HESS CORP (Form: 10-Q, Received: 05/07/2015 17:14:07)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2015

¨	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

HESS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE

(State or Other Jurisdiction of Incorporation or Organization)

13-4921002

(I.R.S. Employer Identification Number)

1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y.

(Address of Principal Executive Offices)

10036

(Zip Code)

(Registrant’s Telephone Number, Including Area Code is (212) 997-8500)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 ( d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	¨	Non-Accelerated Filer	¨	Smaller Reporting Company	¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At March 31, 2015, there were 287,382,013 shares of Common Stock outstanding.

HESS CORPORATION

Form 10-Q

TABLE OF CONTENTS

Item No.		Page Number
	PART I FINANCIAL INFORMATION
1.	Financial Statements (Unaudited)
	Consolidated Balance Sheet at March 31, 2015 and December 31, 2014	2
	Statement of Consolidated Income for the three months ended March 31, 2015 and 2014	3
	Statement of Consolidated Comprehensive Income for the three months ended March 31, 2015 and 2014	4
	Statement of Consolidated Cash Flows for the three months ended March 31, 2015 and 2014	5
	Statement of Consolidated Equity for the periods ended March 31, 2015 and 2014	6
	Notes to Consolidated Financial Statements	7
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
3.	Quantitative and Qualitative Disclosures about Market Risk	27
4.	Controls and Procedures	27
	PART II OTHER INFORMATION
1.	Legal Proceedings	28
2.	Share Repurchase Activities	28
6.	Exhibits and Reports on Form 8-K	29
	Signatures	30
	Certifications

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements.

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)

	March 31,			December 31,
	2015			2014
	(In millions,
	except share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,506		$	2,444
Accounts receivable
Trade		1,405			1,642
Other		306			431
Inventories		546			527
Other current assets		560			1,643
Total current assets		4,323			6,687
PROPERTY, PLANT AND EQUIPMENT
Total — at cost		46,958			46,522
Less: Reserves for depreciation, depletion, amortization and lease impairment		19,750			19,005
Property, plant and equipment — net		27,208			27,517
GOODWILL		1,858			1,858
DEFERRED INCOME TAXES		2,356			2,169
OTHER ASSETS		356			347
TOTAL ASSETS	$	36,101		$	38,578
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	681		$	708
Accrued liabilities		2,427			3,781
Taxes payable		290			294
Short-term debt and current maturities of long-term debt		69			68
Total current liabilities		3,467			4,851
LONG-TERM DEBT		5,911			5,919
DEFERRED INCOME TAXES		1,794			2,009
ASSET RETIREMENT OBLIGATIONS		2,086			2,281
OTHER LIABILITIES AND DEFERRED CREDITS		1,176			1,198
Total liabilities		14,434			16,258
EQUITY
Hess Corporation stockholders’ equity
Common stock, par value $1.00
Authorized — 600,000,000 shares
Issued — 287,382,013 shares at March 31, 2015; 285,834,964 shares at December 31, 2014		287			286
Capital in excess of par value		3,306			3,277
Retained earnings		19,578			20,052
Accumulated other comprehensive income (loss)		(1,504	)		(1,410	)
Total Hess Corporation stockholders’ equity		21,667			22,205
Noncontrolling interests		—			115
Total equity		21,667			22,320
TOTAL LIABILITIES AND EQUITY	$	36,101		$	38,578

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)

	Three Months Ended
	March 31,
	2015			2014
	(In millions,
	except per share amounts)
REVENUES AND NON-OPERATING INCOME
Sales (excluding excise taxes) and other operating revenues	$	1,538		$	2,673
Other, net		12			(81	)
Total revenues and non-operating income		1,550			2,592
COSTS AND EXPENSES
Cost of products sold (excluding items shown separately below)		306			393
Operating costs and expenses		478			466
Production and severance taxes		36			62
Exploration expenses, including dry holes and lease impairment		269			119
General and administrative expenses		147			142
Interest expense		85			81
Depreciation, depletion and amortization		956			726
Total costs and expenses		2,277			1,989
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(727	)		603
Provision (benefit) for income taxes		(351	)		239
INCOME (LOSS) FROM CONTINUING OPERATIONS		(376	)		364
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES		(13	)		57
NET INCOME (LOSS)		(389	)		421
Less: Net income (loss) attributable to noncontrolling interests		—			35
NET INCOME (LOSS) ATTRIBUTABLE TO HESS CORPORATION	$	(389	)	$	386
NET INCOME (LOSS) ATTRIBUTABLE TO HESS CORPORATION PER SHARE
BASIC:
Continuing operations	$	(1.32	)	$	1.14
Discontinued operations		(0.05	)		0.07
NET INCOME (LOSS) PER SHARE	$	(1.37	)	$	1.21
DILUTED:
Continuing operations	$	(1.32	)	$	1.13
Discontinued operations		(0.05	)		0.07
NET INCOME (LOSS) PER SHARE	$	(1.37	)	$	1.20
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (DILUTED)		283.5			322.6
COMMON STOCK DIVIDENDS PER SHARE	$	0.25		$	0.25

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended
	March 31,
	2015			2014
	(In millions)

NET INCOME (LOSS)	$	(389	)	$	421

OTHER COMPREHENSIVE INCOME (LOSS):

Derivatives designated as cash flow hedges
Effect of hedge (gains) losses reclassified to income		—			(5	)
Income taxes on effect of hedge (gains) losses reclassified to income		—			2
Net effect of hedge (gains) losses reclassified to income		—			(3	)
Change in fair value of cash flow hedges		20			14
Income taxes on change in fair value of cash flow hedges		(7	)		(5	)
Net change in fair value of cash flow hedges		13			9
Change in derivatives designated as cash flow hedges, after taxes		13			6

Pension and other postretirement plans
Amortization of net actuarial losses		19			8
Income taxes on amortization of net actuarial losses		(6	)		(3	)
Net effect of amortization of net actuarial losses		13			5
Change in pension and other postretirement plans, after taxes		13			5

Foreign currency translation adjustment
Foreign currency translation adjustment		(120	)		51
Change in foreign currency translation adjustment		(120	)		51

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		(94	)		62

COMPREHENSIVE INCOME (LOSS)		(483	)		483
Less: Comprehensive income (loss) attributable to noncontrolling interests		—			35
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HESS CORPORATION	$	(483	)	$	448

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(389	)	$	421
Adjustments to reconcile net income (loss) to net cash provided by operating activities
(Gains) losses on asset sales, net		—			(10	)
Depreciation, depletion and amortization		956			726
Loss from equity affiliates		—			93
Exploratory dry hole costs		169			9
Exploration lease impairment		54			32
Stock compensation expense		26			22
Provision (benefit) for deferred income taxes		(347	)		112
(Income) loss from discontinued operations, net of income taxes		13			(57	)
Changes in operating assets and liabilities		(109	)		(231	)
Cash provided by (used in) operating activities - continuing operations		373			1,117
Cash provided by (used in) operating activities - discontinued operations		(11	)		41
Net cash provided by (used in) operating activities		362			1,158

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(1,237	)		(1,146	)
Proceeds from asset sales		—			1,237
Other, net		(10	)		(57	)
Cash provided by (used in) investing activities - continuing operations		(1,247	)		34
Cash provided by (used in) investing activities - discontinued operations		95			(296	)
Net cash provided by (used in) investing activities		(1,152	)		(262	)

CASH FLOWS FROM FINANCING ACTIVITIES
Debt with maturities of greater than 90 days
Repayments		(17	)		(333	)
Common stock acquired and retired		(67	)		(1,043	)
Cash dividends paid		(72	)		(79	)
Employee stock options exercised, including income tax benefits		8			33
Cash provided by (used in) financing activities - continuing operations		(148	)		(1,422	)
Cash provided by (used in) financing activities - discontinued operations		—			—
Net cash provided by (used in) financing activities		(148	)		(1,422	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(938	)		(526	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		2,444			1,814
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,506		$	1,288

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D.)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

STATEMENT OF CONSOLIDATED EQUITY (UNAUDITED)

										Accumulated
				Capital in						Other			Total Hess
	Common			Excess of			Retained			Comprehensive			Stockholders’			Noncontrolling			Total
	Stock			Par			Earnings			Income (Loss)			Equity			Interests			Equity
	(In millions)
BALANCE AT JANUARY 1, 2015	$	286		$	3,277		$	20,052		$	(1,410	)	$	22,205		$	115		$	22,320
Net income (loss)								(389	)					(389	)		—			(389	)
Other comprehensive income (loss)											(94	)		(94	)		—			(94	)
Comprehensive income (loss)														(483	)		—			(483	)
Activity related to restricted common stock awards, net		1			18			—			—			19			—			19
Employee stock options, including income tax benefits		—			9			—			—			9			—			9
Performance share units		—			5			—			—			5			—			5
Cash dividends declared		—			—			(72	)		—			(72	)		—			(72	)
Common stock acquired and retired		—			(3	)		(13	)		—			(16	)		—			(16	)
Noncontrolling interests, net		—			—			—			—			—			(115	)		(115	)
BALANCE AT MARCH 31, 2015	$	287		$	3,306		$	19,578		$	(1,504	)	$	21,667		$	—		$	21,667

BALANCE AT JANUARY 1, 2014	$	325		$	3,498		$	21,235		$	(338	)	$	24,720		$	64		$	24,784
Net income (loss)								386						386			35			421
Other comprehensive income (loss)											62			62			—			62
Comprehensive income (loss)														448			35			483
Activity related to restricted common stock awards, net		1			14			—			—			15			—			15
Employee stock options, including income tax benefits		1			34			—			—			35			—			35
Performance share units		—			3			—			—			3			—			3
Cash dividends declared		—			—			(79	)		—			(79	)		—			(79	)
Common stock acquired and retired		(13	)		(136	)		(849	)		—			(998	)		—			(998	)
Noncontrolling interests, net		—			—			—			—			—			(1	)		(1	)
BALANCE AT MARCH 31, 2014	$	314		$	3,413		$	20,693		$	(276	)	$	24,144		$	98		$	24,242

See accompanying Notes to Consolidated Financial Statements.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The financial statements included in this report reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the Corporation’s consolidated financial position at March 31, 2015 and December 31, 2014 and the consolidated results of operations and cash flows for the three months ended March 31, 2015 and 2014. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by U.S. generally accepted accounting principles (GAAP) have been condensed or omitted from these interim financial statements. These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014.

The statements of consolidated income and consolidated cash flows for the three months ended March 31, 2014, have been recast to reflect the Corporation’s retail business which was sold in September 2014, and its energy trading joint venture, HETCO, which was sold in February 2015, as discontinued operations. Certain other information in the financial statements and notes has been reclassified to conform to the current period presentation.

New Accounting Pronouncements: In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . The ASU amends the criteria for reporting discontinued operations to include only disposals representing a strategic shift in operations. The ASU also requires expanded disclosures regarding the assets, liabilities, income, and expenses of discontinued operations. This ASU became effective for the Corporation in the first quarter of 2015 and did not have a significant impact on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , as a new Accounting Standards Codification (ASC) Topic ASC 606. This ASU is effective for the Corporation beginning in the first quarter of 2018 , with early adoption permitted from the first quarter of 2017. The Corporation is currently assessing the impact of the ASU on its consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis , which makes changes to both the variable interest model and the voting model, affecting all reporting entities involved with limited partnerships or similar entities. This ASU is effective for the Corporation beginning in the first quarter of 2016 , with early adoption permitted . The Corporation is currently assessing the impact of the ASU on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This ASU is effective for the Corporation beginning in the first quarter of 2016 , with early adoption permitted . The Corporation is currently assessing the impact of the ASU on its consolidated financial statements.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. Discontinued Operations

The results of operations for the Corporation’s divested retail business and energy trading joint venture, HETCO, have been reported as discontinued operations in the Statement of Consolidated Income for all periods presented. The Corporation’s interest in HETCO was sold in February 2015 and the retail business was sold in September 2014.

Sales and other operating revenues and Income (loss) from discontinued operations were as follows:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Sales and other operating revenues	$	14		$	3,167
Income (loss) from discontinued operations before income taxes	$	(24	)	$	73
Current tax provision (benefit)		—			—
Deferred tax provision (benefit)		(11	)		16
Provision (benefit) for income taxes		(11	)		16
Income (loss) from discontinued operations, net of income taxes	$	(13	)	$	57
Less: Net income (loss) attributable to noncontrolling interests		—			35
Income (loss) from discontinued operations attributable to Hess Corporation	$	(13	)	$	22

At December 31, 2014, HETCO assets totaling $1,035 million, which consisted of accounts receivable and other long‑lived assets, were reported in Other current assets, and liabilities totaling $797 million, which consisted primarily of accounts payable, were reported in Accrued liabilities in the Consolidated Balance Sheet.

3. Inventories

Inventories consisted of the following:

	March 31,		December 31,
	2015		2014
	(In millions)
Crude oil and natural gas liquids	$	284	$	246
Materials and supplies		262		281
Total inventories	$	546	$	527

4. Capitalized Exploratory Well Costs

The following table discloses the net changes in capitalized exploratory well costs pending determination of proved reserves for the three months ended March 31, 2015 (in millions):

Balance at January 1	$	1,416
Additions to capitalized exploratory well costs pending the determination of proved reserves		160
Reclassifications to wells, facilities and equipment based on the determination of proved reserves		(70	)
Capitalized exploratory well costs charged to expense		(120	)
Balance at March 31, 2015	$	1,386

Capitalized exploratory well costs charged to expense in the preceding table excludes $49 million of exploratory well costs which were incurred and subsequently expensed in 2015. First quarter 2015 results included an after-tax charge of $67 million ($159 million pre-tax) to write-off a previously capitalized exploration well and related leasehold costs associated with the Dinarta Block in the Kurdistan Region of Iraq following the decision of the Corporation and its partner in March 2015 to cease further drilling activity in the region. Capitalized exploratory well costs greater than one year old after completion of drilling were $1,217 million at March 31, 2015. Approximately 70% of the capitalized well costs in excess of one year relates to Block WA-390-P, offshore Western Australia, where development planning and commercial activities for the Corporation’s natural gas discoveries are ongoing. In December 2014, the Corporation executed a non-binding letter of intent with the North West Shelf (NWS), a third party joint venture with existing natural gas processing and liquefaction

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

facilities. Successful execution of binding agreements with NWS is necessary before the Corporation can execute a gas sales agreement and sanction development of the project. Approximately 30% of the capitalized well costs in excess of one year relates to offshore Ghana where the Corporation has drilled seven successful exploration wells. Appraisal plans for the seven wells on the block were submitted to the Ghanaian government in June 2013 for approval. Four of the plans were approved and discussions continue with the government on the three remaining appraisal plans. In the third quarter of 2014, the Corporation completed a three well appraisal program in Ghana. Well results continue to be evaluated and development planning is progressing.

5. Debt

In January 2015, the Corporation entered into a new $4 billion syndicated revolving credit facility that expires in January 2020. The new facility, which replaced a $4 billion facility that was scheduled to expire in April 2016, can be used for borrowings and letters of credit. Based on the Corporation’s credit rating as of March 31, 2015, borrowings on the facility will generally bear interest at 1.075% above the London Interbank Offered Rate with the facility fee amounting to 0.175% per annum. The interest rate and facility fee are subject to adjustment if the Corporation's credit rating changes. The restrictions on the amount of total borrowings and secured debt are substantially similar to the previous facility. At March 31, 2015, there were no borrowings outstanding or letters of credit issued against the syndicated revolving credit facility.

6. Exit and Severance Costs

During the three months ended March 31, 2015 and 2014, the Corporation recorded exit related costs of $6 million and $20 million, respectively. In addition, the Corporation incurred severance totaling $33 million in the first quarter of 2014, primarily related to the Corporation’s divestiture program announced in March 2013. During the first quarter of 2015, payments for accrued severance costs amounted to $28 million.

7. Retirement Plans

Components of net periodic pension cost consisted of the following:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Service cost	$	17		$	12
Interest cost		26			25
Expected return on plan assets		(42	)		(40	)
Amortization of unrecognized net actuarial losses		19			8
Pension expense	$	20		$	5

In 2015, the Corporation expects to contribute approximately $55 million to its funded pension plans. Through March 31, 2015, the Corporation contributed approximately $13 million of this amount.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8. Weighted Average Common Shares

The net income (loss) and weighted average number of common shares used in the basic and diluted earnings per share computations were as follows:

	Three Months Ended
	March 31,
	2015			2014
	(In millions,
	except per share amounts)
Net income (loss) from continuing operations attributable to Hess Corporation	$	(376	)	$	364
Income (loss) from discontinued operations, net of income taxes		(13	)		57
Less: Net income (loss) attributable to noncontrolling interests		—			35
Net income (loss) from discontinued operations attributable to Hess Corporation		(13	)		22
Net income (loss) attributable to Hess Corporation	$	(389	)	$	386

Weighted average common shares outstanding:
Basic		283.5			318.1
Effect of dilutive securities
Restricted common stock		—			1.5
Stock options		—			1.8
Performance share units		—			1.2
Diluted		283.5			322.6

Net income (loss) attributable to Hess Corporation per share:
Basic:
Continuing operations	$	(1.32	)	$	1.14
Discontinued operations		(0.05	)		0.07
Net income (loss) per share	$	(1.37	)	$	1.21
Diluted:
Continuing operations	$	(1.32	)	$	1.13
Discontinued operations		(0.05	)		0.07
Net income (loss) per share	$	(1.37	)	$	1.20

The Corporation granted 1,118,043 shares of restricted stock, 362,873 performance share units (PSUs) and 521,773 stock options in the first quarter of 2015 and 1,016,801 shares of restricted stock, 292,662 PSUs and 162,911 stock options for the same period in 2014. For the three months ended March 31, 2015, the Corporation excluded 6,790,531 stock options, 2,876,887 restricted stock awards and 1,139,268 performance stock units from calculating diluted shares as those are anti-dilutive when using if converted method. The weighted average common shares used in the diluted earnings per share calculations for the three months ended March 31, 2014 exclude the effect of 3,371,122 stock options and 292,662 performance stock units, because their effect would be anti-dilutive.

The Corporation is permitted to repurchase up to $6.5 billion of outstanding common shares under a board authorized plan. As of March 31, 2015, the inception-to-date shares repurchased under the plan was 62.9 million shares at a cost of approximately $5.3 billion.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. Guarantees and Contingencies

The Corporation is subject to loss contingencies with respect to various claims, lawsuits and other proceedings. The Corporation cannot predict with certainty if, how or when such claims, lawsuits and proceedings will be resolved or what the eventual relief, if any, may be. Numerous issues may need to be resolved, including through lengthy discovery, conciliation and/or arbitration proceedings, or litigation before a loss or range of loss can be reasonably estimated. Subject to the foregoing, in management’s opinion, based upon currently known facts and circumstances, the outcome of such lawsuits, claims and proceedings is not expected to have a material adverse effect on the financial condition of the Corporation. However, the Corporation could incur judgments, enter into settlements or revise its opinion regarding the outcome of certain matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and its cash flows in the period in which the amounts are paid.

In July 2004, HOVENSA LLC (HOVENSA), a 50/50 joint venture between the Corporation’s subsidiary, Hess Oil Virgin Islands Corp. (HOVIC), and a subsidiary of Petroleos de Venezuela S.A. (PDVSA), and HOVIC each received a letter from the Commissioner of the Virgin Islands Department of Planning and Natural Resources and Natural Resources Trustees, advising of the Trustee’s intention to bring suit against HOVIC and HOVENSA under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The letter alleges that HOVIC and HOVENSA are potentially responsible for damages to natural resources arising from releases of hazardous substances from the HOVENSA refinery, which had been operated by HOVIC until October 1998. An action was filed on May 5, 2005 in the District Court of the Virgin Islands against HOVENSA, HOVIC and other companies that operated industrial facilities on the south shore of St. Croix asserting that the defendants are liable under CERCLA and territorial statutory and common law for damages to natural resources. In 2014 HOVIC, HOVENSA and the government of the U.S. Virgin Islands entered into a settlement agreement pursuant to which HOVENSA paid $3.5 million and agreed to pay the government of the U.S. Virgin Islands an additional $40 million no later than December 31, 2014. HOVENSA was unable to make this additional payment because the U.S. Virgin Islands legislature did not approve a proposed operating agreement required to complete a proposed sale of HOVENSA, which would have provided funds to make the settlement payment. Under the terms of the settlement agreement, the U.S. Virgin Islands government was granted a first lien on HOVENSA’s assets to secure the settlement payment, and in January 2015 the government commenced a foreclosure action to enforce this lien. HOVENSA intends to defend this action and is also actively pursuing a sale of its terminal assets to satisfy its obligations, including its obligations to the government; however, it is possible that any such sale may not be completed before HOVENSA exhausts its available funds to continue current activities and it may be required to commence bankruptcy proceedings. The Registrant does not believe the resolution of the foreclosure proceeding or a HOVENSA bankruptcy will have a material adverse effect on its financial condition.

In February 2015, the Pension Benefit Guaranty Corporation (PBGC) issued a notice of determination to terminate the HOVENSA pension plan. HOVENSA had been in negotiations with the PBGC to make additional contributions to the plan with proceeds from a proposed sale of HOVENSA, which was not completed for the reasons described above. The Registrant does not believe that the resolution of this matter will have a material adverse effect on its financial condition.

The Corporation is from time to time involved in other judicial and administrative proceedings, including proceedings relating to other environmental matters. The Corporation cannot predict with certainty if, how or when such proceedings will be resolved or what the eventual relief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters before a loss or range of loss can be reasonably estimated for any proceeding. Subject to the foregoing, in management’s opinion, based upon currently known facts and circumstances, the outcome of such proceedings is not expected to have a material adverse effect on the financial condition, results of operations or cash flows of the Corporation.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10. Segment Information

The Corporation has completed its transition to a pure play Exploration and Production (E&P) company. The results of operations for its retail, energy marketing, terminal and refining businesses as well as the energy trading joint venture, HETCO, have been classified as discontinued operations. The Corporation currently has one operating segment, E&P, and other unallocated costs reflected under Corporate, Interest and Other.

The Corporation’s results by segment were as follows:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Sales and other operating revenues:
Exploration and Production	$	1,538		$	2,673
Corporate, Interest and Other		—			—
Total	$	1,538		$	2,673

Net income (loss) attributable to Hess Corporation:
Exploration and Production	$	(286	)	$	508
Corporate, Interest and Other		(90	)		(144	)
Income (loss) from continuing operations		(376	)		364
Discontinued operations		(13	)		22
Total	$	(389	)	$	386

Identifiable assets by operating segment were as follows:

	March 31,		December 31,
	2015		2014
	(In millions)
Exploration and Production	$	35,981	$	36,512
Corporate, Interest and Other		21		908
Continuing operations		36,002		37,420
Discontinued operations		99		1,158
Total	$	36,101	$	38,578

11. Financial Risk Management

In the normal course of its business, the Corporation is exposed to commodity risks related to changes in the prices of crude oil and natural gas as well as changes in interest rates and foreign currency values. In the disclosures that follow, corporate risk management activities refer to the mitigation of these risks through hedging activities. The Corporation was also exposed to commodity price risks primarily related to crude oil, natural gas, refined petroleum products and electricity, as well as foreign currency values from a 50% voting interest in a consolidated energy trading joint venture up until the sale of the Corporation’s interest in the joint venture in February 2015.

Corporate Financial Risk Management Activities: Financial risk management activities include transactions designed to reduce risk in the selling prices of crude oil or natural gas produced by the Corporation or to reduce exposure to foreign currency or interest rate movements. Generally, futures, swaps or option strategies may be used to fix or reduce volatility in the forward selling price of a portion of the Corporation’s crude oil or natural gas production. Forward contracts may also be used to purchase certain currencies in which the Corporation does business with the intent of reducing exposure to foreign currency fluctuations. These forward contracts comprise various currencies, primarily the British Pound and Danish Krone. Interest rate swaps may be used to convert interest payments on certain long-term debt from fixed to floating rates.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The gross volumes of Corporate risk management derivative contracts outstanding were as follows:

	March 31,		December 31,
	2015		2014
Commodity, primarily crude oil (millions of barrels)		16		—
Foreign exchange (millions of USD *)	$	862	$	1,189
Interest rate swaps (millions of USD)	$	1,300	$	1,300

*	Denominated in U.S. dollars (USD).

In the first quarter of 2015, the Corporation entered into Brent crude oil collars to hedge 50,000 barrels of oil per day for the ten months from March 2015 to December 2015 at a cost of $38 million. Under the terms of these contracts, the floor price to be received by the Corporation is $60 per barrel and the ceiling price it may receive is $80 per barrel. All Brent crude oil collars have been designated as cash flow hedges.

At March 31, 2015, the after-tax deferred gains in Accumulated other comprehensive income (loss) related to Brent crude oil collars were $12 million, which will be reclassified into earnings during 2015, as the hedged crude oil sales are recognized in earnings. There was no hedge ineffectiveness for the three months ended March 31, 2015 and a loss of approximately $1 million for the three months ended March 31, 2014 under the 2014 hedge program. The Corporation recorded within Sales and other operating revenues a pre-tax gain of $12 million for the three months ended March 31, 2015, associated with changes in the time value of Brent crude oil collars.

At March 31, 2015 and December 31, 2014, the Corporation had interest rate swaps with gross notional amounts of $1,300 million. During the first quarter of 2015, the Corporation settled existing interest rate swaps and received cash of $41 million. Simultaneously, the Corporation entered into new interest rate swap arrangements. All interest rate swaps have been designated as fair value hedges. The Corporation recorded an increase of approximately $10 million for the three months ended March 31, 2015 and an increase of approximately $1 million (excluding accrued interest) for the three months ended March 31, 2014, in the fair value of interest rate swaps. These items, excluding accrued interest, offset changes in the carrying value of the hedged fixed-rate debt.

Total foreign exchange gains reported in Other, net in Revenues and non-operating income in the Statement of Consolidated Income totaled $15 million pre-tax in the first quarter of 2015 compared with a loss of $6 million pre-tax in the first quarter of 2014. Gains or losses on foreign exchange derivative contracts not designated as hedges, which are a component of total foreign exchange gains and losses, amounted to gains of $98 million in the first quarter of 2015 and was nil in the first quarter of 2014.

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fair Value Measurements: The following table provides information about the effect of netting arrangements on the presentation of the Corporation’s physical and financial derivative assets and (liabilities) that are measured at fair value, with the effect of single counterparty multilateral netting being included in column (v):

				Gross Amounts Offset
				in the Consolidated
				Balance Sheet
				Physical					Net Amounts			Gross Amounts
				Derivative					Presented in			Not Offset in
				and					the			the
	Gross			Financial			Cash		Consolidated			Consolidated		Net
	Amounts			Instruments			Collateral		Balance Sheet			Balance Sheet		Amounts
	(i)			(ii)			(iii)		(iv)=(i)+(ii)+(iii)			(v)		(vi)=(iv)+(v)
	(In millions)
March 31, 2015
Assets
Derivative contracts
Commodity	$	81		$	(12	)	$	—	$	69		$	—	$	69
Interest rate and other		38			(1	)		—		37			—		37
Counterparty netting		—			(1	)		—		(1	)		—		(1	)
Total derivative contracts	$	119		$	(14	)	$	—	$	105		$	—	$	105
Liabilities
Derivative contracts
Commodity	$	(15	)	$	12		$	—	$	(3	)	$	—	$	(3	)
Other		(3	)		1			—		(2	)		—		(2	)
Counterparty netting		—			1			—		1			—		1
Total derivative contracts	$	(18	)	$	14		$	—	$	(4	)	$	—	$	(4	)

The net assets and liabilities that were offset in the Consolidated Balance Sheet as reflected in column (iv) of the table above were included in Accounts receivable – Trade and Accounts payable, respectively.

The table below reflects the gross and net fair values of risk management derivative instruments:

	Accounts			Accounts
	Receivable			Payable
	(In millions)
March 31, 2015
Derivative contracts designated as hedging instruments
Commodity	$	69		$	—
Interest rate and other		4			(1	)
Total derivative contracts designated as hedging instruments		73			(1	)
Derivative contracts not designated as hedging instruments
Commodity		12			(15	)
Foreign exchange		34			(2	)
Total derivative contracts not designated as hedging instruments		46			(17	)
Gross fair value of derivative contracts		119			(18	)
Master netting arrangements		(14	)		14
Net fair value of derivative contracts	$	105		$	(4	)

As at March 31, 2015, Level 1 items comprised $3 million of Derivative liabilities. Level 2 items comprised Derivative liabilities of $1 million and Derivative assets of $105 million, which included commodity contracts of $69 million and interest rate and other items of $36 million. The Corporation did not have Level 3 instruments at March 31, 2015. For all other short-term financial instruments, primarily cash equivalents and accounts receivable and payable, carrying value

PART I - FINANCIAL INFORMATION (CONT’D)

HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

approximated their fair value at March 31, 2015. Total Long-term debt of $5,980 million at March 31, 2015, had a fair value of $6,938 million based on Level 2 inputs.

Discontinued Operations - Trading Activities: In the first quarter of 2015, the Corporation sold its interest in the energy trading joint venture. Pursuant to the terms of the sale, the successor entity is permitted to continue to utilize the Corporation’s guarantees issued in favor of existing counterparties until November 12, 2015, provided that new trades are for a period of one year or less, comply with certain credit requirements, and net exposures remain within value at risk limits previously applied by the Corporation. The Corporation has the right to seek reimbursement from the successor entity upon any counterparty draw on the applicable guarantee from the Corporation. The fair value of the guarantee recorded by the Corporation amounted to $11 million.

PART I - FINANCIAL INFORMATION (CONT’D.)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Hess Corporation is a global Exploration and Production (E&P) company that develops, produces, purchases, transports and sells crude oil , natural gas liquids, and natural gas with production operations primarily in the United States (U.S.), Denmark, Equatorial Guinea, the Joint Development Area of Malaysia/Thailand (JDA), Malaysia, and Norway.

First Quarter Results

The Corporation reported a net loss of $389 million in the first quarter of 2015, compared with net income of $386 million in the first quarter of 2014. Excluding items affecting comparability of earnings between periods on page 18, adjusted net losses were $279 million in the first quarter of 2015 down from adjusted net income of $446 million in the first quarter of 2014, primarily due to the decline in realized selling prices, which reduced first quarter 2015 results by approximately $700 million after-tax.

First Quarter Response to Low Oil Prices

During the first quarter, the Corporation conducted an extensive company-wide review of its cost base . As a result of our efforts to date, we have lowered full year 2015 guidance for capital and exploratory expenditures by $300 million to $4.4 billion, and reduced our full year 2015 guidance for cash operating costs by approximately $250 million, or $2.00 per barrel of oil equivalent down to a forecasted range of $17.50 to $18.50 per barrel. Of the $550 million of initial savings we have identified, approximately $50 million results from a reduction in activity level, $250 million from self-elected cost reductions and $250 million from supply chain savings. In addition, the Corporation significantly reduced share repurchases in the first quarter of 2015 to $16 million.

Based on current strip crude oil prices, the Corporation forecasts a significant net loss and net cash flow deficit in 2015. The Corporation expects to fund its 2015 net cash flow deficit with existing cash on hand and, if necessary, borrowings under its long-term syndicated revolving credit facility. The Corporation plans to preserve its financial flexibility and to improve its cash flow by pursuing further cost reductions and supply chain savings, significantly moderating stock repurchases compared with 2014, and depending on where crude oil prices trend, potentially further reducing its planned capital program. In addition, should needs dictate, the Corporation may also access other sources of liquidity by utilizing existing uncommitted credit facilities, issuing debt and equity securities, and/or pursuing further asset sales.

Exploration and Production

E&P incurred a net loss of $286 million in the first quarter of 2015 compared with net income of $508 million in the first quarter of 2014. Excluding items affecting comparability of earning between periods, the adjusted net loss was $193 million in the first quarter of 2015 compared to adjusted net income of $514 million in 2014. In the first quarter of 2015, the Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $44.78 per barrel down from $99.17 per barrel in the first quarter of 2014. The average worldwide natural gas liquids selling price was $14.91 per barrel in the first quarter of 2015, down from $44.28 per barrel in the year-ago quarter while the average worldwide natural gas selling price was $4.74 per thousand cubic feet (mcf) in the first quarter of 2015 compared with $7.03 per mcf in the first quarter a year-ago . Worldwide crude oil and natural gas production was 361,000 barrels of oil equivalent per day (boepd) in the first quarter of 2015, compared with 318,000 boepd in the same period of 2014. Pro forma production, which excludes production from assets sold as well as any contribution from Libya, was 361,000 boepd and 294,000 boepd in the first quarter of 2015 and 2014, respectively.

The Corporation expects production to average between 355,000 boepd and 365,000 boepd for the second quarter of 2015 excluding Libya. The Corporation’s full year 2015 production forecast is expected to be between 350,000 boepd and 360,000 boepd excluding Libya.

PART I - FINANCIAL INFORMATION (CONT’D.)

Overview (continued)

The following is an update of E&P activities:

In North Dakota, net production from the Bakken oil shale play increased to an average of 108,000 boepd for the first quarter of 2015 compared with 63,000 boepd in the prior year quarter due to continued drilling activities and the first quarter 2014 shut-down of the Tioga gas plant to complete the expansion project. The Corporation brought 70 gross operated wells on production in the first quarter of 2015 with drilling and completion costs per operated well averaging $6.8 million, a reduction of 9% from the first quarter of 2014. The average number of Bakken operated rigs was 12 in the first quarter of 2015. The Corporation plans to operate 8 rigs for the remainder of 2015 and expects Bakken production to average between 95,000 boepd and 105,000 boepd during 2015.

In the Utica shale, net production from the wet gas acreage amounted to 17,000 boepd in the first quarter of 2015, compared to 2,000 boepd in the prior year quarter. In addition, five wells were drilled, four wells were completed and four wells were brought on production across the Corporation’s joint venture acreage in the first quarter of 2015. The Corporation and its joint venture partner are currently operating a total of two rigs but plan to release one rig by June 2015. As a result of this reduction, the Corporation anticipates drilling 15 to 20 wells in 2015.

In the Gulf of Mexico, first quarter net production from Tubular Bells was 18,000 boepd and is forecast to be in the range of 30,000 boepd to 35,000 boepd for 2015 with the continued initial ramp up of production, the resolution of first quarter 2015 mechanical issues and a fourth production well scheduled to be brought online late in the second quarter of 2015. At the Corporation’s Sicily prospect, the operator has completed exploration drilling and logging of the well and results are being evaluated.

At the Valhall Field in Norway, net production averaged 30,000 boepd during the first quarter of 2015, which included a maintenance shut-down, compared with 37,000 boepd in the year-ago quarter. The operator has suspended drilling operations on one rig in the field until 2016 to reduce spend. Net production for 2015 is estimated to be in the range of 30,000 boepd to 35,000 boepd.

·	In Equatorial Guinea, the Corporation plans to defer the remaining portion of an infill drilling program at the Okume Field beginning in the second quarter to reduce spend and allow time to evaluate newly acquired 4D seismic.

·	In Guyana, the operator commenced drilling of the Liza-1 well and anticipates that the well will reach target depth by the second quarter of 2015.

In the Kurdistan region of Iraq, the Corporation suspended drilling at the Shireen 1 exploration well due to mechanical issues. Based on well results to date and given the current oil price environment, the Corporation and its partner agreed in March to abandon the well, relinquish the Dinarta Block, and to exit operations in the region.

·	In Libya, production was shut-in for the first quarter of 2015 due to continued civil unrest in the country.

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations

The after-tax income (loss) by major operating activity is summarized below:

	Three Months Ended
	March 31,
	2015			2014
	(In millions,
	except per share amounts)
Net income (loss) attributable to Hess Corporation:
Exploration and Production	$	(286	)	$	508
Corporate, Interest and Other		(90	)		(144	)
Income (loss) from continuing operations		(376	)		364
Discontinued operations		(13	)		22
Total	$	(389	)	$	386

Net income (loss) attributable to Hess Corporation per share - Diluted:
Continuing operations	$	(1.32	)	$	1.13
Discontinued operations		(0.05	)		0.07
Net income (loss) attributable to Hess Corporation per share - Diluted	$	(1.37	)	$	1.20

Items Affecting Comparability of Earnings Between Periods

The following table summarizes, on an after-tax basis, items of income (expense) that are included in net income (loss) and affect comparability of earnings between periods. The items in the table below are explained and the pre-tax amounts are shown on pages 23 to 24.

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Exploration and Production	$	(93	)	$	(6	)
Corporate, Interest and Other		(4	)		(60	)
Discontinued operations		(13	)		6
Total items affecting comparability of earnings between periods	$	(110	)	$	(60	)

In the following discussion and elsewhere in this report, the financial effects of certain transactions are disclosed on an after-tax basis. Management reviews segment earnings on an after-tax basis and uses after-tax amounts in its review of variances in segment earnings. Management believes that after-tax amounts are a preferable method of explaining variances in earnings, since they show the entire effect of a transaction rather than only the pre-tax amount. After-tax amounts are determined by applying the income tax rate in each tax jurisdiction to pre-tax amounts.

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations (continued)

Comparison of Results

Exploration and Production

Following is a summarized income statement of the Corporation’s E&P operations:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Revenues and non-operating Income
Sales and other operating revenues	$	1,538		$	2,673
Other, net		11			4
Total revenues and non-operating income		1,549			2,677
Costs and Expenses
Cost of products sold (excluding items shown separate below)		306			393
Operating costs and expenses		478			466
Production and severance taxes		36			62
Exploration expenses, including dry holes and lease impairment		269			119
General and administrative expenses		88			80
Depreciation, depletion and amortization		953			721
Total costs and expenses		2,130			1,841
Results of operations before income taxes		(581	)		836
Provision (benefit) for income taxes		(295	)		328
Net income (loss) attributable to Hess Corporation	$	(286	)	$	508

Excluding the E&P items affecting comparability of earnings between periods in the table on page 23, the changes in E&P earnings are primarily attributable to changes in selling prices, production and sales volumes, cash operating costs, depreciation, depletion and amortization, exploration expenses and income taxes, as well as the impact of asset sales as described below.

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations (continued)

Selling Prices: Average realized crude oil selling prices were 55% lower in the first quarter of 2015, compared to 2014 primarily due to declines in the benchmark prices for Brent and West Texas Intermediary (WTI) crude oil. In addition, realized selling prices for natural gas liquids declined by approximately 65%.

The Corporation’s average selling prices were as follows:

	Three Months Ended
	March 31,
	2015		2014
Crude oil - per barrel (including hedging)
United States
Onshore	$	38.28	$	88.04
Offshore		43.55		99.34
Total United States		40.14		92.94

Europe		53.31		109.17
Africa		52.93		108.40
Asia		48.44		102.29
Worldwide		44.78		99.17

Crude oil - per barrel (excluding hedging)
United States
Onshore	$	38.28	$	88.04
Offshore		43.55		99.34
Total United States		40.14		92.94

Europe		53.17		108.74
Africa		52.82		107.92
Asia		48.44		102.29
Worldwide		44.74		99.00

Natural gas liquids - per barrel
United States
Onshore	$	14.22	$	53.46
Offshore		15.71		34.07
Total United States		14.47		41.54

Europe		27.58		63.83
Worldwide		14.91		44.28

Natural gas - per mcf
United States
Onshore	$	2.07	$	6.10
Offshore		2.31		4.37
Total United States		2.15		4.96

Europe		7.95		11.48
Asia and other		5.95		7.23
Worldwide		4.74		7.03

In the first quarter of 2015, the Corporation entered into Brent crude oil collars to hedge 50,000 barrels of oil per day (bopd) from March 2015 to December 2015. Under the terms of these contracts, the floor price to be received by the Corporation is $60 per barrel and the ceiling price it may receive is $80 per barrel.

Realized and unrealized gains from crude oil price collars increased Sales and other operating revenues for the three months ended March 31, 2015 by $17 million ($11 million after income taxes). Realized and unrealized gains in the first quarter of 2014 amounted to $9 million ($5 million after income taxes).

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations (continued)

Production Volumes: The Corporation’s crude oil and natural gas production increased to 361,000 boepd in the first quarter of 2015, from 318,000 boepd for the same period in 2014.

The Corporation’s net daily worldwide production by region was as follows:

	Three Months Ended
	March 31,
	2015		2014
	(In thousands)
Operating Data
Net Production Per Day
Crude oil - barrels
United States
Bakken		79		58
Other Onshore		11		9
Total Onshore		90		67
Offshore		50		51
Total United States		140		118

Europe		36		39
Africa		52		48
Asia		2		5
Worldwide		230		210

Natural gas liquids - barrels
United States
Bakken		19		2
Other Onshore		9		2
Total Onshore		28		4
Offshore		6		7
Total United States		34		11

Europe		1		2
Worldwide		35		13

Natural gas - mcf
United States
Bakken		58		15
Other Onshore		79		26
Total Onshore		137		41
Offshore		65		78
Total United States		202		119

Europe		36		37
Asia and other		336		415
Worldwide		574		571

Barrels of oil equivalent*		361		318

Reflects natural gas production converted on the basis of relative energy content (six mcf equals one barrel). Barrel of oil equivalence does not necessarily result in price equivalence as the equivalent price of natural gas on a barrel of oil equivalent basis has been substantially lower than the corresponding price for crude oil over the recent past. In addition, natural gas liquids do not sell at prices equivalent to crude oil. See the average selling prices in the table on page 20.

United States: Crude oil and natural gas liquids production was higher in the first quarter of 2015, compared to the corresponding period in 2014, primarily due to higher production from the Bakken oil shale play, as a result of continued drilling activities and constrained first quarter 2014 production due to the temporary shut-down of the Tioga gas plant to

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations (continued)

complete the expansion project. The increase in natural gas production was attributable to the Bakken and the Utica shale. Offshore production in the first quarter of 2015 was comparable to the year-ago quarter as production from the Tubular Bells Field, which came online in November 2014, was offset by lower production from the Conger and Llano Fields caused by scheduled maintenance activities.

Europe: Production in the first quarter of 2015 was slightly down compared with the same period in 2014, as lower production from the Valhall Field in Norway was largely offset by higher production from the South Arne Field in Denmark. The Valhall Field’s first quarter operations were impacted by maintenance activities while production at the South Arne Field benefited from an ongoing drilling program.

Africa: Crude oil production in Africa was higher in the first quarter of 2015 compared to the corresponding period in 2014, primarily due to an infill drilling program at the Okume Field in Equatorial Guinea, which will be suspended in the second quarter of 2015 to reduce spend and allow time to evaluate newly acquired 4D seismic.

Asia and Other: Asset sales in Indonesia and Thailand in 2014 reduced first quarter 2015 natural gas production but was partially offset by higher production at the Joint Development Area of Malaysia/Thailand. Lower crude oil production in the first quarter of 2015 resulted primarily from the sale of Thailand assets.

Sales Volumes: The impact of higher crude oil sales volumes increased after-tax income by approximately $130 million in the first quarter of 2015, compared with the corresponding period in 2014.

The Corporation’s worldwide sales volumes were as follows:

	Three Months Ended
	March 31,
	2015		2014
	(In thousands)
Crude oil - barrels		19,708		17,750
Natural gas liquids - barrels		3,119		1,122
Natural gas - mcf		51,641		51,357
Barrels of oil equivalent*		31,434		27,432

Crude oil - barrels per day		219		197
Natural gas liquids - barrels per day		35		12
Natural gas - mcf per day		574		571
Barrels of oil equivalent per day*		349		305

Cost of Products Sold: Cost of products sold is mainly comprised of costs relating to the purchases of crude oil, natural gas liquids and natural gas from the Corporation’s partners in Hess operated wells or other third parties. The decrease in Cost of products sold in the first quarter of 2015 compared with the same period in 2014 principally reflects the decline in realized crude oil prices.

Cash Operating Costs: Cash operating costs, consisting of Operating costs and expenses, Production and severance taxes and E&P General and administrative expenses, were down in the first quarter of 2015, compared to the same period in 2014 due to lower production taxes in the Bakken and reduced operating and workover costs in Norway, but were partially offset by operating costs at Tubular Bells which commenced production in the fourth quarter of 2014.

Depreciation, Depletion and Amortization: Depreciation, depletion and amortization (DD&A) expenses were higher in the first quarter of 2015, compared with the prior year period, primarily reflecting higher production volumes from the Bakken, Tubular Bells, Utica, and Okume Fields. The Bakken and Tubular Bells fields each had a higher DD&A rate per barrel than the portfolio average.

Excluding items affecting comparability of earnings between periods, cash operating costs per barrel of oil equivalent (boe) were $17.90 in the first quarter of 2015 compared with $21.11 in the first quarter of 2014 and DD&A costs per boe were $29.36 in the first quarter of 2015 compared with $25.19 in the first quarter of 2014, resulting in total production unit costs of $47.26 and $46.30 per boe in the first quarter of 2015 and 2014, respectively. For the second quarter and full year of 2015, cash operating costs are estimated to be in the range of $17.50 to $18.50 per boe and DD&A expenses are estimated to be in the range of $28.50 to $29.50 per boe resulting in total production unit costs ranging from $46.00 to $48.00 per boe.

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations (continued)

Income Taxes: Excluding items affecting comparability between periods, the effective income tax rate for E&P operations was a benefit of 50% in the first quarter of 2015 compared to a provision of 39% for the first quarter of 2014. For the full year 2015, the E&P effective income tax rate is expected to be a benefit in the range of 39% to 43% and the second quarter rate is expected to be a benefit in the range of 39% to 43%, assuming no contribution from Libya.

Items Affecting Comparability of Earnings Between Periods: The following table summarizes, on an after-tax basis, income (expense) items that affect comparability of E&P earnings between periods:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Dry hole and related expenses	$	(77	)	$	—
Inventory write-off		(16	)		—
Employee severance and exit costs		—			(6	)
	$	(93	)	$	(6	)

Exploration expenses in the first quarter of 2015 included a pre-tax charge of $159 million ($67 million after income taxes) to write-off a previously capitalized exploration well and associated leasehold expenses related to the Dinarta Block, in the Kurdistan Region of Iraq following the decision of the Corporation and its partner in March 2015 to abandon the well, relinquish the Dinarta Block, and to exit operations in the region. Exploration expenses also included a pre-tax charge of $16 million ($10 million after income taxes) to write down a foreign exploration project to fair value. During the first quarter of 2015, the Corporation incurred a pre-tax charge of $21 million ($16 million after income taxes) to write off surplus drilling materials in Equatorial Guinea following the decision to suspend the infill drilling program at the Okume Field. During the first quarter of 2014, the Corporation recorded a pre-tax charge of $6 million ($6 million after income taxes), resulting from planned divestitures and the transformation into a more focused pure play E&P company.

The Corporation’s future E&P earnings may be impacted by external factors, such as volatility in the selling prices of crude oil, natural gas liquids, and natural gas, reserve and production changes, exploration expenses, industry cost inflation, changes in foreign exchange rates and income tax rates, the effects of weather, political risk, environmental risk and catastrophic risk. For a more comprehensive description of the risks that may affect the Corporation’s E&P business, see Item 1A. Risk Factors Related to Our Business and Operations in the Annual Report on Form 10-K for the year ended December 31, 2014.

Corporate, Interest and Other

The following table summarizes corporate, interest and other expenses:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Corporate and other expenses (excluding items affecting comparability)	$	55		$	56
Interest expense		95			100
Less: Capitalized interest		(10	)		(19	)
Interest expense, net		85			81
Corporate, Interest and Other expenses before income taxes		140			137
Provision (benefit) for income taxes		(54	)		(53	)
Net Corporate, Interest and Other expenses after income taxes		86			84
Items affecting comparability of earnings between periods, after-tax		4			60
Total Corporate, Interest and Other expenses after income taxes	$	90		$	144

Corporate and other expenses were comparable in the first quarter of 2015 and 2014. Interest expense, net, increased in the first quarter of 2015 compared with the first quarter of 2014 reflecting lower capitalized interest. Second quarter 2015 Corporate expenses are expected to be in the range of $30 million to $35 million after taxes and interest expense is expected to be in the range of $50 million to $55 million after taxes. Excluding items affecting comparability of earnings, the estimate for corporate expenses for full year 2015 is still expected to be in the range of $120 million to $130 million after taxes and interest expense is still estimated to be in the range of $205 million to $215 million after taxes.

PART I - FINANCIAL INFORMATION (CONT’D.)

Results of Operations (continued)

Items Affecting Comparability of Earnings Between Periods:

First quarter 2015 expenses included exit costs of $6 million ($4 million after income taxes). During the first quarter of 2014, the corporation incurred a charge of $84 million ($52 million after income taxes) to reduce the carrying value of its investment in the Bayonne Energy Center to fair value. In the first quarter of 2014, the Corporation also recorded pre-tax charges of $12 million ($8 million after income taxes) for employee severance and other exit costs.

Discontinued Operations

The net loss attributable to Hess Corporation from discontinued operations was $13 million in the first quarter of 2015 compared to income of $22 million in the first quarter of 2014. The Corporation sold its interest in the energy trading joint venture in February 2015 and the retail business in September 2014.

Liquidity and Capital Resources

The following table sets forth certain relevant measures of the Corporation’s liquidity and capital resources:

	March 31,			December 31,
	2015			2014
	(In millions, except ratio)
Cash and cash equivalents	$	1,506		$	2,444
Short-term debt and current maturities of long-term debt		69			68
Total debt		5,980			5,987
Total equity		21,667			22,320
Debt to capitalization ratio*		21.6	%		21.2	%

*	Total debt as a percentage of the sum of total debt plus equity

Cash Flows

The following table summarizes the Corporation’s cash flows:

	Three Months Ended
	March 31,
	2015			2014
	(In millions)
Cash flows from operating activities:
Cash provided by (used in) operating activities - continuing operations	$	373		$	1,117
Cash provided by (used in) operating activities - discontinued operations		(11	)		41
Net cash provided by (used in) operating activities		362			1,158

Cash flows from investing activities:
Capital expenditures		(1,237	)		(1,146	)
Proceeds from asset sales		—			1,237
Other, net		(10	)		(57	)
Cash provided by (used in) investing activities - continuing operations		(1,247	)		34
Cash provided by (used in) investing activities - discontinued operations		95			(296	)
Net cash provided by (used in) investing activities		(1,152	)		(262	)

Cash flows from financing activities:
Cash provided by (used in) financing activities - continuing operations		(148	)		(1,422	)
Cash provided by (used in) financing activities - discontinued operations		—			—
Net cash provided by (used in) financing activities		(148	)		(1,422	)

Net increase (decrease) in cash and cash equivalents from continuing operations		(1,022	)		(271	)
Net increase (decrease) in cash and cash equivalents from discontinued operations		84			(255	)
Net increase (decrease) in cash and cash equivalents	$	(938	)	$	(526	)

Operating activities: Net cash provided by operating activities was $362 million in the first quarter of 2015, compared with $1,158 million in the same period of 2014, primarily reflecting the decline in benchmark crude oil prices.

PART I - FINANCIAL INFORMATION (CONT’D.)

Liquidity and Capital Resources (continued)

Investing activities: Capital expenditures from continuing operations were higher in the first quarter of 2015 compared to the same period in 2014 primarily as a result of increased development activities at the Stampede project in the Gulf of Mexico and the North Malay Basin project and higher exploration drilling in the Gulf of Mexico, Guyana, and Kurdistan. During the first quarter of 2014, the Corporation received proceeds of approximately $650 million from the sale of its interest in the Pangkah Field, offshore Indonesia, and approximately $590 million from the sale of 47,000 acres of its dry gas position in the Utica shale. In January 2014, the Corporation acquired its partners’ 56% interest in WilcoHess, a retail gasoline joint venture, for approximately $290 million which is reported in discontinued operations.

Financing activities: In the first quarter of 2015, the Corporation repaid $17 million of debt. The Corporation purchased $16 million of common shares and settled $51 million of common stock purchases from 2014 during the first quarter of 2015 under its Board authorized $6.5 billion repurchase plan, down from approximately $1.0 billion in the first quarter of 2014. Dividends paid were $72 million in the first quarter of 2015 compared to $79 million in the first quarter of 2014. The quarterly dividend rate was $0.25 per common share in each period.

Future Capital Requirements and Resources

The Corporation anticipates investing approximately $4.4 billion in capital and exploratory expenditures during 2015. Based on current strip crude oil prices, the Corporation forecasts in 2015 a significant net loss and net cash flow deficit after funding planned capital expenditures, dismantlement obligations, pension contributions, dividends and share repurchases under its Board authorized plan. The Corporation expects to fund its 2015 net cash flow deficit with existing cash on hand and, if necessary, borrowings under its long-term syndicated revolving credit facility.

Crude oil and natural gas prices are volatile and difficult to predict. In addition, unplanned increases in the Corporation’s capital expenditure program could occur. The Corporation plans to preserve its financial flexibility and to improve its cash flow by pursuing further cost reductions and supply chain savings, significantly moderating stock repurchases compared with 2014, and depending on where crude oil prices trend, potentially further reducing its planned capital program. In addition, should needs dictate, the Corporation may also access other sources of liquidity by utilizing existing uncommitted credit facilities, issuing debt and equity securities, and/or pursuing further asset sales.

The table below summarizes the capacity, usage and available capacity of the Corporation’s borrowing and letter of credit facilities at March 31, 2015:

						Letters of
	Expiration					Credit				Available
	Date	Capacity		Borrowings		Issued		Total Used		Capacity
		(In millions)
Revolving credit facility	January 2020	$	4,000	$	—	$	—	$	—	$	4,000
Committed lines	Various *		875		—		25		25		850
Uncommitted lines	Various *		118		—		118		118		—
Total		$	4,993	$	—	$	143	$	143	$	4,850

*	Committed and uncommitted lines have expiration dates through 2016.

The Corporation’s $143 million in letters of credit outstanding at March 31, 2015 are primarily issued to satisfy performance obligations related to the Corporation’s exploration and production activities.

In January 2015, the Corporation entered into a new $4 billion syndicated revolving credit facility that expires in January 2020. The new facility, which replaced a $4 billion facility that was scheduled to expire in April 2016, can be used for borrowings and letters of credit. Based on the Corporation’s credit rating as of March 31, 2015, borrowings on the facility will generally bear interest at 1.075% above the London Interbank Offered Rate. A fee of 0.175% per annum is also payable on the amount of the facility. The interest rate and facility fee are subject to adjustment if the Corporation’s credit rating changes.

The Corporation’s long-term debt agreements, including the revolving credit facility, contain financial covenants that restrict the amount of total borrowings and secured debt. These financial covenants do not currently materially impact the Company’s ability to issue indebtedness to fund its future capital requirements.

The Corporation also has a shelf registration under which it may issue additional debt securities, warrants, common stock or preferred stock.

PART I - FINANCIAL INFORMATION (CONT’D.)

Market Risk Disclosures

The Corporation is exposed in the normal course of business to commodity risks related to changes in the prices of crude oil and natural gas as well as changes in interest rates and foreign currency values . See Note 11, Financial Risk Management , in the Notes to Consolidated Financial Statements. In the disclosures that follow, risk management activities refer to the mitigation of these risks through hedging activities.

Value at Risk: The Corporation uses value at risk to monitor and control commodity risk within its risk management activities. The value at risk model uses historical simulation and the results represent the potential loss in fair value over one day at a 95% confidence level. The model captures both first and second order sensitivities for options. Results may vary from time to time as hedging levels change in risk management activities. The potential change in fair value based on commodity price risk is presented in the financial risk management activities section below.

Financial Risk Management Activities

In the first quarter of 2015, the Corporation entered into Brent crude oil collars to hedge 50,000 bopd from March 2015 to December 2015. Under the terms of these contracts, the floor price to be received by the Corporation is $60 per barrel and the ceiling price it may receive is $80 per barrel.

The Corporation estimates that the value at risk associated with Brent crude oil collars was $16 million at March 31, 2015. The results may vary from time to time primarily as Brent oil prices or hedge levels change.

The Corporation has outstanding foreign exchange contracts used to reduce its exposure to fluctuating foreign exchange rates for various currencies. The change in fair value of foreign exchange contracts from a 10% weakening of the U.S. Dollar exchange rate is estimated to be a loss of approximately $85 million at March 31, 2015.

The Corporation’s outstanding long-term debt of $5,980 million, including current maturities, had a fair value of $6,938 million at March 31, 2015. A 15% decrease in the rate of interest would increase the fair value of debt by approximately $475 million at March 31, 2015. A 15% increase in the rate of interest would decrease the fair value of debt by approximately $420 million at March 31, 2015.

Discontinued Operations – Trading Activities

In the first quarter of 2015, the Corporation sold its interest in the energy trading joint venture, HETCO. Pursuant to the terms of the sale, the successor entity is permitted to continue to utilize the Corporation’s guarantees issued in favor of existing counterparties until November 12, 2015, provided that new trades are for a period of one year or less, comply with certain credit requirements, and net exposures remain within value at risk limits previously applied by the Corporation. The Corporation has the right to seek reimbursement from the successor entity upon any counterparty drawing on the applicable guarantee from the Corporation. The fair value of the guarantee recorded by the Corporation amounted to $11 million.

Forward-looking Information

Certain sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, including references to the Corporation’s future results of operations and financial position, liquidity and capital resources, capital expenditures, asset sales, oil and gas production, costs and expenses, tax rates, debt repayment, hedging, derivative and market risk disclosures include forward-looking information. These sections typically include statements with words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “would” or similar words, indicating that future outcomes are uncertain. Forward-looking disclosures are based on the Corporation’s current understanding and assessment of these activities and reasonable assumptions about the future. Actual results may differ from these disclosures because of changes in market conditions, government actions and other factors.

PART I - FINANCIAL INFORMATION (CONT’D.)

I tem 3.

Quantitative and Qualitative Disclosures about Market Risk.

The information required by this item is presented under Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Disclosures.”

I tem 4.

Controls and Procedures.

Based upon their evaluation of the Corporation’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2015, John B. Hess, Chief Executive Officer, and John P. Rielly, Chief Financial Officer, concluded that these disclosure controls and procedures were effective as of March 31, 2015.

There was no change in internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 in the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

PART I - FINANCIAL INFORMATION (CONT’D.)

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

Information regarding legal proceedings is contained in Note 9, Guarantees and Contingencies in the Notes to Consolidated Financial Statements and is incorporated herein by reference.

Item 2.

Share Repurchase Activities.

The Corporation’s share repurchase activities for the three months ended March 31, 2015, were as follows:

2015	Total Number of Shares Purchased (a) (b)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (c) (In millions)
January		116,250	$	69.65		116,250	$	1,233
February		88,765		74.64		88,765		1,226
March		46,110		74.45		15,560		1,225
Total for 2015		251,125	$	72.29		220,575

(a)	Repurchased in open-market transactions. The average price paid per share was inclusive of transaction fees.

(b)	Includes 30,550 common shares repurchased at a price of $74.58 per common share on the open market, which were subsequently granted to Directors in accordance with the Non-Employee Directors’ Stock Plan.

(c)	In March 2013, the Corporation announced a board authorized plan to repurchase up to $4 billion of outstanding common shares. In May 2014, the Corporation increased the repurchase program to $6.5 billion.

PART II - OTHER INFORMATION (CONT’D.)

I tem 6.

Exhibits and Reports on Form 8 ‑ K.

a.	Exhibits
	10(1)		Credit Agreement dated as of January 21, 2015 among Hess Corporation, the subsidiaries party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, incorporated by reference to Form 8 ‑ K of the Registrant filed on January 27, 2015.
	10(2)*		Form of Restricted Stock Award Agreement.
	10(3)*		Form of Performance Award Agreement for three-year period ending December 31, 2017.
	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).
	101(INS)		XBRL Instance Document
	101(SCH)		XBRL Schema Document
	101(CAL)		XBRL Calculation Linkbase Document
	101(LAB)		XBRL Labels Linkbase Document
	101(PRE)		XBRL Presentation Linkbase Document
	101(DEF)		XBRL Definition Linkbase Document * These exhibits relate to executive compensation plans and arrangements

b.	Reports on Form 8-K

	During the quarter ended March 31, 2015, Registrant filed the following reports on Form 8-K:
	(i)	Filing dated January 27, 2015 under Items 1.01, 1.02, 2.03 and 9.01 reporting entry into a five-year credit agreement between the Corporation and J.P. Morgan Chase Bank, N.A., as lender and administrative agent and the other lenders party thereto.
	(ii)	Filing dated January 28, 2015 reporting under Item 2.02 and 9.01, a press release dated January 28, 2015 reporting Results of Operations and Financial Condition, and Financial Statements and Exhibits.
	(iii)	Filing dated March 3, 2015 reporting under Item 5.02 reporting compensatory arrangements of certain officers.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HESS CORPORATION
(REGISTRANT)


By		/s/ John B. Hess
		JOHN B. HESS
		CHIEF EXECUTIVE OFFICER


By		/s/ John P. Rielly
		JOHN P. RIELLY
		SENIOR VICE PRESIDENT AND
		CHIEF FINANCIAL OFFICER

Date: May 7, 2015

Exhibit 10(2)

RESTRICTED STOCK AWARD AGREEMENT

pursuant to the

HESS CORPORATION

2008 LONG-TERM INCENTIVE PLAN

* * * * *


Awardee:		FIRST NAME — LAST NAME

Grant Date:		DATE

Number of Shares of Common		# OF RESTRICTED SHARES
Stock Subject to such Award:

* * * * *

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Hess Corporation, a Delaware corporation (the “Corporation”), and the Awardee specified above, pursuant to the Hess Corporation 2008 Long-Term Incentive Plan, as in effect and as amended from time to time (the “Plan”); and

WHEREAS, it has been determined under the Plan that it would be in the best interests of the Corporation to grant the restricted stock award provided for herein to the Awardee as an inducement to remain in the employment of the Corporation (and/or any Subsidiary), and as an incentive for increased effort during such employment;

NOW, THEREFORE, in consideration of the mutual covenants and premises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:

The Compensation and Management Development Committee (the “Committee”) of the Board of Directors (the “Board”) of Hess Corporation has granted to you restricted shares of the Common Stock of the Corporation in accordance with the terms and provisions of the Plan and this agreement (the “Restricted Shares”). The Restricted Shares are restricted for a period commencing on the date of grant and ending on the third anniversary of the Grant Date and are otherwise subject to the terms and conditions set forth herein. If the conditions set forth in the Plan and this agreement are not satisfied, this agreement and the Restricted Shares awarded together with all rights and interests relating thereto, shall be void and of no force or effect.

1. Incorporation By Reference; Document Receipt . This agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly not intended to apply to the grant of Restricted Shares hereunder), all of which terms and provisions are made a part of and incorporated in this agreement as if each were expressly set forth mutatis mutandis herein. Any capitalized term not defined in this agreement will have the same meaning as is ascribed thereto under the Plan. You hereby acknowledge receipt of a prospectus describing the Plan and the Awards thereunder and that you have read it carefully and fully understand its content. In the event of any conflict between the terms of this agreement and the terms of the Plan, the terms of the Plan will control.

2. Restricted Stock . Restricted Shares will be issued in book-entry form in your name and deposited with The Bank of New York or other agent designated by the Committee, as escrow agent (the “Escrow Agent”). Prior to the issuance and deposit of the Restricted Shares with the Escrow Agent, you will have no rights of a shareholder, and you will not be entitled to vote the Restricted Shares or receive any dividends or other distributions, in respect of the Restricted Shares. The Restricted Shares will be held by the Escrow Agent pursuant to an agreement (the “Escrow Agreement”) between the Escrow Agent and the Corporation. You authorize the Escrow Agreement to transfer shares and otherwise act in accordance with instructions of the Corporation. You will furnish the Escrow Agent with stock transfer powers or authorizations from time to time, if requested. Except to the extent otherwise provided in the Plan or this agreement, if you remain continuously employed by the Corporation or any Subsidiary until the third anniversary of the Grant Date, the Escrow Agent will, except as provided below, deliver to you shortly thereafter a new share certificate in your name representing the Restricted Shares; provided , however , that Restricted Shares may nevertheless be evidenced on a

noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange. For as long as an account is maintained in your name with a broker, custodian, or other institution retained by the Corporation to assist in the administration of the Plan (the “Administrator”), such Restricted Shares will be deposited into such account.

3. Rights as a Stockholder . While the Restricted Shares are held by the Escrow Agent, you will be the record owner and will have all the rights of a stockholder with respect to the Restricted Shares, including (without limitation) the right to vote, subject to the restrictions provided for in the Plan, the Escrow Agreement and this agreement. From and after the date on which the Restricted Shares are issued in your name and deposited with the Escrow Agent, cash dividends and other distributions made or paid with respect to the Restricted Shares will be held by the Escrow Agent and may (but need not be) reinvested as determined by the Committee, and such dividends and distributions will be paid to you (or your account at the Administrator referred to in Section 2)at the time and to the extent pro tanto that the Restricted Shares become non-forfeitable and are delivered to you by the Escrow Agent. Any new, additional or different securities that you may become entitled to receive with respect to the Restricted Shares under the Plan by virtue of any reinvestment of any cash dividends paid on the Common Stock or any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, split-up, or any similar change affecting the Common Stock, will be delivered to the Escrow Agent subject to the same restrictions, terms and conditions as apply to the related Restricted Shares.

4. Termination and Forfeiture .

4.1 If (i) your employment with the Corporation or any Subsidiary terminates prior to the third anniversary of the Grant Date by reason of your death, permanent total disability or normal retirement under the Corporation’s Employees’ Pension Plan or any successor plan thereto or any similar plan maintained by a Subsidiary in which you participate, and (ii) at the time of such termination due to normal retirement, as applicable, you shall have completed at least five years of continuous service with the Corporation or any Subsidiary, the Escrow Agent will, as promptly as practicable, deliver to you, or your account at the Administrator referred to in Section 2 (in the case of permanent total disability or your normal retirement), or your beneficiary(ies) (in the case of your death) a certificate representing all of the Restricted Shares awarded to you hereunder and all accumulated dividends on the Restricted Shares. The existence and date of permanent total disability will be determined by the Committee and its determination shall be final and conclusive.

4.2 If your employment with the Corporation or any Subsidiary terminates prior to the third anniversary of the Grant Date for any reason other than your death, permanent total disability or normal retirement under the Corporation’s Employees’ Pension Plan or any successor plan thereto or any similar plan maintained by a Subsidiary in which you participate, all of the Restricted Shares, and any rights thereto, awarded to you hereunder, all accumulated dividends in respect thereof will be forfeited by you and returned by the Escrow Agent to the Corporation and you will have no further rights with respect thereto.

4.3 Notwithstanding Section 4.2 above, if (i) your employment with the Corporation or any Subsidiary terminates prior to the third anniversary of the Grant Date by reason of your early retirement under the Corporation’s Employees’ Pension Plan or any successor plan thereto or any similar plan maintained by a Subsidiary in which you participate, and (ii) at the time of such termination, you shall have completed at least five years of continuous service with the Corporation or any Subsidiary, the Committee, in its sole discretion, may (but is not obligated to) determine that it will deliver to you, or your account at the Administrator referred to in Section 2, on a specified date a certificate representing a proportionate number of the Restricted Shares awarded to you hereunder based on the number of calendar days elapsed (as of the date of such early retirement) in the vesting period ending on the third anniversary of the Grant Date, together with a proportionate amount of the accumulated dividends in respect thereof also based on the number of calendar days elapsed (as of the date of such early retirement) in the vesting period ending on the third anniversary of the Grant Date.

4.4 Notwithstanding any other provision of this Agreement to the contrary:

4.4.1 If, following termination of your employment with the Corporation or any Subsidiary due to early retirement, as described in Section 4.3 above, where the Committee has previously determined that you shall receive a proportionate number of the Restricted Shares in accordance with Section 4.3, the Committee determines in its good faith discretion that you shall have engaged in any Prohibited Activity (as hereinafter defined) at any time prior to the third anniversary of the Grant Date, then you shall be obligated to pay or deliver to the Corporation either (at your election): (a) a cash

payment in an amount equal to the Fair Market Value of the proportionate number of Restricted Shares determined in accordance with Section 4.3 as of the date of such termination of your employment due to early retirement, reduced by the amount of any income and social security taxes that you previously paid to the Corporation or a Subsidiary in respect of such Shares, or (b) a number of Shares equal to the proportionate number of the Restricted Shares determined in accordance with Section 4.3 in the case of termination of your employment due to early retirement, reduced by a number of Shares with a Fair Market Value on the date of such delivery equal to the amount of such taxes referred to in clause (a) of this sentence. This Section 4.4 shall not constitute the Corporation’s exclusive remedy for your engagement in any Prohibited Activity, and the Corporation may seek any additional legal or equitable remedy, including injunctive relief, in any such circumstances. If any provision contained in this Section 4.4 shall be held by any court of competent jurisdiction to be unenforceable, void or invalid, the parties intend that such provision be modified to make it valid and enforceable to the fullest extent permitted by law. If any such provision cannot be modified to be valid and enforceable, such provision shall be severed from this Agreement and the invalidity or unenforceability of such provision shall not affect the validity or enforceability of the remaining provisions. Notwithstanding any other provision of this Section 4.4 to the contrary, upon the occurrence of a Change of Control, the foregoing provisions of this Section 4.4 shall automatically terminate and cease to apply with respect to any Restricted Shares that are outstanding and have not previously been forfeited under this Section 4.4.

4.4.2 For purposes of this Agreement:

(a)	“Prohibited Activity” shall mean either Competitive Activity or Interference.

(b) “Competitive Activity” shall mean that you, directly or indirectly, in any manner or capacity, shall be employed by, serve as a director or manager of, act as a consultant to or maintain any material ownership interest in, any E&P Company or M&R Company that competes with the business of the Corporation or any Subsidiary or affiliate thereof in geographical areas in which you are aware that the Corporation or any Subsidiary or affiliate is engaged, or is considering engaging, unless the Committee agrees to such activity of you in writing; provided , however , that your ownership solely as an investor of less than 1% of the outstanding securities of any publicly-traded securities of any E&P Company or M&R Company shall not, by itself, be considered to be Competitive Activity.

(c) “Interference” shall mean that you shall, directly or indirectly, interfere with the relationship between the Company or any Subsidiary or affiliate of the Company and any person (including, without limitation, any business or governmental entity) that to your knowledge is, or was, a client, customer, supplier, licensee or partner of the Company or any Subsidiary, or had any other business relationship with the Company or any Subsidiary.

(d) “E&P Company” shall mean any business which is engaged in the business of exploring for, or developing or producing, crude oil or natural gas.

(e) “M&R Company” shall mean any business which is engaged in the manufacture, generation, purchase, marketing or trading of refined petroleum products, natural gas or electricity.

5. Change of Control . The Restricted Shares awarded to you hereunder are subject to acceleration of vesting and “cash-out” at the discretion of the Committee upon the occurrence of a Change of Control, all as provided in and subject to Section 9 of the Plan.

6. Beneficiary . You may designate the beneficiary or beneficiaries to receive any Restricted Shares or other amounts which may be delivered in respect of this Award after your death. Such designation may be made by you on the enclosed beneficiary designation form and (unless you have waived such right) may be changed by you from time to time by filing a new beneficiary designation form with the Committee. If you do not designate a beneficiary or if no designated beneficiary(ies) survives you, your beneficiary will be the legal representative of your estate.

7. Tax Withholding . No delivery of vested Restricted Shares or payment of any accumulated cash dividends in respect thereof or other amount in respect of this Award will be made unless and until you (or your beneficiary or legal representative) have made appropriate arrangements for the payment of any amounts required to be withheld with respect thereto under all present or future federal, state and local tax laws and regulations and other laws and regulations.

Unless you elect otherwise in writing or are prohibited by law, upon expiration of the applicable restriction period such number of Restricted Shares as shall be necessary to pay such withholding amounts shall be sold by the Administrator on your behalf, and the proceeds thereof shall be delivered to the Corporation for remittance to the appropriate governmental authorities, and the remaining Restricted Shares shall be delivered to you, or your account at the Administrator referred to in Section 2.

Notwithstanding the immediately preceding paragraph, if you make an election pursuant to Section 83(b) of the Code, or the value of any Restricted Shares otherwise becomes includible in your gross income for income tax purposes prior to the expiration of the applicable restriction period, you agree to pay to the Corporation in cash (or make other arrangements, in accordance with Section 12.03 of the Plan, for the satisfaction of) any taxes of any kind required by law to be withheld with respect to such Restricted Shares. If you elect immediate Federal income taxation with respect to all or any portion of the Restricted Shares pursuant to Section 83(b) of the Code, you agree to deliver a copy of such election to the Corporation at the time such election is filed with the Internal Revenue Service.

8. Limitations; Governing Law . Nothing herein or in the Plan will be construed as conferring on you or anyone else the right to continue in the employ of the Corporation or any Subsidiary. The rights and obligations under this agreement and the Award are governed by and construed in accordance with the laws of the State of Delaware, without reference to the principles of conflict of laws thereof.

9. Non-transferability . The Restricted Shares, and any rights and interests with respect thereto, issued under this agreement and the Plan may not, prior to vesting, be sold, exchanged, transferred, assigned or otherwise disposed of in any way by you (or any of your beneficiary(ies)). The Restricted Shares, and any rights and interests with respect thereto, may not, prior to vesting, be pledged, encumbered or otherwise hypothecated in any way by you (or any of your beneficiary(ies)) and will not, prior to vesting, be subject to execution, attachment or similar legal process. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way any of the Restricted Shares, or the levy of any execution, attachment or similar legal process upon the Restricted Shares, contrary to the terms and provisions of this agreement and/or the Plan will be null and void ab initio and without legal force or effect. Each certificate evidencing the Restricted Shares will bear a legend to this effect.

10. Entire Agreement; Amendment . This agreement (including the Plan which is incorporated herein by reference) contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties hereto relating to such subject matter. The Board has the right, in its sole discretion, to amend, alter, suspend, discontinue or terminate the Plan, and the Committee has the right, in its sole discretion, to amend, alter, suspend, discontinue or terminate one or more of the Awards of Restricted Stock or this agreement from time to time in accordance with and as provided in the Plan; provided , however , that no such amendment, alteration, suspension, discontinuance or termination after initial shareholder approval of the Plan may materially impair your previously accrued rights under this agreement or the Plan without your consent. The Corporation will give you written notice of any such modification or amendment of this agreement as soon as practicable after the adoption thereof. This agreement may also be modified, amended or terminated by a writing signed by you and the Corporation.

11. Notices . Any notice which may be required or permitted under this agreement will be in writing and will be delivered in person, or via facsimile transmission, overnight courier service or certified mail, return receipt requested, postage prepaid, properly addressed as follows:

11.1 If the notice is to the Corporation, to the attention of the Secretary of Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036, or at such other address as the Corporation by notice to you may designate in writing from time to time.

11.2 If the notice is to you, at your address as shown on the Corporation’s records, or at such other address as you, by notice to the Corporation, may designate in writing from time to time.

12. Compliance with Laws . The issuance of the Restricted Shares pursuant to this will be subject to, and will comply with, any applicable requirements of federal and state securities laws, rules and regulations (including, without limitation,

the provisions of the Securities Act of 1933, the Exchange Act and the respective rules and regulations promulgated thereunder), any applicable rules of any exchange on which the Common Stock is listed (including, without limitation, the rules and regulations of the New York Stock Exchange), and any other law, rule or regulation applicable thereto. The Corporation will not be obligated to issue any of the Common Stock subject to this agreement if such issuance would violate any such requirements and if issued will be deemed void ab initio .

13. Binding Agreement; Further Assurances . This agreement will inure to the benefit of, be binding upon, and be enforceable by the Corporation and its successors and assigns. Each party hereto will do and perform (or will cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this agreement and the Plan and the consummation of the transactions contemplated thereunder.

14. Counterparts; Headings . This agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which will constitute one and the same instrument. The titles and headings of the various sections of this agreement have been inserted for convenience of reference only and will not be deemed to be a part of this agreement.

15. Severability . The invalidity or unenforceability of any provisions of this agreement in any jurisdiction will not affect the validity, legality or enforceability of the remainder of this agreement in such jurisdiction or the validity, legality or enforceability of any provision of this agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder will be enforceable to the fullest extent permitted by law.

16. Terms of Employment . The Plan is a discretionary plan. You hereby acknowledge that neither the Plan nor this agreement forms part of your terms of employment and nothing in the Plan may be construed as imposing on the Corporation or any Subsidiary a contractual obligation to offer participation in the Plan to any employee of the Corporation or any Subsidiary. The Corporation or any Subsidiary is under no obligation to grant further Restricted Shares to you under the Plan. If you cease to be an employee of the Corporation or any Subsidiary for any reason, you shall not be entitled by way of compensation for loss of office or otherwise howsoever to any sum or other benefit to compensate you for the loss of any rights under this agreement or the Plan. You also acknowledge that the Corporation has adopted a policy prohibiting recipients of equity awarded from the Corporation, including the Restricted Shares, from trading in equity derivative instruments to hedge the economic risks of holding Corporation common stock or interests therein. You hereby acknowledge that you will abide by such policy in all respects.

17. Data Protection . By signing this agreement, you consent to the holding and processing of personal data provided by you to the Corporation for all purposes necessary for the operation of the Plan. These include, but are not limited to:

17.1 Administering and maintaining your records;

17.2 Providing information to any registrars, brokers or third party administrators of the Plan; and

17.3 Providing information to future purchasers of the Corporation or the business in which you work.

IN WITNESS WHEREOF, the Corporation has caused this agreement to be executed by its duly authorized officer, and you have also executed this agreement and acknowledged receipt of other related materials including the Plan prospectus, all as of the Grant Date.


	Very truly yours, HESS CORPORATION
	/s/ John B. Hess
	John B. Hess
	Chief Executive Officer

Acknowledged and Agreed to:

___________________________

Exhibit 10(3)

H ES S COR P ORA T ION 2008 L ON G - TE RM I NC E N T IVE P L AN P e r f o r m a n c e A w a r d A g re e me n t

P ar ti c ip a nt: F I RST NAME – L AST NAME G ra nt D a t e : DATE

Numb e r of P e r f o r m a n c e S h are s: # OF P E R F O R MAN C E S HA R E U N I TS

* * * * *

This P E R F O R MAN C E A W A R D AG R EEMENT ( this “ Ag ree m e nt ”) , d a t e d a s of the G ra nt D a te sp ec i f i e d a bov e , is e nt e re d into b y a nd b e tw e e n HE S S C O RP O R A T I ON, a D e l a w ar e c o r po r a tion ( the “ C o r po ra tion ”) , a nd the P ar t i c ip a nt sp ec i f i e d a bo v e , pu r su a nt to the S h are hold e r V a lue P r o g r a m und e r the H e ss C o r po ra tion 2008 L o n g - T er m I n ce nt i ve P l a n, a s in ef f ec t a nd a s a m e nd e d fr om time to time ( the “ P l a n ”) .

WHEREAS, it h a s b ee n d e t er min e d under the Plan th a t it would be in the b e st int ere sts of the Co r p o ra tion to g r a nt the P erf o r m a n c e A w ar d p r ovid e d f or h e r e in to the P ar ti c ip a nt a s a n ind u ce m e nt to re m a in in the empl o y m e nt of the Co r po r a tion (a nd/or a n y Subsidi a r y ) , a nd a s an in ce ntive f or imp r ov e d p erf o r m a n c e to w ar d c o r p o ra te g o a ls du r ing su c h e mpl o y m e nt;

WHEREAS, pu r su a nt to the p r ovisions of the Pl a n, the Committ e e h a s a utho r iz e d the g ra nt to the P ar ti c ip a nt of a Pe rf o r m a n c e A w ar d in a cc o r d an c e with the t er ms a nd c onditions of this A g r ee m e nt; a nd

WHEREAS, the P ar ti c ip a nt a nd the Co r po ra tion d e si r e to e nt e r into this Ag ree m e nt to e vi d e n c e and c on f i r m the g ra nt o f su c h P erf o r man c e Aw ar d on the t er ms a nd c onditions s e t f o r th h ere in.

NO W , THE R E F O R E, in c onsid era tion of the mu t u a l c ov e n a nts a nd p re mis e s h e r e in af t e r s e t f o r th a nd f or oth e r g ood a nd v a lu a ble c onsid e ra ti o n, the p ar ti e s h ere to h e re b y mutu a l l y c ov e n a nt a nd a g re e a s f ol l ows.

1. I n c o r po r a tion B y R e f er e n ce; D o c um e nt Re ce ip t . This A g r ee m e nt is subj ec t in a ll re sp ec ts t o the t er ms a nd p r ovisio n s of the P l a n ( in c ludin g , without limit a tion, a n y a m e ndm e nts th ere to a dopt e d a t a n y time a nd f r om time to time unl e ss su c h a m e ndm e nts a r e e x p re ss l y not int e nd e d to a pp l y to the g ra nt o f the P erf o r m a n c e Aw ar d h ere un d er) , a ll of whi c h t er ms a nd p r ovisi o ns ar e m a d e a p a r t of a nd in c o r po ra t e d in this A g r e e m e nt a s if e ac h w e r e e x p re ss l y s e t f o r th mut a tis mut a ndis h ere in. A n y ca pit a li z e d t er m not d ef i n e d in this A g r ee m e nt s h a ll h a ve the s a me m ea ni n g a s is a s cr ib ed th ere to und e r t h e P l a n. The P ar ti c ip a nt h e r e b y a c k nowl e dg e s r e ce ipt of a pr osp ec tus d e s cr ibi n g the P l a n a nd t he Aw a r ds th ere un d e r a n d th a t he h a s r e a d it ca r e f ul l y a nd f ul l y und er st a nds its c ont e nt. I n the e v e nt of a n y c on f l i c t b e tw ee n t h e t er ms of t his A g r ee m e nt a nd the t er ms of the P l a n, the t er ms of the P l a n sh a ll c ont r ol.

2. G ra nt of P e r f o r m a n ce A w ar d . P u r su a nt to the p r ovisions of the P l a n, the C o r po ra tion a s of the d a te s e t f o r th a bo v e ( the “ G ra nt D a t e ” ) h a s g r a nt e d to the P ar ti c ip a nt, a nd h e r e b y e vid e n ce s the g r a nt to the P ar ti c ip a nt o f , subj ec t to the t er ms a nd c onditions s e t f o r th h ere i n a nd in the P l a n, a P erf o r m a n c e A w ar d c onsisting of the numb e r of P erf o r m a n c e S h are s sp ec i f i e d a bov e . A P erf o r m a n c e S h a r e is a n un f und e d a nd uns ec u r e d oblig a tion to d e liv e r up to two S h a r e s ( or a p o r tion th ere o f ) or the ca sh e quiv a l e nt th ere o f ( d e t e r min e d in acc o r d a n c e with S ec tion 3 ) , subj ec t to the t er ms a nd c onditions of this A g r ee m e nt a nd those of the P l a n. R efere n ce s h ere in to P erf o r m a n c e S h are s a r e to the P erf o r m a n c e S h a r e s c omp r isi n g s u c h P erf o r m a n c e Aw ar d g r a nt ed pu r su a nt to this A g r ee m e nt.

3. Pa y m e nt of E ar n ed Pe rf o r m a n ce S h a re s . S ubj ec t t o the p r ovisions of S ec tion 5 a nd S ec tion 6, af t e r the e nd of the Pe r f o r m a n c e C y c l e d e s cr ib e d in S ec tion 4 (a) , the C ommitt e e sh a ll cer ti f y in w r iti n g on the d a te ( the “ v e sting d a t e ” ) of its f i r st r e g ul a r m e e ting f ollowing the e nd of the P e r f o r m a n c e C y c le w h e th er , a nd to wh a t e x t e nt, the p erf o r m a n c e g o a l s e t f o r th in S ec tion 4 ( b) h a s b ee n a c hi e v e d a nd d e t e r mine a nd cer ti f y in w r iti n g the n u mb e r of P erf o r m a n c e S h are s e ar n e d p u r su a nt to S ec tion 4. The numb e r of su c h P e r f o r m a n c e S h are s so ear n e d sh a l l be p a id b y t h e C o r po ra t ion a s soon a s a dminist ra tiv e l y p r ac ti c a ble af t e r t h e v e sting d a t e ; p r ovid e d th a t in no e v e n t sh a ll su c h p a y m e nt be m a de l a t e r t h a n M arc h 15 o f the c a l e n d a r y e a r th a t imm e di a t e l y f ollows t he l a st d a y o f the P erf o r m a n c e C y c l e . To the e x t e nt t h a t the P erf o r m a n c e S h a r e s ar e not ear n e d p u r su a nt to S ec ti o n 4, su c h P erf o r m a n c e S h are s sh a ll be f o r f e it e d. Pa y m e nts h ere und e r sh a ll be m a d e in S h are s, unl e ss the C ommitt ee , in its sole dis c r e tion, aff i r m a tiv e l y d e t er min e s th a t su c h p a y m e nts sh a ll be m a de in c a sh, or a c o mbin a tion of S h are s a nd c a sh. I f a c a sh p a y m e nt is m a de in li e u of d e liv er i n g S h are s, t h e a mount of su c h p a y m e nt sh a ll be e q u a l to the Fa ir M ar k e t V a lue of su c h S h a r e s a s of t he t ra di n g d a te imm e di a t e l y p r ior to the d a te of su c h p a y m e n t, l e ss a ppli ca ble t a x withholdin g s in acc o r d a n c e with S ec tion 12.03 of the P l a n.

4. V e sting C r it er i a Appli c a b l e to P erf o r m a n c e S h a r e s .

(a) P erf o r m a n c e C y c l e . T h e P erforman c e C y cle f o r t he P erforman c e A w ard g r a n ted pursuant to this A g r e ement shall commence o n J anua r y 1, 2015, and shall end on D ecemb e r 31, 2017.

(b) P erf o r m a n c e Go a l . T h e performa n ce g o al for t he P erforman c e C y cle is the total return per S h a re to the C orporation’s sha r e h olders, inclusive of dividends p a id, during the P e r forma n ce C y c le in comp a rison to the total return per s h are o f com m on stock, inclusive of dividends paid, during t h e P erforma n ce C y cle achie v ed b y the c o mpan i es that are listed in E x hib i t A attached h e re t o (such companies, the “ C omp ar i son C omp a ni e s ”), as set f orth in this S ection 4(b). For purpo s es of this A g r eement, such t otal shareholder return ( “ Tot a l S h are hold e r R e tu r n ”) for the C orporation and e a ch of t he C omparison C ompanies shall be measu r ed b y dividing (A) the sum of (1) the divid e nds paid (r e g a rdless of w hether paid in c ash or pr o per t y ) on the common stock of such c o mpa n y d u ring the Pe rfo r mance C y cle, assuming r einvestment of such dividends in such stock (based on t h e closing price of such st o ck on the date such dividend is paid), plus (2) the av e r a g e closing p ri c e of a sh a re of s u ch stock on the principal United S tates e x chan g e on wh i ch the stock trades f o r the 60 trad i ng d a y s

imm e di a t e l y p r ior to a nd in c luding the l a st d a y o f the P erf o r m a n c e C y c l e ( a pp r op r i a t e l y a djust e d f or a n y sto c k d i vid e nd, sto c k split, spin - o ff , m e r g e r or oth e r simil a r c o r p o ra te e v e nts )( the “ Endi n g Av e r a g e V a lu e ” ) minus the a v er a g e c l osing p r i c e o f a sh ar e of s u ch c omp a n y 's c ommon sto c k on the p r in c ip a l Unit e d S t a t e s e x c h a n g e on whi c h the sto c k t ra d e s f or t h e 60 t ra di n g d a y s o cc u r r i n g imm e di a t e l y p r i o r to the f i r st d a y o f the P erf o r m a n c e C y c le ( t h e “ B e g inni n g Av e r a ge V a l u e ” ) , b y ( B ) t h e Be g inning A v er a ge V a lu e . F o r the a void a n c e of doubt, it is int e nd e d th a t the f o r e g oi n g c a l c ul a tion of Tot a l S h are hold e r R e tu r n s h a ll t a ke into acc ount not on l y the r e inv e stm e nt of di v id e nds in a sh ar e of c ommon sto c k of the C o r po ra tion a nd a n y C omp ar ison C omp a n y but a lso ca pit a l a pp rec i a tion or d e p r ec i a t i on in the sh are s d e e m e d ac qui re d b y s u c h re inv e s t m e nt. All d e t er min a tions und e r this S ec tion 4 sh a ll be m a de b y the C ommitt ee .

(c) P erce nt a ge of P e r f o r m a n ce S h ares E ar n e d . E x cept as provided in S ection 6, the P erforma n ce S h a res s h all be ear n ed ba s ed on w here the C orporation’s Total S ha r eholder R eturn duri n g t h e P erforma n ce C y c l e ra n ks in comparison to the Total S hareholder R eturns o f the C omparison C ompanies during t h e P erforman c e C y cle. As s oon as practi c able a fter t he completion of the P er f ormance C y cle, the Total S hareho l der R eturns of the C orp o ration and e a ch of the C o mparison C ompanies shall be calc u l ated and ran k ed from fi r st to last (the “ T S R R a nkin g ”). The e x tent to which P erform a nce S hares s h all become earned on t h e vesti n g da t e descri b ed in S ection 3 shall be based on the T S R R anking atta i ned b y t h e C orporation. The percentage of Performance Shares earned (the “Percentage of Performance Shares E ar n e d ”) shall be the p e r cent a g e s et forth in t he P ercen t a g e of Pe rforma n c e S hares Earned column of the sc h edule set forth in E x hibit B attac h ed h e reto that c o rresponds to the T S R R anking attain e d b y the C orp o ration set forth in the T S R R anking column of such schedule. T h e number of P e r forman c e S ha r es ear n ed shall be the p r o duct of the number of P erf o rman c e S hares set forth in S ecti o n 2 multiplied b y the Pe r cent a g e o f P erforman c e S ha r es Ear n ed. I f at a n y time during the P erforma n ce C y cle, a C omparison C ompa n y is acqui r ed, ce ases to e x ist, ceases to be a public l y - t raded comp a n y , files f or bankrupt c y , spins off 5 0 % or more of its as s ets ( e x cept as otherwise prov i ded in E x hibit A ), or sells all, or subst a ntial l y all, of its assets, s uch C omparison C ompany shall be removed and t r eated as if it had never b e en a C o m parison C ompa n y . T h e Total S hareholder R eturns o f the C orporation and the r e maining C omparison C ompanies shall be ranked from first to l a st, and the P ercen t a g e of P erforman c e S ha r es Ear n ed shall be determined as d escribed i n this S ection 4(c) based on the C orporation ' s T S R R anking among the remaini n g C o mparison C ompanies: (i) to the e x tent the number of C omparison C ompanies plus the C orporation is r e duced to 13, 12, 11, 10 or 9, in a ccorda n ce with the percen t a g e c o rr e sponding to C orporation ’ s T S R R anking as set fo r th in E x h ibit C - 1, C - 2, C - 3, C-4 or C-5 attached hereto, r espective l y , and (ii) to the e x tent that the number of C omparison C ompanies plus the C orporation is r e duced to fe w er than 9, in accor d an c e with the percen t a g e c o rr e sponding to the C orpora t ion’s T S R R anking as set forth in E x hib i t C - 5 , p r ovid e d that (1) the C ommittee m a y use its negative discreti o n, consistent with C ode S ection 162(m), to reduce t h e P er c entage of P e r forma n ce S ha r es Earned correspondi n g to such T S R R anking of the C orp o ration such that the P er ce ntage of P erforman c e S ha r es Ear n ed shall be as r easonab l y commensurate as possible wi t h t he P ercent a ge of P e r forma n ce S hares E ar n ed that w o uld have resulted if the n umber of C omparison C ompanies plus the C orporation had been 9, usi n g similar pe r centile hurdles

as e x ist in C -5, with stra ig ht-line interpo l ation between points, and ( 2 ) if the C orporation ranks last amo n g the r emaining C omparison C ompanies, the P er c ent a g e o f P erforman c e S hares Ear n ed shall be 0 %. Notwithstanding the for e g oi n g provisions of t his S ection 4(c) to the contra r y , if the C o r poration’s Total S hareho l der R eturn duri n g the P e r forman c e C y cle is n e gative, the P e r cent a g e o f P erf o rman c e S hares Ear n ed shall not e x ceed 100%.

5. T er min a tion of Empl o y m e nt . E x ce pt a s p r ovid e d in this S ec tion 5, the P ar ti c ip a nt sh a ll not h a ve a n y r i g ht to a n y p a y m e nt h ere und e r unl e ss t h e P ar ti c ip a nt is e mpl o y e d b y t h e C o r po r a tion or a S ubsidi a r y on t h e v e sting d a te pu r su a nt to S ec tion 3.

(a) D ea th, P er m a n e nt Tot al Dis a bili t y o r No r m al R e t i re m e nt . I f (i) the P artici p ant’s e m pl o y ment with the C orp o ration or a n y S ubsidia r y t erminates prior to the vesting d ate pursuant to S ection 3 b y reason of the P articipant ’ s death, permanent total disabili t y or normal reti r ement u n der the C orpo r ation ' s E m pl o y e e s ' P ension P lan or a n y s u c c essor plan the r eto or a n y similar plan maintained by a S ubsidia r y in which the P articipant participates (s u ch applic a ble pension plan, the “ Pe nsion P l a n ”), and (ii) at the time of su c h termination due to no r mal retirement, as appli c able, the P articipant shall have c o mp l eted at least five y e a r s of continuous service w ith the C orporation or a n y S ubsid i a r y , t h e P articipant sha l l be entitled to recei v e the same p a y m ent, if a n y (without pro-ration), in r espect of the P erforma n ce S ha r es a s would have been p a y a ble, and at the same time and subject to the same conditions, had the P articipant’s empl o y m e n t continued until such vesting date. T h e e x istence and date of permanent total disabili t y shall be determined b y t he C ommittee and its determination shall be final and co n clusive.

(b) Oth e r th a n D e a th, P er m a n e nt Tot a l Dis a bili t y or No r m a l R e ti re m e nt . I f the P artic i pant’s empl o y m ent with the C orporation or a n y S ubsidia r y terminates prior to the v e sting date purs u ant to S ection 3 for a n y r eason o t her than the P articipant’s death, p e r m anent total disabili t y or n ormal retirement un d er t he P ension P lan, all of the P erform a nce S hares and the P arti c ipant’s ri g hts with res p e c t thereto shall be immediate l y for f eited and ca n celled without fu r ther action b y the C orpo r ation or the P articipant as of the da t e of such termination of e mpl o y m ent.

(c) E ar l y R e ti re m e nt . Notw i thstanding S ection 5(b), i f (i) the P articipant’s empl o y m e n t with the C orporation or a n y S ubsidia r y t e rminat e s prior to the vesting date p u rsuant to S ection 3 b y r eason of t h e P articipant’s e ar l y reti r ement under the P ension P lan, and (ii) at the time of such term i nation, the P articipant shall have completed at least five y e ars of continuous serv i ce with the C orporation or a n y S ubsidia r y , the C ommittee, in its sole discretion, m a y (but is not obligated to) determine that the P articipant shall be entitled to re c eive the same p a y ment, if a n y , in respect of t h e P erforman c e S ha r es as w ou l d have been p a y able, and at the same time and subject to the same conditions, had the P articipant’s empl o y m e n t continued until such vesting date, p r ovid e d that such p a y m ent shall be pro- r ated ba s ed on the number of cal e ndar d a y s of the P erforma n ce C y cle e l apsed thro u g h the da t e of such ear l y r etirement.

(d) F o r f e itu r e F ollowing E a r l y R e ti re m e nt . Notwiths t anding a n y ot h er provision of th i s A g r eement to the cont r a r y , if, followi n g termin a tion of the

P ar ti c ip a nt ’ s e mpl o y m e n t with the Co r po ra tion or a n y Subsidi a r y d u e to ea r l y re ti r e m e nt, a s d e s cr ib e d in Se c tion 5 (c ) w h er e the Committ e e h a s p re vious l y d e t er mined th a t the P ar ti c ip a nt sh a ll be e ntitl e d to re c e ive a n y p a y m e n ts in re sp ec t of the P e r f o r m a n c e Sh a r es in acc o r d a n c e with S ec tion 5 (c) , the Committ e e d e t er min e s in its g ood f a ith dis cre tion th a t the P ar ti c ip a nt sh a ll h a ve e n ga g e d in a n y P r o hibit e d A c tivi t y (a s h ere i n af t e r d ef in e d) a t a n y time du r ing t h e time th r ou g h the ot h er wise a ppli ca ble v e sti n g d a te with re sp ec t to the P erf o r m a n c e C y c l e , all of the P erf o r m a n c e Sha re s a nd the Pa r ti c ip a nt ’ s r i g hts w ith re sp ec t the re to sh a ll be i mm e di a t e l y f o rfe it e d a nd ca nc e ll e d without f u r ther ac tion b y the Co r po ra tion or the P ar ticip a nt a s of the d a te on w hi c h the P ar ti c ip a nt sh a ll h a ve f i r st e nt ere d into su c h P r ohib i t e d A c tivi t y . This S ec ti o n 5 ( d) sh a ll not c onstitute the Co r po ra tion ’ s e x c lusive re m e d y f or the Pa r ti c ip a n t ’ s e n g a g e m e nt in a n y P r ohibit e d A c tivi t y , a nd the Co r p o r ation may s ee k a n y a ddit i on a l l e g a l or e quit a ble r em e d y , in c luding injun c tive re lie f , in a n y s u c h c i r c umst a n ce s. I f a n y p r ovision c o n t a in e d in this S ec tion 5 ( d) sh a ll be h e ld b y a n y c ou r t of c omp e tent ju r isdi c tion to be un e n f o rc e a bl e , void or inv a lid, the p ar ties int e nd th a t su c h p r ovision be modi f i e d to m a ke i t v a lid a nd e n f o r c ea ble to the f ull e st e x t e nt p er mitt e d b y l a w. I f a n y su c h p r ovision ca n not be modi f i e d to be v a lid a nd e n f o r c ea bl e , s u c h p r ovision sh a ll be s e v e r e d fr om this Ag ree m e nt a nd the inv a l i di t y or un e n f o r c ea bili t y o f su c h p r ovision sh a ll not aff e c t the v a lidi t y or e n f o r c ea bili t y of the re m a ini n g p r ovisi o ns. Notwithst a nding a n y oth e r p r ovision of this S ec tion 5 ( d) to the c ont r a r y , up o n the o cc u r re nce of a C h a nge of Cont r ol, the f o r e g oi n g p r ovisions of this S ec tion 5 ( d) sh a ll a utom a ti ca l l y te r min a te a nd cea se to a pp l y with re spe c t to a n y Pe rf o r m a n c e S h are s th a t a r e outst a ndi n g a nd h a ve not p re vious l y b ee n f o rfe it e d und e r this S ec tion 5 ( d ) . F or pu r po s e s of this A g r e e m e nt:

(i) “Prohibited Activity” shall mean either Competitive Activity or Interference.

(ii) “ C omp e titive A c tivi t y ” s hall mean th a t th e P ar ti c ip a n t , d i rec tl y o r indi rec t l y , i n a ny m a nn e r o r c a p ac i t y , sh a l l b e e mp l o y ed b y , s er v e a s a di rec to r o r m a n a g e r o f , ac t a s a c o n su l t a n t t o o r m a int a i n a ny m a t er i a l o w n er shi p i n t ere s t in , a n y E & P C o mp a ny o r M & R C o mp a ny th a t c o m p e t e s w i t h th e bu s in e s s o f the Co r po ra t io n o r a ny S ub s i di a ry o r aff ili a t e t h ere o f i n g e o g ra phi ca l area s i n w hi c h th e P ar ti c ip a n t i s awar e th a t t h e Co r p o ra t i o n o r a ny S ubsi d i a ry o r aff ili a t e i s e n g a g e d , o r i s c onsid e r in g e n g a g in g , unl e s s th e C o m m i t t e e a g ree s t o s u c h ac t iv i ty o f th e P ar t i c ip a n t i n wr it i n g ; p r o v id e d , ho we v er , th a t th e P ar t i c ip a n t ’ s o w n er shi p s o l e ly a s a n inv e sto r o f l e s s th a n 1 % o f t h e o u t s t a nd i n g s ec u r iti e s o f a ny publi c l y - t r a d e d s ec u r i t i e s o f a ny E & P C o mp a ny o r M & R Co m p a ny shall not, b y itself, be conside r ed to be C ompetitive Activi t y .

( iii ) “ I nt erfere n ce ” sh a l l m ean th at th e P ar ti c ip a n t sh a ll, di rec tl y o r indi rec t l y , int e r fere w it h th e re l a ti o ns h i p b e t ween t h e Co r po ra t io n o r any S ub s i d i a r y o r aff ili a t e o f t h e Co r p o ra t i o n a n d any per so n ( i n c lu d in g , w i tho u t li m it a ti o n , any bus i n e s s o r g ov er nm e n t al e ntit y ) th at t o th e P ar ti c i p a nt ’s k no w l e d g e i s , o r wa s , a c l i e n t , c ust o m er, s u pp l i er, li ce n s ee o r p ar tn er o f th e Co r po ra tio n o r any S ubs i di a r y , o r h ad any oth er b u s i n e s s r e l a t i ons h i p w i t h t h e C o r po ra t io n o r any S ubsidi a r y .

( iv ) “ E & P C o mp a n y ” sh a l l m ean any busin e s s w h i ch is e n g a g ed i n th e bu s in e s s o f e xplo r in g f o r, o r d e v e l o p i n g o r p r odu c i n g , cr ud e o i l o r n a t u ral g a s .

( v ) “ M & R C o mp a n y ” sh a l l m ean any busin e s s w hi ch i s e n g a g ed i n th e m a nu fa c t u re, g e n era tion , p u rc h a s e, m ar k e t i n g o r t ra d i n g o f ref in ed p e t r ol e u m p r odu c t s , n a tu ral g as o r e l ec t r i c it y .

6. C h a n g e o f C ont r ol . Notwithstanding anything in Section 3, 4, 5(a) or 5(c) to the contrary, in the event a Change of Control occurs during the Performance Cycle, the Corporation’s Total Shareholder Return, TSR Ranking and the Percentage of Performance Shares Earned shall be determined in accordance with Section 4 for the portion of the Performance Cycle that ends on the date immediately prior to the date of the Change of Control. Provided that the Performance Shares have not been forfeited pursuant to Section 5 prior to the date of the Change of Control, the number of the Performance Shares earned shall be the sum of (a) the product of the number of Performance Shares set forth in Section 2, multiplied by a fraction, the numerator of which is the number of calendar days of the Performance Cycle that elapse through the date immediately prior to the date of the Change of Control and the denominator of which is the full number of calendar days during the Performance Cycle, multiplied by the Percentage of Performance Shares Earned, plus (b) the product of the number of Performance Shares set forth in Section 2, multiplied by a fraction, the numerator of which is the number of calendar days remaining in the Performance Cycle on and following the date of the Change of Control and the denominator of which is the full number of calendar days during the Performance Cycle. The amount payable subject to the terms and conditions hereof in respect of such earned Performance Shares shall be equal to the product of such number of earned Performance Shares multiplied by the Change of Control Price, without interest or other additional earnings (such amount, the “CoC Earned Performance Share Amount”). Except as otherwise provided in this Section 6, the CoC Earned Performance Share Amount shall be paid in a cash lump-sum during, and no later than March 15 of, the calendar year that immediately follows the last day of the Performance Cycle. If, following a Change of Control, the Participant’s employment with the Corporation or any Subsidiary terminates prior to payment of the CoC Earned Performance Share Amount by reason of (w) termination by the Corporation or such Subsidiary without Cause, (x) resignation by the Participant for Good Reason, (y) the Participant’s death or permanent total disability (determined as described in Section 5(a)) or (z) the Participant’s normal retirement under the Pension Plan after the Participant shall have completed at least five years of continuous service with the Corporation or any Subsidiary, the Participant shall be entitled to receive payment of the CoC Earned Performance Share Amount in a cash lump-sum not later than 5 business days after the effective date of such termination of employment, provided that if such payment would result in accelerated or additional taxes under Section 409A of the Code then such payment shall be made at the time specified in the immediately preceding sentence as if the Participant’s employment had not so terminated. If, following a Change of Control, the Participant’s employment with the Corporation or any Subsidiary terminates under any circumstances other than those described in the immediately preceding sentence, then the Participant shall not have any right to any payment in respect of the Performance Shares, whether or not earned.

7. Dividend Equivalents. With respect to the number of Performance S h are s s e t f o r th in S ec ti o n 2, the P ar ti c ip a nt sh a ll be cre dit e d with Divid e nd Equiv a l e nts with re sp ec t to e ac h su c h P erf o r m a n c e S h a r e e qu a l to the a mount p e r S h ar e of a n y o r din a r y c a sh divid e nds d ec l a r e d b y the B o ar d w i th rec o r d d a t e s du r i n g the p er iod b e g inni n g on the f i r st d a y of the P erf o r m a n c e C y c le a nd e ndi n g on the ea r li e st to o cc ur o f : (a ) the l a st d a y of the P erf o r m a n c e C y c l e ; ( b ) the d a te of a C h a n g e of C ont r ol a nd (c ) the d a te su c h P e r f o r m a n c e S h ar e t e r min a t e s or is f o rfe it e d und e r S ec tion 3 or S ec tion 5. The C o r po ra tion sh a ll p a y in c a sh to the P ar ti c ip a nt a n a mount e qu a l to the p r odu c t of ( i) sum of the a g g r e g a te a m ount of su c h Divid e nd E quiv a l e nts cre dit e d to the P ar ti c ip a nt, multipli e d b y ( ii) the Pe rce n t a g e o f P erf o r m a n c e S h a r e s E ar n e d, su c h a mount to be p a i d a s a nd wh e n t h e re l a t e d P erf o r m a n c e S h are s a r e p a id in a c c o r d a n c e with S ec tion 3 or Se c tion 6, a s a ppli ca bl e . An y Divid e nd Equiv a l e nts s h a ll be f o rfe it e d a s a nd w h e n the re l a t e d P erf o r m a n c e S h a r e s a r e f o rfe it e d in a cc o r d a n c e with S ec tion 3, S ec tion 5 or Section 6.

8. No R i g hts as a S h a r e hol d er . Until sh are s o f C ommon S to c k ar e issu e d, if a t a ll, in s a tis f a c tion of the C o r po ra tion ’ s obli g a tions und e r this Ag ree m e nt, in the time a nd m a nn e r s p e c i f i e d in S ec tion 3 or 6, the P ar ti c ip a nt sh a ll h a ve n o r i g hts a s a sh are hold e r a s to the S h a re s und er l y i n g the P e r f o r m a n c e S h a r e s.

9. B e n e f i c i a r y . The P ar ti c i p a nt m a y d e s i g n a te the b e n ef i c i a r y or b e n ef i c i a r i e s to r e ce ive a n y p a y m e nts whi c h m a y be m a de in re s p ec t of the P erf o r m a n c e S h are s af t e r the P ar ti c ip a n t ’ s d ea th. A n y su c h d e si g n a tion sh a ll be m a d e b y the P ar ti c ip a nt in w r iting on a b e n ef i c i a r y d e si g n a tion f o r m p r ovid e d b y or on b e h a lf of the C o r po ra tion a nd ( unl e ss t he P ar ti c ip a nt h a s w a iv e d su c h r i g h t ) m a y be c h a n g e d b y t h e P ar ti c ip a nt fr om time to time b y f ili n g a n e w b e n e f i c i a r y d e s i g n a tion f o r m a s p r ovid e d th ere in. I f the Pa r ti c ip a n t do e s not d e si g n a t e a b e n ef i c i a r y o r if no d e s i g n a t e d b e n ef i c i a r y su r viv e s the P ar ti c ip a n t , t he P ar ti c ip a nt ’ s b e n ef i c i a r y s h a ll be the l e g a l r e p r e s e nt a tive of his e st a t e.

10. T a x W i thholdin g . No p a y m e nt of S h a re s or ca sh i n re sp ec t of t h e P erf o r m a n c e S h a r e s sh a ll be m a de unl e ss a nd until the P ar ti c ip a nt ( or his or h e r b e n ef i c i a r y or l e g a l re p r e s e nt a tiv e ) sh a ll h a ve m a d e ar r a n g e m e nts s a tis f ac t or y to the C ommitt e e f or the p a y m e nt of a n y a mounts re qu i re d to be withh e ld with r e sp ec t th e r e to und e r a ll p re s e nt or f utu r e fe d e ra l, st a t e , lo c a l a nd non - Unit e d S t a t e s t a x l a ws a nd r e g ul a tions a nd oth e r l a w s a nd r e g ul a tions in a c c o r d a n c e with S ec tion 12.03 of the P l a n. The C o r po ra tion sh a ll h a ve the r i g ht to d e du c t fr o m a ll a mounts p a id to the P ar ti c ip a nt in ca sh in re sp e c t of P e r f o r m a n c e S h a r e s a n y su c h a mounts. I n the c a se of a n y p a y m e nts of P erf o r m a n c e S h a r e s in the f o r m of S h a r e s, unl e ss t he P ar ti c ip a nt e l e c ts oth er wise in a dv a n c e in w r iting o r is p r ohibit e d b y l a w, upon p a y m e nt of su c h S h a r e s, s u c h numb e r of su c h S h are s a s s h a ll be n ece ss a r y to p a y su c h a mounts sh a ll be sold b y the C o r po ra tion or its d e si g n e e on t h e P ar ti c ip a nt ’ s b e h a l f , a nd t h e p r o cee ds th e re of s h a ll be d e liv ere d to the C o r po ra tion f or r e mitt a n c e to the a pp r o p r i a te g o v er nm e nt a l a utho r iti e s. I n the e v e nt the C ommitt e e d e t er min e s th a t a n y a mounts a r e re qui r e d to be withh e ld in re s p ec t of the P erf o r m a n c e S h a r e s p r ior to p a y m e nt of s u c h P er f o r m a n c e S h a re s, the P ar t i c ip a nt sh a ll th ere upon p a y to the C o r po ra tion in ca sh the f ull a mount so re qui re d to be withh e ld.

11. L imit a tions; Gov er ni n g L a w . Nothi n g h e r e in or in the P l a n sh a ll be c onst r u e d a s c on f err i n g on the Pa r ti c ip a nt or a n y o ne e lse the r i g ht to c o n tinue in the e mpl o y of the C o r p o ra ti o n or a n y S ubsidi a r y . The r i g hts a nd obl i g a tions u n d e r this Ag ree m e nt ar e g o v er n e d b y a nd c onst r u e d in a cc o r d a n c e with the l a ws of t he S t a te of D e l a w a re , without r e fe r e n c e to the p r in c ipl e s of c on f li c t of l a ws th e r e o f .

12. Non - t ra ns f era bili t y . E x ce pt a s oth er wise p r ovid e d b y S ec tion 8, the P erf o r m a n c e S h a r e s, a nd a n y r i g hts a nd int e r e sts with re sp ec t th ere to, m a y not be sold, e x c h a n g e d, t r a ns f e r re d, a ss i g n e d or ot h er wi s e dispos e d of in a n y w a y b y the P ar ti c ip a nt ( or the P ar ti c i p a nt ’ s b e n ef i c i a r y ) , a nd m a y not be p l e d g e d or e n c umb ere d in a n y w a y b y the Pa r ti c ip a nt ( or the P ar ti c ip a nt ’ s b e n ef i c i a r y ) , a nd sh a ll not be subj ec t to e x ec ution, a tt ac hm e nt or si m il a r l e g a l p r o ce ss.

13. Enti r e A g r e e m e nt; Am e n dm e nt . This A g r ee m e nt ( in c luding the P l a n whi c h is in c o r po ra t e d h ere in b y r ef e re n c e ) c o n t a ins the e nti r e a g r ee m e nt b e tw een the p ar ti e s h e r e to with r e sp ec t to the subj ec t m a tt e r c ont a in e d h e re in, a nd s up er s e d e s a ll p r ior a g r e e m e nts or p r ior und er st a ndi n g s, wh e th e r w r itt e n or o ra l, b e t w ee n the p ar ti e s h ere to r e l a ting to su c h s u bj ec t m a tt er . The B o a r d h a s the r i g ht, in its sole dis cre tion, to a m e nd, a lt er , susp e nd, d i s c ontinue or t er min a te t h e P l a n, a nd the C ommitt e e h a s the r i g ht, in its sole dis cre tion, to a m e nd, a lt er , susp e nd, di s c ontinue or t er min a te th i s A g r ee m e nt fr om time to time in acc o r d a n c e with a nd a s p r ov i d e d in the P l a n; p r ovid e d , how e v er , th a t no su c h a m e ndm e nt, a lt e ra tion, susp e nsion, dis c ontinu a n c e or t e r min a tion of the P l an m a y m a t er i a l l y imp a ir the P ar ti c ip a nt ’ s p r e vious l y accr u e d r i g hts und e r this Ag ree m e nt or the P l a n without the P ar ti c ip a nt ’ s c on s e nt, e x c e pt a s oth er wise p r ovid e d in S ec tion 11 of the P l a n. This Ag re e m e nt m a y a lso be modi f i e d, a m e nd e d o r t er min a t e d b y a w r iting si g n e d b y the Pa r ti c ip a nt a nd the C o r po ra tion.

14. Noti ce s . A n y noti c e wh i c h m a y be r e qui re d or p e r mitt e d und e r this A g r e e m e nt sh a ll be i n w r iting a nd s h a ll be d e l iv ere d in p er son, o r via f ac simile t ra nsmission, ov er ni g ht c ou r i e r s er v i c e or cer ti f i e d m a il, re tu r n r e ce ipt re q u e st e d, post a g e p re p a id, p r o p er l y a dd r e s s e d a s f ollows:

(a) I f the notice is to the C o r poration, to the attention of the S ecret a r y of Hess C orp or ation, 1185 Avenue of t h e Ameri c as, New York, New York 10036, or at such other a ddress as the C orpo r ation b y notice to the Pa rticipant m a y desi g na t e in writing from time to time.

(b) I f the notice is to the P ar t icipant, at the P articipan t ’s address as shown on t h e C orporation ' s rec o rds, or at such other ad d ress as t he P articipant, b y notice to the C orp o ra t ion, m a y des i g na t e in wr i ting from time to time.

15. C ompli a n ce with L a ws . The issu a n c e o f a n y S h a r e s pu r su a nt to this A g r e e m e nt sh a ll be s ubj ec t to, a nd sh a ll c om p l y with, a n y a ppli c a ble r e qui re m e nts of fe d e r a l a nd st a te s ec u r iti e s l a ws, r ul e s a nd r e g ul a tions ( in c ludin g , without limit a tion, the p r ovisions of the S ec u r iti e s A c t of 1933, a s a m e n d e d, the E x c h a nge A c t a n d the re sp ec tive r ul e s a nd r e g u l a tions p r omul g a t e d th e r e und er) , a n y a ppli ca ble r u l e s of a n y e x c h a nge on whi c h the C ommon S to c k is li s t e d ( in c ludin g , without limit a t i on, the r ul e s

and r e g ul a tions of the N e w Yo r k S to c k E x c h a ng e ) , a nd a n y oth e r l a w, r ule or r e g ul a tion a ppli ca ble th e r e to. The C o r po ra tion sh a ll not be obli g a t e d to issue a n y o f the C ommon S to c k subj ec t to this A g r ee m e nt if su c h issu a n c e would viol a te a n y su c h r e qui re m e nts a nd if issu e d sh a ll be d ee m e d void a b initio.

16. B inding A g r e e m e nt; F u r t h e r Assu ra n ce s . This A g ree m e nt sh a ll inu r e to the b e n e f it o f , be binding upon, a nd be e n f o rcea b l e b y the C o r po r a tion a nd its su cce sso r s a nd a ss i g ns. E ac h p a r t y h ere to s h a ll do a nd p erf o r m ( or sh a ll c a use to be done a nd p erf o r m e d) a ll su c h f u r th e r a c ts a nd sh a ll e x e c ute a nd d e liv e r a ll su c h o th e r a g ree m e nts, cer ti f i c a t e s, i nst r um e nts a nd do c um e n ts a s a n y ot h e r p a r t y h er e to rea son a b l y m a y r e qu e st in o r d e r to c ar r y out the int e nt a nd a c c omplish the pu r pos e s of this Ag ree m e nt a nd the P l a n a nd the c onsumm a tion of the t ra ns ac tions c ont e m p l a t e d th ere und e r .

17. C ount er p ar ts; H ea di n g s . This A g r ee m e nt m a y b e e x ec ut e d in one or mo r e c ount e r p ar ts, e a c h of whi c h sh a ll be d e e m e d to be a n o r i g in a l, but a ll of whi c h sh a ll c onstitute one a nd the s a me inst r um e nt. The titl e s a nd h ea din g s o f the v ar ious s ec tions of this Ag ree m e nt h a ve b ee n ins e r t e d f o r c onv e ni e n c e of r ef e re n c e on l y a nd s h a ll not be d ee m e d to be a p a r t of this A g r ee m e nt.

18. S e v era bili t y . T h e inv a lidi t y or un e n f o r c ea bili t y o f a n y p r ovisions of this A g r ee m e nt in a n y ju r isdi c tion sh a ll not aff e c t the v a lidi t y , l e g a li t y or e n f o r c ea bili t y o f the re m a ind e r of this A g r ee m e nt in su c h ju r isdi c tion or the v a lidi t y , l e g a li t y or e n f o r cea bili t y of a n y p r ovision of this Ag ree m e nt in a n y ot h e r j u r isdi c tion, it b e ing int e n d e d th a t a ll r i g hts a nd obl i g a tions of t h e p ar ti e s h e re und e r sh a ll be e n f o r c e a ble to the f ull e st e x t e nt p er mitt e d b y l a w.

19. T er ms of Empl o y m e nt . T he P l a n is a dis cre tion a r y pl a n. The P ar ti c ip a nt h ere b y ac kn o wl e dg e s t h a t n e ith e r t h e P l a n nor this A g r ee m e nt f o r ms p ar t of the P ar ti c ip a nt ’ s t er ms of e mpl o y m e nt a nd nothi n g in the P l a n m a y be c o n st r u e d a s imposing on the C o r po r a tion or a n y S ubsidi a r y a c ont rac tu a l obl i g a tion to o ffe r p ar ti c ip a tion in the P l a n to a n y e mpl o y e e of t h e C o r po ra tion or a n y S ubsidi a r y . N e ith e r the C o r po ra tion nor a n y S ubsidi a r y is und e r a n y o bli g a tion to g ra nt a n y f u r th e r Aw a r ds to the P ar ti c ip a nt und e r the Pl a n. I f t h e P ar ti c ip a nt c ea s e s to be a n e mpl o y e e of the C o r po ra tion or a n y S ubsidi a r y f or a n y r e a son, the P ar ti c ip a nt sh a ll not be e ntitl e d b y w a y of c omp e ns a tion f or loss of o ff i c e o r oth e r wise h o wso e v e r to a n y sum or o t h e r b e n e f it to c omp e ns a te the Pa r ti c ip a nt f or the loss of a n y r i g h ts und e r this A g r ee m e nt or the P l a n. The P ar ti c ip a nt a lso a c k n owl e dg e s th a t the C o r po r a tion h a s a dopt e d a poli c y p r ohibiting rec ipi e nts of e qui t y a w a r d e d fr om the C o r po r a tion, in c luding the P e r f o r m a n c e S h are s, fr om t ra di n g in e qui t y d e r iv a tive inst r um e nts to h e d g e t h e ec onomic r isks of holding C o r po ra tion c ommon sto c k or int ere sts th e r e in. T he P ar ti c ip a nt h e r e b y a c k nowl e dg e s th a t he will a bide b y su c h poli c y in a ll re s p ec ts.

20. D a ta P r ot ec tion . B y si g n ing this A g r e e m e nt, the P ar ti c ip a nt h ere b y c on s e nts to the holding a nd p r o ce ssi n g of p er son a l d a ta p r ovid e d b y the P ar ti c ip a nt to the C o r po r a tion f or a ll pu r pos e s n ec e ss a r y f o r the op e r a tion of the P l a n. Th e se in c lud e , but a r e n o t limit e d to:

(a) administering and m aintaining the P articipant’s r e cords;

(b) providing information to a n y r e g istr a rs, brok e rs or third par t y administrators of t h e P lan; and

(c) p roviding information to future purc h asers o f the C orporation or the business in which the P articip a nt works.

21. C ode S ec tion 409A . Pa y m e nt of the P erf o r m a n c e S h are s a nd this Ag ree m e nt are int e n d e d t o c o m p l y with S ec tion 409A of the C od e , a nd sh a ll be a dminist ere d a nd c onst r u e d in a cc o r d a n c e with su c h int e nt. A cc o r din g l y , the C o r po ra tion sh a ll h a ve t h e a utho r i t y to t a k e a n y a c tion, or ref r a in fr om t a k i ng a n y ac tion, with re sp ec t to this Ag r e e m e nt th a t it d e t er min e s is n ece ss a r y or a p p r op r i a t e to e nsu r e c ompli a n c e with C ode S ec tion 409A ( p r ovid e d th a t t he C o r po ra tion sh a ll c hoose the a c tion th a t b e st p re s e r v e s the v a l u e of p a y m e nts p r ovid e d t o the P ar ti c ip a nt und e r this A g ree m e nt th a t is c onsist e nt with C ode S ec tion 409A ) . I n f u r th era n ce , but not in limit a tion, of the f o r e g oi n g, notwithstanding any other provisions of this Agreement to the contrary :

(a) in no event m a y the P art i cipant desi g n ate, di r ect l y or indirect l y , the calen d ar y ear of a n y p a y ment to be made he r eunder;

(b) if at the time of the P arti c ipant’s sepa r ation from service, the C orporation determi n es that the P articipant is a “spec i fied empl o y e e ” within the meaning o f C ode S ection 409A, p a y m ents, if a n y , hereund e r that constitute a “de f er r al of compensation” und e r C ode S ection 409A and that would otherwise b e come due on account of s u ch sep a rati o n from servi c e shall be d el a y ed and all such del a y ed p a y ments shall be paid in full upon the earli e r to occur o f (i) a date duri n g the thir t y - d a y p eriod commenci n g six months and one d a y f ollowing s u ch sepa r ation from serv i c e and (ii) the date of the P artici p ant’s death, p r ovid e d that such del a y shall not app l y to a n y p a y ment that is e x cepted from co v er a g e b y C o d e S ection 4 09A, such as a p a y m ent c overed b y t he short-term de f er r al e x ce p tion described in Tr e asu r y Re g ulations S ection 1 . 409A-1(b)( 4 ); and

(c) notwithst anding a n y oth e r provision of this A g r e e ment to the contra r y , a terminati o n or retirement o f P artic i pant ' s empl o y ment h e re u nder shall mean and be int e rpret e d consistent with a “sep a r a tion from servic e ” within the meani n g of C ode S ection 409A w i th respect to a n y p a y m e n ts hereunder t h at constitute a “d e fe r ral of compensation” un d er C ode S ection 409A that become due on a c count of such separation f rom servi c e.

IN WI T N ES S W H E R E O F , the C o r po r a tion h a s ca us e d this A g r ee m e nt to be e x ec ut e d b y its duly a utho r i z e d o f f i c e r , a nd the P ar ti c ip a nt h a s a lso e x ec ut e d this Ag ree m e nt a nd ac kn o wl e d g e d re c e ipt of oth e r re l a t e d m a t er i a ls in c luding t h e P l an p r osp ec tus, a ll a s of the G ra nt D a t e.

HE S S C O RP O R AT I ON

/s/ John B. Hess

J ohn B . H e ss

Chi e f E x ec utive O ff i c er

Acknowledged and Agreed to:

___________________________

E x hib i t A

C o m p a r ison Co m p a n i e s

·	An a d ar ko P e t r o l e um C o r po ra tion

·	Ap ac he C o r p o ra tion

·	C h e s a p ea k e En e rg y C o r po ra t ion

·	C ono c o P hillips C o mp a n y *

·	Continental Resources, Inc.

·	D e von En e rg y C o r p o ra t ion

·	EOG R e sou r c e s, I n c .

·	M ara thon Oil C o r po ra t i on

·	Mu r p h y Oil C o r po r a tion

·	Noble En e rg y , I n c .

·	O cc id e nt a l P e t r ol e um C o r po ra tion

·	Pioneer Natural Resources Co.

·	T a lism a n En e rg y I n c.

* I t is int e nd e d th a t upon a n y re o r g a ni z a tion in whi c h this c omp a n y is split into a s e p ara t e e x plo ra tion a nd p r odu c tion c omp a n y a nd a s e p a r a te m ar k e ti n g a nd r ef ini n g c omp a n y , the C omp ar ison C omp a ni e s list e d h ere in sh a ll in c lude su c h e x plo ra tion a nd p r odu c tion c omp a n y , but not su c h m ar k e ti n g a nd r ef ini n g c o mp a n y , a nd the r e a djust e d histo r i ca l c ommon sto c k p r i ce s a nd divid e nds of su c h e x plo ra tion a nd p r odu c tion c o mp a n y s h a ll be us e d f or c omputing t h e Tot a l S h are hold e r R e t u r n of su c h c om p a n y .

E x hib i t B

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies plus the Corporation is 14:


TSR Ranking		Percentage of Performance Shares Earned

1st		200%
2nd		200%
3rd		180%
4th		160%
5th		140%
6th		120%
7th		100%
8th		83%
9th		67%
10th		50%
11th		0%
12th		0%

13th 0%

14th 0%

Exhibit C-1

Percentage of Performance Shares Earned Schedule

Use this schedule if number of Comparison Companies plus the Corporation is 13:


TSR Ranking		Percentage of Performance Shares Earned

1st		200%
2nd		200%
3rd		175%
4th		150%
5th		125%
6th		100%
7th		88%
8th		75%
9th		63%
10th		50%
11th 12th 13th		0% 0% 0%

Exhibit C-2

P e r c e n t age of P er f o r m a n ce Sh a res E a r n ed S c h e du le

Use this s c h e dule if nu m b e r of C omparison C ompani e s plus the C orporat i on is 12:


T S R R a nking 1st	P erce nt a ge of P e r f o r m a n ce S h ares E ar n ed 200%
2nd	200%
3 rd	175%
4th	150%
5th	125%
6th	100%
7th	83%
8th	66%
9th	50%
10th	0%
11th	0%
12th	0%

E x hib i t C - 3

P e r c e n t age of P er f o r m a n ce Sh a res E a r n ed S c h e du le

Use this s c h e dule if nu m b e r of C o m parison C o m pan i e s p l us the C orpora t i on i s 11:


T S R R a nking 1st	P erce nt a ge of P e r f o r m a n ce S h ares E ar n ed 200%
2nd	200%
3 rd	175%
4th	150%
5th	100%
6th	83%
7th	67%
8th	50%
9th	0%
10th	0%
11th	0%

E x hib i t C - 4

P e r c e n t age of P er f o r m a n ce Sh a res E a r n ed S c h e du le

Use this s c h e dule if nu m b e r of C o m parison C o m pan i e s p l us the C orpora t i on i s 10:


T S R R a nking 1st	P erce nt a ge of P e r f o r m a n ce S h ares E ar n ed 200%
2nd	175%
3 rd	150%
4th	125%
5th	100%
6th	75%
7th	50%
8th	0%
9th	0%
10th	0%

E x hib i t C - 5

P e r c e n t age of P er f o r m a n ce Sh a res E a r n ed S c h e du le

Use this s c h e dule if nu m b e r of C o m parison C o m pan i e s p l us the C orpora t i on i s 9:


T S R R a nking 1st	P erce nt a ge of P e r f o r m a n ce S h ares E ar n ed 200%
2nd	167%
3 rd	133%
4th	100%
5th	83%
6th	67%
7th	50%
8th	0%
9th	0%

Exhibit 31(1)

CERTIFICATIONS

I, John B. Hess, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Hess Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and the internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By		/s/ John B. Hess
		JOHN B. HESS
		CHIEF EXECUTIVE OFFICER

Date: May 7, 2015

Exhibit 31(2)

I, John P. Rielly, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Hess Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By		/s/ John P. Rielly
		JOHN P. RIELLY
		SENIOR VICE PRESIDENT AND
		CHIEF FINANCIAL OFFICER

Date: May 7, 2015

Exhibit 32(1)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hess Corporation (the “Corporation”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John B. Hess, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

By		/s/ John B. Hess
		JOHN B. HESS
		CHIEF EXECUTIVE OFFICER
		Date: May 7, 2015

A signed original of this written statement required by Section 906 has been provided to Hess Corporation and will be retained by Hess Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32(2)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hess Corporation (the “Corporation”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Rielly, Senior Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

By		/s/ John P. Rielly
		JOHN P. RIELLY
		SENIOR VICE PRESIDENT AND
		CHIEF FINANCIAL OFFICER
		Date: May 7, 2015