Hess (HES) DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant  x                              Filed by a Party other than the Registrant  ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨ Definitive Proxy Statement

¨ Definitive Additional Materials

x Soliciting Material Pursuant to § 240.14a-12

HESS CORPORATION

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

x	No fee required.
¨	Fee computed below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1)	Title of each class of securities to which transaction applies:
	(2)	Aggregate number of securities to which transaction applies:
	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
	(4)	Proposed maximum aggregate value of transaction:
	(5)	Total fee paid:
¨	Fee paid previously with preliminary materials.
¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:
	(2)	Form, Schedule or Registration Statement No.:
	(3)	Filing Party:
	(4)	Date Filed:

DELIVERING SHAREHOLDER VALUE

APRIL  2013

Forward-Looking Statements and Other Information

2

This presentation contains projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and

Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company’s current views with respect to

future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be

achieved, and actual results could differ materially from those projected as a result of certain risk factors. A discussion of these risk factors is

included in the Company’s periodic reports filed with the Securities and Exchange Commission.

We use certain terms in this presentation relating to reserves other than proved, such as unproved resources.  Investors are urged to consider

closely the disclosure relating to proved reserves in Hess’

Form 10-K, File No.1-1204, available from Hess Corporation, 1185 Avenue of the

Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com.  You can also obtain this form from the

SEC on the EDGAR system.

Important

Additional

Information

Hess Corporation, its directors and certain of its executive officers may be deemed to be participants in the solicitation of proxies from Hess

shareholders in connection with the matters to be considered at Hess’s 2013 Annual Meeting. Hess has filed a definitive proxy statement and

form of WHITE proxy card with the U.S. Securities and Exchange Commission in connection with the 2013 Annual Meeting. HESS

SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING WHITE

PROXY

CARD

AS

THEY

CONTAIN

IMPORTANT

INFORMATION

Information

regarding

the

identity

of

potential

participants,

and

their

direct

or

indirect

interests,

by

security

holdings

or

otherwise,

is

set

forth

in

the

proxy

statement

and

other

materials

filed

with

the

SEC.

Shareholders

will be able to obtain any proxy statement, any amendments or supplements to the proxy statement and other documents filed by Hess with the

SEC for no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge at Hess’s website at www.hess.com, by

writing to Hess Corporation at 1185 Avenue of the Americas, New York, NY 10036, by calling Hess’s proxy solicitor, MacKenzie Partners, toll-

free at (800) 322-2885 or by email at hess@mackenziepartners.com.

This document contains quotes and excerpts from certain previously published material.  Consent of the author and publication has not been

obtained to use the material as proxy soliciting material.

.

THE HESS VALUE PROPOSITION

3

Culmination of Our Transformation:

A Focused Pure Play E&P Company

Pure Play E&P Company

•

Focused, higher growth, lower risk portfolio

•

Divest Indonesia and Thailand

•

Pursue monetization of Bakken midstream assets (2015)

Exit Downstream

•

Divest Retail

•

Divest Energy Marketing

•

Divest Energy Trading (Hetco)

Return Capital to Shareholders and Retain Financial Flexibility to Fund Growth

•

Increase annual dividend by 150% to $1.00 per share, effective in the third quarter of 2013

•

Authorize share repurchase program of up to $4.0 billion

•

Additional share repurchases from the monetization of Bakken midstream assets

The Right Board to Drive Shareholder Value

•

Six new world class independent Directors with the right mix of corporate leadership,

operational and financial expertise, and top level E&P experience

4

These actions are the culmination of our transformation

into a focused, higher growth, lower risk, pure play E&P company

Culmination of Strategic Transformation

5

Phase I

Phase II

Phase III

5-YEAR TRANSFORMATION

Jan 1, 2010

July 25, 2012

March 4, 2013

Announced three-prong strategy

•

•

•

•

•

•

•

Reduced spending

•

•

Additional asset sales

•

Indonesia

•

Thailand

Bakken midstream monetization

Additional reduction in capital

expenditures and exploration spend

Bakken (added 250,000 net acres)

Utica (added 185,000 net acres)

Swapped for and acquired additional

Valhall equity (Norway) for non-core Clair

(UK) & Gabon assets

Asset sales ($1.7 billion)

Closed HOVENSA joint venture refinery

in St. Croix, U.S. Virgin Islands

Exited refining with closure of Port

Reading refinery

Selling terminal network

Complete exit of downstream

•

Retail

•

Energy Marketing

•

Energy Trading (Hetco)

Management’s continued commitment to reshaping HES’s portfolio has driven an impressive turnaround.

—

Capital One, January 29, 2013

Integrated Oil

Company

Pure Play E&P

Company

5-Year 5-8% CAGR

on Production

(2012 Pro Forma -

2017)

Mid-Teens Aggregate

Production Growth

(2012 Pro Forma -

2014)

•

Jambi Merang

•

UK Gas Assets

•

Snorre

•

Cook and Maclure

•

Snohvit

•

Schiehallion

•

Bittern

Shale

Exploitation

Focused exploration

Beryl

Azerbaijan

Eagle Ford

Russia

Upstream capex down 17% in 2013

Exploration spending down 29% in 2013

Additional asset sales ($1.5 billion)

Sales in progress

The Market Recognizes That Our Plan is Working

6

Source: Bloomberg

Note: Share price performance from 24-Jul-2012 (business day prior to 25-Jul-2012 strategy articulation) through 25-Jan-2013 (business day prior to the announcement of the planned divestiture of terminal

network and Elliott's position).

Hess’

share price increased 34%, outperforming all proxy peers, from our July 25, 2012 strategy update

to the last trading day before the announcement of the planned sale of our terminal network

E&P Proxy Peers

E&P Proxy Peers Median: 12%

Integrated Proxy Peers Median: 9.5%

Integrated Proxy Peers

We believe the companywide transition that began in 2009 is creating a more predictable/profitable growth

model…The company is making solid progress in building a focused portfolio of long life, high return assets

by leveraging its global scale and capability.

—

Dahlman Rose, December 11, 2012

HESS:

A PURE PLAY E&P COMPANY

7

Hess:

A Pure Play E&P Company Driving Shareholder Value

Focused Portfolio

•

78% of reserves and 84% of production in five key areas

Higher Growth, Lower Risk

•

5-year

5-8%

CAGR

on

production

(2012

pro

forma

–

2017)

•

Mid-teens

aggregate

production

growth

(2012

pro

forma

–

2014)

•

Growth

driven

by

Bakken,

Valhall,

Tubular

Bells,

and

North

Malay

Basin

Levered to Oil Prices

•

Highest percentage (79%) of proved reserves that are liquids based among our peers

•

Estimated 85% of 2013 pro forma crude oil production is Brent linked

Technical Breadth, Cost Efficient, Globally Capable

•

Among the leaders in drilling and completion costs in the Bakken

•

Global operator, selected by leading oil & gas companies and host governments on major projects

Returning Capital to Shareholders, Retaining Financial Flexibility, and

Allocating Capital Efficiently

•

Increasing annual dividend

•

Share repurchase program funded by asset sales

•

Financial flexibility to fund lower risk reserve and production growth and drive shareholder value

The Right Board to Drive Shareholder Value

•

Hess’

management and Board of Directors have built the Company’s world class asset portfolio and led the strategic

transformation that has been delivering shareholder value

•

To

lead

the

transformed

Hess

forward

we

are

adding

six

new

world

class

independent

Directors

with

the

right

mix

of

corporate leadership, operational and financial expertise, and top level E&P experience

8

1

2

3

4

5

6

E&P Portfolio Focused on Five Key Areas

9

¹

Snohvit field, Schiehallion, Azerbaijan assets, Russia subsidiary (Samara Nafta), Eagle Ford, Bittern, Beryl area, Indonesia and Thailand assets assumed sold as of January 1, 2012. 

1

78% of Reserves / 84% of Production

Equatorial

Guinea

17% Prod.

5% Res.

Valhall /

South Arne

8% Prod.

28% Res.

JDA

17% Prod.

11% Res.

Deepwater

Gulf of Mexico

23% Prod.

11% Res.

Bakken

19% Prod.

23% Res.

Pro Forma Metrics¹

2012A Production (MBoe/d)

289

2012A Reserves (MMBoe)

1,310

2013E Production (MBoe/d)

290 –

305

Utica

Ghana

North Malay

Basin

Near Term Growth Areas

Longer Term Growth Areas

Tubular Bells

A Higher Growth, Lower Risk

Portfolio to Deliver Results

10

2

BAKKEN SHALE

A leading acreage position in the premier United States shale oil play

Estimated

production

of

64

–

70

MBoe/d

in

2013

(up

15

–

25%

from

2012)

Goal of net production ~120 MBoe/d by mid-decade

VALHALL FIELD

(NORWAY)

Hess

64%

W.I.

with

net

production

24

–

28

MBoe/d

in

2013

Goal of net production ~75 MBoe/d

Redevelopment

complete

in

Q1

2013

and

multi-year

drilling

program

to

commence

in

2013

TUBULAR BELLS

(GULF OF MEXICO)

Hess 57% W.I. and operator with first production targeted in 2014

Anticipated peak annual net production rate of ~25 MBoe/d

NORTH MALAY BASIN

Hess 50% W.I. and operator with first production of ~40 MMcf/d targeted in Q4 2013

Goal of net production ~125 MMcf/d

Gas production linked to fuel oil price in Singapore with PSC through 2033

UTICA SHALE

Attractive position in emerging unconventional play

Focus in 2013 on delineation of our acreage with ~30 wells planned

GHANA

Seven

discoveries

to

date,

including

Pecan

and

Pecan

North

announced

in

Q4

2012

and Q1 2013

Hess 90% W.I. and operator

Company

to

submit

an

appraisal

plan

to

the

Ghanaian

government

for

approval

on

or

before

June

2013.

In

parallel,

Hess

has

begun

pre-development

studies

on

the

block 

5-Year

5-8%

CAGR

on

Production

(2012

Pro

Forma

–

2017)

Pro Forma for Announced Asset Sales Cash Margin Expected to Increase by $5 per Boe

The Leading Oil-Linked Asset Base

11

Source:  SEC filings, company annual reports, and company press releases

Note:

Percentage

of

reserves

that

are

liquids

based

for

peers

calculated

as

per

2012

year-end

SEC

filings.

TLM

is

calculated

as

per

its

2011

annual

report,

pro

forma

for

the

sale

in

2012

of

a

49%

stake

in

its

UK

North

Sea

business.

3

Hess: Driving Performance in the Bakken

12

Reducing Bakken Well Costs…

Source: NDIC Database at 1/24/13

…While Increasing Bakken Production

Hess Completed 10 of the Top 25 Wells in the Bakken in 2012

4

45

36

34

33

31

32

29

28

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

$ 5

$ 5

$ 6

$ 6

$ 6

$ 6

$ 6

$ 5

$ 5

$ 5

$ 5

$ 5

$ 8

$ 8

$ 7

$ 6

$ 5

$ 5

$ 4

$ 5

$ 4

$ 4

$ 4

$ 4

$ 13

$ 13

$

$ 12

$ 11

$ 11

$ 10

$ 10

$ 9

$ 9

$ 9

$ 9

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2012 Drilling & Completion Costs ($mm)

Drilling Costs

Completion Costs

13

0

200

400

600

800

1000

1200

1400

1600

Hess Wells

Peer Wells

5

6

7

9

9

10

11

12

12

14

16

18

25

25

32

38

42

55

62

64

Net Daily Production (Mboe/d)

Drilling Performance: Spud-to-Spud Days

30-Day Initial Production Rate

Hess Has Reduced Well Costs by 30% in 2012

13

Source:

Bakken

drilling

and

completion

cost

data

for

Hess

represents

actual

Q4

2012

drilling

and

completion

costs

per

well.

Peer

costs

represent

peer

estimated

Q4

2012

pre-drill

costs

provided

to

Hess

for

wells

where

Hess

has

an

ownership

interest

but

is

not

an

operator.

Peer

groups

based

on

a

weighted

average

of

well

costs

based

on

total

number

of

wells

balloted.

Proxy

Peers

include

XOM/XTO,

STL/BEXP,

COP,

OXY,

and

EOG.

Bakken

Pure

Play

Peers

include

CLR,

OAS,

and

KOG.

4

2012 Q4 Bakken Drilling & Completion Costs ($mm / well)

…Hess is increasingly demonstrating it can deliver results that are competitive with other leading Bakken

companies.

—

Goldman Sachs, January 30, 2013

$ 10.0

$ 9.4

$ 9.0

Proxy Peers

Bakken

Pure Play Peers

Hess

2012 Q4

Technical Breadth, Cost Efficient,

and Globally Capable

Chosen by leading international oil companies, national

oil companies, and host governments to operate major

new oil & gas developments

•

Chevron endorsed Hess as operator of the $2.3 billion

Tubular Bells offshore deep water Gulf of Mexico development

•

PETRONAS selected Hess as operator of the $2.9 billion

North Malay Basin offshore development

Realizing synergies from the transfer of technical skills

and operating capabilities globally

•

Bakken

hydraulic

fracturing

expertise

utilized

in

Malaysia/Thailand

Joint Development Area

•

Managed pressure drilling and geo-steering experience in

South Arne (Denmark) utilized in Utica shale play

•

Gulf

of

Mexico

deep

water

expertise

has

driven

Hess’

recent

drilling success in Ghana and Equatorial Guinea

•

High pressure and high temperature experience in Gulf of Mexico

is being deployed in the North Malay Basin and other international

assets

14

4

Returning Capital to Shareholders, Retaining

Financial Flexibility, and Allocating Capital Efficiently

Returning capital to shareholders

•

Increased common stock dividend 150% to $1.00 per share annually, effective third quarter of

2013

•

Authorized share repurchase program of up to $4.0 billion

Actual amount and timing of share repurchases dependent upon proceeds from divestiture program

•

We expect to return additional capital to shareholders as a result of monetizing the Bakken

midstream assets, expected 2015

Retaining financial flexibility to fund future growth

•

Initial portion of the divestiture proceeds will be used to pay down short term debt, provide a

cash cushion of an additional $1.0 billion against future commodity price volatility, and fund the

development of our focused growth projects

Allocating capital efficiently

•

Capital investments focused on higher growth, lower risk assets

•

Substantial reductions in capital and exploration expenditures

Upstream capital expenditures down 17% in 2013

Exploration spending down 29% in 2013

Further decrease in capital expenditures planned in 2014

Additional cost reduction program underway

15

5

DR.

KEVIN

MEYERS

-

59

Former Senior Vice President of E&P for the Americas, ConocoPhillips

The Right Board to Drive Shareholder Value

We

have

identified

a

team

of

outstanding

and

experienced

leaders

with

substantial

E&P

and business experience to help execute the next phase of our value plan

JOHN

KRENICKI

JR.

-

50

Former Vice Chairman of GE; President and Chief Executive Officer of GE Energy

JAMES

H.

QUIGLEY

-

61

Former Chief Executive Officer, Deloitte

6

16

Mr. Krenicki recently joined private equity firm Clayton, Dubilier & Rice in 2013 after 29 years in senior leadership roles at GE, including as Vice Chairman.  While

leader of GE Energy, the unit doubled in size and profitability and became GE's largest business – with revenue increasing from $22 billion in 2005 to over $50

billion in 2012.  His responsibilities included oversight of GE’s Oil & Gas, Power & Water, and Energy management businesses, which employ more than 100,000

people in over 165 countries.  Mr. Krenicki is one of America's top corporate executives with a strong track record of success, experience, and leadership in

operations, oil and gas, and energy. His experience leading large scale initiatives and operations across a global energy portfolio will add important

perspective to the Hess Board as the Company completes its transformation to a pure play E&P company.

Mr. Quigley led Deloitte, one of the world's largest accounting and consulting firms.  During his 38 years at Deloitte, he was a trusted consultant on strategic

leadership and operating matters to senior management teams of multinational companies across industries.  As CEO, he was responsible for the consulting,

tax, audit, and financial advisory practices of Deloitte, and as an advisor and consultant, helped guide major strategic initiatives at many companies.  In 2012,

Mr. Quigley was named Trustee of the International Financial Reporting Standards (IFRS) Foundation, the oversight body of the International Accounting

Standards Board (IASB).  He will bring to the Hess Board significant global leadership experience and knowledge of financial, tax and regulatory

matters that are relevant to Hess operations.

Dr. Meyers ran Exploration and Production in the Americas for ConocoPhillips, where he oversaw 6,000 employees and a $6 billion annual capital program, and

was responsible for reorganizing and driving business value in the Americas E&P portfolio.  Dr. Meyers drove the reconfiguration of the company’s upstream

portfolio in North America, divesting $6 billion of low growth, low margin assets and focusing capital into emerging shale plays. He spearheaded the company's

development of the Eagle Ford, moving it from exploration to a twelve-rig development program in under a year, and increased investment in both the Permian

Basin and the Bakken.  Dr. Meyers has over 30 years of experience in exploration and production, both domestic and international.  Based on this experience,

Dr. Meyers will bring to the Hess Board decades of managing cost-efficient E&P operations in geographies directly relevant to Hess’ focused E&P

portfolio.

The Right Board to Drive Shareholder Value

6

We

have

identified

a

team

of

outstanding

and

experienced

leaders

with

substantial

E&P

and business experience to help execute the next phase of our value plan

17

Former Executive Vice President and Chief Financial Officer, CBS

Corporation

Former Chief Operating Officer, TNK-BP Russia

Former Executive Committee Member, Royal Dutch Shell

Dr. Williams worked for over 30 years at Shell, including more than 17 years in Shell’s E&P and upstream business, serving most recently as a member

of the Executive Committee of Royal Dutch Shell, where he was of the top three operating executives collectively responsible for all strategic, capital,

and operational matters.  Most recently, as Downstream Director, Dr. Williams oversaw $400 billion in revenues and approximately 55,000 people,

generating $5.3 billion in profit annually, and redirected a $6 billion annual investment into the higher growth markets of China and Brazil, while

strengthening Shell’s position in key hubs in the U.S. Gulf Coast and Singapore.  His experience as part of an executive group with ultimate

strategic responsibilities for the overall direction of one of the world’s largest oil & gas companies will add invaluable insight to Hess’ Board.

FREDRIC

REYNOLDS

-

62

WILLIAM

SCHRADER

-

55

DR.

MARK

WILLIAMS

-

61

Mr. Reynolds was Executive Vice President and Chief Financial Officer of CBS Corporation and its predecessors from January 1994 until his retirement

in August 2009.  While at CBS, Mr. Reynolds managed the company's transformation, beginning with the acquisition by Westinghouse of CBS in 1995,

followed by the Viacom-CBS merger of 2000 and the subsequent spin-out of MTV Networks, since renamed Viacom.  During his tenure as CFO of CBS,

shareholders experienced substantial share appreciation and return of capital.  Mr. Reynolds is also the lead independent director at AOL Inc. 

Mr. Reynolds will bring to the Hess Board his substantial experience as a CFO with a successful track record of financial oversight, leading a

successful transformation, returning capital, and delivering long term returns.

Mr. Schrader was a senior leader of many of BP's most important E&P businesses, including serving as President of BP Azerbaijan – one of BP’s most

valued assets – and most recently served as COO of TNK-BP, which comprised 27% of BP’s reserves and 29% of BP’s production.  During his tenure

as President of BP Azerbaijan, production increased from 240,000 bpd to over 950,000 bpd while operating costs were reduced from $7/bbl to $4/bbl. 

He also was responsible for all of BP’s E&P business in Indonesia including the Tangguh LNG business.  Mr. Schrader is an outstanding E&P

executive responsible for transforming BP’s best and most valued E&P assets, and will bring to the Board his experience as a disciplined

E&P operator with expertise in production sharing structures, government relations, and delivering returns.

Hess Transformed:

A Pure Play E&P Company Driving Shareholder Value

Focused Portfolio

Higher Growth, Lower Risk

Levered to Oil Prices

Technical Breadth, Cost Efficient, and Globally Capable

Returning Capital to Shareholders, Retaining Financial Flexibility,

and Allocating Capital Efficiently

The Right Board to Drive Shareholder Value

18

1

2

3

4

5

6

Management is doing all the right things…the outlook has never been better.

—

Bank of America Merrill Lynch, January 31, 2013

Research Analysts Support Hess’

Transformation…

And Reject Elliott’s Plan

•

Hess Corporation’s much anticipated response to Elliott Management deals what we believe will provide a

knockout counter-proposal and provides the line of sight on the next leg of the recovery

—

Bank of America Merrill Lynch, March 5, 2013

•

We view the company’s proactive stance and exceptional clarity with its investor base as a major blow to activist

claims. . .

The

accelerated

plan

covers

essentially

all

facets

for

unlocking

value

for

shareholders…

with

the

only

exception being the onshore resource spin off, which remains highly controversial and, in our opinion, not likely

to double the valuation of HES’s Bakken acreage

—

Capital One, March 6, 2013

•

Critically, we believe the strategy outlined by management is a superior route to releasing value

—

Bank of America Merrill Lynch, March 5, 2013

•

We tend to agree with management’s assertion that a breakup into two E&P companies, one domestic and one

international, would not be the best way to create shareholder value

—

Oppenheimer, March 5, 2013

•

We

applaud

the

changes

HES

announced

today…

HES

will

become

a

pure-play

E&P

company

with

a

more

shareholder-friendly approach to returning capital via dividends and share repurchases

—

Wells Fargo, March 4, 2013

•

We expect the HES transformational plan to be viewed more favourably by shareholders than the suggestions

made by Elliott in late January

—

UBS, March 4, 2013

•

We believe the recovery set in place by management well before Elliott entered the fray is compelling. To derail

the process at this juncture would be counter-productive

—

Bank of America Merrill Lynch, March 5, 2013

19

Research Analysts Support Hess’

Transformation…

And Reject Elliott’s Plan

None of the Hess directors are tethered to Elliott’s unusual

compensation scheme or flawed agenda

•All- Star Board. HES will add six new independent directors, all former business executives, each with decades of

distinguished careers, including three with extensive oil industry experience. The new board should help guide

HES with executing its transformation strategy into a pure E&P play

—

Oppenheimer, March 5, 2013

•HES

announced

the

expected

departure

of

six

members

of

its

Board

of

Directors

while

also

putting

forth

six

new

independent

nominees.

In

our

view

. . .this

addresses

Elliott

Associates’

prior

concern

over

the

lack

of

independence

at HES’s Board

—

J.P. Morgan, March 4, 2013

•Hess

has

put

forward

an

equally

attractive

slate

of

candidates

that

in

our

view

will

address

any

and

all

concerns

raised

over

the independence of the board

—

Bank of America Merrill Lynch, March 5, 2013

•HES

has

nominated

six

new

members

to

join

its

board

of

directors.

Four

of

these

members

possess

extensive

energy

experience and three of them have direct experience in oil and gas production

—

Wells Fargo, March 4, 2013

20

HESS’

ASSESSMENT OF

ELLIOTT’S “RECOMMENDATIONS”

21

Elliott Management’s “Recommendations”

Are Flawed and Irrelevant

22

We think Elliott's entry into HES is a bit late as HES is already well underway in executing a successful

transformation strategy.

—

Capital One, January 30, 2013

Elliott’s Central Thesis

Facts

Immediately break the

Company in two

Deeply

flawed

idea

that

undermines

the

prospect

of

future

value

by

breaking

the

Company

into

two

pieces

with

inadequate capital structures to support future growth

Ignores tax considerations and includes flawed valuation assumptions

Hess

–

and

a

number

of

sell-side

analysts

–

believe

that

Elliott’s

central

thesis

will

destroy

real

shareholder

value

Elliott’s Other

“Recommendations”

Facts

Focus portfolio

Irrelevant

in

light

of

Hess’

strategic

transformation,

including

recent

announcements,

to

focus

its

portfolio

on

higher growth, lower risk assets

•

Multi-billion dollar non-core E&P asset divestiture program well underway and realizing value, with additional assets

to be sold

•

Hess completely exiting downstream businesses

Instill capital and

operational discipline

Irrelevant

and ignores facts related to cost leadership in Bakken and reductions to capital and exploration spending

•

Total capital spending has already been reduced

by 17% in 2013 and is continuing to be reduced

•

Exploration

spending

has

already

been

reduced

by

29%

in

2013

•

Drilling

and

completion

costs

in

the

Bakken

have

been

reduced

in

excess

of

30%

and

are

continuing

to

be

reduced

•

We are one of the most efficient operators in the Bakken

•

Hess

Bakken

wells

had

an

average

85%

participation

rate

in

2012

Elect 5 dissident nominees

to the Hess Board

Hess’

management

and

Board

of

Directors

were

responsible

for

building

the

Company’s

world

class

asset

portfolio

that

is now delivering value to shareholders

Hess has proposed six new independent Directors with the right mix of corporate leadership, operational and financial

expertise, and top level E&P experience –

a best-in-class slate of Directors

None of our Directors are tethered to Singer’s unusual compensation scheme and flawed agenda

Elliott’s Central Thesis Ignores Key Issues and is

Based on Flawed Assumptions

23

IGNORES

FINANCING

IMPLICATIONS

Paul

Singer

plans

to

immediately

break

Hess

into

two

pieces,

the

U.S.

unconventional

resource

spin

entity,

“ResourceCo,”

and

the

remaining

Hess

assets,

“InternationalCo,”

both

of

which

we

believe would have higher financing costs and limited financial flexibility

Due to the 3-4 year cash flow deficit that Singer’s ResourceCo would incur, the spun out entity

would

not

be

able

to

assume

any

of

Hess’

existing

debt.

Even

without

any

initial

debt,

Singer’s

ResourceCo

would

likely

be

a

sub-investment

grade

credit

with

limited

stand-alone

debt

capacity. 

As a result, ResourceCo’s ability to fund growth in the Bakken and hence realize future value for

Hess shareholders would be harmed

If Singer’s ResourceCo were to be spun debt free, Singer’s InternationalCo would be forced to

assume all of Hess’

existing debt and therefore restrict InternationalCo’s financial flexibility, future

growth rate, and ability to return cash to shareholders

IGNORES TAX

CONSEQUENCES

Paul

Singer

ignores

the

tax

consequences

of

separating

Hess

into

Singer’s

ResourceCo

and

InternationalCo

•

Bakken

capital

spending

generates

substantial

excess

tax

deductions

that

are

used

to

offset

taxable income generated by other U.S. assets

•

Singer’s ResourceCo would be generating unused tax deductions and InternationalCo

would be paying taxes on otherwise shielded income

•

Singer’s InternationalCo would remain a U.S. domiciled entity with a majority of cash flow

generated from foreign assets, reducing the tax efficiency of funding growth and returning

cash to shareholders

Energy companies often have unproved resources and assets that haven't yet realized their value, and trying

to split up a company like Hess would be a mistake in the long run.  It makes no sense. It's cutting your nose

to spite your face. You don't gain anything by doing that.

—

Fadel

Gheit,

Oppenheimer

“Activist

Investor

Elliott

Management

Seeking

to

Remake

Hess”,

Dow

Jones,

January

29,

2013

Elliott’s Central Thesis Ignores Key Issues and is

Based on Flawed Assumptions

24

“International Remainco”

may trade on a low multiple.

—

Credit Suisse, January 29, 2013

FLAWED VALUATION

ASSUMPTIONS

We

believe

the

Net

Asset

Valuation

assumptions

used

by

Singer

to

justify

a

break-up

are

not

analytically sound. Singer’s target price objective of $126 / share is premised on achieving and

sustaining significant multiple expansion for both Singer’s ResourceCo and for Singer’s

InternationalCo

•

Singer ignores the recent trend in valuation multiples for pure play Bakken companies, which calls into

question the ability of Singer’s ResourceCo to achieve meaningful multiple expansion

•

Elliott

assumes

Singer’s

InternationalCo

achieves

a

“premium

multiple”

despite

being

a

more highly

levered, less tax efficient company with slower growth

•

We believe that the financing implications of separating Hess into Singer’s ResourceCo and

InternationalCo

could

harm

the

ability

for

both

entities

to

fund

the

growth

required

to

maintain current,

more normalized peer group valuations

…We’d note that HES’

Bakken assets are partly dependent on other parts of its portfolio to fund its growth

program, while also providing steady, predictable growth to counterbalance the lumpy less predictable growth

associated with its offshore assets.

—

UBS, January 30, 2013

Elliott Overstates its Valuation Case by Focusing on

Historical Versus Forward-Looking Multiples

25

Source: Bloomberg, IBES.  Market data as of 01-Mar-2013.

Note: Elliott’s Bakken Peers include: CLR, OAS, and KOG.  EV / EBITDA multiples of greater than 25.0x excluded from 2010-2012 averages.

Elliott’s Bakken Peers

Historical 1 yr Forward EV / EBITDA Multiples

Elliott’s Bakken Peers

Current Forward EV / EBITDA Multiples

Valuation multiples are typically

inflated at the start of growth cycles…

…but valuation multiples normalize

as growth cycles mature

Elliott’s

Bakken

Valuation

EV / EBITDA

Multiple

In our opinion, the biggest valuation disconnect is the credit Hess receives for the Bakken relative to its peers

in the play. We see this valuation gap narrowing as HES executes

in the Bakken.

—

Morgan Stanley, January 30, 2013

Third Parties Agree that Elliott’s

Central Thesis Does Not Work

26

As the industry shifted to develop the Bakken in earnest, Hess moved quickly to cement its position.

Using

the

strength

of

cash

flows

from

the

international

business

that

is

the

anchor

of

an

investment

grade credit rating, Hess had the firepower to secure twin acquisition of American Oil and Gas, Tracker

resources and Marquette exploration (Utica) that now constitute the core assets in its unconventional

portfolio. Without the international business potential for any further acquisitions would have been

muted in our view, as it would not have had the firepower to secure the footprint that has anchored our

investment case. Put simply the International business enabled what Hess is essentially the core of its

investment case today.

—

Bank of America Merrill Lynch, January 31, 2013

It is also important to point out that there are serious practical consequences for divesting (even in part)

the company’s fastest-growing asset. The “stub”

(i.e., the remainder of Hess’s upstream portfolio) would

become a much less appealing business, with a short reserve life, slim visibility on growth (it would be

almost entirely exploration-centric), and a very high tax burden due to the overseas overweight.

—

Raymond James, January 30, 2013

Hess Has Been Aggressively

Focusing its Portfolio Since 2010

27

PHASE I

(2010 –

JUL 24, 2012)

Asset sales ($1.7 billion)

•

Jambi Merang (Indonesia)

•

Central & Southern North Sea gas

assets, Cook & Maclure, Bittern /

Triton & Schiehallion fields (UK)

•

Snorre & Snohvit fields (Norway)

PHASE II

(JUL 25, 2012 –

MAR 3, 2013)

Sales agreements reached /

completed ($1.5 billion)

•

Beryl (UK)

•

ACG/BTC (Azerbaijan)

•

Eagle Ford (U.S.)

•

Samara Nafta (Russia)

PHASE III

(MAR 4, 2013 –

2015)

Further asset sales

Monetize Bakken midstream

Closed HOVENSA joint venture

refinery in St. Croix, U.S. Virgin

Islands

Closed Port Reading refinery in

New Jersey

Sale in progress

•

Terminal network

Exit Downstream

•

Retail (1,361 gas stations and

convenience stores)

•

Energy marketing (incl. power

plants)

•

Energy trading (Hetco)

UPSTREAM

DOWNSTREAM

Sales in progress

•

Sinphuhorm field (Thailand)

•

Pailin field (Thailand)

•

Natuna field (Indonesia)

•

Pangkah field (Indonesia)

Hess Has Been Aggressively Cutting Capital

Spending…With More to Come in 2014

We are transitioning from a period of intense investment in our high return assets to one of

increasing production yield and positive cash generation

We are substantially reducing our capital and exploration spending

•

2013 upstream capital expenditures reduced by 17%

•

2013 exploration spending reduced by 29%

•

Bakken expenditures are expected to be $2.2 billion in 2013 versus $3.1 billion in 2012, a 29% decrease

Additional reductions in capital and exploratory expenditures are planned for 2014

Additional cost reduction program underway

28

Peak

Bakken

Capex

¹ Pro forma for all announced asset sales, 2013B upstream capital expenditures expected to be $6.2 billion.

2

Excludes exploration capital for unconventional assets.

Hess: 17 Year Outperformance vs. S&P 500

Source: Bloomberg as of March 28, 2013

Note:

Integrated

proxy

peers

include

BP,

CVX,

XOM,

RDS,

STL,

and

TOT.

29

Hess is an Efficient Operator and

Partner of Choice in the Bakken

30

Source: Bakken drilling and completion cost data for Hess represents actual Q4 2012 drilling and completion costs per well.  Peer costs represent peer estimated Q4 2012 pre-drill

costs provided to Hess for wells where Hess has an ownership interest but is not an operator.  Peer groups based on a weighted average of well costs based on total number of wells

balloted.  Proxy Peers include XOM/XTO, STL/BEXP, COP, OXY, and EOG. Bakken Pure Play Peers include CLR, OAS, and KOG.

Efficient Bakken operator

•

Our Bakken well drilling and completion costs

are below or in line with our peers

•

We expect further cost efficiencies to result from

our shift to pad drilling

High peer participation rates in Hess wells

•

Bakken wells had 85% average participation

rate in 2012

Exceptional Bakken well performance

•

Hess completed 10 of the top 25 highest

30-day initial production rate wells in 2012,

including 3 of the top 5 wells

Bakken well costs continue to trend lower and we

have greater confidence Hess can hit capex

guidance.

—Morgan Stanley, January 30, 2013

$ 10.0

$ 9.4

$ 9.0

Proxy Peers

Bakken

Hess

Q4 2012 Bakken

Well Costs ($mm / Well)

0 %

20 %

40 %

60 %

80 %

100 %

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2012 Well Participation Rates

Average: 85%

Pure Play Peers

The Right Directors and the Right Governance to

Lead the Transformed Hess

Hess’

management and Board of Directors have built the Company’s world class

asset portfolio and led the strategic transformation that has been delivering

shareholder value

In August of 2012, we met with an independent search firm to help us identify

new candidates in anticipation of upcoming vacancies on our Board 

We

have

identified

six

outstanding

new

independent

Directors

who

believe

in

the

value creation opportunities of the transformed Hess

•

These individuals have held senior leadership positions at some of the world’s largest

companies including Royal Dutch Shell, BP, ConocoPhillips, GE, CBS / Viacom, and Deloitte

•

As

a

result

of

the

proposed

changes,

13

of

the

14

Directors

will

be

independent

•

None of the Hess Directors are tethered to Elliott’s unusual compensation scheme and flawed

agenda

We also have taken the following actions to enhance our corporate governance

•

Formally adopting a lead independent director position with enhanced duties

•

Appointing John H. Mullin III as the new lead independent Director

•

Adopting a mandatory director retirement policy

•

Naming new chairpersons for each Board committee

31

DELIVERING SHAREHOLDER VALUE

APRIL  2013