þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2006 |
|
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
DELAWARE
|
13-4921002 | |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
|
1185 AVENUE OF THE AMERICAS,
NEW YORK, N.Y. (Address of principal executive offices) |
10036
(Zip Code) |
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
Common Stock (par value $1.00)
|
New York Stock Exchange |
1
3
7
2006
2005
832
692
2,466
2,406
1,243
1,093
*
Reflects natural gas reserves
converted on the basis of relative energy content (six mcf
equals one barrel).
2006
2005
15
21
21
23
36
44
50
54
22
26
19
24
18
6
109
110
2
Table of Contents
2006
2005
28
30
22
25
12
12
23
85
67
7
4
5
3
12
7
242
228
7
8
3
4
10
12
4
3
1
1
5
4
15
16
54
74
56
63
110
137
244
222
22
28
17
24
283
274
131
51
60
57
26
25
2
219
133
612
544
359
335
*
Reflects natural gas production
converted on the basis of relative energy content (six mcf
equals one barrel).
Table of Contents
4
Table of Contents
5
Table of Contents
2006
2005
2004
$
57.41
$
33.86
$
27.87
55.80
33.30
26.24
51.18
32.10
26.35
61.52
54.69
38.36
54.81
33.69
26.86
$
6.59
$
7.93
$
5.18
6.20
5.29
3.96
4.05
4.02
3.90
5.50
5.65
4.31
6
Table of Contents
2006
2005
2004
$
9.54
$
7.46
$
6.42
10.73
8.13
6.35
9.03
7.99
7.72
6.54
7.29
6.05
9.55
7.91
6.59
Undeveloped
Acreage (Note A)
Gross
Net
(In thousands)
2,199
1,672
2,893
984
13,527
9,572
16,486
10,016
35,105
22,244
Developed
Acreage
Applicable to
Productive Wells (Note A)
Productive Wells
Oil
Gas
Gross
Net
Gross
Net
Gross
Net
(In thousands)
450
385
708
396
74
59
1,183
587
283
98
163
37
9,919
958
844
105
3
2,185
624
40
3
320
60
13,737
2,554
1,875
602
560
156
Table of Contents
Net Exploratory
Net Development
Wells
Wells
2006
2005
2004
2006
2005
2004
1
4
24
28
32
1
3
20
6
5
1
1
17
12
12
6
1
1
11
8
2
8
5
6
72
54
51
4
2
1
2
1
1
1
1
2
1
1
1
1
4
4
5
3
3
12
9
11
72
57
54
Gross
Net
Wells
Wells
12
7
13
6
21
8
19
4
65
25
2006
2005
(Thousands of barrels per day)
218
213
144
136
60
64
37
43
459
456
8
Table of Contents
Refinery
Refinery Utilization
Capacity
2006
2005
(Thousands of
barrels per day)
500
89.7%
92.2%
150
84.3%
81.9%
58
84.3%
92.8%
9
Table of Contents
Item 1A.
Risk
Factors Related to Our Business and Operations
10
Table of Contents
11
Table of Contents
Item 3.
Legal
Proceedings
12
Table of Contents
13
Table of Contents
14
Table of Contents
Item 4.
Submission
of Matters to a Vote of Security Holders
Year Individual
Became an
Executive
Office Held*
52
Chairman of the Board, Chief
Executive Officer and Director
1983
62
Executive Vice President, General
Counsel and Director
1986
60
Executive Vice President,
President of Worldwide Exploration and Production and Director
2001
53
Executive Vice President and
President of Marketing and Refining and Director
1996
46
Senior Vice President
2004
58
Senior Vice President
2003
59
Senior Vice President
1997
49
Senior Vice President
2005
55
Senior Vice President
1995
56
Senior Vice President
2002
44
Senior Vice President and Chief
Financial Officer
2002
50
Senior Vice President
2003
49
Senior Vice President
2004
50
Senior Vice President
2000
47
Vice President & Treasurer
2004
*
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 3,
2006. The first meeting of Directors following the next annual
meeting of stockholders of the Registrant is scheduled to be
held May 2, 2007.
15
Table of Contents
25
58
80
87
88
Item 5.
Market
for the Registrants Common Stock and Related Stockholder
Matters
2006
2005
High
Low
High
Low
$
52.00
$
42.83
$
34.65
$
25.94
53.46
43.23
37.39
28.75
56.45
38.30
47.50
35.53
52.70
37.62
46.33
36.67
*
Prices for all periods reflect
the impact of a
3-for-1
stock split on May 31, 2006.
2006
2005
High
Low
High
Low
$
130.65
$
111.11
$
90.33
$
70.47
133.65
109.90
95.75
74.75
140.20
98.61
120.17
91.32
124.94
95.00
117.56
95.33
**
On December 1, 2006, each
share of the Corporations 7% Mandatory Convertible
Preferred Stock was converted into 2.4915 shares of its
common stock.
16
Table of Contents
Standard & Poors 500 Stock Index, which includes
the Corporation, and
AMEX Oil Index, which is comprised of companies involved in
various phases of the oil industry including the Corporation.
17
Table of Contents
Number of
Securities
Remaining
Available for
Number of
Future Issuance
Securities to
Weighted
Under Equity
be Issued
Average
Compensation
Upon Exercise
Exercise Price
Plans
of Outstanding
of Outstanding
(Excluding
Options,
Options,
Securities
Warrants and
Warrants and
Reflected in
Rights
Rights
Column (a))
(a)
(b)
(c)
12,923,000
$
29.68
11,698,000
*
*
These securities may be awarded
as stock options, restricted stock or other awards permitted
under the Registrants equity compensation plan.
**
Registrant has a Stock Award
Program pursuant to which each non-employee director receives
$150,000 in value of Registrants common stock each year.
These awards are made from shares purchased by the Company in
the open market. Stockholders did not approve this equity
compensation plan.
18
Table of Contents
Item 6.
Selected
Financial Data
2006
2005
2004
2003
2002
(Millions of dollars, except per share amounts)
$
5,307
$
3,219
$
2,594
$
2,295
$
2,702
6,826
6,423
4,638
4,522
3,077
14,411
11,690
8,125
6,250
4,635
1,523
1,415
1,376
1,244
1,137
$
28,067
$
22,747
$
16,733
$
14,311
$
11,551
$
1,916
(a)
$
1,242
(b)
$
970
(c)
$
467
(d)
$
(245
)(e)
7
169
27
7
$
1,916
$
1,242
$
977
$
643
$
(218
)
44
48
48
5
$
1,872
$
1,194
$
929
$
638
$
(218
)
$
6.73
$
4.38
$
3.43
$
1.74
$
(.93
)
6.73
4.38
3.46
2.40
(.83
)
$
6.07
$
3.98
$
3.17
$
1.72
$
(.93
)
6.07
3.98
3.19
2.37
(.83
)
$
22,404
$
19,115
$
16,312
$
13,983
$
13,262
3,772
3,785
3,835
3,941
4,992
8,111
6,286
5,597
5,340
4,249
$
.40
$
.40
$
.40
$
.40
$
.40
*
Per share amounts in all periods
reflect the impact of a
3-for-1
stock split on May 31, 2006.
(a)
Includes net after-tax income of
$173 million primarily from sales of assets, partially
offset by income tax adjustments and accrued leased office
closing costs.
(b)
Includes after-tax expenses of
$37 million primarily relating to income taxes on
repatriated earnings, premiums on bond repurchases and hurricane
related expenses, partially offset by gains from asset sales and
a LIFO inventory liquidation.
(c)
Includes net after-tax income of
$76 million primarily from sales of assets and income tax
adjustments.
(d)
Includes net after-tax expenses
of $25 million, principally from premiums on bond
repurchases and accrued severance and leased office closing
costs, partially offset by income tax adjustments and asset
sales.
(e)
Includes net after-tax expenses
aggregating $708 million, principally resulting from asset
impairments.
19
Table of Contents
Item 7.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
2006
2005
138
17
%
124
18
%
694
83
568
82
832
100
%
692
100
%
236
10
%
282
12
%
2,230
90
2,124
88
2,466
100
%
2,406
100
%
The Atlantic (Hess 25%) and Cromarty (Hess 90%) natural gas
fields in the United Kingdom came onstream in June 2006 and
produced at a combined net rate of approximately 95,000 mcf per
day in the second half of the year.
The Okume Complex development (Hess 85%) in Equatorial Guinea
commenced production in December. Additional development
activities are planned throughout 2007. The Corporation
estimates that its net share of 2007 production will average
approximately 20,000 boepd.
First production from the Phu Horm onshore gas project (Hess
35%) in Thailand commenced in November. The Corporation
estimates that its net share of 2007 production will average
approximately 30,000 mcf per day.
Phase 2 production from the ACG fields (Hess 2.7%) in
Azerbaijan also commenced during 2006.
Development of the Shenzi field (Hess 28%) in the deepwater Gulf
of Mexico was sanctioned and first production is anticipated in
the second half of 2009.
20
Table of Contents
The Genghis Khan field (Hess 28%) was acquired by the Shenzi
partners in February 2007. The field is part of the same
geologic structure as the Shenzi development and first
production is anticipated in the second half of 2007.
The Ujung Pangkah field (Hess 75%) in Indonesia is scheduled to
commence production of natural gas by mid 2007 under an existing
gas sales agreement for 440 million mcf (gross) over a
20 year period with an expected plateau rate of
100,000 mcf per day (gross). The Corporations plans
for Ujung Pangkah in 2007 also include drilling additional
development wells and the commencement of a crude oil
development project.
Capital investments in the JDA (Hess 50%) will be made during
2007 which will be primarily focused on facilities expansion and
development drilling associated with the anticipated
commencement of additional contracted gas sales of 400,000 mcf
per day (gross) in 2008. It is anticipated that production
associated with these additional gas sales will begin ramping up
in the fourth quarter of 2007.
Development of the residual oil zone at the Seminole -
San Andres Unit (Hess 34.3%) in the Permian Basin is
expected to commence in 2007 and production is anticipated to
begin in 2009.
An exploration well on the Corporations Pony prospect on
Green Canyon Block 468 (Hess 100%) in the deepwater Gulf of
Mexico encountered 475 feet of oil saturated sandstone in
Miocene age reservoirs. Drilling of an appraisal sidetrack well
on the Pony Prospect was completed in January 2007 which
encountered 280 feet of oil saturated sandstone in Miocene
age reservoirs after penetrating 60% of its geological
objective. Drilling of the sidetrack well was stopped for
mechanical reasons after successfully recovering 450 feet
of conventional core. The Corporation is currently drilling an
appraisal well about 7,400 feet northwest of the discovery
well.
On the Tubular Bells prospect (Hess 20%) in the Mississippi
Canyon area of the deepwater Gulf of Mexico a successful
appraisal well encountered hydrocarbons approximately
5 miles from the initial discovery well. The operator
intends to drill two sidetrack wells in 2007 which will further
delineate the field.
In January 2006, the Corporation, in conjunction with its Oasis
Group partners, re-entered its former oil and gas production
operations in the Waha concessions (Hess 8.16%) in Libya. The
re-entry terms include a
25-year
extension of the concessions and payments by the Corporation to
the Libyan National Oil Corporation of $359 million. The
Corporations net share of 2006 production from Libya
averaged 23,000 barrels of oil per day.
The Corporation acquired a 55% working interest in the deepwater
section of the West Mediterranean Block 1 Concession (the
West Med Block) in Egypt for $413 million. The Corporation
has a
25-year
development lease for the West Med Block, which contains four
existing natural gas discoveries and additional exploration
opportunities.
During 2006, the Corporation completed the sale of its interests
in certain producing properties in the Permian Basin in Texas
and New Mexico and certain U.S. Gulf Coast oil and gas
producing assets. These asset sales generated total proceeds of
$444 million after closing adjustments and an aggregate
after-tax gain of $236 million ($369 million before
income taxes). Total net production from assets sold was
approximately 8,000 boepd at the time of sale.
21
Table of Contents
2006
2005
(Millions of dollars)
$
908
$
353
2,979
2,031
3,887
2,384
169
106
$
4,056
$
2,490
$
110
$
89
102
60
$
212
$
149
22
Table of Contents
2006
2005
2004
(Millions of dollars, except per share data)
$
1,763
$
1,058
$
755
390
515
451
(110
)
(191
)
(85
)
(127
)
(140
)
(151
)
1,916
1,242
970
7
$
1,916
$
1,242
$
977
$
6.07
$
3.98
$
3.17
$
6.07
$
3.98
$
3.19
*
Per share amounts in all periods
reflect the impact of a
3-for-1
stock split on May 31, 2006.
2006
2005
2004
(Millions of dollars)
$
236
$
41
$
54
(45
)
11
19
(18
)
(9
)
(26
)
11
32
12
(8
)
(72
)
(26
)
13
(13
)
$
173
$
(37
)
$
76
23
Table of Contents
2006
2005
2004
(Millions of dollars)
$
6,524
$
4,210
$
3,416
428
94
90
6,952
4,304
3,506
1,250
1,007
825
552
397
287
209
140
150
1,159
965
918
3,170
2,509
2,180
3,782
1,795
1,326
2,019
737
571
1,763
1,058
755
7
$
1,763
$
1,058
$
762
2006
2005
2004
$
60.45
$
32.64
$
27.42
56.19
33.13
26.18
51.18
32.10
26.35
61.52
54.71
38.36
55.31
33.38
26.70
$
60.45
$
51.16
$
38.56
58.46
52.22
37.57
62.80
51.70
37.07
61.52
54.71
38.36
60.41
51.94
37.64
24
Table of Contents
2006
2005
2004
$
46.22
$
38.50
$
29.50
47.30
37.13
27.44
46.59
38.08
28.81
$
6.59
$
7.93
$
5.18
6.20
5.29
3.96
4.05
4.02
3.90
5.50
5.65
4.31
2006
2005
2004
36
44
44
109
110
119
85
67
61
12
7
4
242
228
228
10
12
12
5
4
6
15
16
18
110
137
171
283
274
319
219
133
85
612
544
575
359
335
342
*
Reflects natural gas production
converted on the basis of relative energy content (six mcf
equals one barrel).
Table of Contents
Before Income Taxes
After Income Taxes
2006
2005
2004
2006
2005
2004
(Millions of dollars)
$
369
$
48
$
55
$
236
$
41
$
54
(45
)
11
19
(30
)
(15
)
(18
)
(9
)
(40
)
(26
)
19
11
$
339
$
27
$
40
$
173
$
37
$
64
26
Table of Contents
27
Table of Contents
Refinery
Refinery Utilization
Capacity
2006
2005
2004
(Thousands of
barrels per day)
500
89.7%
92.2%
96.7%
150
84.3%
81.9%
92.9%
58
84.3%
92.8%
94.5%
65
97.4%
85.3%
83.4%
Before Income Taxes
After Income Taxes
2006
2005
2004
2006
2005
2004
(Millions of dollars)
$
$
51
$
20
$
$
32
$
12
(13
)
(8
)
$
$
38
$
20
$
$
24
$
12
28
Table of Contents
2006
2005
2004
(Millions of dollars)
$
156
$
119
$
116
(46
)
(26
)
(31
)
110
93
85
72
26
(13
)
13
$
110
$
191
$
85
2006
2005
2004
(Millions of dollars)
$
301
$
304
$
295
100
80
54
201
224
241
74
84
90
$
127
$
140
$
151
29
Table of Contents
2006
2005
(Millions of dollars)
$
383
$
315
$
27
$
26
$
3,772
$
3,785
$
8,111
$
6,286
31.7
%
37.6
%
*
Total debt as a percentage of
the sum of total debt plus stockholders equity.
2006
2005
2004
(Millions of dollars)
$
3,491
$
1,840
$
1,903
(3,289
)
(2,255
)
(1,371
)
(134
)
(147
)
(173
)
$
68
$
(562
)
$
359
2006
2005
2004
(Millions of dollars)
$
590
$
229
$
168
2,164
1,598
1,204
921
408
62
3,675
2,235
1,434
169
106
87
$
3,844
$
2,341
$
1,521
30
Table of Contents
2006
2005
(Millions of dollars)
$
1
$
28
1,875
1,675
1,603
982
$
3,479
$
2,685
31
Table of Contents
Payments Due by Period
2008 and
2010 and
Total
2007
2009
2011
Thereafter
(Millions of dollars)
$
3,772
$
27
$
171
$
1,340
$
2,234
2,471
630
567
198
1,076
25,800
8,381
8,990
8,429
(b
)
1,109
809
263
37
794
477
187
89
41
1,316
65
285
220
746
(a)
At December 31, 2006, the
Corporations debt bears interest at a weighted average
rate of 7.0%.
(b)
The Corporation intends to
continue purchasing refined product supply from HOVENSA.
Estimated future purchases amount to approximately
$4.2 billion annually using year-end 2006 prices.
32
Table of Contents
Total
(Millions of
dollars)
$
52
301
*
$
353
*
Includes $15 million
HOVENSA debt and $229 million crude oil purchase guarantees
discussed above. The remainder relates to a loan guarantee of
$57 million for an oil pipeline in which the Corporation
owns a 2.36% interest.
33
Table of Contents
34
Table of Contents
35
Table of Contents
36
Table of Contents
37
Table of Contents
Item 7A.
Quantitative
and Qualitative Disclosures About Market Risk
38
Table of Contents
Forward Commodity Contracts:
The forward
purchase and sale of commodities is performed as part of the
Corporations normal activities. At settlement date, the
notional value of the contract is exchanged for physical
delivery of the commodity. Forward contracts that are designated
as normal purchase and sale contracts under
FAS No. 133 are excluded from the quantitative market
risk disclosures.
Forward Foreign Exchange Contracts:
Forward
contracts include forward purchase contracts for both the
British pound sterling and the Danish kroner. These foreign
currency contracts commit the Corporation to purchase a fixed
amount of pound sterling and kroner at a predetermined exchange
rate on a certain date.
Exchange Traded Contracts:
The Corporation
uses exchange traded contracts, including futures, on a number
of different underlying energy commodities. These contracts are
settled daily with the relevant exchange and may be subject to
exchange position limits.
Swaps:
The Corporation uses financially
settled swap contracts with third parties as part of its hedging
and trading activities. Cash flows from swap contracts are
determined based on underlying commodity prices and are
typically settled over the life of the contract.
Options:
Options on various underlying energy
commodities include exchange traded and third party contracts
and have various exercise periods. As a seller of options, the
Corporation receives a premium at the outset and bears the risk
of unfavorable changes in the price of the commodity underlying
the option. As a purchaser of options, the Corporation pays a
premium at the outset and has the right to participate in the
favorable price movements in the underlying commodities. These
premiums are a component of the fair value of the options.
Energy Securities:
Energy securities include
energy related equity or debt securities issued by a company or
government or related derivatives on these securities.
39
Table of Contents
Trading
Non-Trading
Activities
Activities
(Millions of dollars)
$
17
$
62
20
75
22
86
17
62
$
18
$
93
11
111
18
127
7
93
Brent Crude Oil
Average
Thousands of
Selling Price
Barrels per Day
$
25.85
24
25.56
24
25.54
24
25.78
24
26.37
24
26.90
24
40
Table of Contents
2006
2005
(Millions of dollars)
$
1,109
$
184
(82
)
6
(547
)
(23
)
(115
)
942
$
365
$
1,109
2010 and
Total
2007
2008
2009
Beyond
(Millions of dollars)
$
357
$
198
$
62
$
65
$
32
24
30
(12
)
6
(16
)
(16
)
$
365
$
212
$
50
$
65
$
38
2006
2005
(Millions of dollars)
$
347
$
353
59
139
41
70
$
447
$
562
*
Based on information provided by
counterparties and other available sources.
41
Table of Contents
Item 8.
Financial
Statements and Supplementary Data
Page
Number
43
44
46
47
48
49
50
51
78
84
90
91
*
Schedules other than
Schedule II 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.
42
Table of Contents
Senior Vice President and
Chief Financial Officer
By
Chairman of the Board and
Chief Executive Officer
43
Table of Contents
Hess Corporation
February 23, 2007
44
Table of Contents
Hess Corporation
February 23, 2007
45
Table of Contents
*
Common stock and Capital in
excess of par value as of December 31, 2005 are restated to
reflect the impact of a
3-for-1
stock split on May 31, 2006.
46
Table of Contents
For the Years Ended
December 31
2006
2005
2004
(In millions, except per share data)
$
28,067
$
22,747
$
16,733
203
376
244
369
48
55
81
84
94
28,720
23,255
17,126
19,912
17,041
11,971
1,250
1,007
825
940
842
737
552
397
287
130
136
195
471
357
342
201
224
241
1,224
1,025
970
24,680
21,029
15,568
4,040
2,226
1,558
2,124
984
588
1,916
1,242
970
7
$
1,916
$
1,242
$
977
44
48
48
$
1,872
$
1,194
$
929
$
6.73
$
4.38
$
3.43
6.73
4.38
3.46
$
6.07
$
3.98
$
3.17
6.07
3.98
3.19
OUTSTANDING (DILUTED)*
315.7
312.1
306.3
*
Weighted average number of
shares and per-share amounts in all periods reflect the impact
of a
3-for-1
stock split on May 31, 2006.
47
Table of Contents
For the Years Ended
December 31
2006
2005
2004
(Millions of dollars)
$
1,916
$
1,242
$
977
1,224
1,025
970
241
170
81
99
78
77
(369
)
(48
)
(55
)
279
(118
)
(211
)
197
(101
)
(156
)
(7
)
(179
)
(1,042
)
(705
)
(152
)
(270
)
(16
)
(44
)
877
783
47
(111
)
131
232
138
34
3,491
1,840
1,903
(3,675
)
(2,235
)
(1,434
)
(169
)
(106
)
(87
)
(3,844
)
(2,341
)
(1,521
)
444
74
57
76
60
90
35
(48
)
3
(3,289
)
(2,255
)
(1,371
)
320
600
25
(333
)
(650
)
(131
)
(161
)
(159
)
(157
)
40
62
90
(134
)
(147
)
(173
)
68
(562
)
359
315
877
518
$
383
$
315
$
877
48
Table of Contents
2006
2005
2004
Shares
Amount
Shares
Amount
Shares
Amount
(Millions of dollars; thousands of shares)
13,824
$
14
13,827
$
14
13,827
$
14
(13,500
)
(14
)
(3
)
324
13,824
14
13,827
14
279,197
279
275,145
275
269,604
270
903
1
948
1
927
1
1,283
1
3,098
3
4,614
4
33,635
34
6
315,018
315
279,197
279
275,145
275
1,656
1,544
1,423
36
37
23
68
75
98
(20
)
(51
)
1,689
1,656
1,544
5,914
4,831
4,011
1,916
1,242
977
(115
)
(111
)
(109
)
(44
)
(48
)
(48
)
7,671
5,914
4,831
(1,526
)
(1,024
)
(350
)
104
(502
)
(674
)
(142
)
(1,564
)
(1,526
)
(1,024
)
(51
)
(43
)
(28
)
(8
)
(15
)
51
(51
)
(43
)
$
8,111
$
6,286
$
5,597
*
Common stock and Capital in
excess of par value as of January 1, 2004,
December 31, 2004 and December 31, 2005 are restated
to reflect the impact of a
3-for-1
stock split on May 31, 2006.
49
Table of Contents
For the Years Ended
December 31
2006
2005
2004
(Millions of dollars)
$
1,916
$
1,242
$
977
345
946
511
(379
)
(1,381
)
(1,196
)
90
(33
)
(25
)
48
(34
)
36
104
(502
)
(674
)
$
2,020
$
740
$
303
50
Table of Contents
1.
Summary
of Significant Accounting Policies
51
Table of Contents
52
Table of Contents
53
Table of Contents
54
Table of Contents
2.
Items Affecting
the Comparability of Income
Before Taxes
After Taxes
2006
2005
2004
2006
2005
2004
(Millions of dollars, income (expense))
$
369
$
48
$
55
$
236
$
41
$
54
(45
)
11
19
(30
)
(15
)
(18
)
(9
)
(40
)
(26
)
19
11
51
20
32
12
(13
)
(8
)
(72
)
(39
)
(26
)
13
(20
)
(13
)
$
339
$
26
$
40
$
173
$
(37
)
$
76
55
Table of Contents
3.
Acquisitions
$
362
236
598
(3
)
(236
)
$
359
56
Table of Contents
4.
Inventories
2006
2005
(Millions of dollars)
$
202
$
161
1,185
1,149
(676
)
(656
)
711
654
294
201
$
1,005
$
855
5.
Refining
Joint Venture
2006
2005
2004
(Millions of dollars)
$
290
$
612
$
518
263
39
943
814
636
2,123
1,950
1,843
32
39
36
(1,060
)
(996
)
(606
)
(252
)
(252
)
(252
)
(108
)
(57
)
(48
)
$
1,968
$
2,373
$
2,166
$
11,788
$
10,439
$
7,776
(11,377
)
(9,682
)
(7,282
)
$
411
$
757
$
494
$
203
$
376
$
244
57
Table of Contents
2006
2005
2004
(Millions of dollars)
$
484
$
1,070
$
656
(10
)
(426
)
(167
)
(796
)
(550
)
(312
)
$
(322
)
$
94
$
177
*
Before Virgin Islands income
taxes, which were recorded in the Corporations income tax
provision.
6.
Property,
Plant and Equipment
2006
2005
(Millions of dollars)
$
1,231
$
629
3,298
3,490
15,670
13,717
1,781
1,628
21,980
19,464
9,672
9,952
$
12,308
$
9,512
Table of Contents
2006
2005
2004
(Millions of dollars)
$
244
$
220
$
225
299
97
150
(144
)
(12
)
(149
)
(61
)
(6
)
$
399
$
244
$
220
28
16
15
$
46
8
17
$
71
7.
Asset
Retirement Obligations
2006
2005
(Millions of dollars)
$
564
$
511
16
8
(118
)
(26
)
44
33
282
62
36
(24
)
$
824
$
564
59
Table of Contents
8.
Long-Term
Debt
2006
2005
(Millions of dollars)
$
300
$
600
318
103
103
662
662
693
693
745
745
598
598
2,801
2,801
145
163
148
161
53
52
7
8
3,772
3,785
27
26
$
3,745
$
3,759
60
Table of Contents
9.
Share-Based
Compensation
2005
2004
(Millions of dollars, except per share data)
$
1,242
$
977
18
11
(37
)
(18
)
$
1,223
$
970
$
4.38
$
3.46
3.98
3.19
$
4.31
$
3.44
3.92
3.17
*
Per share amounts in both
periods reflect the impact of a
3-for-1
stock split on May 31, 2006.
61
Table of Contents
Stock Options
Restricted Stock
Weighted-
Shares of
Weighted-
Average
Restricted
Average
Exercise Price
Common
Price on Date
Options*
per Share*
Stock*
of Grant*
(Thousands)
(Thousands)
12,471
$
19.51
3,729
$
17.55
3,594
24.26
1,268
24.32
(4,614
)
19.51
(253
)
16.99
(90
)
21.98
(340
)
17.73
11,361
21.00
4,404
19.52
3,282
30.91
1,121
30.79
(3,099
)
19.96
(989
)
19.89
(93
)
24.85
(173
)
19.67
11,451
24.09
4,363
22.32
2,853
49.46
984
50.40
(1,283
)
22.96
(237
)
22.78
(98
)
40.07
(66
)
30.24
12,923
29.68
5,044
27.68
7,821
$
19.52
8,181
21.36
6,832
22.08
*
Stock options, restricted stock
and weighted average exercise prices per share in all periods
reflect the impact of a
3-for-1
stock split on May 31, 2006.
Outstanding Options
Exercisable Options
Weighted-
Average
Weighted-
Weighted-
Remaining
Average
Average
Range of
Contractual
Exercise Price
Exercise Price
Options*
Life
per Share*
Options*
per Share*
(Thousands)
(Thousands)
3,413
4
$
18.89
3,413
$
18.89
6,528
7
26.39
3,358
24.91
2,982
9
49.23
61
45.41
12,923
7
29.68
6,832
22.08
*
Stock options and weighted
average exercise prices per share reflect the impact of a
3-for-1
stock split on May 31, 2006.
62
Table of Contents
2006
2005
2004
4.50
%
3.90
%
4.30
%
.321
.300
.293
.80
%
1.30
%
1.70
%
5
7
7
$
16.50
$
10.51
$
7.92
24,621
12,923
11,698
10.
Foreign
Currency Translation
11.
Retirement
Plans
63
Table of Contents
(a)
Included within Other assets on
the Corporations balance sheet
(b)
Included within Other
liabilities and deferred credits on the Corporations
balance sheet
Funded
Unfunded
Postretirement
Pension Plans
Pension Plan
Medical Plan
2006
2005
2006
2005
2006
2005
(Millions of dollars)
$
1,030
$
925
$
105
$
77
$
73
$
71
31
26
4
4
3
2
57
53
6
5
5
4
16
60
4
24
11
(36
)
(34
)
(5
)
(5
)
(3
)
(4
)
1,098
1,030
114
105
89
73
826
750
126
42
45
68
5
5
3
4
(36
)
(34
)
(5
)
(5
)
(3
)
(4
)
961
826
(137
)
(204
)
(114
)*
(105
)*
(89
)
(73
)
205
278
51
53
34
26
1
3
3
(2
)
(3
)
$
68
$
75
$
(60
)
$
(49
)
$
(57
)
$
(50
)
*
The trust established by the
Corporation to fund the supplemental plan held assets valued at
$76 million at December 31, 2006 and $53 million
at December 31, 2005.
64
Table of Contents
Funded
Unfunded
Postretirement
Pension Plans
Pension Plan
Medical Plan
2006
2005
2006
2005
2006
2005
(Millions of dollars)
$
(137
)
$
(93
)
$
(114
)
$
(83
)
$
(89
)
$
(50
)
1
3
205
167
54
31
32
$
68
$
75
$
(60
)
$
(49
)
$
(57
)
$
(50
)
*
The amount included in
accumulated other comprehensive income (loss) after income taxes
was $183 million at December 31, 2006 and
$131 million at December 31, 2005.
Pension Plans
Postretirement Medical Plan
2006
2005
2004
2006
2005
2004
(Millions of dollars)
$
34
$
30
$
26
$
3
$
3
$
2
63
58
54
5
4
4
(63
)
(56
)
(56
)
1
2
2
(1
)
(1
)
(1
)
30
24
16
6
3
1
1
$
65
$
58
$
48
$
10
$
7
$
6
65
Table of Contents
2006
2005
2004
5.8
%
5.5
%
5.8
%
4.4
4.3
4.5
5.5
5.8
6.2
7.5
7.5
8.5
4.3
4.5
4.5
2006
2005
2004
5.8
%
5.5
%
5.8
%
8.0
%
9.0
%
10.0
%
4.5
%
4.5
%
4.5
%
2011
2011
2011
At
Target
December 31
Allocation
2006
2005
55
%
61
%
61
%
35
34
35
10
5
4
100
%
100
%
100
%
66
Table of Contents
(Millions of dollars)
$
52
55
59
67
79
420
12.
Income
Taxes
2006
2005
2004
(Millions of dollars)
$
4
$
50
$
93
(314
)
(162
)
19
(14
)
(23
)
116
(278
)
(185
)
1,836
1,047
801
143
220
(28
)
1,979
1,267
773
29
(5
)
$
2,124
$
984
$
588
*
See note 2 for items
affecting comparability of income taxes between years.
67
Table of Contents
2006
2005
2004
(Millions of dollars)
$
398
$
(941
)
$
(411
)
3,642
3,167
1,969
$
4,040
$
2,226
$
1,558
(a)
Includes substantially all of
the Corporations interest expense and the results of
hedging activities.
(b)
Foreign income includes the
Corporations Virgin Islands and other operations located
outside of the United States.
2006
2005
(Millions of dollars)
$
2,473
$
1,657
347
324
179
97
2,999
2,078
1,470
1,578
372
314
316
189
182
197
260
140
2,600
2,418
(164
)
(76
)
2,436
2,342
$
(563
)
$
264
2006
2005
(Millions of dollars)
$
152
$
121
1,435
1,544
(51
)
(2,099
)
(1,401
)
$
(563
)
$
264
68
Table of Contents
2006
2005
2004
35.0
%
35.0
%
35.0
%
17.5
7.5
5.0
0.3
(0.4
)
(0.9
)
3.3
(0.2
)
(1.2
)
(1.3
)
52.6
%
44.2
%
37.8
%
69
Table of Contents
13.
Stockholders
Equity and Net Income Per Share
2006
2005
2004
(Thousands of shares)
278,100
272,700
268,355
31,656
34,247
34,976
3,135
2,507
1,110
2,776
2,651
1,817
315,667
312,105
306,258
*
Weighted average number of
shares in all periods reflect the impact of a
3-for-1
stock split on May 31, 2006.
2006
2005
2004
$
6.73
$
4.38
$
3.43
.03
$
6.73
$
4.38
$
3.46
$
6.07
$
3.98
$
3.17
.02
$
6.07
$
3.98
$
3.19
*
Per share amounts in all periods
reflect the impact of a
3-for-1
stock split on May 31, 2006.
70
Table of Contents
14.
Leased
Assets
(Millions of dollars)
$
630
343
224
105
93
1,076
2,471
88
$
2,383
2006
2005
2004
(Millions of dollars)
$
198
$
201
$
238
15
14
58
$
183
$
187
$
180
15.
Financial
Instruments, Non-trading and Trading Activities
71
Table of Contents
Brent Crude Oil
Average
Thousands of
Selling Price
Barrels per Day
$
25.85
24
25.56
24
25.54
24
25.78
24
26.37
24
26.90
24
72
Table of Contents
2006
2005
(Millions of dollars, asset (liability))
$
632
$
199
(273
)
(115
)
252
963
(265
)
(265
)
620
763
(2,711
)
(2,512
)
16.
Guarantees
and Contingencies
73
Table of Contents
17.
Segment
Information
74
Table of Contents
Exploration
Marketing
Corporate
and Production
and Refining
and Interest
Consolidated(a)
(Millions of dollars)
$
6,860
$
21,480
$
2
275
$
6,585
$
21,480
$
2
$
28,067
$
1,763
$
390
$
(237
)
$
1,916
$
$
203
$
$
203
201
201
1,159
61
4
1,224
2,019
224
(119
)
2,124
57
1,143
1,200
14,397
6,190
1,817
22,404
9,397
2,919
(433
)
11,883
3,675
158
11
3,844
$
4,428
$
18,673
$
2
356
$
4,072
$
18,673
$
2
$
22,747
$
1,058
$
515
$
(331
)
$
1,242
$
$
376
$
$
376
224
224
965
58
2
1,025
737
298
(51
)
984
43
1,346
1,389
10,961
6,337
1,817
19,115
7,832
3,074
(835
)
10,071
2,235
101
5
2,341
75
Table of Contents
Exploration
Marketing
Corporate
and Production
and Refining
and Interest
Consolidated(a)
(Millions of dollars)
$
3,586
$
13,448
$
1
302
$
3,284
$
13,448
$
1
$
16,733
$
755
$
451
$
(236
)
$
970
7
7
$
762
$
451
$
(236
)
$
977
$
$
244
$
$
244
241
241
918
50
2
970
571
158
(141
)
588
28
1,226
1,254
10,407
4,850
1,055
16,312
7,603
2,519
(690
)
9,432
1,434
85
2
1,521
(a)
After elimination of transactions between affiliates, which
are valued at approximate market prices.
(b)
Sales and operating revenues are reported net of excise and
similar taxes in the consolidated statement of income, which
amounted to approximately $1,800 million in each year.
(c)
Calculated as equity plus debt.
Asia and
United States
Europe
Africa
Other
Consolidated
(Millions of dollars)
$
22,599
$
3,108
$
1,677
$
683
$
28,067
2,402
3,255
4,495
2,156
12,308
$
19,496
$
2,016
$
827
$
408
$
22,747
1,836
3,080
2,791
1,805
9,512
$
14,254
$
1,705
$
548
$
226
$
16,733
1,880
2,591
2,293
1,741
8,505
76
Table of Contents
18.
Related
Party Transactions
2006
2005
(Millions of dollars)
$
4,694
$
3,991
1,664
1,244
179
98
*
The Corporation has agreed to purchase 50% of HOVENSAs
production of refined products at market prices, after sales by
HOVENSA to unaffiliated parties.
19.
Subsequent
Events
77
Table of Contents
United
Asia and
Total
States
Europe
Africa
Other
(Millions of dollars)
$
607
$
86
$
32
$
483
$
6
314
8
306
802
544
92
57
109
2,462
329
644
1,080
409
$
193
$
14
$
173
$
6
$
215
215
378
197
60
43
78
1,668
162
522
857
127
$
62
$
62
$
$
$
297
194
22
35
46
1,255
200
459
506
90
*
Includes $298 million,
$70 million and $51 million in 2006, 2005 and 2004,
respectively, related to the accruals for asset retirement
obligations.
At December 31
2006
2005
(Millions of dollars)
$
1,231
$
629
3,298
3,490
15,670
13,717
20,199
17,836
8,910
9,243
$
11,289
$
8,593
78
Table of Contents
United
Asia and
Total
States
Europe
Africa
Other
(Millions of dollars)
$
6,249
$
957
$
3,052
$
1,637
$
603
275
275
6,524
1,232
3,052
1,637
603
1,250
221
631
284
114
552
353
39
117
43
209
95
74
15
25
1,159
127
490
401
141
3,170
796
1,234
817
323
3,354
436
1,818
820
280
1,870
161
1,009
609
91
$
1,484
$
275
$
809
$
211
$
189
$
3,854
$
741
$
2,004
$
769
$
340
356
356
4,210
1,097
2,004
769
340
1,007
253
478
198
78
397
233
26
97
41
140
74
39
11
16
965
145
408
301
111
2,509
705
951
607
246
1,701
392
1,053
162
94
709
141
500
29
39
$
992
$
251
$
553
$
133
$
55
79
Table of Contents
United
Asia and
Total
States
Europe
Africa
Other
(Millions of dollars)
$
3,114
$
607
$
1,753
$
568
$
186
302
302
3,416
909
1,753
568
186
825
198
415
171
41
287
135
28
78
46
150
57
31
25
37
918
147
497
215
59
2,180
537
971
489
183
1,236
372
782
79
3
543
132
381
36
(6
)
693
240
401
43
9
7
7
$
700
$
240
$
401
$
43
$
16
*
Includes $40 million of
Gulf of Mexico hurricane related costs.
**
Includes accrued severance and
costs for vacated office space of approximately $30 million
and $15 million in 2006 and 2004, respectively.
Table of Contents
Crude Oil, Condensate and Natural Gas Liquids
Natural Gas
Africa,
United
Asia and
United
Asia and
States
Europe
Africa
Other
Total
States
Europe
Other
Total
(Millions of barrels)
(Millions of mcf)
127
305
135
79
646
360
800
1,172
2,332
15
20
8
(14
)
29
(1
)
75
(76
)
(2
)
3
3
53
3
62
13
2
287
302
1
1
(1
)
(1
)
(6
)
(6
)
(20
)
(46
)
(22
)
(2
)
(90
)
(67
)
(126
)
(34
)
(227
)
124
282
174
66
646
(c)
300
(d)
751
1,349
2,400
16
23
4
(10
)
33
21
70
(99
)
(8
)
3
2
11
2
18
13
2
190
205
1
1
87
87
1
22
23
(4
)
(4
)
(20
)
(42
)
(24
)
(3
)
(89
)
(53
)
(108
)
(53
)
(214
)
124
348
165
55
692
(c)
282
(d)
715
1,409
2,406
7
21
39
(3
)
64
2
63
45
110
45
11
6
2
64
32
11
168
211
4
4
2
121
123
15
15
(21
)
(21
)
(37
)
(37
)
(17
)
(42
)
(31
)
(4
)
(94
)
(43
)
(112
)
(84
)
(239
)
138
340
304
50
832
(c)
236
(d)
677
1,553
2,466
105
249
95
16
465
297
518
633
1,448
110
234
80
12
436
260
528
471
1,259
108
233
67
13
421
251
559
496
1,306
90
223
194
19
526
195
517
585
1,297
(a)
Includes the impact of changes
in selling prices on production sharing contracts with cost
recovery provisions and stipulated rates of return. In 2006 this
amount was immaterial for both oil and natural gas. In 2005 and
2004, revisions included reductions of approximately
23 million barrels of crude oil in each year and
63 million and 52 million mcf of natural gas,
respectively, relating to higher selling prices.
(b)
Includes 26% of crude oil
reserves and 56% of natural gas reserves held under production
sharing contracts. These reserves are located outside of the
United States and are subject to different political and
economic risks.
(c)
Includes 23 million barrels
in 2006 and 2005, and 3 million barrels in 2004 of crude
oil reserves relating to minority interest owners of corporate
joint ventures.
(d)
Excludes approximately
400 million mcf of carbon dioxide gas for sale or use in
company operations.
81
Table of Contents
United
Asia and
Total
States
Europe
Africa
Other
(Millions of dollars)
$
55,252
$
8,686
$
19,751
$
18,480
$
8,335
20,355
2,098
9,398
5,629
3,230
16,765
2,331
5,625
7,908
901
37,120
4,429
15,023
13,537
4,131
18,132
4,257
4,728
4,943
4,204
5,771
1,423
1,358
1,322
1,668
$
12,361
$
2,834
$
3,370
$
3,621
$
2,536
$
50,273
$
9,449
$
23,534
$
8,827
$
8,463
14,822
1,622
6,976
3,391
2,833
13,666
2,764
8,703
1,037
1,162
28,488
4,386
15,679
4,428
3,995
21,785
5,063
7,855
4,399
4,468
7,296
1,892
2,448
1,168
1,788
$
14,489
$
3,171
$
5,407
$
3,231
$
2,680
$
34,425
$
6,542
$
14,743
$
6,161
$
6,979
11,989
1,623
5,007
2,939
2,420
8,168
1,641
5,190
485
852
20,157
3,264
10,197
3,424
3,272
14,268
3,278
4,546
2,737
3,707
5,091
1,138
1,450
887
1,616
$
9,177
$
2,140
$
3,096
$
1,850
$
2,091
82
Table of Contents
2006
2005
2004
(Millions of dollars)
$
14,489
$
9,177
$
7,017
(5,274
)
(3,203
)
(2,591
)
2,164
1,598
1,204
(4,329
)
9,334
3,683
(2,402
)
(1,725
)
(1,564
)
1,937
865
997
1,235
1,499
578
2,937
393
(29
)
2,308
1,424
1,057
(1,381
)
(3,533
)
(1,463
)
677
(1,340
)
288
(2,128
)
5,312
2,160
$
12,361
$
14,489
$
9,177
83
Table of Contents
(Unaudited)
Sales and
Other
Diluted Net
Operating
Gross
Net
Income
Revenues
Profit(a)
Income
per Share*
(Million of dollars, except per share data)
$
7,159
$
1,138
$
695
(b)
$
2.21
6,718
1,152
565
(c)
1.79
7,035
1,225
297
(d)
.94
7,155
1,096
359
1.13
$
4,956
$
621
$
219
(e)
$
.71
4,963
596
299
(f)
.96
5,769
604
272
(g)
.87
7,059
875
452
(h)
1.44
*
Per-share amounts in all periods
reflect the impact of a
3-for-1
stock split on May 31, 2006.
(a)
Gross profit represents sales
and other operating revenues, less cost of products sold,
production expenses, marketing expenses, other operating
expenses and depreciation, depletion and amortization.
(b)
Includes after-tax income of
$186 million from asset sales in the United
States.
(c)
Includes net after-tax income of
$32 million from asset sales, partially offset by accrued
office closing costs.
(d)
Includes an after-tax expense of
$105 million for income tax adjustments in the United
Kingdom.
(e)
Includes net after-tax expenses
of $12 million related to tax on repatriated earnings, partially
offset by income related to an asset exchange, a favorable legal
settlement and liquidation of prior year LIFO
inventories.
(f)
Includes net after-tax income of
$4 million resulting from a favorable foreign tax rate
change, partially offset by premiums on repurchased
bonds.
(g)
Includes after-tax expenses of
$45 million due to hurricane related expenses and tax on
repatriated earnings.
(h)
Includes net after-tax income of
$16 million related to asset sales and liquidation of prior
year LIFO inventories, partially offset by hurricane related
expenses, premiums on bond repurchases and a charge related to a
customer bankruptcy.
84
Table of Contents
Item 9.
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 9A.
Controls
and Procedures
Item 9B.
Other
Information
Item 10.
Directors,
Executive Officers and Corporate Governance of the
Registrant
Item 11.
Executive
Compensation
Item 12.
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
Item 13.
Certain
Relationships and Related Transactions, and Director
Independence
85
Table of Contents
Item 14.
Principal
Accounting Fees and Services
Item 15.
Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K
(a)
1. and 2.
Financial statements and financial statement schedules
3.
Exhibits
3(1)
Restated Certificate of
Incorporation of Registrant, including amendment thereto dated
May 3, 2006 incorporated by reference to Exhibit(3) of
Registrants
Form 10-Q
for the three months ended June 30, 2006.
3(2)
By-Laws of Registrant incorporated
by reference to Exhibit 3 of
Form 10-Q
of Registrant for the three months ended June 30, 2002.
4(1)
Certificate of designations,
preferences and rights of 3% cumulative convertible preferred
stock of Registrant incorporated by reference to Exhibit 4
of
Form 10-Q
of Registrant for the three months ended June 30, 2000.
4(2)
Five-Year Credit Agreement dated
as of December 10, 2004, as amended and restated as of
May 12, 2006, among Registrant, certain subsidiaries of
Registrant, J.P. Morgan Chase Bank, N.A. as lender and
administrative agent, and the other lenders party thereto,
incorporated by reference to Exhibit(4) of
Form 10-Q
of Registrant for the three months ended June 30, 2006.
4(3)
Indenture dated as of
October 1, 1999 between Registrant and The Chase Manhattan
Bank, as Trustee, incorporated by reference to Exhibit 4(1)
of
Form 10-Q
of Registrant for the three months ended September 30, 1999.
4(4)
First Supplemental Indenture dated
as of October 1, 1999 between Registrant and The Chase
Manhattan Bank, as Trustee, relating to Registrants
7
3
/
8
% Notes
due 2009 and
7
7
/
8
% Notes
due 2029, incorporated by reference to Exhibit 4(2) to
Form 10-Q
of Registrant for the three months ended September 30, 1999.
4(5)
Prospectus Supplement dated
August 8, 2001 to Prospectus dated July 27, 2001
relating to Registrants 5.30% Notes due 2004,
5.90% Notes due 2006, 6.65% Notes due 2011 and
7.30% Notes due 2031, incorporated by reference to
Registrants prospectus filed pursuant to
Rule 424(b)(2) under the Securities Act of 1933 on
August 9, 2001.
4(6)
Prospectus Supplement dated
February 28, 2002 to Prospectus dated July 27, 2001
relating to Registrants 7.125% Notes due 2033,
incorporated by reference to Registrants prospectus filed
pursuant to Rule 424(b)(2) under the Securities Act of 1933
on February 28, 2002.
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.
86
Table of Contents
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)
Third Extension and Amendment
Agreement dated April 15, 1998 and effective
October 30, 1998 among Hess Oil Virgin Islands Corp., PDVSA
V.I., Inc., HOVENSA L.L.C. and the Government of the Virgin
Islands incorporated by reference to Exhibit 10(4) of
Form 10-K
of Registrant for the fiscal year ended December 31, 1998.
10(5)
*
Incentive Cash Bonus Plan
description incorporated by reference to Item 1.01 of
Form 8-K
of Registrant dated February 7, 2007.
10(6)
*
Financial Counseling Program
description incorporated by reference to Exhibit 10(6) of
Form 10-K
of Registrant for fiscal year ended December 31, 2004.
10(7)
*
Hess Corporation Savings and Stock
Bonus Plan.
10(8)
*
Performance Incentive Plan for
Senior Officers, incorporated by reference to
Exhibit (10) of
Form 10-Q
of Registrant for the three months ended June 30, 2006.
10(9)
*
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(10)
*
Amendment dated December 31,
2006 to Hess Corporation Pension Restoration Plan.
10(11)
*
Letter Agreement dated
May 17, 2001 between Registrant and John P. Rielly relating
to Mr. Riellys participation in the Hess Corporation
Pension Restoration Plan, incorporated by reference to
Exhibit 10(18) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2002.
10(12)
*
Second Amended and Restated 1995
Long-Term Incentive Plan, including forms of awards thereunder
incorporated by reference to Exhibit 10(11) of
Form 10-K
of Registrant for fiscal year ended December 31, 2004.
10(13)
*
Compensation program description
for non-employee directors, incorporated by reference to
Item 1.01 of
Form 8-K
of Registrant dated January 1, 2007.
10(14)
*
Change of Control Termination
Benefits Agreement dated as of September 1, 1999 between
Registrant and John B. Hess, incorporated by reference to
Exhibit 10(1) of
Form 10-Q
of Registrant for the three months ended September 30,
1999. Substantially identical agreements (differing only in the
signatories thereto) were entered into between Registrant and J.
Barclay Collins, John J. OConnor and F. Borden Walker.
10(15)
*
Change of Control Termination
Benefits Agreement dated as of September 1, 1999 between
Registrant and John A. Gartman incorporated by reference to
Exhibit 10(14) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2001.
Substantially identical agreements (differing only in the
signatories thereto) were entered into between Registrant and
other executive officers (other than the named executive
officers referred to in Exhibit 10(15)).
10(16)
*
Letter Agreement dated
March 18, 2002 between Registrant and John J. OConnor
relating to Mr. OConnors participation in the
Hess Corporation Pension Restoration Plan incorporated by
reference to Exhibit 10(15) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2001.
10(17)
*
Letter Agreement dated
March 18, 2002 between Registrant and F. Borden Walker
relating to Mr. Walkers participation in the Hess
Corporation Pension Restoration Plan incorporated by reference
to Exhibit 10(16) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2001.
10(18)
*
Deferred Compensation Plan of
Registrant dated December 1, 1999 incorporated by reference
to Exhibit 10(16) of
Form 10-K
of Registrant for the fiscal year ended December 31, 1999.
10(19)
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) incorporated by reference to
Exhibit 2.1 of
Form 8-K
of Registrant dated October 30, 1998.
10(20)
Amended and Restated Limited
Liability Company Agreement of HOVENSA L.L.C. dated as of
October 30, 1998 incorporated by reference to
Exhibit 10.1 of
Form 8-K
of Registrant dated October 30, 1998.
21
Subsidiaries of Registrant.
Table of Contents
23
Consent of Ernst & Young
LLP, Independent Registered Public Accounting Firm, dated
February 23, 2007, to the incorporation by reference in
Registrants Registration Statements
(Form S-8
Nos. 333-115844,
333-94851
and
333-43569,
and
Form S-3
Nos.
333-110294
and
333-132145),
of its reports relating to Registrants financial
statements, which consent appears on
page F-1
herein.
31(1)
Certification required by
Rule 13a-14(a)
(17 CFR
240.13a-14(a))
or
Rule 15d-14(a)
(17 CFR 240.15d-14(a)).
31(2)
Certification required by
Rule 13a-14(a)
(17 CFR
240.13a-14(a))
or
Rule 15d-14(a)
(17 CFR
240.15d-14(a)).
32(1)
Certification required by
Rule 13a-14(b)
(17 CFR
240.13a-14(b))
or
Rule 15d-14(b)
(17 CFR
240.15d-14(b))
and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350).
32(2)
Certification required by
Rule 13a-14(b)
(17 CFR
240.13a-14(b))
or
Rule 15d-14(b)
(17 CFR
240.15d-14(b))
and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350).
*
These exhibits relate to
executive compensation plans and arrangements.
(b)
Reports
on
Form 8-K
Table of Contents
By
Director, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Senior Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
Director
February 28, 2007
89
Table of Contents
90
Table of Contents
Additions
Charged
to Costs
Charged
Deductions
Balance
and
to Other
from
Balance
January 1
Expenses
Accounts
Reserves
December 31
(In millions)
$
30
$
14
$
$
5
$
39
$
76
$
24
$
66
$
2
$
164
$
17
$
16
$
2
$
5
$
30
$
77
$
10
$
2
$
13
$
76
$
18
$
2
$
2
$
5
$
17
$
126
$
9
$
13
$
71
$
77
91
Table of Contents
3(1)
Restated Certificate of
Incorporation of Registrant, including amendment thereto dated
May 3, 2006 incorporated by reference to Exhibit(3) of
Registrants
Form 10-Q
for the three months ended June 30, 2006.
3(2)
By-Laws of Registrant incorporated
by reference to Exhibit 3 of
Form 10-Q
of Registrant for the three months ended June 30, 2002.
4(1)
Certificate of designations,
preferences and rights of 3% cumulative convertible preferred
stock of Registrant incorporated by reference to Exhibit 4
of
Form 10-Q
of Registrant for the three months ended June 30, 2000.
4(2)
Five-Year Credit Agreement dated
as of December 10, 2004, as amended and restated as of
May 12, 2006, among Registrant, certain subsidiaries of
Registrant, J.P. Morgan Chase Bank, N.A. as lender and
administrative agent, and the other lenders party thereto,
incorporated by reference to Exhibit(4) of
Form 10-Q
of Registrant for the three months ended June 30, 2006.
4(3)
Indenture dated as of
October 1, 1999 between Registrant and The Chase Manhattan
Bank, as Trustee, incorporated by reference to Exhibit 4(1)
of
Form 10-Q
of Registrant for the three months ended September 30, 1999.
4(4)
First Supplemental Indenture dated
as of October 1, 1999 between Registrant and The Chase
Manhattan Bank, as Trustee, relating to Registrants
7
3
/
8
% Notes
due 2009 and
7
7
/
8
% Notes
due 2029, incorporated by reference to Exhibit 4(2) to
Form 10-Q
of Registrant for the three months ended September 30, 1999.
4(5)
Prospectus Supplement dated
August 8, 2001 to Prospectus dated July 27, 2001
relating to Registrants 5.30% Notes due 2004,
5.90% Notes due 2006, 6.65% Notes due 2011 and
7.30% Notes due 2031, incorporated by reference to
Registrants prospectus filed pursuant to
Rule 424(b)(2) under the Securities Act of 1933 on
August 9, 2001.
4(6)
Prospectus Supplement dated
February 28, 2002 to Prospectus dated July 27, 2001
relating to Registrants 7.125% Notes due 2033,
incorporated by reference to Registrants prospectus filed
pursuant to Rule 424(b)(2) under the Securities Act of 1933
on February 28, 2002.
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)
Third Extension and Amendment
Agreement dated April 15, 1998 and effective
October 30, 1998 among Hess Oil Virgin Islands Corp., PDVSA
V.I., Inc., HOVENSA L.L.C. and the Government of the Virgin
Islands incorporated by reference to Exhibit 10(4) of
Form 10-K
of Registrant for the fiscal year ended December 31, 1998.
10(5)
*
Incentive Cash Bonus Plan
description incorporated by reference to Item 1.01 of
Form 8-K
of Registrant dated February 7, 2007.
10(6)
*
Financial Counseling Program
description incorporated by reference to Exhibit 10(6) of
Form 10-K
of Registrant for fiscal year ended December 31, 2004.
10(7)
*
Hess Corporation Savings and Stock
Bonus Plan.
10(8)
*
Performance Incentive Plan for
Senior Officers, incorporated by reference to
Exhibit (10) of
Form 10-Q
of Registrant for the three months ended June 30, 2006.
10(9)
*
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.
Table of Contents
10(10)
*
Amendment dated December 31,
2006 to Hess Corporation Pension Restoration Plan.
10(11)
*
Letter Agreement dated
May 17, 2001 between Registrant and John P. Rielly relating
to Mr. Riellys participation in the Hess Corporation
Pension Restoration Plan, incorporated by reference to
Exhibit 10(18) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2002.
10(12)
*
Second Amended and Restated 1995
Long-Term Incentive Plan, including forms of awards thereunder
incorporated by reference to Exhibit 10(11) of
Form 10-K
of Registrant for fiscal year ended December 31, 2004.
10(13)
*
Compensation program description
for non-employee directors, incorporated by reference to
Item 1.01 of
Form 8-K
of Registrant dated January 1, 2007.
10(14)
*
Change of Control Termination
Benefits Agreement dated as of September 1, 1999 between
Registrant and John B. Hess, incorporated by reference to
Exhibit 10(1) of
Form 10-Q
of Registrant for the three months ended September 30,
1999. Substantially identical agreements (differing only in the
signatories thereto) were entered into between Registrant and J.
Barclay Collins, John J. OConnor and F. Borden Walker.
10(15)
*
Change of Control Termination
Benefits Agreement dated as of September 1, 1999 between
Registrant and John A. Gartman incorporated by reference to
Exhibit 10(14) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2001.
Substantially identical agreements (differing only in the
signatories thereto) were entered into between Registrant and
other executive officers (other than the named executive
officers referred to in Exhibit 10(15)).
10(16)
*
Letter Agreement dated
March 18, 2002 between Registrant and John J. OConnor
relating to Mr. OConnors participation in the
Hess Corporation Pension Restoration Plan incorporated by
reference to Exhibit 10(15) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2001.
10(17)
*
Letter Agreement dated
March 18, 2002 between Registrant and F. Borden Walker
relating to Mr. Walkers participation in the Hess
Corporation Pension Restoration Plan incorporated by reference
to Exhibit 10(16) of
Form 10-K
of Registrant for the fiscal year ended December 31, 2001.
10(18)
*
Deferred Compensation Plan of
Registrant dated December 1, 1999 incorporated by reference
to Exhibit 10(16) of
Form 10-K
of Registrant for the fiscal year ended December 31, 1999.
10(19)
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) incorporated by reference to
Exhibit 2.1 of
Form 8-K
of Registrant dated October 30, 1998.
10(20)
Amended and Restated Limited
Liability Company Agreement of HOVENSA L.L.C. dated as of
October 30, 1998 incorporated by reference to
Exhibit 10.1 of
Form 8-K
of Registrant dated October 30, 1998.
21
Subsidiaries of Registrant.
23
Consent of Ernst & Young
LLP, Independent Registered Public Accounting Firm, dated
February 23, 2007, to the incorporation by reference in
Registrants Registration Statements
(Form S-8
Nos.
333-115844,
333-94851
and
333-43569,
and
Form S-3
Nos.
333-110294
and
333-132145),
of its reports relating to Registrants financial
statements, which consent appears on
page F-1
herein.
31(1)
Certification required by
Rule 13a-14(a)
(17 CFR
240.13a-14(a))
or
Rule 15d-14(a)
(17 CFR
240.15d-14(a)).
31(2)
Certification required by
Rule 13a-14(a)
(17 CFR
240.13a-14(a))
or
Rule 15d-14(a)
(17 CFR
240.15d-14(a)).
32(1)
Certification required by
Rule 13a-14(b)
(17 CFR
240.13a-14(b))
or
Rule 15d-14(b)
(17 CFR
240.15d-14(b))
and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350).
32(2)
Certification required by
Rule 13a-14(b)
(17 CFR
240.13a-14(b))
or
Rule 15d-14(b)
(17 CFR
240.15d-14(b))
and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350).
*
These exhibits relate to
executive compensation plans and arrangements.
By:
/s/ Brian J. Bohling
|
||
Brian
J. Bohling
|
1
ARTICLE | TITLE | PAGE | ||||||
1 |
Definitions
|
1 | ||||||
2 |
Eligibility and Membership
|
15 | ||||||
3 |
Member Contributions
|
21 | ||||||
4 |
Company Contributions
|
22 | ||||||
5 |
Investment of Contributions
|
26 | ||||||
6 |
Members Investment Directions
|
29 | ||||||
7 |
Vesting of Company Contributions
|
31 | ||||||
8 |
In-Service Withdrawals and Loans
|
32 | ||||||
9 |
Termination of Employment and Termination of Membership
|
38 | ||||||
10 |
Forfeitures
|
41 | ||||||
11 |
Administration of the Plan
|
43 | ||||||
12 |
Amendment of the Plan
|
52 | ||||||
13 |
Termination of Participation by a Company and Termination of the Plan
|
53 | ||||||
14 |
Adoption of the Plan by Participating Companies
|
56 | ||||||
15 |
Plan Investments
|
57 | ||||||
16 |
General Provisions Governing Payment of Benefits
|
60 | ||||||
17 |
Miscellaneous Provisions
|
68 | ||||||
18 |
Top-Heavy Provisions
|
71 | ||||||
19 |
Cash or Deferred Arrangement
|
76 | ||||||
20 |
Rollover Amounts from Other Plans
|
80 | ||||||
21 |
Pick Kwik Plan Accounts
|
81 | ||||||
22 |
Coordination With Retail Operations Plan
|
87 | ||||||
23 |
Coordination With HOVENSA Plan
|
89 | ||||||
24 |
Merit Plan Accounts
|
91 | ||||||
25 |
Triton Plan Accounts
|
96 | ||||||
26 |
Minimum Distribution Requirements
|
98 | ||||||
27 |
Amendment of the Plan for EGTRRA
|
103 |
1
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96
Contribution type and | Corresponding | |
earnings thereof under | contribution type under | |
Triton Plan | Plan | |
Employee Contributions
|
Elective Deferrals | |
|
||
Triton Matching
|
Matching Contributions | |
Contributions
|
||
|
||
Rollover contributions
|
Rollover amounts | |
|
||
ESOP contributions
|
Matching Contributions |
97
98
99
100
101
102
103
104
105
HESS CORPORATION | ||||||
|
||||||
By: | /s/ Brian J. Bohling | |||||
|
Name: | Brian J. Bohling | ||||
|
Title: | S V P. Human Resources |
106
1
By: /s/
Brian J. Bohling
|
||
|
2
EXHIBIT 21
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
PAGE 1 OF 2
SUBSIDIARIES OF THE REGISTRANT
Organized under
Name of Subsidiary
the laws of
Hess Energy Exploration Limited
Delaware
Hess Limited
United Kingdom
Hess Norge A/S
Norway
Hess Oil Virgin Islands Corp.
U.S. Virgin Islands
Hess Receivables LLC
Delaware
Hess (GEA) Limited
Cayman Islands
Hess Energy Trading Company, LLC
Delaware
Hess Egypt West Mediterranean Limited
Cayman Islands
ZAO Samara - Nafta
Russian Federation
ZAO Volganeft
Russian Federation
Hess International Holdings Limited
Cayman Islands
Hess Denmark ApS
Denmark
Amerada Hess Production Gabon
Gabon
Hess Oil and Gas Holdings Inc.
Cayman Islands
Hess (Thailand) Limited
United Kingdom
Hess (ACG) Limited
Cayman Islands
Tioga Gas Plant, Inc.
Delaware
Other subsidiaries (names omitted because such unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary)
Each of the foregoing subsidiaries conducts business under the name listed, and is 100% owned by the Registrant, except for Hess Energy Trading Company, LLC, which is a trading company that is a joint venture between the Registrant and unrelated parties.
1
EXHIBIT 21
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
PAGE 2 OF 2
SUBSIDIARIES OF THE REGISTRANT
Name of Affiliate
Organized under
the laws of
HOVENSA L.L.C. (50% owned)
U.S. Virgin Islands
Summarized Financial Information of HOVENSA L.L.C. is included in the Registrants 2006 Annual Report to Stockholders.
2
By |
/s/ John
B. Hess
|
By |
/s/ John
P. Rielly
|
By |
/s/ John
B. Hess
|
By |
/s/ John
P. Rielly
|