DOI Offshoredag 2009, Esbjerg
Hess Corporation New York Head Office E&P activity in 22 countries 2008 average production 381,000 boepd End-2008 proved reserves in excess of 1.4 billion boe Marketing: Strong position selling petroleum products worldwide, gas and electricity on US East Coast Refineries: Port Reading in New Jersey and, in a joint venture with the Venezuelan state company PDVSA, at St Croix in the US Virgin Islands 2008 revenues $41 billion, Global Fortune 300 company
Hess Corporation Rich heritage Strong roots 1933 Hess 1919 Amerada Petroleum Chairman, John Hess, son of founder, Leon Hess Significant Hess family ownership ~ 20% Renamed Hess Corporation May 2006
History of Independence Amerada Petroleum Established Hess founded in Perth Amboy, N.J.. Leon Hess delivered heating oil in 1 truck Purchased 1 st refinery in Port Reading, N.J.. 1st retail gas station Global growth based on North Sea won reputation as technical and commercial innovator Became operator in the UK North Sea and developed as major player Amerada Petroleum Ltd. and Hess merge. Listed as Amerada Hess Corporation on NYSE. Baldpate compliant tower world s largest free standing tower Acquired Triton Energy to expand presence in W. Africa and S.E. Asia New strategy in place Major international expansion Portfolio of new developments Exploration success Rename to Hess Corporation. Major developments on stream in Equatorial Guinea, Thailand, Indonesia. Consistent growth
Hess Goals & Strategy Corporate Grow the company long term through Exploration & Production Operate Marketing & Refining for near term returns and cash flow Exploration and Production Build upon global franchise Create value through exploration, developments and technology Marketing and Refining Leverage Hess brand on US East Coast Maximize free cash flow from marketing and refining assets Financial Deliver first quartile financial and shareholder returns Ensure capital availability to fund growth
E&P Goals and Strategy Long-Term Goals Grow Reserves and Production 3% p.a. Maintain R/P ratio of ~10 Strategy Deliver resources and value from exploration Execute cost effective developments Extract more value from producing fields Build a sustainable growth portfolio
Global Portfolio Libya Area 54 Deepwater Gulf of Mexico Indonesia Brazil Santos Basin Australia NW Shelf Major Exploration Programs Major Production Assets
Hess Global E&P Organisation John Hess, Chairman New York Greg Hill, President Exploration & Production New York Exploration & New Ventures Bill Drennen Senior Vice President Houston Global Developments TBA Senior Vice President Houston Global Production John Simon Senior Vice President Houston Michael Turner Senior Vice President London New Business Development & Portfolio Management Howard Paver Senior Vice President London E&P Technology Scott Heck, Senior Vice President Business Support George Functions Sandison, Senior Vice President
E&P Finanskrise? Global Crisis Recession induced by banking/finance market collapse Recession impact on industrial demand and growth E&P Crisis? Consequences of global finance crisis Superimposed onto unique E&P events: Collapse of oil prices from record highs Historically high commodity prices and service costs slow to respond
Hess Response Establish expenditure plan for sub $50 oil for next 2 years Live within means (balance sheet) Trim capital investments Prudent cost reductions Identify impactful production increases
HDK Focus at South Arne EHS&SR priorities unchanged Maximise performance from existing asset Integrity Management Plan for the future
J F M A M J J A S O N D YTD 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Bbls/day MMScf/day Production Performance 30000 ACTUAL OIL OIL FORECAST ACTUAL GAS OIL BUDGET 30 20000 20 10000 10 0 0 Production performance above target
Minimizing Deferred Production
South Arne Lattice Tower (LT) Background Unique complex structure under-designed Modelled fatigue life low in a several structural joints In current state will deliver EoFL reserves & poses no safety risk Key Points LT needs rigorous inspection until end of field life Mitigation plan in place in case of crack detection Under designed for Ship Impact Case 14
Conceptual Ph3 Development 15
Summary South Arne performance exceeds expectation Hess well positioned to weather the Global Recession