1996 -- None
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ITEM 3. LEGAL PROCEEDINGS
The Registrant and its wholly-owned subsidiary, Hess Oil Virgin Islands
Corp. ("HOVIC") had been under investigation by a grand jury in, and by the
United States Attorney's Office for, the District of New Jersey, and 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 concerned the storage and shipment of
allegedly hazardous waste. The waste at issue, spent distillate desulfurizer
catalyst, was shipped from the HOVIC refinery in St. Croix, U.S. Virgin Islands,
to various locations in the United States, including Arizona. The investigations
sought to determine whether criminal violations of the Resource Conservation and
Recovery Act ("RCRA") and other federal laws occurred in connection with the
handling and transportation of the alleged hazardous waste.
In December 1996, HOVIC entered into a plea agreement with United States
Attorneys for the Districts of New Jersey, Arizona and the Virgin Islands, the
Southern District of Texas and the Western District of Louisiana, the U.S.
Environmental Protection Agency - Region II (the "EPA") and the U.S. Department
of Justice, Environmental and Natural Resource Division (collectively, the
"United States"). Pursuant to the plea agreement, which was approved by the
United States District Court for the District of New Jersey, HOVIC entered a
guilty plea to a one-count information charging it with causing hazardous waste
to be transported without a manifest in violation of Title 42, United States
Code, Section 6928(d)(5), a provision of RCRA. Under the plea agreement, the
United States agreed that it will not bring any further charges against
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HOVIC, Registrant or HOVIC's affiliates or any of their respective present or
former employees for any criminal violations arising out of or related to: the
generation, treatment, storage, transportation and disposal of spent refinery
catalyst generated at the HOVIC refinery between April 1990 and January 1992 and
transported to certain locations in Texas and Arizona specified in the plea
agreement between December 1991 and May 1992; the reporting of or failure to
report the release of benzene in connection with the spent catalyst described
above; written or oral statements or testimony concerning the spent catalyst
described above; or the filing of the 1990/1991 and 1992/1993 EPA Biennial
reports filed by HOVIC or Registrant.
The sentence agreed to be imposed upon HOVIC under the plea agreement,
which was approved and imposed by the District Court, as a result of HOVIC's
plea of guilty was as follows: (i) HOVIC paid a criminal fine of $3,000,000;
(ii) HOVIC paid $2,300,000 in restitution/community service to be disbursed in
accordance with the plea agreement; and (iii) HOVIC further agreed to comply
with EPA reporting requirements contained in the plea agreement relating to
spent distillate desulfurizer catalyst at the HOVIC refinery.
Under the plea agreement, it is agreed that the entry of this plea shall
not affect the consideration of the EPA of any permit or application. HOVIC and
the EPA have also separately agreed that the entry of this plea shall not result
in a civil debarment of HOVIC, Registrant or HOVIC's affiliates, provided that
HOVIC materially complies with the reporting requirements of the plea agreement.
If it is determined that HOVIC or Registrant has materially failed to comply
with any provision of the plea agreement, the United States shall be released
from its commitments under the plea agreement and shall so notify HOVIC in
writing.
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 September 24, 1996, the EPA commenced an administrative proceeding
against Registrant and HOVIC. The complaint alleges that HOVIC did not determine
whether two wastes generated from maintenance activities at HOVIC's refinery
were hazardous, and that on six occasions in 1994, these wastes were placed on
HOVIC's land treatment units in violation of federal land disposal restrictions
regulations. EPA is seeking a penalty of $165,917. HOVIC and Registrant are
engaging in settlement discussions with 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 1996, 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, 1997 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............ 42 Chairman of the Board, Chief Executive 1983
Officer and Director
W. S. H. Laidlaw........ 41 President, Chief Operating Officer and 1986
Director
Leon Hess............... 82 Chairman of the Executive Committee and 1969
Director
H. W. McCollum.......... 83 Chairman of the Finance Committee and 1969
Director
J. Barclay Collins II... 52 Executive Vice President, General Counsel and 1986
Director
John Y. Schreyer........ 57 Executive Vice President, Chief Financial 1990
Officer and Director
Alan A. Bernstein....... 52 Senior Vice President 1987
Marco B. Bianchi........ 57 Senior Vice President and Director 1986
F. Lamar Clark.......... 63 Senior Vice President 1990
Neal Gelfand............ 52 Senior Vice President 1980
Daniel F. McCarthy...... 52 Senior Vice President 1995
Lawrence H. Ornstein.... 45 Senior Vice President 1995
Rene L. Sagebien........ 56 Senior Vice President 1990
F. Borden Walker........ 43 Senior Vice President 1996
Gerald A. Jamin......... 55 Treasurer 1985
</TABLE>
- --------------------------------------------------------------------------------
* 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 1, 1996, except that Mr. Walker was elected to his
present office by the Board of Directors at its regular meeting on August 7,
1996. The first meeting of Directors following the next annual meeting of
stockholders of the Registrant is scheduled to be held May 7, 1997.
Except for Mr. Walker, 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 August 1996, Mr. Walker
had been a general manager in the areas of gasoline marketing, convenience store
development and advertising at Mobil Corporation.
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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 1996 and 1995, dividend
payments and restrictions thereon and the number of holders of Common Stock is
presented on page 21 (Financial Review), page 29 (Long-Term Debt) and on page 44
(Ten-Year Summary of Financial Data) of the accompanying 1996 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 42 through 45 of
the accompanying 1996 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 17 through 21
of the accompanying 1996 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 21 through
41 of the accompanying 1996 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 7, 1997.
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 7, 1997.
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 7, 1997.
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 7, 1997.
------------------------
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)* - 1995 Long-Term Incentive Plan, as amended, incorporated by
reference to Appendix A of Registrant's definitive proxy statement
dated March 28, 1996 for the Annual Meeting of Stockholders held
on May 1, 1996.
13 - 1996 Annual Report to Stockholders of Registrant.
21 - Subsidiaries of Registrant.
23 - Consent of Ernst & Young LLP, Independent Auditors, dated March 21,
1997, 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.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of Registrant's
fiscal year ended December 31, 1996.
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 21ST DAY OF
MARCH 1997.
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 21, 1997
...........................................
(JOHN B. HESS)
Director, President and Chief
/s/ W.S.H. LAIDLAW Operating Officer March 21, 1997
...........................................
(W.S.H. LAIDLAW)
/s/ MARCO B. BIANCHI Director March 21, 1997
...........................................
(MARCO B. BIANCHI)
/s/ NICHOLAS F. BRADY Director March 21, 1997
...........................................
(NICHOLAS F. BRADY)
/s/ J. BARCLAY COLLINS II Director March 21, 1997
...........................................
(J. BARCLAY COLLINS II)
/s/ PETER S. HADLEY Director March 21, 1997
...........................................
(PETER S. HADLEY)
/s/ LEON HESS Director March 21, 1997
...........................................
(LEON HESS)
/s/ EDITH E. HOLIDAY Director March 21, 1997
...........................................
(EDITH E. HOLIDAY)
Director March 21, 1997
...........................................
(WILLIAM R. JOHNSON)
Director March 21, 1997
...........................................
(THOMAS H. KEAN)
/s/ H. W. MCCOLLUM Director March 21, 1997
...........................................
(H. W. MCCOLLUM
/s/ ROGER B. ORESMAN Director March 21, 1997
...........................................
(ROGER B. ORESMAN)
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Director, Executive Vice
President
and Chief Financial Officer
(Principal Accounting and
/s/ JOHN Y. SCHREYER Financial Officer) March 21 1997
............................................................................................................
(JOHN Y. SCHREYER)
Director March 21, 1997
............................................................................................................
(WILLIAM I. SPENCER)
/s/ ROBERT N. WILSON Director March 21, 1997
............................................................................................................
(ROBERT N. WILSON)
/s/ ROBERT F. WRIGHT Director March 21, 1997
............................................................................................................
(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, 1996 and 1995......................... *
Statement of Consolidated Income for each of the three years in the period ended
December 31, 1996.............................................................. *
Statement of Consolidated Retained Earnings for each of the three years in the
period ended December 31, 1996................................................. *
Statement of Consolidated Cash Flows for each of the three years in the period
ended December 31, 1996........................................................ *
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, 1996........ *
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 22 through 36, the Quarterly
Financial Data (unaudited) on page 21, and the Supplementary Oil and Gas Data
(unaudited) on pages 37 through 41 of the accompanying 1996 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 14, 1997,
included in the 1996 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 14, 1997, with respect to the
consolidated financial statements incorporated herein by reference.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, N.Y.
March 21, 1997
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)* -- 1995 Long-Term Incentive Plan, as amended, incorporated by
reference to Appendix A of Registrant's definitive proxy
statement dated March 28, 1996 for the Annual Meeting of
Stockholders held on May 1, 1996.
13 -- 1996 Annual Report to Stockholders of Registrant.
21 -- Subsidiaries of Registrant.
23 -- Consent of Ernst & Young LLP, Independent Auditors, dated
March 21, 1997, 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.
<PAGE> 1
UNITED STATES EXPLORATION AND PRODUCTION
In the Gulf of Mexico, Amerada Hess is utilizing a technologically innovative
compliant tower to develop its Baldpate prospect, which is in 1,650 feet of
water on Garden Banks Block 260 (AHC 50%). Production is expected to begin
in the second half of 1998, with peak gross production estimated at 40,000
barrels of oil per day and 150,000 Mcf of natural gas per day. Amerada Hess
also is evaluating the possibility of a subsea development of a discovery made
in 1996 on Garden Banks Block 216 (AHC 50%) that would be tied back as a
satellite to the facilities currently being constructed on Garden Banks Block
260. Early in 1997, the Corporation drilled an encouraging well on Garden Banks
Block 215 (AHC 37.50%) upon which additional drilling is planned.
Development of the Enchilada prospect on Garden Banks Blocks 127 (AHC
25%) and 128 (AHC 25%) is proceeding with the installation of facilities
designed to produce up to 60,000 barrels of oil and natural gas liquids per day
and 400,000 Mcf of natural gas per day. Production is expected to begin in the
second quarter of 1997. Fabrication is under way for the development of Garden
Banks Block 172 (AHC 60%), which will be tied into the Garden Banks Block 128
facilities.
Production facilities have been installed on Ship Shoal Block 240 (AHC
33.34%) with first production expected in March 1997 at an average gross rate
of 25,000 Mcf of natural gas per day and 800 barrels of condensate per day.
Production has begun from South Marsh Island Block 192, which Amerada Hess
operates with a 33.33% interest. Gross production has been averaging 25,000 Mcf
of natural gas per day and 650 barrels of oil per day.
Onshore activities in 1996 concentrated on the Gulf Coast, North
Dakota, New Mexico and California after the sale of the Corporation's interests
in 340 fields for an aggregate sales price of $380 million. In onshore
exploration, the Corporation continued its successful drilling program on its
prospects in the Mississippi salt dome trend (AHC 75%). Daily gross production
is averaging 35,000 Mcf of natural gas and 1,365 barrels of oil from this
drilling program.
[Map of the Gulf Coast The Gulf Coast and the Gulf of Mexico will
and the Gulf of Mexico] provide additional crude oil and natural gas
production for the Corporation.
6
<PAGE> 2
PHOTO OF SALT DOME PROSPECT
MISSISSIPPI
7
<PAGE> 3
PHOTO OF BLOCK 29/1b
NORTH SEA
8
<PAGE> 4
INTERNATIONAL EXPLORATION AND PRODUCTION
UNITED KINGDOM Amerada Hess Limited, the Corporation's British subsidiary,
brought two new fields on stream in 1996. The Fergus Field (AHL 65%) began
production in September and has achieved gross rates of over 16,000 barrels of
oil per day. The Telford Field (AHL 31.42%) was brought on stream in October
and has been producing at an average gross rate of over 12,700 barrels of oil
per day.
Three developments in which Amerada Hess Limited participated were
completed in 1996. Production from the Nevis Field (AHL 22.72%) began in
September at an initial gross daily rate of 13,300 barrels of oil and 10,600
Mcf of natural gas. The Arkwright Field (AHL 28.21%) began producing in
November at a gross rate of 11,000 barrels of oil per day. The Beaufort Field
(AHL 23.08%) is producing 30,000 Mcf of natural gas per day.
Amerada Hess Limited is developing the Durward and Dauntless Fields
(AHL 28%) which are expected to begin producing in the second quarter of 1997.
Production from the Schiehallion Field (AHL 15.67%) is expected in the first
half of 1998.
Exploration successes during 1996 created a number of new oil and gas
development opportunities. An exploration well drilled on Block 29/lb (AHL
51.65%) with the partners in adjacent Block 29/la tested at a maximum rate of
6,647 barrels of oil per day and 7,490 Mcf of natural gas per day. A well
drilled on Block 20/5c (AHL 50%) by Amerada Hess Limited in a joint venture
with the partners in Block 14/30b (AHL 44%) tested at a rate of 8,647 barrels
per day of light hydrocarbons. A discovery known as Wood was drilled on Block
22/18 (AHL 28.20%) and tested at 3,500 barrels of oil per day and 10,000 Mcf of
natural gas per day. The Halley Field (AHL 28.46%) was declared commercially
viable after a well tested at 4,700 barrels of oil per day.
Possible developments for longer term growth are the Mariner Field (AHL
26.67%), the Clair Field (AHL 9.29%) and the Easington Catchment Area (ECA)
(AHL 32%). Mariner and Clair are potential oil developments and the ECA is a
potential natural gas development.
A large number of recent
developments and probable [Map of the
new developments continue United Kingdom
to make the United Kingdom North Sea]
a core area for the
Corporation.
9
<PAGE> 5
NORWAY Crude oil and natural gas liquids production for Amerada Hess Norge A/S,
the Corporation's Norwegian subsidiary, increased to 29,188 barrels per day in
1996 from 26,990 barrels per day in 1995, largely as a result of the
installation of a new wellhead platform at the Valhall Field (AHN 28.09%).
Amerada Hess Norge is preparing a development plan for the Mjolner
Field (AHN 50%). The current plan envisions first production early in 1999
with net production for Amerada Hess Norge expected to peak at 7,000 barrels of
oil per day.
In the Norwegian Fifteenth Round of License Awards, Amerada Hess Norge
received 20% interests in Blocks 24/9,24/11 and 24/12 and a 15% interest in
Block 6710/10. In 1997, Amerada Hess Norge also obtained its third operatorship
in Norway on Blocks 6306/2 and 6306/5 in which it has interests of 70%.
DENMARK Amerada Hess A/S, the Corporation's Danish subsidiary, completed a
successful appraisal well in 1996 on the South Arne Field (AH A/S 65.69%),
which tested at 5,263 barrels of oil per day. The original discovery well
drilled in 1995 had tested crude oil at a rate of 2,341 barrels per day.
Amerada Hess A/S has filed a plan with the Danish authorities to develop the
South Arne Field.
GABON The Corporation's share of production in the Rabi Kounga Field averaged
9,725 barrels of oil per day in 1996 compared with 9,468 barrels per day in
1995. Amerada Hess, as operator with a 55% interest, completed an extensive
seismic program covering its Mazoumbel exploration permit during 1996. An
exploration well is expected to be drilled on this 573,534 acre permit in 1997.
THAILAND Phase one of the development of the Pailin Field (AHC 15%) has begun.
Production is expected to begin in 1999 with peak production for Amerada Hess
expected to be 40,000 Mcf of natural gas per day and 1,000 barrels of oil per
day. Drilling to extend the Pailin Field and increase production rates has
begun.
INDONESIA The Corporation acquired a 33.33% interest in the Jabung production
sharing contract. This includes the North Geragai Field that is being
developed. First production is expected in mid-1997 with the Corporation's
share expected to peak at 4,000 barrels of oil per day and 14,000 Mcf of
natural gas per day. A subsequent discovery was made and tested at 3,915
barrels of oil per day and 6,800 Mcf of natural gas per day. Additional
drilling is planned.
[Map of the The waters offshore
waters offshore Norway and Denmark
Norway and offer significant future
Denmark] potential for oil and
gas development.
10
<PAGE> 6
PHOTO OF SOUTH ARNE FIELD
DENMARK
11
<PAGE> 7
PHOTO OF CATCRACKER EXPANSION
ST. CROIX, VIRGIN ISLANDS
12
<PAGE> 8
REFINING AND MARKETING
REFINING Hess Oil Virgin Islands Corp., the Corporation's Virgin Islands
subsidiary (HOVIC), brought its fluid catalytic cracking unit down for a
scheduled maintenance turnaround in the fourth quarter of 1996, the first
turnaround since the unit came on stream in October 1993. While routine
maintenance was being performed, the capacity of the fluid catalytic cracking
unit was increased from 110,000 barrels per day to its current operating rate
of approximately 125,000 barrels per day. The unit manufactures gasoline from
feedstock of heavy gas oils and residual fuel oils. The increased operating
rate allows a greater percentage of the refinery's yield to be sold as higher
value gasoline.
HOVIC also has initiated a program to increase the use of advanced
computer controls for maximizing operational performance of its processing
units. Advanced computer controls were installed on the fluid catalytic
cracking unit during 1996 and will be installed on most of the refinery's other
units over the next two years.
The Virgin Islands refinery is capable of manufacturing California Air
Resources Board (CARB) gasoline and CARB diesel fuel, which are required in
California, and the new .05% sulfur European diesel fuel. Several cargoes of
CARB gasoline and CARB diesel fuel were shipped to California during 1996.
The Corporation has received a modified air permit from the New Jersey
Environmental Protection Agency to operate its fluid catalytic cracking unit at
Port Reading at rates up to 62,000 barrels per day. The unit operated at an
average rate of 58,000 barrels per day in 1996 compared with an average rate of
54,000 barrels per day in 1995. Late in 1996, the unit's operating rate reached
a level of 60,000 barrels per day.
Refinery runs averaged 396,000 barrels per day in 1996 compared with
377,000 barrels per day in 1995.
The deepwater harbor
and strategic location of
the Virgin Islands refinery [Photo of the
permit the unloading of Virgin Islands
VLCC's carrying crude oil Refinery]
and the loading of
products that can be
shipped worldwide.
13
<PAGE> 9
MARKETING Amerada Hess is introducing a new marketing concept in its HESS retail
operations with the objective of becoming the leading independent retail
gasoline marketer in its market areas. HESS retail sites will offer more
services and products to consumers, including branded "fast food", a proprietary
gourmet coffee and an enlarged beverage fountain program as a first stage. The
program is designed to make these sites a primary consumer destination and
maximize returns from this business. Three new stations incorporating this
concept are expected to be opened in Florida in the second quarter of 1997, with
others to follow later in the year. Many existing stations will be rebuilt and
others will be modified to offer additional services and products.
Amerada Hess also is seeking to increase the number of HESS gasoline
stations in areas in which it has a significant market presence or in which such
a presence can be established. New stations will be built and others will be
upgraded. The upgrading program includes modernized signage, improved lighting
and state-of-the-art dispensers with the capability to permit consumers to pay
at the pump. Marginal gasoline stations are being traded, sold or closed.
Amerada Hess is continuing its program of establishing relationships
with branded retailers in order to increase the volume of gasoline marketed
under the HESS brand name without requiring significant additional capital
expenditures. At year-end 1996, Amerada Hess had existing agreements covering
more than thirty HESS gasoline stations.
The Corporation has been entering into throughput agreements with
other oil companies to provide storage at HESS terminals along the East Coast
of the United States. The Corporation's goal is to become the leading
independent terminal operator on the East Coast of the United States by
providing the same high quality terminalling service to others as it
traditionally has provided for its marketing operations.
Product sales averaged 495,000 barrels per day in 1996 compared with
487,000 barrels per day in 1995. The increase resulted from higher distillate
sales during the winter of 1996, which was much colder than normal.
The number of
HESS retail outlets
[Photo of a is being increased
HESS retail and facilities are
outlet] being upgraded
to offer state-of-
the-art services.
14
<PAGE> 10
Photo of HESS STATION
New York
15
<PAGE> 11
FINANCIAL REVIEW
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis of Results of Operations and Financial
Condition
Consolidated Results of Operations
Net income for 1996 amounted to $660 million ($7.09 per share), compared with a
net loss of $394 million ($4.24 per share) in 1995 and net income of $74 million
($.79 per share) in 1994.
The results by major operating activity for 1996, 1995 and 1994 are summarized
below (in millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
1996 1995(*) 1994(*)
- ------------------------------------------------------------------
<S> <C> <C> <C>
Exploration and production $ 210 $ 129 $ 121
Refining, marketing and shipping 181 9 135
Corporate (19) (10) (32)
Interest (136) (193) (191)
- ------------------------------------------------------------------
Income (loss) excluding special items 236 (65) 33
Special items 424 (329) 41
- ------------------------------------------------------------------
Net income (loss) $ 660 $(394) $ 74
==================================================================
</TABLE>
(*)Restated to conform with current period presentation.
Special Items
Special items in 1996, 1995 and 1994 are summarized below (in millions):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Refining,
Exploration Marketing
and and
Total Production Shipping Corporate
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Gain on asset sales $ 421 $ 421 $ -- $ --
Litigation settlement 25 25 -- --
Asset write-downs (22) (22) -- --
- ------------------------------------------------------------------------------------------
Total $ 424 $ 424 $ -- $ --
==========================================================================================
1995
FAS No. 121 asset impairment $(416) $ (69) $(347) $ --
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)
- ------------------------------------------------------------------------------------------
Total $(329) $ 23 $(363) $ 11
==========================================================================================
1994
Gain on asset sales $ 41 $ 41 $ -- $ --
==========================================================================================
</TABLE>
The net gain on asset sales in 1996 of $421 million ($4.52 per share) reflects
the sale of the Corporation's Canadian operations, certain United States and
United Kingdom producing properties and Abu Dhabi assets. Proceeds from asset
sales amounted to approximately $1 billion and enabled the Corporation to
significantly reduce debt. The 1996 asset sales are more fully described in Note
2 to the financial statements. The other special items include income from the
settlement of litigation on the right to drill certain South Atlantic leases
acquired in 1981 and a charge principally to reduce the carrying values of
certain United States undeveloped leases.
Special items in 1995 included an after-tax charge of $416 million ($4.47 per
share) resulting from the adoption of Financial Accounting Standard (FAS) No.
121 on asset impairment. This non-cash charge to earnings related primarily to
the Corporation's Port Reading refinery, United States flag vessels and certain
domestic exploration and production properties. The 1995 results also included
net gains from asset sales, principally United States pipeline and gathering
assets and an interest in an undeveloped United Kingdom natural gas field.
Gains on asset sales, the litigation settlement and tax refund (including
interest) are reflected in non-operating revenues in the income statement.
Hurricane-related costs and staff-reduction costs are included in operating
expenses and selling, general and administrative expenses, respectively.
The Corporation is reengineering its financial functions and installing new
systems and software. Project costs in 1996 approximated $20 million, with
comparable annual costs anticipated through mid-1998. These costs are included
in selling, general and administrative expenses. The Corporation expects to
benefit from this project beginning in 1998.
17
<PAGE> 12
Comparison Of Results
Exploration and Production: Excluding special items, exploration and production
earnings increased by $81 million in 1996, primarily due to higher average
worldwide crude oil selling prices and increased United States natural gas
prices. The increase in earnings in 1995 was $8 million, reflecting higher crude
oil selling prices and volumes, offset by increased exploration expenses. The
Corporation's average selling prices, including the effects of hedging, were as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Crude oil and natural gas
liquids (per barrel)
United States $16.49 $15.82 $15.43
Foreign 20.18 16.95 15.91
Natural gas (per Mcf)
United States(*) 2.43 1.70 1.91
Foreign 1.93 1.60 1.75
============================================================================
</TABLE>
(*)Includes sales of purchased gas.
The increase in the United States crude oil selling price indicated above does
not fully reflect the increase in market prices in 1996, because hedge positions
limited the effect of rising prices. Hedge positions in 1995 and 1994 had
positive effects on the Corporation's selling prices. The increase in the
average foreign natural gas price in 1996 reflects the change in the
Corporation's sales mix, as lower value Canadian natural gas was eliminated by
the sale of the Canadian operations in April. The selling price of natural gas
in the United Kingdom was comparable in 1996 and 1995.
The Corporation's net daily worldwide production was as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Crude oil and natural gas
liquids (barrels per day)
United States 50,125 63,006 67,602
Foreign 186,672 197,454 182,918
- ------------------------------------------------------------------------------
Total 236,797 260,460 250,520
- ------------------------------------------------------------------------------
Natural gas (Mcf per day)
United States 337,653 401,581 427,103
Foreign 347,013 482,550 419,015
- ------------------------------------------------------------------------------
Total 684,666 884,131 846,118
==============================================================================
</TABLE>
United States crude oil and natural gas production was lower, principally
reflecting asset sales in 1996 and natural decline in 1995. The reduction in
foreign crude oil production in 1996 largely reflects the sales of the Canadian
and Abu Dhabi operations. Production in the United Kingdom in 1996 was
comparable to 1995, as new production substantially offset the decline in
existing fields and sales of non-core fields. The overall increase in foreign
crude oil production in 1995 was due to higher United Kingdom production,
principally from the Fife Field. The 1996 decline in foreign natural gas
production was due to the sale of operations in Canada.
Depreciation, depletion, amortization and lease impairment charges were
lower in 1996 reflecting decreased production volumes (primarily due to asset
sales), reduced asset carrying values and positive crude oil reserve revisions
at the end of 1995. Depreciation and related charges in 1995 were also lower,
principally due to lower production volumes in the United States. Exploration
expenses were lower in 1996, primarily in the United Kingdom and Denmark. These
areas were largely responsible for the increase in exploration expense in 1995.
The effective income tax rate on exploration and production earnings continues
to be higher than the United States statutory rate, due to special petroleum
taxes on certain fields in the United Kingdom and in Norway.
The Corporation's major program of exploration and production asset sales
is complete. Oil and gas production in the short-term will be lower than
pre-sale levels, however, the effect on the Corporation's earnings is not
expected to be significant. New United States and foreign crude oil and natural
gas developments will add to production in the future. The Corporation's
exploration and production earnings are very sensitive to the selling prices of
crude oil and natural gas and there is no assurance that current market prices
will continue.
Refining, Marketing and Shipping: The results of refining, marketing and
shipping operations amounted to income of $181 million in 1996, compared with
income (excluding special items) of $9 million in 1995 and $135 million in 1994.
The increase in 1996 was due to improved margins, particularly for distillates
and residual fuel oils. Average selling prices for all refined products
increased by approximately $4.00 per barrel, although the cost of crude oil also
increased. Since the Corporation accounts for its
18
<PAGE> 13
inventories on the first-in, first-out and average cost methods, it tends to
have higher earnings during periods of rising refined product prices and lower
earnings during periods of falling prices. A substantial amount of the 1996
income was generated by a refining subsidiary, for which income taxes are not
provided, due to available loss carryforwards. Refining and marketing industry
conditions are extremely competitive and earnings will continue to be volatile.
The decrease in refining, marketing and shipping earnings in 1995 was
primarily due to lower margins on distillates and residual fuel oils reflecting
the relatively mild winter of 1994-1995, although gasoline margins improved
somewhat during the year.
Total refined product sales volumes amounted to 181 million barrels in
1996, 178 million barrels in 1995 and 171 million barrels in 1994. The fluid
catalytic cracking unit in the Virgin Islands operated at the rate of 100,000
barrels per day in 1996, in spite of being shutdown for scheduled maintenance
for more than a month. The current operating rate is approximately 125,000
barrels per day.
The Corporation has indicated that it will consider joint venture
alternatives that involve some or all of its refining and marketing operations.
Corporate: Excluding special items, net corporate expenses were $19 million in
1996, $10 million in 1995 and $32 million in 1994. The variance in each year is
principally due to the impact of foreign source earnings on the provision for
United States income taxes. Prior to 1996, corporate expenses were reduced by
the operating earnings of crude oil gathering and pipeline operations that were
sold at the end of 1995.
Interest: After-tax interest expense decreased by 30% in 1996, reflecting the
use of the proceeds from asset sales and cash flow from operations to reduce
debt. Assuming no increase in interest rates, interest expense is expected to be
lower in 1997.
Consolidated Operating Revenues
Sales and other operating revenues amounted to $8,272 million in 1996, an
increase of $970 million, or 13%, from 1995. The increase was primarily due to
the higher selling prices of refined products, particularly distillates and
residual fuel oils. Also contributing to the increase were higher average crude
oil and natural gas selling prices and higher sales volumes of purchased natural
gas. Sales and other operating revenues increased by 11% in 1995 compared with
1994, reflecting higher gasoline selling prices and sales volumes and increased
foreign crude oil production and selling prices.
Liquidity And Capital Resources
Net cash provided by operating activities, including changes in operating assets
and liabilities, amounted to $808 million in 1996 compared with $1,241 million
in 1995 and $957 million in 1994. The decrease in 1996 was primarily due to
changes in working capital items, particularly inventories. In 1996, the
Corporation generated proceeds from asset sales of approximately $1 billion,
principally from the sale of its Canadian operations and certain United States
producing properties. The major program of asset sales, which contributed
significantly to the Corporation's liquidity and ability to reduce debt in 1996,
has been completed. The increase in cash provided by operating activities in
1995 was due to changes in working capital components.
Total debt was $1,939 million at December 31, 1996 compared with $2,718
million at December 31, 1995. The debt to total capitalization ratio decreased
to 36.4% from 50.5% at year-end 1995. In 1996 and 1995, the Corporation sold
forward crude oil production of $101 million and $151 million, respectively,
which reduced debt at the end of each year. At December 31, 1996, floating rate
debt amounted to 34% of total debt. The Corporation had borrowing capacity
available under existing revolving credit agreements of $1,628 million and
additional unused lines of credit under uncommitted arrangements with banks of
$345 million. The existing borrowing arrangements, including restrictive
covenants, are more fully described in Note 6 to the financial statements.
In August 1996, the Corporation announced a stock repurchase program of up
to $250 million. As of year end, 154,700 shares had been purchased at a cost of
approximately $9 million.
19
<PAGE> 14
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,
1996, the Corporation had open hedge positions equal to 8% of its estimated 1997
worldwide crude oil production. In certain circumstances, hedge counterparties
may elect to purchase up to an additional 1% of 1997 production. The Corporation
also had open contracts equal to 19% of its estimated 1997 United States natural
gas production and approximately 2% of its production for the succeeding twelve
months. The Corporation had hedges covering 12% of its refining and marketing
inventories and had additional short positions, principally crack spreads,
approximating 4% of refined products to be manufactured in the next twelve
months. As market conditions change, the Corporation will adjust its hedging
positions.
The Corporation also hedges a portion of its exposure to fluctuating
foreign exchange rates, principally the Pound Sterling. Generally, these
exchange rates are fixed by selling currency forward to correspond with crude
oil sales commitments. See Note 12 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, Denmark, Gabon, Indonesia and
Thailand, and intends to increase its exploration activities in other
international areas. Therefore, the Corporation is subject to business risks
associated with foreign operations. Such exposures include the effect of
currency risks on the financial statements. However, the effect of foreign
currency translation 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 1996,
1995 and 1994 (in millions):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Exploration and production
Exploration $236 $245 $196
Development 512 377 333
Oil and gas reserve acquisitions 40 4 3
- ----------------------------------------------------------------------------
788 626 532
Refining, marketing and other 73 66 64
- ----------------------------------------------------------------------------
Total $861 $692 $596
============================================================================
</TABLE>
The increase in development costs in 1996 was due primarily to oil and gas
projects in the North Sea, including expenditures on the producing fields Scott
and Valhall and the new developments Durward/Dauntless and Schiehallion. The
purchase of oil and gas reserves in 1996 reflects the acquisition of an interest
in the Jabung Production Sharing Contract in Indonesia. This acquisition
includes proved reserves, which are in the process of being developed, and
exploration prospects. Excluding possible reserve acquisitions, capital
expenditures in 1997 are expected to be approximately $1 billion and will be
financed principally by internally generated funds.
Environment, Health And Safety
The Corporation's awareness of its environmental responsibilities and
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 current laws and that it is well positioned to meet
currently proposed regulations.
The Corporation continues to focus on energy conservation, pollution
control and waste minimization and treatment. There are also programs for
compliance evaluation, facility auditing and employee training to monitor
operational activities and to prevent conditions that might threaten the
environment.
20
<PAGE> 15
The Corporation produces gasolines that meet the current requirements for
oxygenated and reformulated gasolines of 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 of its gasoline stations.
Furthermore, the Corporation can meet the more restrictive requirements for
reformulated gasolines that take effect in 1998. The Corporation's Virgin
Islands refinery can also produce gasolines that comply with the requirements
for reformulated gasolines that begin in 2000. This refinery has desulfurization
capabilities enabling it to produce low-sulfur diesel fuel that meets the
requirements of the Clean Air Act. The Corporation can also produce gasolines
that meet the requirements of the California Air Resources Board.
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 $13 million in 1996, $15 million in 1995 and $16
million in 1994 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 $7 million in 1996, $15
million in 1995 and $8 million in 1994.
Dividends
Cash dividends on common stock totaled $.60 per share ($.15 per quarter) during
1996 and 1995.
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 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1996 1995
---------------------- ----------------------
Quarter Ended High Low High Low
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31 55-3/4 50-3/4 50-1/2 43-3/4
June 30 59-7/8 52-1/8 53-1/8 47-1/2
September 30 54-5/8 47-1/2 51-3/4 45-3/4
December 31 60-1/2 52-1/2 53-5/8 43-1/4
============================================================================
</TABLE>
QUARTERLY FINANCIAL DATA
Quarterly results of operations for the years ended December 31, 1996 and 1995
follow (millions of dollars, except per share data):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Income
Sales (loss) Net
and other excluding Net income
operating Gross special Special income (loss)
Quarter revenues profit(a) items items (loss) per share
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996
First $2,215 $ 368 $ 66 $ -- $ 66 $ .71
Second 2,095 314 26 350 (b) 376 4.04
Third 1,746 295 27 71 (b) 98 1.05
Fourth 2,216 443 117 3 (c) 120 1.29
- ----------------------------------------------------------------------------------------------------------
Total $8,272 $1,420 $ 236 $ 424 $ 660 $ 7.09
==========================================================================================================
1995
First $1,892 $ 310 $ (19) $ 44 (d) $ 25 $ .27
Second 1,773 294 (40) -- (40) (.43)
Third 1,642 223 (79) (25)(e) (104) (1.13)
Fourth 1,995 362 73 (348)(f) (275) (2.95)
- ----------------------------------------------------------------------------------------------------------
Total $7,302 $1,189 $ (65) $(329) $(394) $(4.24)
==========================================================================================================
</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) Represents net gains on asset sales.
(c) Includes income of $25 million from the settlement of litigation on the
right to drill certain South Atlantic leases and a charge of $22 million
principally to reduce the carrying values of certain undeveloped leases.
(d) Reflects the refund of windfall profits taxes and related interest.
(e) 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.
(f) Reflects an after-tax charge for asset impairment of $416 million
resulting from the adoption of FAS No. 121 and a net gain on asset sales
of $68 million.
The results of operations for the periods reported herein should not be
considered as indicative of future operating results.
21
<PAGE> 16
CONSOLIDATED BALANCE SHEET
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
At December 31
--------------------------------
Thousands of dollars 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 112,522 $ 56,071
Accounts receivable
Trade 812,175 760,947
Other 35,954 37,384
Inventories 1,272,312 838,770
Other current assets 193,881 269,372
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 2,426,844 1,962,544
- ------------------------------------------------------------------------------------------------------------------------
Investments And Advances 218,573 185,522
- ------------------------------------------------------------------------------------------------------------------------
Property, Plant And Equipment
Exploration and production 8,233,445 9,392,184
Refining 2,650,486 2,619,721
Marketing 883,555 882,610
Shipping 134,933 169,697
- ------------------------------------------------------------------------------------------------------------------------
Total--at cost 11,902,419 13,064,212
Less reserves for depreciation, depletion, amortization and lease impairment 6,995,136 7,694,496
- ------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment--net 4,907,283 5,369,716
- ------------------------------------------------------------------------------------------------------------------------
Deferred Income Taxes And Other Assets 231,781 238,588
- ------------------------------------------------------------------------------------------------------------------------
Total Assets $ 7,784,481 $ 7,756,370
========================================================================================================================
</TABLE>
22
<PAGE> 17
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
At December 31
---------------------------------
1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable--trade $ 666,172 $ 518,770
Accrued liabilities 501,369 500,629
Deferred revenue 103,031 151,416
Taxes payable 258,723 239,080
Notes payable 18,000 90,000
Current maturities of long-term debt 189,685 104,685
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 1,736,980 1,604,580
- -----------------------------------------------------------------------------------------------------------
Long-term debt 1,660,998 2,523,181
- -----------------------------------------------------------------------------------------------------------
Capitalized lease obligations 50,818 64,202
- -----------------------------------------------------------------------------------------------------------
Deferred liabilities and credits
Deferred income taxes 616,900 602,792
Other 335,154 301,219
- -----------------------------------------------------------------------------------------------------------
Total deferred liabilities and credits 952,054 904,011
- -----------------------------------------------------------------------------------------------------------
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--93,073,305 shares in 1996; 93,011,255 shares in 1995 93,073 93,011
Capital in excess of par value 754,559 744,252
Retained earnings 2,613,920 2,017,064
Equity adjustment from foreign currency translation (77,921) (193,931)
- -----------------------------------------------------------------------------------------------------------
Total stockholders' equity 3,383,631 2,660,396
- -----------------------------------------------------------------------------------------------------------
Total Liabilities And Stockholders' Equity $ 7,784,481 $ 7,756,370
===========================================================================================================
</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.
23
<PAGE> 18
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 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales (excluding excise taxes) and other operating revenues $8,272,186 $ 7,302,307 $6,601,984
Non-operating revenues
Asset sales 529,271 96,010 41,657
Other 128,254 126,472 55,152
- ---------------------------------------------------------------------------------------------------------------------------
Total revenues 8,929,711 7,524,789 6,698,793
- ---------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of products sold and operating expenses 6,069,295 5,220,657 4,449,819
Exploration expenses, including dry holes 279,335 297,817 249,433
Selling, general and administrative expenses 618,429 634,271 590,647
Interest expense 165,501 247,465 245,149
Depreciation, depletion, amortization and lease impairment 783,207 893,067 927,933
Asset impairment -- 584,161 --
Provision for income taxes 353,845 41,764 162,098
- ---------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 8,269,612 7,919,202 6,625,079
- ---------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ 660,099 $ (394,413) $ 73,714
- ---------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share $ 7.09 $ (4.24) $ .79
===========================================================================================================================
</TABLE>
STATEMENT OF CONSOLIDATED RETAINED EARNINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
For the Years Ended December 31
-------------------------------------------------------
Thousands of dollars, except per share data 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Year $ 2,017,064 $ 2,467,267 $ 2,449,325
Net income (loss) 660,099 (394,413) 73,714
Dividends declared--common stock
($.60 per share in 1996, 1995 and 1994) (55,761) (55,790) (55,772)
Common stock acquired and retired (7,482) -- --
- ------------------------------------------------------------------------------------------------------------
Balance at End of Year $ 2,613,920 $ 2,017,064 $ 2,467,267
============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
24
<PAGE> 19
STATEMENT OF CONSOLIDATED CASH FLOWS
Amerada Hess Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31
-----------------------------------------
Thousands of dollars 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ 660,099 $ (394,413) $ 73,714
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Depreciation, depletion, amortization and lease impairment 783,207 893,067 927,933
Asset impairment -- 584,161 --
Exploratory dry hole costs 164,601 178,883 152,971
Pre-tax gain on asset sales (529,271) (96,010) (41,657)
Increase in accounts receivable (66,452) (226,790) (15,927)
(Increase) decrease in inventories (434,206) 106,357 (90,258)
Increase (decrease) in accounts payable, accrued liabilities and
deferred revenue 110,736 328,457 (191,282)
Increase in taxes payable 32,623 67,229 62,437
Changes in deferred income taxes and other 86,384 (199,934) 79,087
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 807,721 1,241,007 957,018
- -------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Capital expenditures
Exploration and production (788,286) (626,518) (532,189)
Refining, marketing and other (72,339) (65,593) (64,095)
- -------------------------------------------------------------------------------------------------------------------
Total capital expenditures (860,625) (692,111) (596,284)
Proceeds from asset sales and other 1,037,073 177,344 72,804
Investment in affiliate -- (31,552) --
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 176,448 (546,319) (523,480)
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Issuance (repayment) of notes (72,046) 26,247 (54,153)
Long-term borrowings -- 25,000 289,843
Repayment of long-term debt and capitalized lease obligations (794,527) (689,355) (642,112)
Cash dividends paid (55,746) (55,788) (55,711)
Common stock acquired (8,236) -- --
- -------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (930,555) (693,896) (462,133)
- -------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash 2,837 2,144 2,095
- -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 56,451 2,936 (26,500)
Cash and Cash Equivalents at Beginning of Year 56,071 53,135 79,635
- -------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 112,522 $ 56,071 $ 53,135
===================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE> 20
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, 1994 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
Distribution to trustee under executive incentive
compensation and stock ownership plans (net) 211,750 212 11,300
Common stock acquired and retired (154,700) (155) (1,247)
Employee stock options exercised 5,000 5 254
- ---------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 93,073,305 $ 93,073 $ 754,559
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE> 21
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, United Kingdom, Norway and Gabon. The
Corporation also has oil and gas activities in Denmark, Indonesia, Thailand and
other parts of the world. The Corporation also manufactures, purchases,
transports and markets refined petroleum products. The Corporation's terminals
and retail outlets are located principally on the East Coast 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
liabilities, environmental obligations, depreciation, depletion and
amortization, 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 65% 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 throughput 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.
27
<PAGE> 22
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.
Employee Stock Options and Nonvested Common Stock Awards: The Corporation uses
the intrinsic value method to account for employee stock options. Because the
exercise prices of employee stock options equal or exceed the market price of
the stock on the date of grant, the Corporation does not recognize compensation
expense. The Corporation records compensation expense for nonvested common stock
awards ratably over the vesting period.
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 Canadian operations were sold in April 1996.
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 Sales
In 1996, the Corporation sold exploration and production assets resulting in a
net gain of $421,150,000 ($4.52 per share). These sales included the
Corporation's Canadian operations, certain United States and United Kingdom
producing properties and Abu Dhabi assets. At the time the Canadian operations
were sold, average production amounted to approximately 11,000 barrels of crude
oil and natural gas liquids per day and 190,000 Mcf of natural gas per day.
United States production was reduced by approximately 12,500 barrels of crude
oil and natural gas liquids per day and 85,000 Mcf of natural gas per day due to
asset sales. The effect of lower production on the Corporation's future earnings
is not expected to be significant.
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 $68,100,000 ($.73 per share). In 1994, the Corporation
also sold an interest in a United Kingdom natural gas field for a net gain of
$41,200,000 ($.44 per share).
3. 1995 Asset Impairment
As required by Statement of Financial Accounting Standards (FAS) No. 121, the
Corporation recorded losses on long-lived assets where events or circumstances
indicated that the assets were impaired. 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.
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,
$346,396,000 related to refining, marketing and shipping operations, principally
for a refining facility and ocean going vessels. The remainder related to oil
and gas producing properties.
28
<PAGE> 23
4. Inventories
Inventories at December 31 are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Thousands of dollars 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Crude oil and other charge stocks $ 441,071 $240,425
Refined and other finished products 734,141 492,613
- -------------------------------------------------------------------------
1,175,212 733,038
Materials and supplies 97,100 105,732
- -------------------------------------------------------------------------
Total $1,272,312 $838,770
=========================================================================
</TABLE>
5. Short-Term Notes Payable and Related Lines of Credit
Short-term notes payable to banks at December 31, 1996 amount to $18,000,000
compared to $90,000,000 at December 31, 1995. The weighted average interest
rates on these borrowings were 7.5% and 6.4% at December 31, 1996 and 1995,
respectively. At December 31, 1996, the Corporation has unused lines of credit
under uncommitted arrangements with several banks aggregating approximately
$345,000,000. No compensating balances or fees are required for such lines of
credit.
6. Long-Term Debt
Long-term debt at December 31 consists of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1996 1995
- --------------------------------------------------------------------------------
<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 52,574 52,557
Fixed rate notes, payable principally to
insurance companies, weighted
average rate 8.7%, due through 2014 1,202,100 1,285,491
Revolving Credit Agreement with banks,
weighted average rate 5.6%, due 1999 396,609 760,928
Revolving Credit Agreement with banks,
weighted average rate 6.4%, due
through 2002 175,000 414,090
Revolving Credit Agreement of
Canadian subsidiary* -- 90,000
Other loans, at 8.0%, due 2007 4,400 4,800
- --------------------------------------------------------------------------------
1,850,683 2,627,866
Less amount included in current
maturities 189,685 104,685
- --------------------------------------------------------------------------------
Total $1,660,998 $2,523,181
================================================================================
</TABLE>
*The Corporation's Canadian operations were sold in April 1996.
The aggregate long-term debt maturing during the next five years is as
follows (in thousands): 1997--$189,685 (included in current liabilities);
1998--$84,686; 1999--$536,294; 2000--$400 and 2001--$45,400.
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, 1996, the ratio of current
assets to current liabilities is 1.4 to 1 and the Corporation has additional
allowable borrowing capacity for the construction or acquisition of assets of
$1,628,000,000. Retained earnings free of restrictions at December 31, 1996
amount to $763,000,000.
At December 31, 1996, the Corporation has a Revolving Credit Agreement
with banks aggregating $1,400,000,000 ($396,609,000 outstanding at December 31,
1996), 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 with banks aggregating
$800,000,000 ($175,000,000 outstanding at December 31, 1996), which declines
each year from 1999 through 2002. Borrowings bear 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.
The Corporation sold forward a portion of its crude oil production in 1996
and 1995 and used the proceeds to repay revolving credit debt. Accordingly, at
December 31, 1996 and 1995, $101,028,000 and $151,073,000, respectively, is
included in deferred revenue on the Consolidated Balance Sheet.
The total amount of interest paid, principally on short-term and long-term
debt, in 1996, 1995 and 1994 was $176,033,000, $254,760,000 and $248,595,000,
respectively.
29
<PAGE> 24
7. Stockholders' Equity
In May 1996, the stockholders of the Corporation approved the 1995 Long-Term
Incentive Plan (the "Plan"), which the Corporation's Board of Directors had
approved in December 1995. The Plan authorizes the grant of 4,500,000 shares for
various types of awards, including options, with a maximum of 1,000,000 shares
authorized for nonvested common stock awards. Outstanding stock options
generally vest one year from the date of grant; outstanding nonvested common
stock generally vests three years from the date of grant. The Corporation also
has an Executive Long-Term Incentive Compensation and Stock Ownership Plan,
which expires in 1997.
The Corporation's stock option activity in 1996 consisted of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Weighted-
average
exercise price
Thousands, except per share data Options per share
- -------------------------------------------------------------------------------
<S> <C> <C>
Granted in 1995, approved in 1996 863 $56.39
Granted in 1996 629 62.22
Exercised (5) 51.75
Forfeited (66) 56.39
- -------------------------------------------------------------------------------
Outstanding at end of year 1,421 $58.99
- -------------------------------------------------------------------------------
Exercisable at end of year 792 $56.42
Weighted-average fair value of options granted
Exercise price equals market price on
grant date $18.91
Exercise price exceeds market price on
grant date $15.47
===============================================================================
</TABLE>
Exercise prices for employee stock options at December 31, 1996 ranged
from $49.00 to $64.75 per share. The weighted-average remaining contractual life
of employee stock options is 9.4 years.
To comply with FAS No. 123, Accounting for Stock-Based Compensation, the
Corporation used the Black-Scholes model to estimate the fair value of employee
stock options for pro forma disclosure of net income and earnings per share as
if the fair value method had been used. The Corporation used the following
weighted-average assumptions in the Black-Scholes model: risk-free interest rate
of 5.8%; dividend yield of 1.1%; expected stock price volatility of .213; and an
expected life of seven years. In 1996, the Corporation's net income would have
been reduced by approximately $7,700,000 and net income per share would have
been reduced by $.08, if option expense were recorded using the fair value
method.
Total compensation expense in 1996 for nonvested common stock was
$5,915,000. Awards of nonvested common stock were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Shares of Weighted-
nonvested average
common price on
Thousands, except per share data stock awarded date of grant
- -------------------------------------------------------------------
<S> <C> <C>
Granted in 1995, approved in 1996 203 $49.81
Granted in 1996 95 57.30
===================================================================
</TABLE>
At December 31, 1996 the number of common shares reserved for issuance is
as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------
Future distributions under the following plans
Executive Long-Term Incentive Compensation and
Stock Ownership Plan 217,750
1995 Long-Term Incentive Plan 2,861,500
Stock options outstanding under the 1995 Long-Term
Incentive Plan 1,421,000
Warrants* 1,046,532
- ---------------------------------------------------------------------
Total 5,546,782
=====================================================================
</TABLE>
*Issued in connection with an insurance company financing, exercisable through
June 27, 2001 at $64.98 per share.
30
<PAGE> 25
8. Foreign Currency Translation
Foreign currency exchange transactions reflected in net income (after income tax
effect) amounted to gains of $1,813,000 in 1996 and $1,475,000 in 1995 and a
loss of $931,000 in 1994.
The equity adjustment from foreign currency translation, reflected as a
component of stockholders' equity, changed by $116,010,000 in 1996 (including
$33,541,000 from the sale of the Corporation's Canadian operations) and
$10,240,000 in 1995. The cumulative translation adjustments at December 31
consist of:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Thousands of dollars 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Working capital $ 32,754 $ 42,281
Property, plant and equipment, net (167,769) (385,066)
Long-term debt 71,386 77,105
Deferred income taxes (39,539) 16,530
Other items 25,247 55,219
- -------------------------------------------------------------------------
Total $ (77,921) $(193,931)
=========================================================================
</TABLE>
9. 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 1996 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of benefits earned $ 17,915 $ 27,270 $ 24,119
Accrued interest on projected
benefit obligation 29,961 26,149 24,080
Loss (return) on plan assets (40,960) (67,063) 9,326
Net amortization and deferral 8,558 39,707 (36,860)
- -------------------------------------------------------------------------------------
Total $ 15,474 $ 26,063 $ 20,665
=====================================================================================
</TABLE>
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 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
Market value of plan assets $ 381,532 $ 343,782
Book reserves 47,517 53,347
- ------------------------------------------------------------------------------------
Total assets and reserves 429,049 397,129
- ------------------------------------------------------------------------------------
Actuarial present value of benefit obligation
Vested 339,442 338,920
Non-vested 13,355 3,849
- ------------------------------------------------------------------------------------
Total 352,797 342,769
Effects of projected future salary increases 67,001 61,813
- ------------------------------------------------------------------------------------
Projected benefit obligation 419,798 404,582
- ------------------------------------------------------------------------------------
Total assets and reserves in excess of (less
than) projected benefit obligation $ 9,251 $ (7,453)
====================================================================================
Components of assets and reserves in excess
of (less than) projected benefit obligation
Unrecognized prior service costs $ (11,601) $ (5,569)
Unrecognized net experience gains
(losses) 19,464 (6,200)
Unrecognized net transitional asset 1,388 4,316
- ------------------------------------------------------------------------------------
Total $ 9,251 $ (7,453)
====================================================================================
</TABLE>
The discount rate and assumed rate of future salary increases used in
determining the actuarial present value of the projected benefit obligation were
7.5% and 5.5%, respectively, in 1996 and 7% and 5.5%, respectively, in 1995. The
expected long-term rate of return on plan assets was 8.5% in 1996 and 1995.
The Corporation has a nonqualified supplemental pension plan covering
certain employees, which provides 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 plan if it were not for
limitations imposed by income tax regulations. The projected benefit obligation
related to this unfunded plan totaled $29,562,000 at December 31, 1996 and
$21,330,000 at December 31, 1995. Pension expense for the plan was $3,970,000 in
1996, $3,706,000 in 1995 and $3,871,000 in 1994. At December 31, 1996, the
Corporation has accrued $16,252,000 for this plan.
31
<PAGE> 26
10. Provision for Income Taxes
The provision for income taxes consisted of:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States Federal
Current $ 20,156 $ 4,411 $ (350)
Deferred 6,528 (190,512) (39,948)(a)
State 4,904 2,796 1,666
- --------------------------------------------------------------------------------
31,588 (183,305) (38,632)
- --------------------------------------------------------------------------------
Foreign
Current 285,302 190,609 131,107
Deferred 36,955 34,460 69,623
- --------------------------------------------------------------------------------
322,257 225,069 200,730
- --------------------------------------------------------------------------------
Total $ 353,845 $ 41,764 $ 162,098
================================================================================
</TABLE>
(a) Includes benefit of operating loss of $43,121.
Income (loss) before income taxes consisted of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Thousands of dollars 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 55,678 $(656,190) $(170,813)
Foreign* 958,266 303,541 406,625
- -------------------------------------------------------------------------------
Total $1,013,944 $(352,649) $ 235,812
===============================================================================
</TABLE>
*Foreign income includes the Corporation's Virgin Islands, shipping and other
operations located outside of the United States.
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 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities
Fixed assets $ 405,617 $ 388,994
Foreign petroleum taxes 316,942 239,218
Other 50,823 74,551
- -------------------------------------------------------------------------
Total deferred tax liabilities 773,382 702,763
- -------------------------------------------------------------------------
Deferred tax assets
Accrued liabilities 152,323 169,250
Net operating and other loss
carryforwards 396,872 400,839
Tax credit carryforwards 124,455 104,516
Other 18,390 17,636
- -------------------------------------------------------------------------
Total deferred tax assets 692,040 692,241
Valuation allowance (271,213) (325,739)
- -------------------------------------------------------------------------
Net deferred tax assets 420,827 366,502
- -------------------------------------------------------------------------
Net deferred tax liabilities $ 352,555 $ 336,261
=========================================================================
</TABLE>
The difference between the Corporation's effective income tax rate and the
United States statutory rate is reconciled below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
United States statutory rate 35.0% (35.0)% 35.0%
Effect of foreign operations,
including foreign tax credits (.6) 46.7 33.4
State income taxes, net of
Federal income tax benefit .3 .5 .5
Alternative minimum tax -- -- (1.8)
Tax credits (.1) (.6) --
Other .3 .2 1.6
- -----------------------------------------------------------------------------------
Total 34.9% 11.8% 68.7%
===================================================================================
</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 $1.2
billion at December 31, 1996, 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, 1996, 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 $90 million, which can be carried forward
indefinitely. A refining subsidiary of the Corporation has a net operating loss
carryforward of approximately $880 million, expiring through 2011, and a foreign
exploration and production subsidiary has a $60 million loss carryforward.
Income taxes paid (net of refunds) in 1996, 1995 and 1994 amounted to
$294,905,000, $101,066,000 and $66,569,000, respectively.
11. 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
(93,110,496 shares in 1996, 93,001,601 shares in 1995 and 92,968,993 shares in
1994). Such weighted average number of shares reflects the exercise of
outstanding stock options to the extent dilutive.
32
<PAGE> 27
12. 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 has used 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, 1996, the Corporation's hedging activities
included commodity and financial contracts maturing mostly through 1997,
covering 17,200,000 barrels of crude oil and refined products (92,200,000
barrels in 1995) and 24,300,000 Mcf of natural gas (38,900,000 Mcf in 1995). Of
the crude oil and refined product hedges, 6,900,000 barrels related to
exploration and production activities (48,500,000 barrels in 1995), and the
remainder related to refining and marketing operations.
The Corporation produced 87,000,000 barrels of crude oil and natural gas
liquids and 251,000,000 Mcf of natural gas in 1996, and had approximately
44,000,000 barrels of crude oil and refined products in its refining and
marketing inventories at December 31, 1996. 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 $11,600,000 at December 31, 1996
and $34,000,000 at December 31, 1995. Deferred gains or losses related to
anticipated transactions are not material.
Financial Instruments: At December 31, 1996, the Corporation has no interest
rate conversion agreements outstanding ($490,000,000 at December 31, 1995). The
Corporation has $270,800,000 of notional value foreign currency forward and
purchased option contracts maturing generally in 1997 ($430,000,000 at December
31, 1995) and $37,000,000 in letters of credit outstanding ($36,300,000 at
December 31, 1995). 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>
- -----------------------------------------------------------------------------------------------
1996 1995
------------------------- -------------------------
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 $(1,279) $(1,379) $(1,363) $(1,528)
Interest rate conversion
agreements -- -- -- (23)
Foreign currency
exchange agreements
and options -- 18 -- (2)
===============================================================================================
</TABLE>
At times, the Corporation uses crude oil, natural gas and refined product
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.
33
<PAGE> 28
13. 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, 1996, the Corporation had net capital lease assets
of $85,516,000, 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, 1996, 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>
1997 $ 165,415 $22,991
1998 117,450 24,516
1999 101,094 28,658
2000 98,102 --
2001 83,308 --
Remaining years 437,579 --
- --------------------------------------------------------------------
Total minimum lease payments 1,002,948 76,165
Less: Imputed interest -- 5,560
Income from subleases 16,615 --
- --------------------------------------------------------------------
Net minimum lease payments $ 986,333 $70,605
====================================================================
Capitalized lease obligations--
Current $19,787
Long-term 50,818
- --------------------------------------------------------------------
Total $70,605
====================================================================
</TABLE>
Rental expense for all operating leases, other than rentals applicable to
oil and gas leases, was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Thousands of dollars 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total rental expense $185,669 $179,255 $164,395
Less income from subleases 5,264 1,748 3,443
- --------------------------------------------------------------------------------
Net rental expense $180,405 $177,507 $160,952
================================================================================
</TABLE>
14. Information on Major Operating Activities
Financial data by major geographic area for each of the three years ended
December 31, 1996 follow:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Consol-
Millions of dollars United States(a) Europe Other idated(b)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Operating revenues
Unaffiliated customers $ 6,589 $1,568 $ 115 $ 8,272
Intergeographic
transfers -- -- 104
Operating profit(c) 123 451 77 651
Gain on asset sales 196 56 277 529
Identifiable assets 5,046 2,502 236 7,784
Net assets 2,054 1,038 292 3,384
===============================================================================
1995
Operating revenues
Unaffiliated customers $ 5,750 $1,320 $ 232 $ 7,302
Intergeographic
transfers -- 71 96
Operating profit (loss)(c) (611) 286 124 (201)
Gain (loss) on asset sales 75 23 (2) 96
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(c) 66 261 112 439
Gain on asset sales -- 42 -- 42
Identifiable assets 5,293 2,316 729 8,338
Net assets 1,804 796 500 3,100
===============================================================================
</TABLE>
(a) Includes U.S. Virgin Islands and shipping operations.
(b) After elimination of transactions between affiliates, which are valued at
approximate market prices.
(c) Excludes asset sales.
34
<PAGE> 29
14. Information on Major Operating Activities (Continued)
The following table presents financial data by major operating activity for each
of the three years ended December 31, 1996 (with prior years restated to conform
with current year presentation):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Exploration and Refining, Marketing
Millions of dollars Production and Shipping Corporate Consolidated(a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Operating revenues
Total operating revenues $ 3,166 $ 5,283 $ 2
Less: Transfers between affiliates 177 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
Operating revenues from unaffiliated customers $ 2,989 $ 5,282 $ 1 $ 8,272
===================================================================================================================================
Operating profit (loss)(b) $ 523 $ 174 $ (46) $ 651
Gain on asset sales 529 -- -- 529
Interest expense -- -- (166) (166)
(Provision) benefit for income taxes (418) 7 57 (354)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 634 $ 181 $(155) $ 660
===================================================================================================================================
Depreciation, depletion, amortization and lease impairment $ 656 $ 125 $ 2 $ 783
Identifiable assets 3,600 3,802 382 7,784
Capital expenditures 788 68 5 861
===================================================================================================================================
1995
Operating revenues
Total operating revenues $ 2,888 $ 4,528 $ 197
Less: Transfers between affiliates 245 2 64
- -----------------------------------------------------------------------------------------------------------------------------------
Operating revenues from unaffiliated customers $ 2,643 $ 4,526 $ 133 $ 7,302
===================================================================================================================================
Operating profit (loss)(b) $ 351 $ (514) $ (38) $ (201)
Gain on asset sales 51 7 38 96
Interest expense -- -- (247) (247)
(Provision) benefit for income taxes (250) 153 55 (42)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 152 $ (354) $(192) $ (394)
===================================================================================================================================
Depreciation, depletion, amortization and lease impairment $ 724 $ 164 $ 5 $ 893
Asset impairment 106 478 -- 584
Identifiable assets 3,920 3,476 360 7,756
Capital expenditures 626 63 3 692
===================================================================================================================================
1994
Operating revenues
Total operating revenues $ 2,725 $ 4,181 $ 136
Less: Transfers between affiliates 434 3 3
- -----------------------------------------------------------------------------------------------------------------------------------
Operating revenues from unaffiliated customers $ 2,291 $ 4,178 $ 133 $ 6,602
===================================================================================================================================
Operating profit (loss)(b) $ 334 $ 129 $ (24) $ 439
Gain on asset sales 42 -- -- 42
Interest expense -- -- (245) (245)
(Provision) benefit for income taxes (214) 6 46 (162)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 162 $ 135 $(223) $ 74
===================================================================================================================================
Depreciation, depletion, amortization and lease impairment $ 751 $ 171 $ 6 $ 928
Identifiable assets 4,163 3,987 188 8,338
Capital expenditures 532 62 2 596
===================================================================================================================================
</TABLE>
(a) After elimination of transactions between affiliates, which are valued at
approximate market prices.
(b) Excludes asset sales.
35
<PAGE> 30
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, 1996 and 1995 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, 1996. 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, 1996 and 1995 and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
As discussed in Note 3 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 14, 1997
36
<PAGE> 31
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.
During 1996, the Corporation sold its wholly-owned Canadian subsidiary,
certain United States and United Kingdom producing properties and Abu Dhabi
assets.
Costs Incurred In Oil and Gas Producing Activities
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
United Other
For the Years Ended December 31 (Millions of dollars) Total States Europe Canada Areas
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Property acquisitions $ 70 $ 32 $ 1 $-- $37
Exploration 321 124 160 15 22
Development 512 152 337 11 12
1995
Property acquisitions $ 48 $ 36 $ 2 $ 8 $ 2
Exploration 320 137 145 28 10
Development 377 107 242 18 10
1994
Property acquisitions $ 21 $ 14 $ -- $ 5 $ 2
Exploration 274 139 99 31 5
Development 333 120 170 31 12
===================================================================================================================
</TABLE>
Capitalized Costs Relating to Oil and Gas Producing Activities
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
At December 31 (Millions of dollars) 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unproved properties $ 279 $ 407
Proved properties 1,437 1,763
Wells, equipment and related facilities 6,517 7,222
- -------------------------------------------------------------------------------------------------------------
Total costs 8,233 9,392
Less: Reserves for depreciation, depletion, amortization and lease impairment 5,364 6,128
- -------------------------------------------------------------------------------------------------------------
Net capitalized costs $2,869 $3,264
=============================================================================================================
</TABLE>
37
<PAGE> 32
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 14 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 Europe Canada Areas
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Sales and other operating revenues
Unaffiliated customers $2,061 $ 474 $1,500 $ 55 $ 32
Inter-company 184 102 -- 4 78
- ------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,245 576 1,500 59 110
- ------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Production expenses, including related taxes 646 177 438 14 17
Exploration expenses, including dry holes 280 129 120 7 24
Other operating expenses 224 81 115 4 24
Depreciation, depletion, amortization and
lease impairment 656 209 409 16 22
Provision for income taxes 262 (6) 272 9 (13)
- ------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 2,068 590 1,354 50 74
- ------------------------------------------------------------------------------------------------------------------------------
Results of operations $ 177 $ (14)* $ 146 $ 9 $ 36
==============================================================================================================================
1995
Sales and other operating revenues
Unaffiliated customers $1,988 $ 540 $1,247 $148 $ 53
Inter-company 241 102 67 8 64
- ------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,229 642 1,314 156 117
- ------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Production expenses, including related taxes 633 214 350 46 23
Exploration expenses, including dry holes 298 113 151 24 10
Other operating expenses 223 67 126 13 17
Depreciation, depletion, amortization and
lease impairment 724 229 415 48 32
Asset impairment 106 106 -- -- --
Provision for income taxes 197 (30) 207 13 7
- ------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 2,181 699 1,249 144 89
- ------------------------------------------------------------------------------------------------------------------------------
Results of operations $ 48 $ (57) $ 65 $ 12 $ 28
==============================================================================================================================
1994
Sales and other operating revenues
Unaffiliated customers $1,714 $ 603 $ 879 $172 $ 60
Inter-company 385 98 237 2 48
- ------------------------------------------------------------------------------------------------------------------------------
Total revenues 2,099 701 1,116 174 108
- ------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Production expenses, including related taxes 607 224 318 47 18
Exploration expenses, including dry holes 250 128 99 18 5
Other operating expenses 187 70 92 11 14
Depreciation, depletion, amortization and
lease impairment 751 298 368 57 28
Provision for income taxes 200 (7) 167 22 18
- ------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,995 713 1,044 155 83
- ------------------------------------------------------------------------------------------------------------------------------
Results of operations $ 104 $ (12) $ 72 $ 19 $ 25
==============================================================================================================================
</TABLE>
*Includes a net charge of $22 million, principally to reduce the carrying values
of certain undeveloped leases.
38
<PAGE> 33
The Corporation's net oil and gas reserves have been estimated by DeGolyer and
MacNaughton, independent consultants. 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 Europe Canada 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, 1994 670 198 395 39 38
Revisions of previous estimates 49 13 35 (2) 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) (56) (5) (6)
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1994 644 198 373 34 39
Revisions of previous estimates 68 11 44 -- 13
Extensions, discoveries and other additions 95 30 61 3 1
Sales of minerals in-place (17) (11) (4) (2) --
Production (95) (23) (62) (4) (6)
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1995 695 205 412 31 47
Revisions of previous estimates 13 6 2 -- 5
Improved recovery 6 6 -- -- --
Extensions, discoveries and other additions 45 5 40 -- --
Purchases of minerals in-place 4 -- -- -- 4
Sales of minerals in-place (98) (33) (8) (30) (27)
Production (87) (18) (63) (1) (5)
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1996 578 171 383 -- 24
=================================================================================================================================
Natural Gas (Millions of Mcf)
At January 1, 1994 2,653 949 1,104 600 --
Revisions of previous estimates 142 105 38 (1) --
Extensions, discoveries and other additions 167 101 16 50 --
Purchases of minerals in-place 4 3 1 -- --
Sales of minerals in-place (76) -- (76) -- --
Production (309) (156) (85) (68) --
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1994 2,581 1,002 998 581 --
Revisions of previous estimates 53 6 57 (10) --
Extensions, discoveries and other additions 270 200 7 10 53
Sales of minerals in-place (100) (23) (38) (39) --
Production (323) (147) (97) (79) --
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1995 2,481 1,038 927 463 53
Revisions of previous estimates 108 34 74 -- --
Improved recovery 3 3 -- -- --
Extensions, discoveries and other additions 84 50 34 -- --
Purchases of minerals in-place 39 4 -- -- 35
Sales of minerals in-place (598) (158) -- (440) --
Production (251) (124) (104) (23) --
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1996 1,866 847* 931 -- 88
=================================================================================================================================
Net Proved Developed Reserves
Crude Oil, Including Condensate and Natural Gas
Liquids (Millions of barrels)
At January 1, 1994 514 169 271 38 36
At December 31, 1994 505 171 263 33 38
At December 31, 1995 540 157 310 31 42
At December 31, 1996 412 121 280 -- 11
Natural Gas (Millions of Mcf)
At January 1, 1994 2,260 794 887 579 --
At December 31, 1994 2,210 838 814 558 --
At December 31, 1995 2,036 755 823 458 --
At December 31, 1996 1,368 553 815 -- --
=================================================================================================================================
</TABLE>
*Excludes 515 million Mcf of carbon dioxide gas for sale or use in company
operations.
39
<PAGE> 34
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 Europe Canada Areas
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Future revenues $18,479 $5,936 $11,630 $ -- $913
- -----------------------------------------------------------------------------------------------------------------------------
Less:
Future development and production costs 6,551 1,906 4,382 -- 263
Future income tax expenses 5,297 1,319 3,632 -- 346
- -----------------------------------------------------------------------------------------------------------------------------
11,848 3,225 8,014 -- 609
- -----------------------------------------------------------------------------------------------------------------------------
Future net cash flows 6,631 2,711 3,616 -- 304
Less: Discount at 10% annual rate 2,447 1,160 1,213 -- 74
- -----------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net
cash flows $ 4,184 $1,551 $ 2,403 $ -- $230
=============================================================================================================================
1995
Future revenues $17,201 $5,343 $ 9,857 $1,093 $908
- -----------------------------------------------------------------------------------------------------------------------------
Less:
Future development and production costs 7,352 2,289 4,273 539 251
Future income tax expenses 4,034 921 2,631 142 340
- -----------------------------------------------------------------------------------------------------------------------------
11,386 3,210 6,904 681 591
- -----------------------------------------------------------------------------------------------------------------------------
Future net cash flows 5,815 2,133 2,953 412 317
Less: Discount at 10% annual rate 2,057 899 952 143 63
- -----------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net
cash flows $ 3,758 $1,234 $ 2,001 $ 269 $254
=============================================================================================================================
1994
Future revenues $14,545 $4,267 $ 8,236 $1,266 $776
- -----------------------------------------------------------------------------------------------------------------------------
Less:
Future development and production costs 6,874 2,317 3,696 667 194
Future income tax expenses 2,789 465 1,910 152 262
- -----------------------------------------------------------------------------------------------------------------------------
9,663 2,782 5,606 819 456
- -----------------------------------------------------------------------------------------------------------------------------
Future net cash flows 4,882 1,485 2,630 447 320
Less: Discount at 10% annual rate 1,622 577 787 168 90
- -----------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net
cash flows $ 3,260 $ 908 $ 1,843 $ 279 $230
=============================================================================================================================
</TABLE>
40
<PAGE> 35
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) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Standardized measure of discounted future net cash flows at beginning of year $ 3,758 $ 3,260 $ 3,039
- ----------------------------------------------------------------------------------------------------------------
Changes during the year
Sales and transfers of oil and gas produced during year, net of
production costs (1,599) (1,574) (1,479)
Development costs incurred during year 512 377 333
Net changes in prices and production costs applicable to future production 2,577 1,195 604
Net change in estimated future development costs (168) (118) (264)
Extensions and discoveries (including improved recovery) of oil and
gas reserves, less related costs 315 451 135
Revisions of previous oil and gas reserve estimates 311 277 314
Sales of minerals in-place, net (983) (165) (2)
Accretion of discount 600 498 437
Net change in income taxes (814) (758) (380)
Revision in rate or timing of future production and other changes (325) 315 523
- ----------------------------------------------------------------------------------------------------------------
Total 426 498 221
- ----------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows at end of year $ 4,184 $ 3,758 $ 3,260
================================================================================================================
</TABLE>
41
<PAGE> 36
TEN-YEAR SUMMARY OF FINANCIAL DATA
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statement of Consolidated Income
Revenues
Sales (excluding excise taxes) and other operating revenues
Crude oil (including sales of purchased oil) $1,528,692 $ 1,565,310 $1,228,045
Natural gas (including sales of purchased gas) 1,364,833 1,120,450 1,063,560
Petroleum products 5,080,790 4,311,082 3,980,563
Other operating revenues 297,871 305,465 329,816
- -----------------------------------------------------------------------------------------------------------------
Total 8,272,186 7,302,307 6,601,984
Non-operating revenues (including asset sales) 657,525(a) 222,482 96,809
- -----------------------------------------------------------------------------------------------------------------
Total revenues 8,929,711 7,524,789 6,698,793
- -----------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold and operating expenses 6,069,295 5,220,657 4,449,819
Exploration expenses, including dry holes 279,335 297,817 249,433
Selling, general and administrative expenses 618,429 634,271 590,647
Interest expense 165,501 247,465 245,149
Depreciation, depletion, amortization and lease impairment 783,207 893,067 927,933
Asset impairment -- 584,161(b) --
Provision for income taxes 353,845 41,764 162,098
- -----------------------------------------------------------------------------------------------------------------
Total costs and expenses 8,269,612 7,919,202 6,625,079
- -----------------------------------------------------------------------------------------------------------------
Net income (loss) $ 660,099 $ (394,413) $ 73,714
=================================================================================================================
Net income (loss) per share $ 7.09 $ (4.24) $ .79
=================================================================================================================
Dividends per Share of Common Stock $ .60 $ .60 $ .60
Weighted Average Number of Shares Outstanding
(in thousands) 93,110 93,002 92,969
=================================================================================================================
</TABLE>
(a) Includes a pre-tax gain on asset sales of $529,271. The net gain, after
applicable income taxes, was $421,150 ($4.52 per share).
(b) 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).
(c) 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.
See accompanying notes to consolidated financial statements.
42
<PAGE> 37
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,219,750 $1,362,118 $1,448,793 $1,248,193 $ 904,233 $ 872,757 $ 886,504
1,020,563 787,996 574,004 458,615 315,578 288,915 284,610
3,348,900 3,428,702 3,897,748 4,587,646 4,107,770 2,864,342 3,347,242
290,308 279,541 346,300 653,051 261,373 179,997 195,209
- ---------------------------------------------------------------------------------------------------
5,879,521 5,858,357 6,266,845 6,947,505 5,588,954 4,206,011 4,713,565
21,153 95,352 149,496 133,593 90,373 57,533 71,024
- ---------------------------------------------------------------------------------------------------
5,900,674 5,953,709 6,416,341 7,081,098 5,679,327 4,263,544 4,784,589
- ---------------------------------------------------------------------------------------------------
4,287,139 4,039,180 4,409,832 4,708,925 3,837,800 2,964,534 3,521,552
258,826 228,998 301,183 276,200 164,925 182,205 106,440
596,919 581,542 582,549 512,805 422,491 380,169 328,118
156,615 147,099 177,850 224,200 187,811 145,439 144,147
824,651 833,405 828,765 743,467 545,934 441,414 431,482
-- -- -- -- -- -- --
44,727(c) 115,940 31,854 132,788 44,017 25,566 22,990
- ---------------------------------------------------------------------------------------------------
6,168,877 5,946,164 6,332,033 6,598,385 5,202,978 4,139,327 4,554,729
- ---------------------------------------------------------------------------------------------------
$ (268,203) $ 7,545 $ 84,308 $ 482,713 $ 476,349 $ 124,217 $ 229,860
===================================================================================================
$ (2.90) $ .09 $ 1.04 $ 5.96 $ 5.87 $ 1.51 $ 2.73
===================================================================================================
$ .60 $ .60 $ .60 $ .60 $ .60 $ .60 $ .45
92,595 87,317 81,088 81,023 81,147 82,031 84,136
===================================================================================================
</TABLE>
43
<PAGE> 38
TEN-YEAR SUMMARY OF FINANCIAL DATA
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Thousands of dollars, except per share data 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Selected Balance Sheet Data at Year-End
Cash and cash equivalents $ 112,522 $ 56,071 $ 53,135
Working capital 689,864 357,964 520,247
Property, plant and equipment
Exploration and production $ 8,233,445 $ 9,392,184 $ 9,790,468
Refining, marketing and other 3,668,974 3,672,028 4,514,358
- -----------------------------------------------------------------------------------------------------------
Total--at cost 11,902,419 13,064,212 14,304,826
Less reserves 6,995,136 7,694,496 7,938,824
- -----------------------------------------------------------------------------------------------------------
Property, plant and equipment--net $ 4,907,283 $ 5,369,716 $ 6,366,002
- -----------------------------------------------------------------------------------------------------------
Total assets $ 7,784,481 $ 7,756,370 $ 8,337,940
Total debt 1,939,288 2,717,866 3,339,788
Stockholders' equity 3,383,631 2,660,396 3,099,629
Stockholders' equity per share $ 36.35 $ 28.60 $ 33.33
===========================================================================================================
Summarized Statement Of Cash Flows
Net cash provided by operating activities $ 807,721 $ 1,241,007 $ 957,018
- -----------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Capital expenditures
Exploration and production (788,286) (626,518) (532,189)
Refining, marketing and other (72,339) (65,593) (64,095)
- -----------------------------------------------------------------------------------------------------------
Total capital expenditures (860,625) (692,111) (596,284)
Proceeds from sales of property,
plant and equipment and other 1,037,073 145,792 72,804
- -----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 176,448 (546,319) (523,480)
- -----------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Issuance (repayment) of notes (72,046) 26,247 (54,153)
Long-term borrowings -- 25,000 289,843
Repayment of long-term debt and
capitalized lease obligations (794,527) (689,355) (642,112)
Issuance of common stock -- -- --
Cash dividends paid (55,746) (55,788) (55,711)
Common and preferred stock retired (8,236) -- --
- -----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (930,555) (693,896) (462,133)
- -----------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 2,837 2,144 2,095
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ 56,451 $ 2,936 $ (26,500)
===========================================================================================================
Stockholder Data at Year-End
Number of common shares outstanding (in thousands) 93,073 93,011 92,996
Number of stockholders (based on number of
holders of record) 10,153 11,294 11,506
Market price of common stock $ 57.88 $ 53.00 $ 45.63
===========================================================================================================
</TABLE>
44
<PAGE> 39
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 79,635 $ 141,014 $ 120,170 $ 129,914 $ 120,300 $ 213,184 $ 226,513
245,026 551,459 625,370 603,244 493,168 285,074 161,764
$ 9,360,871 $ 9,203,951 $ 9,306,435 $ 8,340,951 $ 6,531,956 $ 5,488,339 $ 5,138,183
4,426,369 3,886,814 3,223,397 2,817,032 2,635,300 2,550,122 2,475,418
- ---------------------------------------------------------------------------------------------------------------
13,787,240 13,090,765 12,529,832 11,157,983 9,167,256 8,038,461 7,613,601
7,052,328 6,646,801 6,339,232 5,594,399 4,688,142 4,358,765 4,064,227
- ---------------------------------------------------------------------------------------------------------------
$ 6,734,912 $ 6,443,964 $ 6,190,600 $ 5,563,584 $ 4,479,114 $ 3,679,696 $ 3,549,374
- ---------------------------------------------------------------------------------------------------------------
$ 8,641,546 $ 8,721,756 $ 8,841,435 $ 9,056,636 $ 6,867,411 $ 5,371,979 $ 5,304,808
3,687,922 3,186,199 3,266,195 2,925,285 2,697,184 1,672,329 1,631,345
3,028,911 3,387,599 3,131,982 3,106,029 2,560,628 2,215,154 2,158,544
$ 32.71 $ 36.59 $ 38.63 $ 38.34 $ 31.69 $ 27.02 $ 26.30
===============================================================================================================
$ 819,423 $ 1,137,707 $ 1,364,268 $ 1,326,444 $ 805,848 $ 747,393 $ 452,158
- ---------------------------------------------------------------------------------------------------------------
(755,419) (916,536) (1,295,039) (1,267,506) (1,730,072) (652,859) (304,938)
(592,622) (641,258) (417,276) (193,921) (98,597) (77,070) (43,205)
- ---------------------------------------------------------------------------------------------------------------
(1,348,041) (1,557,794) (1,712,315) (1,461,427) (1,828,669) (729,929) (348,143)
12,436 25,423 37,788 (12,012) 6,644 16,401 4,845
- ---------------------------------------------------------------------------------------------------------------
(1,335,605) (1,532,371) (1,674,527) (1,473,439) (1,822,025) (713,528) (343,298)
- ---------------------------------------------------------------------------------------------------------------
117,791 (159,756) (183,351) 46,744 13,823 (205,414) 398,889
547,704 675,016 786,280 461,413 1,203,994 416,161 63,000
(167,769) (524,384) (269,414) (287,531) (194,870) (191,159) (372,115)
-- 497,360 -- -- -- -- --
(41,603) (64,194) (36,468) (60,681) (48,785) (49,248) (25,857)
-- -- -- (6,213) (43,632) (7,420) (62,138)
- ---------------------------------------------------------------------------------------------------------------
456,123 424,042 297,047 153,732 930,530 (37,080) 1,779
- ---------------------------------------------------------------------------------------------------------------
(1,320) (8,534) 3,468 2,877 (7,237) (10,114) 23,193
- ---------------------------------------------------------------------------------------------------------------
$ (61,379) $ 20,844 $ (9,744) $ 9,614 $ (92,884) $ (13,329) $ 133,832
===============================================================================================================
92,587 92,584 81,068 81,019 80,804 81,979 82,089
12,000 13,088 13,732 14,669 16,638 18,031 19,343
$ 45.13 $ 46.00 $ 47.50 $ 46.38 $ 48.75 $ 31.50 $ 24.88
===============================================================================================================
</TABLE>
45
<PAGE> 40
TEN-YEAR SUMMARY OF OPERATING DATA
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Production Per Day (Net)(*)
Crude oil (barrels)
United States 41,020 52,284 55,638
United Kingdom 134,726 135,429 122,043
Norway 27,603 25,576 24,279
Africa 9,725 9,512 8,857
Canada 3,145 9,749 10,581
Abu Dhabi 2,784 7,227 7,273
- --------------------------------------------------------------------------------------------
Total 219,003 239,777 228,671
============================================================================================
Natural gas liquids (barrels)
United States 9,105 10,722 11,964
United Kingdom 6,628 6,900 6,756
Norway 1,585 1,414 1,320
Canada 476 1,647 1,809
- --------------------------------------------------------------------------------------------
Total 17,794 20,683 21,849
============================================================================================
Natural gas (Mcf)
United States 337,653 401,581 427,103
United Kingdom 253,983 239,307 208,742
Norway 30,445 27,743 24,417
Canada 62,585 215,500 185,856
- --------------------------------------------------------------------------------------------
Total 684,666 884,131 846,118
============================================================================================
Well Completions (Net)
Oil wells 39 33 28
Gas wells 25 41 44
Dry holes 40 50 24
Productive Wells at Year-End (Net)
Oil wells 854 2,154 2,160
Gas wells 455 1,160 1,146
- --------------------------------------------------------------------------------------------
Total 1,309 3,314 3,306
============================================================================================
Undeveloped Net Acreage (Held at End of Year)
United States 891,000 1,440,000 1,685,000
Canada -- 799,000 743,000
Other international 7,455,000 5,072,000 3,827,000
- --------------------------------------------------------------------------------------------
Total 8,346,000 7,311,000 6,255,000
============================================================================================
Shipping
Vessels owned or under charter at year-end 13 16 17
Total deadweight tons 1,236,000 2,010,000 2,265,000
Refining (Barrels Daily)
Refinery crude runs 396,000 377,000 388,000
Petroleum Products Sold (Barrels Daily)
Gasoline, distillates and other light products 412,000 401,000 375,000
Residual fuel oils 83,000 86,000 93,000
- --------------------------------------------------------------------------------------------
Total 495,000 487,000 468,000
============================================================================================
Storage Capacity at Year-End (Barrels) 86,986,000 89,165,000 94,597,000
Number of Employees (Average) 9,085 9,574 9,858
============================================================================================
</TABLE>
(*)In 1996, the Corporation sold its Canadian and Abu Dhabi operations and
certain United States and United Kingdom producing properties.
46
<PAGE> 41
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
60,173 62,517 66,063 62,434 60,992 60,782 62,635
80,019 86,265 59,979 56,027 38,707 32,223 27,709
26,388 29,598 28,619 24,351 24,135 21,782 20,937
8,301 6,910 8,952 -- -- -- --
11,536 11,528 11,966 9,494 9,178 9,251 8,592
10,004 11,150 9,866 8,475 7,230 9,374 6,903
- ----------------------------------------------------------------------------------------------
196,421 207,968 185,445 160,781 140,242 133,412 126,776
==============================================================================================
11,798 11,063 10,047 9,436 9,986 7,183 5,913
3,783 1,468 766 805 466 295 402
1,432 1,707 1,752 2,004 2,016 1,884 1,847
1,956 1,981 1,997 1,704 1,732 1,529 1,306
- ----------------------------------------------------------------------------------------------
18,969 16,219 14,562 13,949 14,200 10,891 9,468
==============================================================================================
502,459 601,824 583,740 457,042 335,112 283,114 282,906
188,024 153,599 128,014 145,921 126,643 141,139 180,594
28,987 31,858 26,947 25,656 24,371 20,389 18,771
167,839 137,680 104,151 76,768 72,855 61,653 49,229
- ----------------------------------------------------------------------------------------------
887,309 924,961 842,852 705,387 558,981 506,295 531,500
==============================================================================================
48 33 45 17 19 39 35
49 20 41 33 19 8 13
37 22 36 38 31 35 28
2,189 2,082 2,103 2,111 2,048 2,014 2,058
1,115 966 927 905 714 612 620
- ----------------------------------------------------------------------------------------------
3,304 3,048 3,030 3,016 2,762 2,626 2,678
==============================================================================================
1,854,000 1,819,000 1,802,000 1,716,000 1,589,000 1,556,000 1,566,000
788,000 840,000 842,000 835,000 582,000 786,000 787,000
3,522,000 2,328,000 2,638,000 2,494,000 2,501,000 3,936,000 3,875,000
- ----------------------------------------------------------------------------------------------
6,164,000 4,987,000 5,282,000 5,045,000 4,672,000 6,278,000 6,228,000
==============================================================================================
15 21 21 23 22 21 21
2,398,000 3,223,000 2,825,000 3,012,000 3,081,000 2,719,000 2,903,000
351,000 335,000 320,000 383,000 397,000 296,000 371,000
291,000 275,000 285,000 296,000 299,000 222,000 257,000
95,000 102,000 128,000 132,000 171,000 157,000 154,000
- ----------------------------------------------------------------------------------------------
386,000 377,000 413,000 428,000 470,000 379,000 411,000
==============================================================================================
94,380,000 95,199,000 94,879,000 93,867,000 91,794,000 90,798,000 88,047,000
10,173 10,263 10,317 9,645 8,740 8,151 7,890
==============================================================================================
</TABLE>
47
<PAGE> 1
EXHIBIT 21
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
Organized under
Name of Subsidiary the laws of
------------------ -----------
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 (Port Reading) Corporation ............ Delaware
Amerada Hess Production Gabon ...................... Gabon
Amerada Hess Shipping Corporation .................. Liberia
Hess Oil Virgin Islands Corp. ...................... U.S. Virgin Islands
Jamestown Insurance Company Limited ................ Bermuda
Tioga Gas Plant, Inc. .............................. Delaware
Tug New York Company ............................... Delaware
(*) Sold subsidiary in 1996.
(**) Principal assets sold in 1996.
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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 112,522
<SECURITIES> 0
<RECEIVABLES> 848,129
<ALLOWANCES> 0
<INVENTORY> 1,272,312
<CURRENT-ASSETS> 2,426,844
<PP&E> 11,902,419
<DEPRECIATION> 6,995,136
<TOTAL-ASSETS> 7,784,481
<CURRENT-LIABILITIES> 1,736,980
<BONDS> 1,660,998
0
0
<COMMON> 93,073
<OTHER-SE> 3,290,558
<TOTAL-LIABILITY-AND-EQUITY> 7,784,481
<SALES> 8,272,186
<TOTAL-REVENUES> 8,929,711
<CGS> 6,069,295
<TOTAL-COSTS> 6,069,295
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 165,501
<INCOME-PRETAX> 1,013,944
<INCOME-TAX> 353,845
<INCOME-CONTINUING> 660,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 660,099
<EPS-PRIMARY> 7.09
<EPS-DILUTED> 7.09
</TABLE>
