Attached files
| file | filename |
|---|---|
| 8-K - 8-K - HESS CORP | hes-8k_20171222.htm |
Exhibit 99.1
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is derived from the historical consolidated financial statements of Hess Corporation (“Hess” or the “Company”) and has been adjusted to reflect the sale of Hess Norge AS on December 22, 2017, which includes Hess’ interests in the Valhall and Hod Fields offshore Norway (“Norwegian Assets”). The cash purchase price was $2.0 billion, with an effective date of January 1, 2017, subject to closing adjustments.
The unaudited pro forma Consolidated Balance Sheet as of September 30, 2017 gives effect to the disposition of the Norwegian Assets as if it had occurred on September 30, 2017. The unaudited pro forma Statements of Consolidated Income for the nine months ended September 30, 2017 and the year ended December 31, 2016 both give effect to the disposition of the Norwegian Assets as if it had occurred on January 1, 2016.
Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated financial statements. In Hess’ opinion, all adjustments that are necessary to present fairly the pro forma information have been made.
The unaudited pro forma consolidated statements do not purport to represent what Hess’ financial position or results of operations would have been had the disposition of the Norwegian Assets actually occurred on the dates indicated above, nor are they indicative of future financial position or results of operations. These unaudited pro forma consolidated financial statements should be read in conjunction with Hess’ historical consolidated financial statements and related notes for the periods presented.
1
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2017
|
|
|
Historical |
|
|
|
|
Pro Forma Adjustments (Note 2) |
|
|
|
|
Pro Forma |
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|||
|
|
|
(In millions, except per share amounts) |
|
|||||||||||||
|
|
|
|
|
|
|
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|
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Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,526 |
|
|
|
|
$ |
2,056 |
|
|
b |
|
$ |
4,582 |
|
|
Accounts receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade |
|
|
933 |
|
|
|
|
|
(3 |
) |
|
a |
|
|
930 |
|
|
Other |
|
|
110 |
|
|
|
|
|
(2 |
) |
|
a |
|
|
108 |
|
|
Inventories |
|
|
372 |
|
|
|
|
|
(23 |
) |
|
a |
|
|
349 |
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Other current assets |
|
|
142 |
|
|
|
|
|
(51 |
) |
|
a |
|
|
91 |
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Total current assets |
|
|
4,083 |
|
|
|
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|
1,977 |
|
|
|
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|
6,060 |
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Property, plant and equipment: |
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|
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Total — at cost |
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47,855 |
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|
|
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|
(6,722 |
) |
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a |
|
|
41,133 |
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Less: Reserves for depreciation, depletion, amortization and lease impairment |
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27,576 |
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|
|
|
|
(5,159 |
) |
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a |
|
|
22,417 |
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Property, plant and equipment — net |
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20,279 |
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|
|
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(1,563 |
) |
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|
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18,716 |
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Goodwill |
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|
360 |
|
|
|
|
|
— |
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|
|
|
|
360 |
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Deferred income taxes |
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1,480 |
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|
|
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|
(1,464 |
) |
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a |
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|
16 |
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Other assets |
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|
398 |
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|
|
|
|
— |
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|
|
|
|
398 |
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Total Assets |
|
$ |
26,600 |
|
|
|
|
$ |
(1,050 |
) |
|
|
|
$ |
25,550 |
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Liabilities |
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|
|
|
|
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|
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Current Liabilities: |
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|
|
|
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|
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|
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Accounts payable |
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$ |
421 |
|
|
|
|
$ |
(5 |
) |
|
a |
|
$ |
416 |
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Accrued liabilities |
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1,570 |
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|
|
|
|
(268 |
) |
|
a |
|
|
1,302 |
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|
Taxes payable |
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|
101 |
|
|
|
|
|
— |
|
|
|
|
|
101 |
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Current maturities of long-term debt |
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122 |
|
|
|
|
|
— |
|
|
|
|
|
122 |
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Total current liabilities |
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2,214 |
|
|
|
|
|
(273 |
) |
|
|
|
|
1,941 |
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Long-term debt |
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|
6,592 |
|
|
|
|
|
— |
|
|
|
|
|
6,592 |
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|
Deferred income taxes |
|
|
584 |
|
|
|
|
|
— |
|
|
|
|
|
584 |
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Asset retirement obligations |
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1,846 |
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|
|
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(815 |
) |
|
a |
|
|
1,031 |
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Other liabilities and deferred credits |
|
|
936 |
|
|
|
|
|
— |
|
|
|
|
|
936 |
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Total Liabilities |
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12,172 |
|
|
|
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(1,088 |
) |
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|
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11,084 |
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Equity |
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|
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|
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Hess Corporation stockholders’ equity: |
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Preferred stock, par value $1.00; Authorized — 20,000,000 shares |
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Series A 8% Cumulative Mandatory Convertible; $1,000 per share liquidation preference; Issued — 575,000 shares (2016: 575,000) |
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1 |
|
|
|
|
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— |
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|
|
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|
1 |
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Common stock, par value $1.00; Authorized — 600,000,000 shares |
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|
|
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Issued — 317,754,024 shares (2016: 316,523,200) |
|
|
318 |
|
|
|
|
|
— |
|
|
|
|
|
318 |
|
|
Capital in excess of par value |
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|
5,847 |
|
|
|
|
|
— |
|
|
|
|
|
5,847 |
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|
Retained earnings |
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|
8,438 |
|
|
|
|
|
(799 |
) |
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|
|
|
7,639 |
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|
Accumulated other comprehensive income (loss) |
|
|
(1,472 |
) |
|
|
|
|
837 |
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|
c |
|
|
(635 |
) |
|
Total Hess Corporation stockholders’ equity |
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|
13,132 |
|
|
|
|
|
38 |
|
|
|
|
|
13,170 |
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Noncontrolling interests |
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|
1,296 |
|
|
|
|
|
— |
|
|
|
|
|
1,296 |
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|
Total equity |
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|
14,428 |
|
|
|
|
|
38 |
|
|
|
|
|
14,466 |
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Total Liabilities and Equity |
|
$ |
26,600 |
|
|
|
|
$ |
(1,050 |
) |
|
|
|
$ |
25,550 |
|
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
2
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
|
|
|
Historical |
|
|
|
|
Pro Forma Adjustments (Note 3) |
|
|
|
|
Pro Forma |
|
|||
|
|
|
(In millions, except per share amounts) |
|
|||||||||||||
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|
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Revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
3,863 |
|
|
|
|
$ |
(311 |
) |
|
d |
|
$ |
3,552 |
|
|
Gains on asset sales, net |
|
|
276 |
|
|
|
|
|
— |
|
|
|
|
|
276 |
|
|
Other, net |
|
|
30 |
|
|
|
|
|
(28 |
) |
|
d |
|
|
2 |
|
|
Total revenues and non-operating income |
|
|
4,169 |
|
|
|
|
|
(339 |
) |
|
|
|
|
3,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) |
|
|
851 |
|
|
|
|
|
3 |
|
|
d |
|
|
854 |
|
|
Operating costs and expenses |
|
|
1,086 |
|
|
|
|
|
(146 |
) |
|
d |
|
|
940 |
|
|
Production and severance taxes |
|
|
88 |
|
|
|
|
|
— |
|
|
|
|
|
88 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
151 |
|
|
|
|
|
— |
|
|
|
|
|
151 |
|
|
General and administrative expenses |
|
|
309 |
|
|
|
|
|
(6 |
) |
|
d |
|
|
303 |
|
|
Interest expense |
|
|
245 |
|
|
|
|
|
— |
|
|
|
|
|
245 |
|
|
Depreciation, depletion and amortization |
|
|
2,237 |
|
|
|
|
|
(287 |
) |
|
e |
|
|
1,950 |
|
|
Impairment |
|
|
2,503 |
|
|
|
|
|
(2,503 |
) |
|
f |
|
|
— |
|
|
Total costs and expenses |
|
|
7,470 |
|
|
|
|
|
(2,939 |
) |
|
|
|
|
4,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(3,301 |
) |
|
|
|
|
2,600 |
|
|
|
|
|
(701 |
) |
|
Provision (benefit) for income taxes |
|
|
(1,995 |
) |
|
|
|
|
2,060 |
|
|
g |
|
|
65 |
|
|
Net income (loss) |
|
|
(1,306 |
) |
|
|
|
|
540 |
|
|
|
|
|
(766 |
) |
|
Less: Net income (loss) attributable to noncontrolling interests |
|
|
91 |
|
|
|
|
|
— |
|
|
|
|
|
91 |
|
|
Net income (loss) attributable to Hess Corporation |
|
|
(1,397 |
) |
|
|
|
|
540 |
|
|
|
|
|
(857 |
) |
|
Less: Preferred stock dividends |
|
|
34 |
|
|
|
|
|
— |
|
|
|
|
|
34 |
|
|
Net income (loss) attributable to Hess Corporation common stockholders |
|
$ |
(1,431 |
) |
|
|
|
$ |
540 |
|
|
|
|
$ |
(891 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Hess Corporation Per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(4.55 |
) |
|
|
|
|
|
|
|
|
|
$ |
(2.84 |
) |
|
Diluted |
|
$ |
(4.55 |
) |
|
|
|
|
|
|
|
|
|
$ |
(2.84 |
) |
|
Weighted Average Number of Common Shares Outstanding (Diluted) |
|
|
314.3 |
|
|
|
|
|
|
|
|
|
|
|
314.3 |
|
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
3
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016
|
|
|
Historical |
|
|
|
|
Pro Forma Adjustments (Note 3) |
|
|
|
|
Pro Forma |
|
|||
|
|
|
(In millions, except per share amounts) |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenues |
|
$ |
4,762 |
|
|
|
|
$ |
(424 |
) |
|
d |
|
$ |
4,338 |
|
|
Gains on asset sales, net |
|
|
23 |
|
|
|
|
|
— |
|
|
|
|
|
23 |
|
|
Other, net |
|
|
59 |
|
|
|
|
|
(7 |
) |
|
|
|
|
52 |
|
|
Total revenues and non-operating income |
|
|
4,844 |
|
|
|
|
|
(431 |
) |
|
|
|
|
4,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold (excluding items shown separately below) |
|
|
1,063 |
|
|
|
|
|
(5 |
) |
|
d |
|
|
1,058 |
|
|
Operating costs and expenses |
|
|
1,880 |
|
|
|
|
|
(252 |
) |
|
d |
|
|
1,628 |
|
|
Production and severance taxes |
|
|
101 |
|
|
|
|
|
— |
|
|
|
|
|
101 |
|
|
Exploration expenses, including dry holes and lease impairment |
|
|
1,442 |
|
|
|
|
|
— |
|
|
|
|
|
1,442 |
|
|
General and administrative expenses |
|
|
415 |
|
|
|
|
|
(6 |
) |
|
d |
|
|
409 |
|
|
Interest expense |
|
|
338 |
|
|
|
|
|
— |
|
|
|
|
|
338 |
|
|
Loss on debt extinguishment |
|
|
148 |
|
|
|
|
|
— |
|
|
|
|
|
148 |
|
|
Depreciation, depletion and amortization |
|
|
3,244 |
|
|
|
|
|
(362 |
) |
|
e |
|
|
2,882 |
|
|
Impairment |
|
|
67 |
|
|
|
|
|
— |
|
|
|
|
|
67 |
|
|
Total costs and expenses |
|
|
8,698 |
|
|
|
|
|
(625 |
) |
|
|
|
|
8,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(3,854 |
) |
|
|
|
|
194 |
|
|
|
|
|
(3,660 |
) |
|
Provision (benefit) for income taxes |
|
|
2,222 |
|
|
|
|
|
186 |
|
|
g |
|
|
2,408 |
|
|
Net income (loss) |
|
|
(6,076 |
) |
|
|
|
|
8 |
|
|
|
|
|
(6,068 |
) |
|
Less: Net income (loss) attributable to noncontrolling interests |
|
|
56 |
|
|
|
|
|
— |
|
|
|
|
|
56 |
|
|
Net income (loss) attributable to Hess Corporation |
|
|
(6,132 |
) |
|
|
|
|
8 |
|
|
|
|
|
(6,124 |
) |
|
Less: Preferred stock dividends |
|
|
41 |
|
|
|
|
|
— |
|
|
|
|
|
41 |
|
|
Net income (loss) attributable to Hess Corporation common stockholders |
|
$ |
(6,173 |
) |
|
|
|
$ |
8 |
|
|
|
|
$ |
(6,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Hess Corporation Per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(19.92 |
) |
|
|
|
|
|
|
|
|
|
$ |
(19.89 |
) |
|
Diluted |
|
$ |
(19.92 |
) |
|
|
|
|
|
|
|
|
|
$ |
(19.89 |
) |
|
Weighted Average Number of Common Shares Outstanding (Diluted) |
|
|
309.9 |
|
|
|
|
|
|
|
|
|
|
|
309.9 |
|
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
4
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
On December 22, 2017, the Company completed the sale of Hess Norge AS, which includes Hess’ interests in its Norwegian assets. The cash purchase price was $2.0 billion, with an effective date of January 1, 2017, subject to closing adjustments.
The unaudited pro forma Consolidated Balance Sheet as of September 30, 2017 gives effect to the disposition of the Norwegian assets as if it had occurred on September 30, 2017. The unaudited pro forma Statement of Consolidated Income for the nine months ended September 30, 2017 and the year ended December 31, 2016 both give effect to the disposition of the Norwegian assets as if it had occurred on January 1, 2016.
The unaudited pro forma consolidated financial statements reflect adjustments that are described in the accompanying notes and are based on available information and certain assumptions we believe are reasonable to fairly present the pro forma information. The unaudited pro forma consolidated statements do not purport to represent what Hess’ financial position or results of operations would have been had the disposition of the Norwegian assets actually occurred on the dates indicated above, nor are they indicative of future financial position or results of operations. These unaudited pro forma consolidated financial statements should be read in conjunction with the Company’s consolidated historical financial statements and related notes for the periods presented.
2. Adjustments to the Unaudited Pro Forma Consolidated Balance Sheet
The following adjustments were made to the accompanying unaudited pro forma Consolidated Balance Sheet as of September 30, 2017:
|
|
a) |
Reflects the elimination of assets and liabilities of Hess Norge AS. |
|
|
b) |
Reflects the receipt of net sale proceeds from the sale of the Norwegian assets less existing cash in Norway as of September 30, 2017. |
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c) |
Reflects a charge of $837 million in the Consolidated Statement of Income to remove the cumulative translation adjustment in respect of the Norwegian assets that had previously reduced Accumulated other comprehensive income (loss). |
5
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
3. Adjustments to the Unaudited Pro Forma Statement of Consolidated Income
The following adjustments were made to the accompanying unaudited pro forma Statement of Consolidated Income.
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d) |
Reflects the elimination of revenues and operating expenses of the Norwegian assets. |
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e) |
Reflects the elimination of depletion, depreciation and amortization expense related to the Norwegian assets. |
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f) |
Reflects the elimination of impairment expense recognized during the nine months ended September 30, 3017 related to the Norwegian assets. |
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g) |
Reflects the income tax effects of the pro forma adjustments presented. |
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