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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2001
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.
(Address of principal executive offices)
10036
(Zip Code)
(Registrant's telephone number, including area code is (212) 997 8500)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
At June 30, 2001, 89,523,255 shares of Common Stock were outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(in millions, except per share data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- -----------------
2001 2000 2001 2000
------ ------ ------ ------
REVENUES
Sales (excluding excise taxes) and other operating revenues $3,461 $2,644 $7,644 $5,475
Non-operating income
Equity in income of HOVENSA L.L.C. 51 41 66 52
Other 53 29 84 57
------ ------ ------ ------
Total revenues 3,565 2,714 7,794 5,584
------ ------ ------ ------
COSTS AND EXPENSES
Cost of products sold 2,236 1,717 5,168 3,592
Production expenses 173 129 326 262
Marketing expenses 152 122 305 228
Exploration expenses, including dry holes
and lease impairment 73 90 157 152
Other operating expenses 54 51 110 108
General and administrative expenses 58 51 123 102
Interest expense 41 39 81 77
Depreciation, depletion and amortization 229 167 410 341
------ ------ ------ ------
Total costs and expenses 3,016 2,366 6,680 4,862
------ ------ ------ ------
Income before income taxes 549 348 1,114 722
Provision for income taxes 192 146 420 296
------ ------ ------ ------
NET INCOME $ 357 $ 202 $ 694 $ 426
====== ====== ====== ======
NET INCOME PER SHARE
BASIC $ 4.03 $ 2.25 $ 7.86 $ 4.74
====== ====== ====== ======
DILUTED $ 3.98 $ 2.24 $ 7.77 $ 4.71
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 89.6 90.5 89.3 90.5
COMMON STOCK DIVIDENDS PER SHARE $ .30 $ .15 $ .60 $ .30
See accompanying notes to consolidated financial statements.
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PART I - FINANCIAL INFORMATION (CONT'D.)
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions of dollars, thousands of shares)
ASSETS
JUNE 30, DECEMBER 31,
2001 2000
-------- --------
CURRENT ASSETS
Cash and cash equivalents $ 58 $ 312
Accounts receivable 2,827 2,996
Inventories 479 401
Other current assets 361 406
-------- --------
Total current assets 3,725 4,115
-------- --------
INVESTMENTS AND ADVANCES
HOVENSA L.L.C 897 831
Other 299 219
-------- --------
Total investments and advances 1,196 1,050
-------- --------
PROPERTY, PLANT AND EQUIPMENT
Total - at cost 13,146 11,898
Less reserves for depreciation, depletion,
amortization and lease impairment 7,920 7,575
-------- --------
Property, plant and equipment - net 5,226 4,323
-------- --------
NOTE RECEIVABLE 419 443
-------- --------
DEFERRED INCOME TAXES AND OTHER ASSETS 298 343
-------- --------
TOTAL ASSETS $ 10,864 $ 10,274
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 1,784 $ 1,875
Accrued liabilities 866 1,158
Taxes payable 477 440
Notes payable 8 7
Current maturities of long-term debt 274 58
-------- --------
Total current liabilities 3,409 3,538
-------- --------
LONG-TERM DEBT 1,998 1,985
-------- --------
DEFERRED LIABILITIES AND CREDITS
Deferred income taxes 485 510
Other 351 358
-------- --------
Total deferred liabilities and credits 836 868
-------- --------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00, 20,000 shares authorized
3% cumulative convertible series
Authorized - 330 shares
Issued - 327 shares ($16 million liquidation preference) -- --
Common stock, par value $1.00
Authorized - 200,000 shares
Issued - 89,523 shares at June 30, 2001;
88,744 shares at December 31, 2000 90 89
Capital in excess of par value 908 864
Retained earnings 3,691 3,069
Accumulated other comprehensive income (68) (139)
-------- --------
Total stockholders' equity 4,621 3,883
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,864 $ 10,274
======== ========
See accompanying notes to consolidated financial statements.
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PART I - FINANCIAL INFORMATION (CONT'D.)
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
Six Months Ended June 30
(in millions)
2001 2000
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 694 $ 426
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, depletion and amortization 410 341
Exploratory dry hole costs 82 65
Lease impairment 14 13
Provision for deferred income taxes 58 89
Undistributed earnings of affiliates (57) (42)
------- -------
1,201 892
Changes in operating assets and liabilities (180) 16
------- -------
Net cash provided by operating activities 1,021 908
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,467) (405)
Other (55) 10
------- -------
Net cash used in investing activities (1,522) (395)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable 1 2
Long-term borrowings 282 --
Repayment of long-term debt (5) (294)
Cash dividends paid (67) (41)
Common stock acquired (20) (62)
Stock options exercised 56 20
------- -------
Net cash provided by (used in) financing activities 247 (375)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH -- (1)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (254) 137
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 312 41
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 58 $ 178
======= =======
See accompanying notes to consolidated financial statements.
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PART I - FINANCIAL INFORMATION (CONTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - The financial statements included in this report reflect all
normal and recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the
Corporation's consolidated financial position at June 30, 2001 and
December 31, 2000, and the consolidated results of operations for
the three- and six-month periods ended June 30, 2001 and 2000 and
the consolidated cash flows for the six-month periods ended June
30, 2001 and 2000. The unaudited results of operations for the
interim periods reported are not necessarily indicative of results
to be expected for the full year.
Certain notes and other information have been condensed or omitted
from these interim financial statements. These statements,
therefore, should be read in conjunction with the consolidated
financial statements and related notes included in the 2000 Annual
Report to Stockholders, which have been incorporated by reference
in the Corporation's Form 10-K for the year ended December 31,
2000.
Note 2 - Inventories consist of the following (in millions):
June 30, December 31,
2001 2000
-------------------------
Crude oil and other charge stocks $ 133 $ 103
Refined and other finished products 478 502
Less: LIFO adjustment (222) (281)
----- -----
389 324
Materials and supplies 90 77
----- -----
Total inventories $ 479 $ 401
===== =====
Note 3 - The Corporation accounts for its investment in HOVENSA L.L.C.
using the equity method. Summarized income statement information
for HOVENSA follows (in millions):
Three months Six months
ended June 30 ended June 30
----------------- -----------------
2001 2000 2001 2000
------ ------ ------ ------
Total revenues $1,230 $1,343 $2,345 $2,472
Costs and expenses 1,126 1,261 2,212 2,367
------ ------ ------ ------
Net income $ 104 $ 82 $ 133 $ 105
====== ====== ====== ======
Amerada Hess
Corporation's share $ 51 $ 41 $ 66 $ 52
====== ====== ====== ======
Note 4 - In January 2001, the Corporation replaced its $2 billion Global
Revolving Credit Facility, which was due to expire in 2002, with
two new committed revolving credit facilities. The first provides
for $1.5 billion of short-term revolving credit through January
2002 and bears interest at .525% above the London Interbank
Offered Rate ("LIBOR"). The second is for $1.5 billion of
five-year revolving credit, which expires in
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PART I - FINANCIAL INFORMATION (CONTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 2006 and currently bears interest at .50% above LIBOR.
Facility fees of .10% and .125% per annum are currently payable
on the credit lines. Interest rate spreads and facility fees
fluctuate based on the Corporation's public debt rating. The
Corporation has the option to extend up to $500 million of
outstanding debt under the short-term facility for an additional
364 days.
After the end of the quarter, the Corporation entered into an
agreement for an additional $1 billion of two-year revolving
credit. This revolving credit facility currently bears interest at
.525% above LIBOR. A facility fee of .10% per annum is currently
payable on the credit line. Interest rate spreads and facility
fees fluctuate based on the Corporation's public debt rating. The
amount of the facility is automatically reduced by the proceeds
resulting from the issuance of any long-term debt security in the
capital markets.
Note 5 - The provision for income taxes consisted of the following (in
millions):
Three months Six months
ended June 30 ended June 30
--------------- ---------------
2001 2000 2001 2000
---- ---- ---- ----
Current $166 $ 83 $362 $207
Deferred 26 63 58 89
---- ---- ---- ----
Total $192 $146 $420 $296
==== ==== ==== ====
Note 6 - Foreign currency transaction gains (losses), after income tax
effects, amounted to the following (in millions):
Three months Six months
ended June 30 ended June 30
--------------- ---------------
2001 2000 2001 2000
----- ----- ----- -----
Foreign currency
gains (losses) $ 4 $ (2) $ 14 $ 2
===== ===== ===== =====
Note 7 - The weighted average number of common shares used in the basic and
diluted earnings per share computations are as follows (in
thousands):
Three months Six months
ended June 30 ended June 30
----------------- -----------------
2001 2000 2001 2000
------ ------ ------ ------
Common shares - basic 88,407 89,818 88,159 89,875
Effect of dilutive securities
(equivalent shares)
Nonvested common stock 441 342 402 382
Stock options 589 299 501 238
Convertible preferred
stock 205 77 205 44
------ ------ ------ ------
Common shares - diluted 89,642 90,536 89,267 90,539
====== ====== ====== ======
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PART I - FINANCIAL INFORMATION (CONTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - The Corporation adopted FAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, on January 1, 2001. This
statement requires that the Corporation recognize all derivatives
on the balance sheet at fair value and establishes criteria for
using derivatives as hedges. The Corporation uses derivatives in
its hedging program and its trading activities, including its 50%
owned trading partnership.
The Corporation reclassifies hedging gains and losses included in
other comprehensive income to earnings at the time the hedged
transactions are recognized. Hedging increased exploration and
production results by $21 million ($14 million after income taxes)
in the second quarter of 2001 and reduced income by $10 million
($6 million after income taxes) in the first half of 2001. The
impact of hedging on refining and marketing results was not
material.
At June 30, 2001, after-tax deferred gains from hedging crude oil
and natural gas contracts expiring through 2003 were approximately
$72 million (including $60 million of unrealized gains). Of the
total, $6 million relates to the remainder of 2001.
Note 9 - Comprehensive income, which includes net income and the effects of
foreign currency translation and cash flow hedges recorded
directly in stockholders' equity, was as follows (in millions):
Three months Six months
ended June 30 ended June 30
--------------- ---------------
2001 2000 2001 2000
----- ----- ----- -----
Comprehensive income $ 359 $ 195 $ 665 $ 418
===== ===== ===== =====
Note 10 - The Corporation's results by operating segment were as follows (in
millions):
Three months Six months
ended June 30 ended June 30
-------------------- --------------------
2001 2000 2001 2000
------- ------- ------- -------
Operating revenues
Exploration and production (*) $ 1,244 $ 870 $ 2,520 $ 1,920
Refining, marketing
and shipping 2,478 1,959 5,648 3,889
------- ------- ------- -------
Total $ 3,722 $ 2,829 $ 8,168 $ 5,809
======= ======= ======= =======
Net income (loss)
Exploration and production $ 304 $ 178 $ 579 $ 396
Refining, marketing
and shipping 101 64 206 112
Corporate, including interest (48) (40) (91) (82)
------- ------- ------- -------
Total $ 357 $ 202 $ 694 $ 426
======= ======= ======= =======
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PART I - FINANCIAL INFORMATION (CONTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(*) Includes transfers to affiliates of $261 million and $524
million during the three- and six-months ended June 30, 2001,
compared to $185 million and $334 million for the
corresponding periods of 2000.
Note 11 - In June 2001, the Financial Accounting Standards Board issued FAS
No. 141, Business Combinations, and FAS No. 142, Goodwill and
Other Intangible Assets. These new statements require the use of
the purchase method of accounting for all business combinations
entered into after June 29, 2001. In addition, the new rules will
require that goodwill no longer be amortized as an expense.
Instead, goodwill will be subject to an annual impairment test.
Except for the accounting for new goodwill as discussed below, the
Corporation will adopt these rules on January 1, 2002. Early in
2002, the Corporation will perform the first of the required
impairment tests of goodwill. The Corporation has not yet
determined what the effects of the new accounting standards will
be on its income and financial position.
When the planned acquisition of Triton Energy Limited is
completed, goodwill recorded in connection with this purchase will
be accounted for under the provisions of FAS No. 142 and will not
be amortized.
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PART I - FINANCIAL INFORMATION (CONT'D.)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
RESULTS OF OPERATIONS
Net income for the second quarter of 2001 amounted to $357
million compared with $202 million in the second quarter of 2000.
Net income for the first half of 2001 was $694 million compared
with $426 million in the first half of 2000.
The after-tax results by major operating activity for the
three- and six-month periods ended June 30, 2001 and 2000 were as
follows (in millions, except per share data):
Three months Six months
ended June 30 ended June 30
---------------- ----------------
2001 2000 2001 2000
----- ----- ----- -----
Exploration and production $ 304 $ 178 $ 579 $ 396
Refining, marketing and shipping 101 64 206 112
Corporate (19) (10) (32) (22)
Interest expense (29) (30) (59) (60)
----- ----- ----- -----
Net income $ 357 $ 202 $ 694 $ 426
===== ===== ===== =====
Net income per share (diluted) $3.98 $2.24 $7.77 $4.71
===== ===== ===== =====
Exploration and Production
Operating earnings from exploration and production
activities were $126 million higher in the second quarter of 2001
compared with the second quarter of 2000. For the first six
months, exploration and production earnings were $183 million
higher in 2001 than 2000. These increases mainly reflect higher
worldwide crude oil and natural gas selling prices and sales
volumes.
The Corporation's average selling prices, including the
effects of hedging, were as follows:
Three months Six months
ended June 30 ended June 30
--------------------- ---------------------
2001 2000 2001 2000
-------- -------- -------- --------
Crude oil (per barrel)
United States $ 24.82 $ 24.46 $ 24.55 $ 23.55
Foreign 27.87 24.09 26.76 24.89
Natural gas liquids (per barrel)
United States $ 20.25 $ 18.69 $ 22.98 $ 19.84
Foreign 20.28 20.64 21.41 21.60
Natural gas (per Mcf)
United States $ 4.64 $ 3.37 $ 4.96 $ 2.90
Foreign 2.48 2.10 2.73 2.09
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PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
The Corporation's net daily worldwide production was as
follows (in thousands):
Three months Six months
ended June 30 ended June 30
----------------- -----------------
2001 2000 2001 2000
------ ------ ------ ------
Crude oil (barrels per day)
United States 69 55 63 53
United Kingdom 117 112 119 112
Norway 25 27 25 25
Denmark 17 19 20 25
Algeria 13 -- 13 --
Gabon 9 7 8 8
Indonesia 6 4 6 4
Azerbaijan 4 3 4 3
------ ------ ------ ------
Total 260 227 258 230
====== ====== ====== ======
Natural gas liquids (barrels per day)
United States 15 12 13 13
Foreign 8 10 9 9
------ ------ ------ ------
Total 23 22 22 22
====== ====== ====== ======
Natural gas (Mcf per day)
United States 474 298 399 296
United Kingdom 289 299 316 322
Denmark 38 25 44 29
Norway 25 24 25 25
Indonesia and Thailand 34 33 32 35
------ ------ ------ ------
Total 860 679 816 707
====== ====== ====== ======
Barrels of oil equivalent
(barrels per day) 426 362 416 370
====== ====== ====== ======
On a barrel of oil equivalent basis, the Corporation's oil
and gas production increased by 18% in the second quarter of 2001
compared with the corresponding period of 2000. The increases in
United States crude oil and natural gas production mainly resulted
from the purchase of substantially all of the assets of a
privately held exploration and production company in April. In
addition, production from the Conger Field in the Gulf of Mexico,
which commenced in the fourth quarter of 2000, contributed to the
increase. United Kingdom crude oil production increased
principally because of production from the Bittern Field, which
commenced in the second half of 2000. Crude oil production in the
first half of 2001 also reflects production from the Corporation's
interest in a redevelopment project in Algeria. The failure of
power generation turbines in late June through July 17 will reduce
crude oil production from the South Arne Field in Denmark in the
third quarter.
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PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
Production expenses in 2001 were higher than 2000,
partially due to increased production volumes and to the mix of
producing fields. Depreciation, depletion and amortization charges
were also higher in 2001, reflecting higher production and
increased per-barrel costs from the acquisition completed in
April. The effective income tax rate on exploration and production
earnings in the first half of 2001 was 40%, compared with 42% in
the first half of 2000.
Crude oil and natural gas selling prices are currently
below the average selling prices that the Corporation received in
the second quarter. The effect of lower prices on the
Corporation's third quarter earnings will only be partially
mitigated by its hedging program.
Refining, Marketing and Shipping
Operating earnings for refining, marketing and shipping
activities amounted to $101 million and $206 million in the second
quarter and first half of 2001, compared with $64 million and $112
million in the corresponding periods of 2000. The Corporation's
downstream operations include its 50% equity share of HOVENSA, a
refining joint venture.
HOVENSA
The Corporation's share of HOVENSA's income was $51 million
in the second quarter of 2001 compared with $41 million in the
second quarter of 2000. The Corporation's share of HOVENSA's
income in the first half of 2001 was $66 million compared with $52
million in 2000. Margins for refined products were higher in the
second quarter and first half of 2001 compared with the
corresponding periods of 2000. Increased margins were partially
offset by scheduled maintenance on the fluid catalytic cracking
unit for six weeks during the first half of the year. Income taxes
on HOVENSA's results are offset by available loss carryforwards.
Operating earnings from refining, marketing and shipping
activities also included interest income of $20 million in the
first half of 2001 and $25 million in the first half of 2000 on
the note received from PDVSA V.I. in connection with the formation
of the joint venture.
Retail, energy marketing and other
Results from retail gasoline operations for the second
quarter and first half of 2001 were higher than the corresponding
periods of 2000, reflecting higher margins at gasoline stations.
The Corporation's Port Reading refining facility had increased
earnings, reflecting improved margins and the shutdown for
scheduled maintenance in the first quarter of last year. Earnings
from energy marketing activities decreased in the second quarter
and first half of 2001 compared with the corresponding periods of
2000. The reduced earnings in the second quarter included an
after-tax
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PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
charge of $13 million, reflecting adjustments to the cost of
natural gas purchased for resale to customers of recently acquired
energy marketing businesses. Marketing expenses increased by $30
million in the second quarter and $77 million in the first half of
2001 compared with 2000, principally reflecting expanded retail
and energy marketing operations. Total refined product sales
volumes amounted to 77 million barrels in the first half of 2001
compared with 68 million barrels in the first half of 2000.
The Corporation has a 50% voting interest in a consolidated
partnership that trades energy commodities and energy derivatives.
The Corporation also takes trading positions in addition to its
hedging program. The combined results from trading activities
amounted to a loss of $12 million in the second quarter and income
of $12 million in the first half of 2001. This compares with
breakeven results in the second quarter of 2000 and a loss of $10
million in the first half of 2000. Expenses of the trading
partnership are included in marketing expenses.
During the second quarter of 2001, the Corporation sold its
fleet of tugs and barges in the Northeast United States, resulting
in an after-tax gain of $17 million. The pre-tax gain of $26
million is included in non-operating income in the income
statement.
Refining margins deteriorated at the end of the second
quarter and continue to be depressed. This will negatively affect
HOVENSA and Port Reading earnings in the third quarter.
Corporate
Corporate results in the second quarter and first half of
2001 were higher than the comparable periods of 2000, because of
lower interest income and lower dividend income from reinsurers
and increased administrative expenses.
Consolidated Operating Revenues
Sales and other operating revenues increased by 31% in the
second quarter and 40% in the first half of 2001 compared with the
same periods in 2000. The increase primarily reflects higher
selling prices and increased sales volumes of refined products and
purchased natural gas. Crude oil and natural gas production
volumes and natural gas selling prices were also higher.
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PART I - FINANCIAL INFORMATION (CONT'D.)
LIQUIDITY AND CAPITAL RESOURCES
On July 10, 2001 the Corporation announced that it entered
into a definitive agreement to commence a cash tender offer for
all outstanding ordinary shares of Triton Energy Limited for $45
per share. The transaction has a total cost of approximately $3.2
billion, including the assumption of approximately $500 million in
Triton debt. A private investment firm holding 38% of Triton
shares has given the Corporation an irrevocable commitment to sell
its interest to the Corporation. The Corporation plans to finance
this transaction using existing credit facilities and new
borrowings.
Net cash provided by operating activities, including
changes in operating assets and liabilities, amounted to $1,021
million in the first half of 2001 compared with $908 million in
the first half of 2000. Excluding changes in balance sheet
accounts, the increase was $309 million and resulted primarily
from improved operating results.
Total debt was $2,280 million at June 30, 2001 compared
with $2,050 million at December 31, 2000. The debt to
capitalization ratio decreased to 33% at June 30 compared to 35%
at year-end. At June 30, 2001, the Corporation had $2.7 billion of
additional borrowing capacity available under its revolving credit
agreements and additional unused lines of credit under uncommitted
arrangements with banks of $219 million. In July 2001, the
Corporation entered into an agreement for an additional $1 billion
of two-year revolving credit. The Corporation has also filed a
shelf registration statement for $3 billion of debt securities,
which became effective on July 27, 2001. The Corporation currently
intends to issue approximately $1.2 billion of these debt
securities to fund a portion of the Triton acquisition. The $1
billion, two-year revolving credit facility will be reduced by the
proceeds of this debt issuance. The Corporation intends to fund
the remainder of the purchase under its existing revolving credit
agreements and with available cash.
Since inception of the Corporation's $300 million common
stock repurchase program in March 2000, the Corporation has
repurchased 3,707,100 shares as of June 30, 2001, for
approximately $240 million.
The Corporation uses futures, forwards, options and swaps
to reduce the effects of changes in the selling prices of crude
oil, natural gas and refined products. These instruments fix the
selling prices of a portion of the Corporation's production and
the related gains or losses are an integral part of the
Corporation's selling prices. At June 30, 2001, the Corporation
had open hedge positions on 17% of its estimated worldwide crude
oil production and 20% of its U.S. natural gas production for the
remainder of the year. The Corporation has also hedged 13% of its
estimated crude oil production and 19% of its U.S. natural gas
production for 2002 and 6% of its U.S. natural gas production for
2003. As market conditions change, the Corporation may adjust its
hedge positions.
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PART I - FINANCIAL INFORMATION (CONT'D.)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Corporation uses value at risk to estimate the
potential effects of changes in fair values of derivatives and
other instruments used in hedging activities and derivatives and
commodities used in trading activities. The Corporation estimates
that at June 30, 2001, the value at risk was $17 million ($36
million at December 31, 2000) related to hedging activities and
$21 million ($16 million at December 31, 2000) for trading
activities.
The Corporation reduces its exposure to fluctuating foreign
exchange rates by using forward contracts to fix the exchange rate
on a portion of the foreign currency required in its North Sea
operations. At June 30, 2001, the Corporation had $448 million of
notional value foreign exchange contracts outstanding.
Capital expenditures in the first half of 2001 amounted to
$1,467 million, of which $1,365 million related to exploration and
production activities. These expenditures include the purchases of
oil and natural gas reserves in the Gulf of Mexico and onshore
Louisiana for $865 million. Capital expenditures in the first half
of 2000 amounted to $405 million including $321 million for
exploration and production. For the remainder of 2001, capital
expenditures, excluding Triton acquisition costs and post
acquisition Triton capital expenditures, are expected to be
approximately $760 million and will be financed by internally
generated funds and borrowings. In April, the Corporation also
invested $86 million in a 50% joint venture with a company that
owns and operates 120 gasoline stations and convenience stores and
21 travel centers located in Virginia, North Carolina and South
Carolina. In May, the Corporation leased 53 retail outlets in
Boston and southern New Hampshire.
FORWARD LOOKING INFORMATION
Certain sections of Management's Discussion and Analysis of
Results of Operations and Financial Condition, including
references to the Corporation's future results of operations and
financial position, contain forward-looking information. These
disclosures are based on the Corporation's current assessments and
reasonable assumptions about the future. Actual results may differ
from these disclosures because of changes in market conditions,
government actions and other factors.
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
The Annual Meeting of Stockholders of the Registrant was held on
May 2, 2001. The Inspectors of Election reported that 80,130,348
shares of Common Stock of the Registrant were represented in
person or by proxy at the meeting, constituting 89.91% of the
votes entitled to be cast. At the meeting, stockholders voted upon
the election of four nominees for the Board of Directors for the
three-year term expiring in 2004 and the ratification of the
selection by the Board of Directors of Ernst & Young LLP as the
independent auditors of the Registrant for the fiscal year ended
December 31, 2001.
With respect to the election of directors, the inspectors
of election reported as follows:
FOR WITHHOLD AUTHORITY TO VOTE
NAME NOMINEE LISTED FOR NOMINEE LISTED
---- -------------- ------------------
Nicholas F. Brady 79,373,844 756,504
J. Barclay Collins 79,400,610 729,738
Thomas H. Kean 79,385,973 744,375
Frank A. Olson 79,399,220 731,128
The inspectors reported that 79,546,147 votes were cast for
the ratification of the selection of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 2001,
348,519 votes were cast against said ratification and holders of
235,682 votes abstained.
There were no broker non-votes with respect to the election
of directors or the ratification of the selection of independent
auditors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4 - Credit agreement dated as of July 30, 2001 between
Registrant and Citibank, N.A.
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the three
months ended June 30, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERADA HESS CORPORATION
(REGISTRANT)
By /s/ John B. Hess
---------------------------------
JOHN B. HESS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
By /s/ John Y. Schreyer
---------------------------------
JOHN Y. SCHREYER
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: August 7, 2001
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