Hess Reports Lower Q1 Earnings



Hess Corp. reported net income of $370 million for the first quarter of 2007 compared with net income of $699 million for the first quarter of 2006. First quarter 2006 results included an after-tax gain of $186 million related to the sale of certain United States producing properties.

Exploration and Production earnings were $340 million in the first quarter of 2007 compared with $706 million in the first quarter of 2006. The Corporation's oil and gas production, on a barrel-of-oil equivalent basis, was 382,000 barrels per day in the first quarter of 2007 compared with 361,000 barrels per day in the first quarter of 2006.

In the first quarter of 2007, the Corporation's average worldwide crude oil selling price, including the effect of hedging, was $50.74 per barrel, a decrease of $2.56 per barrel from the first quarter of 2006. The Corporation's average worldwide natural gas selling price was $5.00 per Mcf in the first quarter of 2007, compared to $6.73 per Mcf in the first quarter of 2006.

Marketing and Refining earnings were $101 million in the first quarter of 2007 compared with $53 million in the first quarter of 2006. Refining earnings were $54 million in the first quarter of 2007 compared with $25 million in the first quarter of 2006, reflecting higher refined product margins and volumes. In the first quarter of 2006, refining earnings were affected by the unscheduled shutdown and maintenance of the fluid catalytic cracking unit at HOVENSA. Marketing earnings were $43 million in the first quarter of 2007 compared with $12 million in the same period of 2006, primarily reflecting higher margins. Earnings from trading operations were $4 million in the first quarter of 2007 compared to $16 million in the first quarter of 2006.

Net cash provided by operating activities was $639 million in the first quarter of 2007 compared with $1,198 million in the first quarter of 2006. Capital and exploratory expenditures for the first quarter of 2007 amounted to $1,181 million, of which $1,159 million related to Exploration and Production operations. These expenditures include $371 million for the acquisition of a 28% interest in the Genghis Khan oil and gas development in the deepwater Gulf of Mexico. Capital and exploratory expenditures for the first quarter of 2006 amounted to $1,387 million, of which $1,354 million related to Exploration and Production operations. These expenditures included $673 million for the acquisition of assets in Egypt and the re-entry into Libya.

At March 31, 2007, cash and cash equivalents totaled $249 million compared with $383 million at December 31, 2006. Total debt was $4,141 million at March 31, 2007 and $3,772 million at December 31, 2006. The Corporation's debt to capitalization ratio at March 31, 2007 was 32.5% compared with 31.6% at the end of 2006.

Effective January 1, 2007, the Corporation retrospectively adopted a new accounting pronouncement related to refinery turnarounds. As a result of this accounting change, the Corporation's previously reported first quarter 2006 net income increased by $4 million, fourth quarter 2006 net income was unchanged and retained earnings as of December 31, 2006 increased by $36 million. All of the financial information presented in this release and the accompanying schedules reflect this retrospective accounting change.

Hess Corp., with headquarters in New York, is a global integrated energy company engaged in the exploration for and the development, production, purchase, transportation and sale of crude oil and natural gas. The Corporation also manufactures, purchases, transports, trades and markets refined petroleum and other energy products.

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