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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) IS OCTOBER 30, 1998
AMERADA HESS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
COMMISSION FILE NUMBER 1-1204
13-4921002
(I.R.S. employer identification number)
1185 AVENUE OF THE AMERICAS, NEW YORK, NY
(Address of principal executive offices)
10036
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE IS (212) 997-8500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The Registrant, through its wholly-owned subsidiary, Hess Oil Virgin Islands
Corp. (HOVIC), owned and operated a petroleum refinery in St. Croix, United
States Virgin Islands.
On October 30, 1998, the Registrant completed a joint venture transaction with
Petroleos de Venezuela, S.A. (PDVSA). Pursuant to this transaction, PDVSA, V.I.,
Inc. (PDVSA V.I.), a wholly-owned subsidiary of PDVSA, purchased a 50% interest
in the refinery fixed assets for $62.5 million in cash, a $562.5 million,
10-year note from PDVSA V.I., bearing interest at 8.46% per annum and requiring
principal payments over its term, and a $125 million, 10-year, contingent note
from PDVSA V.I., also bearing interest at 8.46% per annum. PDVSA V.I.'s payment
obligation under both the note and the contingent note are guaranteed by PDVSA
and secured by a pledge of PDVSA V.I.'s membership interest in the joint
venture. HOVIC and PDVSA V.I. each contributed their 50% interests in the
refinery fixed assets to HOVENSA, L.L.C. (HOVENSA). HOVENSA is 50% owned by
HOVIC and 50% owned by PDVSA V.I. and will operate the Virgin Islands refinery.
At closing, the Registrant also received $307 million (subject to final
adjustment) from HOVENSA as payment for the net working capital of the refinery.
The Registrant recorded a loss of $106 million resulting from this transaction
and an additional noncash, after-tax charge of $44 million representing a
reduction of the book value of related refining and marketing assets.
Pursuant to a long-term supply contract, HOVENSA will immediately begin
purchasing approximately 155,000 barrels per day of Venezuelan Mesa crude oil.
HOVENSA will construct a delayed coking unit at the refinery. After construction
of the coking unit, HOVENSA will purchase approximately 115,000 additional
barrels per day of Venezuelan Merey crude oil.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
The following unaudited pro forma consolidated balance sheet, pro forma
consolidated income statements and accompanying notes give effect to
the sale of working capital and of one-half of the refinery assets and
formation
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of the joint venture. The assets sold or transferred to the joint
venture have been eliminated from the pro forma consolidated financial
statements and the equity investment and equity income have been
recorded. The pro forma consolidated balance sheet at September 30,
1998 is presented as if the sale of assets, the formation of the joint
venture and the reduction in the book value of related assets took
place on September 30, 1998. The pro forma consolidated income
statements for the year ended December 31, 1997, and for the nine
months ended September 30, 1998, are presented as if the sale of
assets, the formation of the joint venture and the reduction in the
book value of related assets happened on January 1, 1997.
The pro forma financial information should be read in conjunction with
Form 10-Q for the quarter ended September 30, 1998 and with the
Registrant's consolidated financial statements and related notes
included in the 1997 Annual Report to Stockholders, which have been
incorporated by reference in the Registrant's Form 10-K for 1997. The
pro forma financial information does not purport to be indicative of
the results of operations or the financial position that would have
actually occurred if the sale had been consummated on the dates
indicated or that may be expected in the future.
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AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1998
(in millions of dollars)
A S S E T S PRO FORMA
ADJUSTMENTS
HISTORICAL (A) PRO FORMA
--------- --------- ---------
CURRENT ASSETS
Cash and cash equivalents $ 67.2 $ 395.1 } $ 67.2
(395.1)}(B)
Accounts receivable 1,083.8 (21.9) 1,061.9
Inventories 925.3 (432.5) 492.8
Note receivable -- 24.0 24.0
Other current assets 277.3 (8.2) 269.1
--------- --------- ---------
Total current assets 2,353.6 (438.6) 1,915.0
--------- --------- ---------
INVESTMENTS AND ADVANCES
HOVENSA -- 718.5 718.5
Other 266.1 266.1
--------- --------- ---------
Total investments and advances 266.1 718.5 984.6
--------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT
Total - at cost 13,621.5 (2,470.8)} 10,982.3
(168.4)}(C)
Less reserves for depreciation, depletion,
amortization and lease impairment 7,914.2 (1,020.6)} 6,769.2
(124.4)}(C)
--------- --------- ---------
Property, plant and equipment - net 5,707.3 (1,494.2) 4,213.1
--------- --------- ---------
OTHER ASSETS
Note receivable -- 538.5 538.5
Deferred income taxes and other assets 318.2 (16.4) 301.8
--------- --------- ---------
Total other assets 318.2 522.1 840.3
--------- --------- ---------
TOTAL ASSETS $ 8,645.2 $ (692.2) $ 7,953.0
========= ========= =========
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 $ 965.4 $ (113.8) $ 851.6
Accrued liabilities 414.3 (16.0) 398.3
Deferred revenue 177.0 177.0
Taxes payable 254.1 254.1
Notes payable 37.0 37.0
Current maturities of long-term debt 139.7 139.7
--------- --------- ---------
Total current liabilities 1,987.5 (129.8) 1,857.7
--------- --------- ---------
LONG-TERM DEBT 2,488.3 (395.1) (B) 2,093.2
--------- --------- ---------
CAPITALIZED LEASE OBLIGATIONS 24.5 24.5
--------- --------- ---------
DEFERRED LIABILITIES AND CREDITS
Deferred income taxes 581.9 581.9
Other 456.4 (17.3) 439.1
--------- --------- ---------
Total deferred liabilities and credits 1,038.3 (17.3) 1,021.0
--------- --------- ---------
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 - 90,364,705 shares at September 30, 1998 90.4 90.4
Capital in excess of par value 764.8 764.8
Retained earnings 2,335.9 (106.0)} 2,185.9
(44.0)}(C)
Equity adjustment from foreign currency translation (84.5) (84.5)
--------- --------- ---------
Total stockholders' equity 3,106.6 (150.0) 2,956.6
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,645.2 $ (692.2) $ 7,953.0
========= ========= =========
See accompanying notes to pro forma consolidated financial information.
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AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
PRO FORMA STATEMENT OF CONSOLIDATED INCOME
For the Nine Months Ended September 30, 1998
(in millions, except per share data)
PRO FORMA
ADJUSTMENTS PRO
HISTORICAL (D) FORMA
--------- --------- ---------
REVENUES
Sales (excluding excise taxes) and
other operating revenues $ 4,974.0 $ (552.2) $ 4,421.8
Non-operating revenues
Asset sales 80.3 80.3
Other 63.7 (1.3)} 95.0
32.6 }(E)
Equity in income of HOVENSA L.L.C. 15.7 (F) 15.7
--------- --------- ---------
Total revenues 5,118.0 (505.2) 4,612.8
--------- --------- ---------
COSTS AND EXPENSES
Cost of products sold and operating expenses 3,742.7 (447.3) 3,295.4
Exploration expenses, including dry holes
and lease impairment 257.0 257.0
Selling, general and administrative expenses 523.9 (5.6) 518.3
Interest expense 109.0 (23.2) (E) 85.8
Depreciation, depletion and amortization 480.2 (63.0)} 413.7
(3.5)}(G)
Provision for income taxes 45.8 4.6 (E) 50.4
--------- --------- ---------
Total costs and expenses 5,158.6 (538.0) 4,620.6
--------- --------- ---------
NET LOSS $ (40.6) $ 32.8 $ (7.8)
========= ========= =========
NET LOSS PER SHARE --
BASIC AND DILUTED $ (0.45) $ (0.09)
========= =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 89.7 89.7
COMMON STOCK DIVIDENDS
PER SHARE $ 0.45 $ 0.45
See accompanying notes to pro forma consolidated financial information.
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AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
PRO FORMA STATEMENT OF CONSOLIDATED INCOME
For the Year Ended December 31, 1997
(in millions, except per share data)
PRO FORMA
ADJUSTMENTS PRO
HISTORICAL (D) FORMA
--------- --------- ---------
REVENUES
Sales (excluding excise taxes) and
other operating revenues $ 8,233.7 $ (915.3) $ 7,318.4
Non-operating revenues
Asset sales 16.5 16.5
Other 89.8 (9.6)} 127.1
46.9 }(E)
Equity in loss of HOVENSA L.L.C. (66.6) (F) (66.6)
--------- --------- ---------
Total revenues 8,340.0 (944.6) 7,395.4
--------- --------- ---------
COSTS AND EXPENSES
Cost of products sold and operating expenses 6,301.0 (959.5) 5,341.5
Exploration expenses, including dry holes
and lease impairment 373.2 373.2
Selling, general and administrative expenses 649.8 (12.9) 636.9
Interest expense 136.1 (23.1) (E) 113.0
Depreciation, depletion and amortization 672.7 (78.2)} 589.8
(4.7)}(G)
Asset impairment 80.6 80.6
Provision for income taxes 119.1 0.1} 123.8
4.6} (E)
--------- --------- ---------
Total costs and expenses $ 8,332.5 $(1,073.7) $ 7,258.8
--------- --------- ---------
NET INCOME $ 7.5 $ 129.1 $ 136.6
========= ========= =========
NET INCOME PER SHARE
Basic $ 0.08 $ 1.50
========= =========
Diluted $ 0.08 $ 1.49
========= =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 91.7 91.7
COMMON STOCK DIVIDENDS
PER SHARE $ 0.60 $ 0.60
See accompanying notes to pro forma consolidated financial information.
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AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma consolidated financial statements are based on estimates
and may differ from actual results. The following notes describe the pro forma
adjustments:
Pro Forma Consolidated Balance Sheet
(A) Record (i) the proceeds from sale of one-half of the refinery fixed
assets to PDVSA V.I., including $62.5 million in cash and $562.5
million note receivable, (ii) the sale of net working capital of HOVIC
and (iii) the formation of the HOVENSA joint venture. The Registrant
also received a $125 million contingent note that was not valued for
accounting purposes. The Registrant recorded a $106 million loss
because of this transaction.
(B) Reduce debt from net proceeds of (i) $62.5 million in cash received
from sale of the fixed assets and $332.6 from the sale of HOVIC working
capital at September 30, 1998 (actual amount at October 30, 1998 was
$307 million).
(C) Record $44 million impairment of certain related refining and marketing
assets.
Pro Forma Statement of Consolidated Income
(D) Eliminate revenues and expenses related to ownership of the refinery.
(E) Record interest income on the notes receivable and reduced interest
expense from lower pro forma debt and related income tax effect.
(F) Record equity in income or loss of joint venture. This includes the
impact of extending the depreciable life of the refinery to reflect the
extension of an operating concession agreement with the Government of
the U.S. Virgin Islands. However, it does not include any expected
beneficial effects related to crude oil supply contracts with Petroleos
de Venezuela, S.A. In addition, the pro forma financial statements do
not include future construction of a coker or its effects on
operations.
(G) Record reduced depreciation of related impaired refining and marketing
assets.
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Note: The estimated decrease in pro forma retained earnings of approximately
$150 million is subject to post closing adjustments. To show the
effects of the HOVENSA joint venture on ongoing operations, the pro
forma consolidated income statement for the year ended December 31,
1997, does not reflect the nonrecurring loss on the formation of the
joint venture and on the impairment of certain related refining and
marketing assets.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (CONTINUED)
(c) Exhibits.
2.1 Asset Purchase and Contribution Agreement dated as of
October 26, 1998, among PDVSA V.I., Inc., Hess Oil
Virgin Islands Corp. and HOVENSA L.L.C. (including
Glossary of definitions).
10.1 Amended and Restated Limited Liability Company
Agreement of HOVENSA L.L.C. dated as of October 30,
1998.
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 hereunto duly authorized.
AMERADA HESS CORPORATION
(REGISTRANT)
Date: November 10, 1998 By s/s John Y. Schreyer
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John Y. Schreyer
Executive Vice President and
Chief Financial Officer
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