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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________________
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-1204
AMERADA HESS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
13-4921002
(I.R.S. employer identification number)
1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y.
(Address of principal executive offices)
10036
(Zip Code)
(Registrant's telephone number, including area code is (212) 997-8500)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
At March 31, 1995, 92,992,755 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
Three Months Ended March 31
(in thousands, except per share data)
1995 1994
----------- ------------
REVENUES
Sales (excluding excise taxes) and
other operating revenues $ 1,892,211 $ 1,857,628
Interest and other non-operating revenues 86,123 11,598
----------- ------------
Total revenues 1,978,334 1,869,226
----------- ------------
COSTS AND EXPENSES
Cost of products sold and operating expenses 1,363,875 1,205,628
Exploration expenses, including dry holes 64,748 59,858
Selling, general and administrative expenses 154,465 157,354
Interest expense 64,951 60,566
Depreciation, depletion and amortization 207,803 229,869
Lease impairment 10,320 12,801
Provision for income taxes 87,010 59,494
----------- ------------
Total costs and expenses 1,953,172 1,785,570
----------- ------------
NET INCOME $ 25,162 $ 83,656
=========== ============
NET INCOME PER SHARE $ .27 $ .90
=========== ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 92,994 92,905
COMMON STOCK DIVIDENDS PER SHARE $ .15 $ .15
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 thousands of dollars)
A S S E T S
MARCH 31, DECEMBER 31,
1995 1994
------------- -------------
CURRENT ASSETS
Cash and cash equivalents $ 37,806 $ 53,135
Accounts receivable 575,222 570,525
Inventories 841,154 945,635
Prepaid expenses 151,258 152,366
------------- ------------
Total current assets 1,605,440 1,721,661
------------- ------------
INVESTMENTS AND ADVANCES 173,922 140,300
------------- ------------
PROPERTY, PLANT AND EQUIPMENT
Total - at cost 14,553,355 14,304,826
Less reserves for depreciation, depletion,
amortization and lease impairment 8,221,140 7,938,824
------------- ------------
Property, plant and equipment - net 6,332,215 6,366,002
------------- ------------
OTHER ASSETS 85,041 109,977
------------- ------------
TOTAL ASSETS $ 8,196,618 $ 8,337,940
============= =============
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable - trade $ 288,900 $ 291,571
Accrued liabilities 537,120 555,363
Notes payable 5,893 63,747
Taxes payable 163,140 168,927
Current maturities of long-term debt 129,790 121,806
------------- ------------
Total current liabilities 1,124,843 1,201,414
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LONG-TERM DEBT 3,009,187 3,154,235
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CAPITALIZED LEASE OBLIGATIONS 83,590 80,928
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DEFERRED LIABILITIES AND CREDITS
Deferred income taxes 577,990 547,537
Other 254,166 254,197
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Total deferred liabilities and credits 832,156 801,734
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STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized - 20,000,000 shares for issuance in series -- --
Common stock, par value $1.00
Authorized - 200,000,000 shares
Issued - 92,992,755 shares at March 31, 1995;
92,995,755 shares at December 31, 1994 92,993 92,996
Capital in excess of par value 743,404 743,537
Retained earnings 2,478,482 2,467,267
Equity adjustment from foreign currency translation (168,037) (204,171)
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Total stockholders' equity 3,146,842 3,099,629
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,196,618 $ 8,337,940
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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
Three Months Ended March 31
(in thousands)
1995 1994
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 25,162 $ 83,656
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, depletion, amortization and lease impairment 218,123 242,670
Exploratory dry hole costs 39,994 39,559
Changes in operating assets and liabilities 84,293 81,549
Deferred income taxes and other items 25,538 31,681
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Net cash provided by operating activities 393,110 479,115
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (156,531) (131,082)
Other (21,458) 1,906
------------ -----------
Net cash used in investing activities (177,989) (129,176)
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CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in notes payable (57,974) (89,900)
Long-term borrowings - - 65,929
Repayment of long-term debt (147,022) (293,768)
Cash dividends paid (27,895) (27,838)
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Net cash used in financing activities (232,891) (345,577)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 2,441 309
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (15,329) 4,671
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 53,135 79,635
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 37,806 $ 84,306
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See accompanying notes to consolidated financial statements.
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PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 1 - The financial statements included in this report reflect all
normal and recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the Company's
consolidated financial position at March 31, 1995 and December 31,
1994, and the consolidated results of operations and the
consolidated cash flows for the three-month periods ended March
31, 1995 and 1994. The unaudited results of operations for the
interim periods reported are not necessarily indicative of results
to be expected for the year.
Certain notes and other information have been condensed or omitted
from these interim financial statements. Such statements,
therefore, should be read in conjunction with the consolidated
financial statements and related notes included in the 1994 Annual
Report to Stockholders, which have been incorporated by reference
in the Corporation's Form 10-K for the year ended December 31,
1994.
Note 2 - Inventories consist of the following:
March 31, December 31,
1995 1994
----------- ------------
Crude oil and other charge stocks $ 258,111 $ 250,291
Refined and other finished products 468,837 582,696
Materials and supplies 114,206 112,648
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Total inventories $ 841,154 $ 945,635
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Note 3 - The provision for income taxes consisted of the following:
Three months
ended March 31
---------------------------------
1995 1994
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Current $ 58,904 $ 32,280
Deferred 28,106 27,214
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Total $ 87,010 $ 59,494
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Note 4 - Foreign currency exchange transactions, reflected in selling,
general and administrative expenses, amounted to losses of $3,567
and $2,053, respectively, for the three-month periods ended March
31, 1995 and 1994. The net effect, after applicable income taxes,
amounted to losses of $1,039 and $1,792, respectively, for the
three-month periods ended March 31, 1995 and 1994.
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PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 5 - The Corporation uses futures, forward, option and swap contracts
to reduce the impact of fluctuations in the prices of crude oil,
natural gas and refined products. These contracts correlate to
movements in the value of inventory and the prices of crude oil
and natural gas, and as hedges, any resulting gains or losses are
recorded as part of the hedged transaction. Net unrealized losses
on the Corporation's petroleum hedging activities were
approximately $18,000 at March 31, 1995.
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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 first quarter of 1995 amounted to $25
million ($.27 per share) compared with net income of $84 million
($.90 per share) for the first quarter of 1994. Net income for
the first quarter of 1995 includes income of $44 million ($.47 per
share) from the refund of windfall profits taxes applicable to the
years 1981 through 1986 and related interest.
Following is a summary of net income by major operating
activity (in millions):
Three months
ended March 31
-------------------
1995 1994
------ ------
Exploration and production $ 91 $ 44
Refining and marketing (15) 76
Corporate administration,
including interest expense,
and other operating activities (51) (36)
------ ------
Total $ 25 $ 84
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Excluding the tax refund referred to above, earnings from
exploration and production activities increased by $3 million in
the first quarter of 1995 compared with the corresponding period
of 1994. The Corporation's average selling prices, including the
effects of hedging, were as follows:
Three months
ended March 31
-------------------
1995 1994
------ ------
Crude oil and natural gas liquids
(per barrel)
United States $16.04 $15.17
Foreign 16.85 14.80
Natural gas (per Mcf)
United States 1.71 2.33
Foreign 1.74 1.77
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PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
The Corporation's net daily worldwide production was as
follows:
Three months
ended March 31
----------------------
1995 1994
-------- ---------
Crude oil and natural gas liquids
(barrels per day)
United States 63,838 70,412
Foreign 188,739 185,487
------- ---------
Total 252,577 255,899
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Natural gas (Mcf per day)
United States 405,351 492,033
Foreign 519,141 515,067
------- ---------
Total 924,492 1,007,100
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The benefit of higher worldwide crude oil selling prices in
the first quarter of 1995 was partially offset by lower natural
gas selling prices in the United States and Canada. Domestic
production of crude oil and natural gas was lower, principally
because of natural field decline. In the first quarter of 1995,
depreciation, depletion and amortization charges were lower for
United States exploration and production, reflecting lower
production volumes and positive oil and gas reserve revisions at
year-end. Exploration expenses were lower in the United States,
but the reduction was more than offset by increased foreign
exploration activity. The Corporation's exploration and
production earnings will continue to be affected by volatility in
the selling prices of crude oil and natural gas.
Refining and marketing operations had a loss of $15 million
in the first quarter of 1995 compared with income of $76 million
in the first quarter of 1994. The decrease was due to lower
refined product margins, as average selling prices in the first
quarter of 1995 approximated the 1994 level, but the cost of crude
oil increased. The margins on gasolines improved slightly in the
first quarter of 1995; however, this improvement was more than
offset by lower margins on distillates and residual fuel oils.
Results in the first quarter of 1994 benefited from a colder
winter than was experienced in 1995. Income taxes were not
provided on a substantial portion of the first quarter 1994
refining and marketing income because of the utilization of a net
operating loss carryforward of a refining subsidiary. Total
refined product sales volumes amounted to 49 million barrels in
the first quarter of 1995, approximately the same as in 1994.
Refining and marketing earnings will continue to be affected
by competitive industry conditions and supply and demand factors,
including the effects of weather.
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PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
Corporate administration, including interest expense, and
other operating activities (principally transportation), had net
expenses of $51 million in the first quarter of 1995 compared with
$36 million in the first quarter of 1994. The increase in 1995
was due in part to increased interest expense, reflecting higher
interest rates, although debt has been reduced. The first quarter
of 1994 included the reversal into income of costs accrued for
future maintenance on a ship that was sold early in 1994.
Sales and other operating revenues in the first quarter of
1995 amounted to $1,892 million, an increase of $35 million from
the corresponding period of 1994. The increase was primarily due
to higher crude oil selling prices. Non-operating revenues
increased in the first quarter of 1995 largely reflecting the
refund of windfall profits taxes and related interest of $67
million (before income tax effect).
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities, including changes
in operating assets and liabilities, amounted to $393 million in
the first quarter of 1995 compared with $479 million in the first
quarter of 1994. The decrease was primarily due to lower
operating results. Cash provided by operating activities exceeded
capital expenditures of $157 million and $131 million in the first
quarter of 1995 and 1994, respectively. The excess cash flow in
the first quarter of each year was used principally to repay debt.
Total debt was $3,145 million at March 31, 1995 compared
with $3,340 million at December 31, 1994. The debt to total
capitalization ratio decreased to 50% at March 31, 1995 from 52%
at year-end 1994. The Corporation anticipates that debt will be
reduced further in 1995, but the reduction in the first quarter,
which included the tax refund referred to above, may not be
indicative of the change to be expected for the full year.
At March 31, 1995, the Corporation had additional borrowing
capacity available under existing revolving credit agreements of
$697 million and additional unused lines of credit under
uncommitted arrangements with banks of $716 million.
In the first quarter of 1995, the Corporation exchanged its
48% common stock interest in Pict Petroleum plc for an interest in
Premier Consolidated Oilfields plc ("Premier"), another United
Kingdom independent oil and gas company. The Corporation also
purchased additional shares in Premier for $31 million, bringing
its total equity interest to 25%.
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PART I - FINANCIAL INFORMATION (CONT'D.)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Corporation uses futures, forward, option and swap
contracts, generally with maturities of one year or less, 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 March 31,
1995, the Corporation had open hedge positions on approximately
35% of its estimated worldwide crude oil production over the next
twelve months and option contracts, providing varying degrees of
protection against declines in market prices, covering an
additional 5% of crude oil production. The Corporation also had
open contracts equal to approximately 50% of its estimated United
States and Canadian natural gas production over the next twelve
months and option contracts providing varying degrees of price
protection, covering approximately 15% of its natural gas
production. The Corporation had hedges covering approximately 40%
of its refining and marketing inventories and had additional short
positions, principally crack spreads, approximating 10% of refined
products to be manufactured in the next twelve months. As market
conditions change, the Corporation will adjust its hedging
positions.
Capital expenditures in the first quarter of 1995 amounted
to $157 million compared with $131 million in the corresponding
period of 1994. Capital expenditures for exploration and
production activities were $143 million in the first quarter of
1995 compared with $114 million in the first three months of 1994.
Capital expenditures for the remainder of 1995 are currently
expected to be approximately $550 million. It is anticipated that
these expenditures will be financed by internally generated funds.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
The Registrant filed no report on Form 8-K during the
three months ended March 31, 1995.
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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/s John B. Hess
---------------------------------
JOHN B. HESS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
By s/s John Y. Schreyer
---------------------------------
JOHN Y. SCHREYER
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: May 9, 1995
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EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule