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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, 1997
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)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS
Common Stock (par value $1.00)
NAME OF EACH EXCHANGE
ON WHICH REGISTERED
New York Stock Exchange
Toronto Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant amounted to $4,595,000,000 as of February 28, 1998.
At February 28, 1998, 91,415,205 shares of Common Stock were outstanding.
Certain items in Parts I and II incorporate information by reference from
the 1997 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 6, 1998.
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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,
Indonesia, Thailand and other parts of the world. Of the Company's proved
reserves (on a barrel of oil equivalent basis), 34% are located in the United
States, 60% 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 218,572
barrels per day in 1997 compared with 236,797 barrels per day in 1996. Worldwide
natural gas production was 569,254 Mcf per day in 1997 compared with 684,666 Mcf
per day in 1996.
At December 31, 1997, the Corporation had 595 million barrels of proved
crude oil and natural gas liquids reserves compared with 578 million barrels at
the end of 1996. Proved natural gas reserves were 1,935 million Mcf at December
31, 1997 compared with 1,866 million Mcf at December 31, 1996. The Corporation
has a number of oil and gas developments underway in the United States, United
Kingdom and in other international areas. It also has an inventory of domestic
and foreign drillable prospects. In 1996, the Corporation sold its Canadian and
Abu Dhabi operations and certain non-core United States and United Kingdom
producing properties.
UNITED STATES. The Corporation operates principally offshore in the Gulf
of Mexico and onshore in the states of Texas, Louisiana and North Dakota. During
1997, 20% of the Corporation's crude oil and natural gas liquids production and
55% 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:
1997 1996
------- -------
CRUDE OIL, INCLUDING CONDENSATE AND
NATURAL GAS LIQUIDS (BARRELS PER DAY)
Texas..................................................... 16,136 19,204
North Dakota.............................................. 12,077 12,366
Gulf of Mexico............................................ 10,295 10,642
Louisiana................................................. 1,700 2,155
Other..................................................... 3,742 5,758
------- -------
Total............................................. 43,950 50,125
======= =======
NATURAL GAS (MCF PER DAY)
Gulf of Mexico............................................ 104,803 133,878
North Dakota.............................................. 59,576 46,934
Texas..................................................... 52,402 30,632
Louisiana................................................. 43,668 46,713
California................................................ 17,779 16,870
New Mexico................................................ 17,467 22,253
Mississippi............................................... 14,972 17,341
Other..................................................... 1,248 23,032
------- -------
Total............................................. 311,915 337,653
======= =======
The Corporation is developing the Baldpate Field in the Gulf of Mexico and
is participating in other developments and evaluating additional discoveries,
principally in the Garden Banks area.
UNITED KINGDOM. The Corporation's activities in the United Kingdom are
conducted by its wholly-owned subsidiary, Amerada Hess Limited. During 1997, 61%
of the Corporation's crude oil and natural gas liquids production and 40% of its
natural gas production were from United Kingdom operations.
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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, 1997:
INTEREST 1997 1996
PRODUCING FIELD -------- ---- ----
CRUDE OIL, INCLUDING CONDENSATE AND
NATURAL GAS LIQUIDS (BARRELS PER
DAY)
Scott............................... 34.95% 41,040 51,877
Fife/Fergus......................... 85.00/65.00 25,981 31,430
Beryl/Ness.......................... 22.22 17,697 19,037
Telford............................. 31.42 10,548 626
Arbroath/Montrose/Arkwright......... 28.21 9,617 9,320
Ivanhoe/Rob Roy/Hamish.............. 42.08 8,795 14,163
Hudson.............................. 28.00 8,456 8,343
Nevis............................... 37.34 5,359 869
Other............................... Various 5,298 5,689
------- -------
Total.......................... 132,791 141,354
======= =======
NATURAL GAS (MCF PER DAY)
Everest/Lomond...................... 18.67/16.67% 50,732 44,591
Davy/Bessemer....................... 27.78/23.08 41,292 40,551
Beryl/Ness.......................... 22.22 37,076 45,581
Indefatigable....................... 23.08 27,360 32,736
Leman............................... 21.74 21,454 37,967
Scott............................... 34.95 18,811 22,760
Other............................... Various 29,079 29,797
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Total.......................... 225,804 253,983
======= =======
The Corporation is developing several oil and gas fields in the United
Kingdom North Sea and is evaluating other discoveries. Production from the
Schiehallion and Flora Fields is expected to commence in 1998.
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 31,173 and 29,188 net barrels per day in 1997 and 1996, respectively.
Approximately 70% of the 1997 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 10,127
and 9,725 net barrels of crude oil per day in 1997 and 1996, respectively.
OTHER INTERNATIONAL. Production from one of the Corporation's interests in
Indonesia commenced in 1997 and is averaging approximately 2,000 barrels of
crude oil per day. Additional developments are underway in Indonesia and
Thailand. The Corporation is also developing the South Arne Field in Denmark
with production scheduled to commence in 1999. The Corporation is continuing its
active international exploration program.
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
411,000 barrels per day in 1997 and 396,000 barrels per day in 1996. 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 1997, the Corporation's production supplied less than 5% of its crude
runs. Approximately 80% of the refined products marketed in 1997 was obtained
from the Corporation's refineries. The Corporation purchased the balance from
others under short-
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term supply contracts and by spot purchases from various sources. Sales of
refined products averaged 509,000 barrels per day in 1997 and 495,000 barrels
per day in 1996.
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 1997,
refined products produced were approximately 72% gasoline and distillates, 7%
refinery feedstocks and the remainder principally residual fuel oil. In addition
to crude distillation capacity, the refinery has a fluid catalytic cracking
unit, which is currently operating at a rate of approximately 135,000 barrels
per day. 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.
On February 3, 1998, the Corporation announced an agreement in principle
with Petroleos de Venezuela, S.A. ("PDVSA") to create a joint venture, 50% owned
by each party, to own and operate the Corporation's Virgin Islands refinery.
Under the proposed terms of the transaction, PDVSA will acquire a 50%
interest in the refinery for $625 million, consisting of $62.5 million in cash
and an interest-bearing note payable over ten years. The Corporation will also
receive an additional note for $125 million, which is contingently payable over
ten years based on the joint venture's future cash flows. This note will not be
included in the purchase price for accounting purposes.
At closing, the joint venture will purchase the crude oil and refined
product inventories and other working capital of the refinery. The joint venture
will also enter into a long-term supply contract to purchase Venezuelan crude
oil. In addition, the joint venture will finance and construct a coker and
related facilities, which will enable the refinery to process lower-cost, heavy
crude oil from Venezuela to be purchased under a separate long-term supply
contract. These long-term supply contracts cover more than 50% of the refinery's
crude oil requirements at its current operating rate.
The transaction is subject to the preparation of definitive contracts,
Virgin Islands governmental authorizations and corporate board approvals.
PORT READING FACILITY. The Corporation owns and operates a fluid catalytic
cracking facility in Port Reading, New Jersey, which processes vacuum gas oil
and residual fuel oil and currently operates at a rate of approximately 60,000
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. The Corporation
also markets natural gas to utilities and other industrial and commercial
customers.
At December 31, 1997, the Corporation had 638 HESS(R) gasoline stations of
which approximately 80% were operated by the Corporation. Most of the
Corporation's stations are concentrated in relatively densely populated areas,
principally in New York, New Jersey and Florida. Of the Corporation's stations,
288 have convenience stores. The Corporation owns in fee approximately 70% 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
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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.
A substantial decline in crude oil and refined product selling prices
occurred in late 1997 and is continuing in the first quarter of 1998, as world
supply has increased more than demand. The Corporation's results of operations
from exploration and production and refining and marketing operations are
extremely sensitive to these selling prices and earnings are being negatively
affected. The Corporation cannot predict how long these conditions will
continue.
OTHER ITEMS
The Corporation's operations may be affected by federal, state, local,
territorial and foreign laws and regulations relating to tax increases and
retroactive tax claims, expropriation of property, cancellation of contract
rights, and changes in import regulations, as well as other political
developments. The Corporation has been affected by certain of these events in
various countries in which it operates. The Corporation markets motor fuels
through lessee-dealers and wholesalers in certain states where legislation
prohibits producers or refiners of crude oil from directly engaging in retail
marketing of motor fuels. Similar legislation 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 $5 million in 1997
and the Corporation anticipates comparable capital expenditures in 1998. In
addition, the Corporation expended $12 million in 1997 for environmental
remediation, with a comparable amount anticipated for 1998.
The number of persons employed by the Corporation averaged 9,216 in 1997
and 9,085 in 1996.
Additional operating and financial information relating to the business and
properties of the Corporation appears in the text on pages 6 through 13 under
the heading "Exploration and Production," on pages 14 through 18 under the
heading "Refining and Marketing," on pages 20 through 26 under the heading
"Financial Review" and on pages 27 through 53 of the accompanying 1997 Annual
Report to Stockholders, which information is incorporated herein by reference.*
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* Except as to information specifically incorporated herein by reference under
Items 1, 2, 5, 6, 7, 7A and 8, no other information or data appearing in the
1997 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 1997, 1996
and 1995 are presented under Supplementary Oil and Gas Data in the accompanying
1997 Annual Report to Stockholders, which has been incorporated herein by
reference.
During 1997, the Corporation provided oil and gas reserve estimates for
1996 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 contracts or agreements in excess of one year's
duration to sell fixed quantities of its crude oil production. Approximately 50%
of the Corporation's 1997 natural gas sales was made under long-term contracts
to various purchasers. Contractual commitments in 1998 (which are expected to be
comparable to 1997) will be filled from the Corporation's production and from
contractual purchases.
2. AVERAGE SELLING PRICES AND AVERAGE PRODUCTION COSTS
1997 1996 1995
- -----------------------------------------------------------
Average selling prices (Note A)
Crude oil, including condensate and natural gas
liquids (per barrel)
United States.................................... $18.43 $16.49 $15.82
Europe........................................... 19.20 20.23 17.05
Africa and Asia.................................. 18.48 20.95 17.06
Canada and Abu Dhabi............................. - 17.91 16.02
Average.......................................... 19.01 19.41 16.68
Natural gas (per Mcf)
United States (Note B)........................... $ 2.47 $ 2.43 $ 1.70
Europe........................................... 2.36 2.05 2.05
Africa and Asia.................................. 1.05 - -
Canada........................................... - 1.35 1.02
Average.......................................... 2.45 2.31 1.67
- --------------------------------------------------------------------------------
Note A: Includes inter-company transfers valued at approximate market
prices and the effect of the Corporation's hedging activities. The increase in
the United States crude oil selling price in 1997 reflects improved hedging
results.
Note B: Includes sales of purchased gas.
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1997 1996 1995
- -----------------------------------------------------------
Average production (lifting) costs per barrel of
production (Note C)
United States.................................... $4.39 $4.56 $4.29
Europe........................................... 5.62 5.30 4.34
Africa and Asia.................................. 2.55 2.02 1.99
Canada and Abu Dhabi............................. - 3.21 3.00
Average.......................................... 5.13 4.88 4.09
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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 (6 Mcf equals one barrel).
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, 1997
DEVELOPED
ACREAGE PRODUCTIVE WELLS (NOTE A)
APPLICABLE TO -------------------------
PRODUCTIVE WELLS OIL GAS
(IN THOUSANDS) ------------ -----------
- ---------------------------------------------------------------------------------------
GROSS NET GROSS NET GROSS NET
----- --- ----- --- ----- ---
United States............................. 1,882 525 2,829 791 837 417
Europe.................................... 613 138 371 58 138 28
Africa and Asia........................... 65 12 139 11 4 2
----- --- ----- --- ---- ---
Total........................... 2,560 675 3,339 860 979 447
===== === ===== === ==== ===
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Note A: Includes multiple completion wells (wells producing from different
formations in the same bore hole) totaling 83 gross wells and 43 net wells.
4. GROSS AND NET UNDEVELOPED ACREAGE AT DECEMBER 31, 1997
UNDEVELOPED ACREAGE
(IN THOUSANDS)
--------------------
GROSS NET
- --------------------------------------------------------------------------------
United States........................................ 1,428 915
Europe............................................... 9,601 3,478
Africa, Asia and other............................... 21,375 6,300
------ ------
Total...................................... 32,404 10,693
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5. NUMBER OF NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
NET EXPLORATORY WELLS NET DEVELOPMENT WELLS
------------------------ ------------------------
1997 1996 1995 1997 1996 1995
- ------------------------------------------
Productive wells
United States........................ 5 8 20 27 22 25
Europe............................... 5 6 3 8 12 10
Africa, Asia and other............... 2 - - 6 1 1
Canada and Abu Dhabi................. - 7 3 - 8 12
--- --- --- --- --- ---
Total........................... 12 21 26 41 43 48
--- --- --- --- --- ---
Dry holes
United States........................ 11 22 24 3 - 3
Europe............................... 8 8 6 1 2 -
Africa, Asia and other............... 1 2 1 - - -
Canada and Abu Dhabi................. - 5 14 - 1 2
--- --- --- --- --- ---
Total........................... 20 37 45 4 3 5
--- --- --- --- --- ---
Total..................................... 32 58 71 45 46 53
=== === === === === ===
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6. NUMBER OF WELLS IN PROCESS OF DRILLING AT DECEMBER 31, 1997
GROSS NET
WELLS WELLS
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United States.............................................. 6 3
Europe..................................................... 7 2
Africa, Asia and other..................................... 2 1
-- --
Total............................................ 15 6
== ==
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7. NUMBER OF WATERFLOODS AND PRESSURE MAINTENANCE PROJECTS IN PROCESS OF
INSTALLATION AT DECEMBER 31, 1997 -- None
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ITEM 3. LEGAL PROCEEDINGS
On April 27, 1993, the Texas Natural Resource Conservation Commission
("TNRCC", then known as the Texas Water Commission) notified the Registrant of
alleged violations 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. Although there
are many potential sources for hydrocarbon discharge in this vicinity, the
Registrant is continuing a groundwater assessment, corrective measures program
and other appropriate responses to these groundwater conditions. 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 Registrant. 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.
The Corporation periodically receives notices from the U.S. Environmental
Protection Agency (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
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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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1997, 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, 1998 regarding
executive officers of the Registrant:
YEAR
INDIVIDUAL
BECAME AN
EXECUTIVE
NAME AGE OFFICE HELD* OFFICER
------------------------------------------------------------------------------------------------------
John B. Hess............ 43 Chairman of the Board, Chief Executive Officer and 1983
Director
W. S. H. Laidlaw........ 42 President, Chief Operating Officer and Director 1986
Leon Hess............... 83 Chairman of the Executive Committee and Director 1969
J. Barclay Collins II... 53 Executive Vice President, General Counsel and 1986
Director
John Y. Schreyer........ 58 Executive Vice President, Chief Financial Officer and 1990
Director
Alan A. Bernstein....... 53 Senior Vice President 1987
F. Lamar Clark.......... 64 Senior Vice President 1990
John A. Gartman......... 50 Senior Vice President 1997
Neal Gelfand............ 53 Senior Vice President 1980
Daniel F. McCarthy...... 53 Senior Vice President 1995
Lawrence H. Ornstein.... 46 Senior Vice President 1995
Rene L. Sagebien........ 57 Senior Vice President 1990
F. Borden Walker........ 44 Senior Vice President 1996
Gerald A. Jamin......... 56 Treasurer 1985
- --------------------------------------------------------------------------------
* 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 7, 1997, except that Mr. Gartman was elected to his
present office by the Board of Directors at its regular meeting on October 1,
1997. The first meeting of Directors following the next annual meeting of
stockholders of the Registrant is scheduled to be held May 6, 1998.
Except for Messrs. Walker and Gartman, 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. Mr. Gartman
had been a vice president of Public Service Electric and Gas Company in the area
of energy marketing prior to his employment with the Registrant in October 1997.
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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 1997 and 1996, dividend
payments and restrictions thereon and the number of holders of Common Stock is
presented on page 26 (Financial Review), page 34 (Long-Term Debt) and on page 50
(Ten-Year Summary of Financial Data) of the accompanying 1997 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 48 through 51 of
the accompanying 1997 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 20 through 26
of the accompanying 1997 Annual Report to Stockholders, which has been
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is presented under "Derivative
Financial Instruments" on pages 24 and 25 and in Footnote 12 on pages 37 to 39
of the accompanying 1997 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 26 through
47 of the accompanying 1997 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.
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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 6, 1998.
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 6, 1998.
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 6, 1998.
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 6, 1998.
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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
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.
4(3) -Credit Agreement dated as of May 20, 1997 among Registrant,
the Subsidiary Borrowers thereunder, The Chase Manhattan
Bank as Administrative Agent and the Lenders party
thereto, incorporated by reference to Exhibit 4 of Form
10-Q of Registrant for the three months ended June 30,
1997.
-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
12
3. EXHIBITS (continued)
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.
10(11)* -Stock Award Program for non-employee directors dated August
6, 1997.
13 -1997 Annual Report to Stockholders of Registrant.
21 -Subsidiaries of Registrant.
23 -Consent of Ernst & Young LLP, Independent Auditors, dated
March 20, 1998, to the incorporation by reference in
Registrant's Registration Statements on Form S-8 (Nos.
333-43569, 333-43571 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).
- --------------------------------------------------------------------------------
* 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, 1997.
11
13
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 20TH DAY OF
MARCH 1998.
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.
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------------------------------
Director, Chairman of
the Board and
Chief Executive Officer
/s/ JOHN B. HESS (Principal Executive Officer) March 20, 1998
............................................................................................................
(JOHN B. HESS)
Director, President and Chief
/s/ W.S.H. LAIDLAW Operating Officer March 20, 1998
............................................................................................................
(W.S.H. LAIDLAW)
/s/ NICHOLAS F. BRADY Director March 20, 1998
............................................................................................................
(NICHOLAS F. BRADY)
/s/ J. BARCLAY COLLINS II Director March 20, 1998
............................................................................................................
(J. BARCLAY COLLINS II)
/s/ PETER S. HADLEY Director March 20, 1998
............................................................................................................
(PETER S. HADLEY)
/s/ LEON HESS Director March 20, 1998
............................................................................................................
(LEON HESS)
Director March 20, 1998
............................................................................................................
(EDITH E. HOLIDAY)
Director March 20, 1998
............................................................................................................
(WILLIAM R. JOHNSON)
/s/ THOMAS H. KEAN Director March 20, 1998
............................................................................................................
(THOMAS H. KEAN)
/s/ FRANK A. OLSON Director March 20, 1998
............................................................................................................
(FRANK A. OLSON)
/s/ H. W. MCCOLLUM Director March 20, 1998
............................................................................................................
(H. W. MCCOLLUM)
Director March 20, 1998
............................................................................................................
(ROGER B. ORESMAN)
12
14
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------------------------------
Director, Executive Vice President
and Chief Financial Officer
(Principal Accounting and
/s/ JOHN Y. SCHREYER Financial Officer) March 20, 1998
............................................................................................................
(JOHN Y. SCHREYER)
Director March 20, 1998
............................................................................................................
(WILLIAM I. SPENCER)
/s/ ROBERT N. WILSON Director March 20, 1998
............................................................................................................
(ROBERT N. WILSON)
/s/ ROBERT F. WRIGHT Director March 20, 1998
............................................................................................................
(ROBERT F. WRIGHT)
- --------------------------------------------------------------------------------------------------------------
13
15
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE
NUMBER
- ------------------------------------------------------------
Statement of Consolidated Income for each of the three years
in the period ended December 31, 1997..................... *
Statement of Consolidated Retained Earnings for each of the
three years in the period ended December 31, 1997......... *
Consolidated Balance Sheet at December 31, 1997 and 1996.... *
Statement of Consolidated Cash Flows for each of the three
years in the period ended December 31, 1997............... *
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, 1997..................... *
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................................................... **
- --------------------------------------------------------------------------------
* The financial statements and notes thereto together with the Report of
Ernst & Young LLP, Independent Auditors, on pages 27 through 42, the Quarterly
Financial Data (unaudited) on page 26, and the Supplementary Oil and Gas Data
(unaudited) on pages 43 through 47 of the accompanying 1997 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
16
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 19, 1998,
included in the 1997 Annual Report to Stockholders of Amerada Hess Corporation.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8, Nos. 333-43569, 333-43571 and 33-65115) pertaining to the
Amerada Hess Corporation Employees' Savings and Stock Bonus Plan, Amerada Hess
Corporation Savings and Stock Bonus Plan for Retail Operations Employees and the
1995 Long-Term Incentive Plan, of our report dated February 19, 1998, with
respect to the consolidated financial statements incorporated herein by
reference.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, N.Y.
March 20, 1998
F-2
17
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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.
4(3)* -- Credit Agreement dated as of May 20, 1997 among
Registrant, the Subsidiary Borrowers thereunder, The Chase
Manhattan Bank as Administrative Agent and the Lenders
party thereto, incorporated by reference to Exhibit 4 of
Form 10-Q of Registrant for the three months ended June
30, 1997.
-- 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.
18
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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.
10(11)* -- Stock Award Program for non-employee directors dated
August 6, 1997.
13 -- 1997 Annual Report to Stockholders of Registrant.
21 -- Subsidiaries of Registrant.
23 -- Consent of Ernst & Young LLP, Independent Auditors, dated
March 20, 1998, to the incorporation by reference in
Registrant's Registration Statements on Form S-8 (Nos.
333-43569, 333-43571 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).
- --------------------------------------------------------------------------------
* These exhibits relate to executive compensation plans and arrangements.