hess UBS Global Oil and Gas Conference Presentation

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hess UBS Global Oil and Gas Conference Presentation

  1. 1. UBS Global Oil and Gas Conference May 22, 2008
  2. 2. Strategy CORPORATE • Grow the company long term through Exploration and Production • Operate Marketing and Refining for near term returns and cash flow EXPLORATION AND PRODUCTION • Build a sustainable franchise • Create value through exploration, developments and technology MARKETING AND REFINING • Expand Hess brand in Retail and Energy Marketing on East Coast • Maximize free cash flow from refining assets FINANCIAL • Deliver first quartile financial and shareholder returns • Ensure capital availability to fund growth 2
  3. 3. 2007 Highlights Generated net income of $1.8 billion Grew year end proved reserves by 7% to 1.33 billion boe Replaced 167% of production - FD&A cost of $16.20 per boe Increased reserve life to 9.5 years Grew worldwide oil and gas production by 5% Expanded our Retail and Energy Marketing businesses Improved debt to capitalization ratio to 28.9% Total Shareholder Return 104% - 10th best in S&P 500 th 3
  4. 4. E&P Goals and Strategy Goals Grow Production by 3-5% p.a. Grow Reserves by 5-8% p.a. Strategy Deliver resources and value from exploration Execute cost effective developments Extract more value from producing fields Build a sustainable growth portfolio 4
  5. 5. Global Portfolio of Developments SNØHVIT BAKKEN ACG PHASE 3 SEMINOLE ROZ SHENZI SINPHUHORM GENGHIS KHAN JDA PHASE 2 OKUME COMPLEX JAMBI MERANG PANGKAH GAS PANGKAH OIL 2007 2008 2009 2010 5
  6. 6. Significant Growth from New Developments 2010 Production Capacity MBOED (Net) Bakken Jambi Merang 150 Seminole ROZ 2009 Pangkah Oil 100 Shenzi 2008 JDA Phase 2 Snøhvit 50 ACG Phase 3 2007 Sinphuhorm Okume Complex 0 Pangkah Gas Genghis Khan 07 08 09 10 Represents production capacity, not forecast 6
  7. 7. Okume Complex Hess 85% W.I., operator 125 - 150 MMBOE net resources 40 MBOED net peak production achieved 1Q08 7
  8. 8. JDA 50% W.I. Largest reserve holding in portfolio Attractive economics PSC through 2029 Phase 1 Pilok Thailand Bangkok ~120 MMSCFD net production Cambodia Yetagon Phase 2 Vietnam Will double net production to Erawan Gulf of Pailin Thailand ~250 MMSCFD in 3Q08 Songkhla JDA JDA Malaysia Kerteh Kuala Lumpur Sumatra Singapore 8
  9. 9. Pangkah Hess 75% W.I., operator 80 - 120 MMBOE net resources First gas in April 2007 First oil in 1H09 20 MBOED net Kuala Lumpur Malaysia production in 2009 Indonesia Pangkah Java Sea Jakarta 9
  10. 10. Shenzi Hess 28% W.I. GC 609 3 mi GC 608 GC 610 Un-tested North Flank Development 100-150 MMBOE net Plan Area resources #G1-1 609 #1 Salt #1 #1 Facilities installation #3ST1 #2ST2 #4 scheduled for #2 #2 #3 #5 Genghis mid 2008 Khan #2ST1 GC 653 GC 654 GC 652 First oil in 1H09 Green Canyon Area Shenzi 25 MBOED net peak Pony / production K2 Area Knotty Head Neptune lt be Tahiti ld Fo Tonga e en Atlantis c io Mad Dog M Puma Miocene Fields 10
  11. 11. North Dakota Bakken Shale Williston Gas Plant Impact Tioga Beaver East Lodge Red Sky Nesson Capa • Hess enjoys strong infrastructure position in Williston Basin • 411,000 net acres in North Blue Buttes Dakota Bakken Shale play Hawkeye • Six rig program in 2008; Stampede eight rigs in 2009 • 2008 net production ~8 MBOED 11
  12. 12. Hess Global Exploration Strategy Pursue a global program which delivers value and secures long term growth through an appropriately balanced portfolio Tactics • Focus on the best basins • Take material equity positions • Apply fit-for-purpose technology • Focus on high-impact wildcat and appraisal wells BASIN PLAY LEAD NEW FIELD APPRAISAL INVENTORY INVENTORY INVENTORY WILDCATS Prospect Inventory Define & Rank Define & Rank & Define & Rank & Define & Rank & Calibrate, Evaluate, Best Basins Capture Best Plays Mature Best Leads Drill Best Prospects Appraise 12
  13. 13. Deepwater Gulf Of Mexico Program Texas Louisiana Tubular Bells Conger Pony Northwestern y Pla Green e Canyon Garden en i oc Banks M Shenzi Llano Baldpate Paleogene Play 4 Producing Fields 1 Field Development 2 Field Appraisals 13
  14. 14. US Gulf Of Mexico – Pony Prospect Pony Well Pony Well GC 468 No. 2 GC 468 No. 2 ST Hess 100% W.I. Salt 100 - 500 MMBOE net resource potential on Hess blocks Discovery well encountered 475 feet Pony Well GC 468 No. 1 ST of oil saturated sandstones Pony Well Pony No. 1 ST well confirmed 100+ GC 468 No. 1 MMBOE net resource Knotty Head Well No.2 well encountered all reservoir GC 512 No. 1 sands seen by discovery well 3 Miles No. 2 ST well result expected in Knotty Head Well GC 512 No. 1 ST 2Q08 14
  15. 15. Australia Exploration Program North West Shelf, Australia WA-390-P • Hess 100% W.I. • 2 - 15 TCF resource potential WA-404-P Scarborough • 3D seismic acquired Jansz-lo Pluto 5 TCF 20 TCF 4-6 TCF • Drilling starts late 2Q08 WA-404-P • Hess 50% W.I. • 2 - 15 TCF resource Greater Gorgon Area potential WA-390-P 40 TCF 60 km • 3D seismic in 2008 • Drilling starts 2009 15
  16. 16. Libya – Area 54 • Hess 100% W.I. AREA 54 Mediterranean Sea • Large significant untested structure Algeria Egypt • Potential offshore Libya extension of prolific Sirte Basin 500 km • Rig commitment Sirte Basin signed; anticipated mid 2008 spud 16
  17. 17. Ghana – Tano Cape Three Points • Hess 100% W.I. COTE D’IVOIRE GHANA • Significant frontier acreage position • Adjacent to Jubilee Odum-1 Jubilee Field Field (Mahogany discovery & Hyedua-1 Ankobra 50 Km 50 Km appraisal) • Anticipate drilling in 4Q08 17
  18. 18. Brazil Exploration Program BM-ES-30 • Hess 60% WI • 3D seismic acquired in 2007 • Anticipate drilling in 2009 • Above salt • Cretaceous sandstone BM-S-22 • Hess 40% WI • Drill 3Q08 • Sub-salt • Cretaceous carbonate 18
  19. 19. Marketing and Refining NY Refinery Refinery Strategic Objectives Terminal Terminal MA Marketing Marketing PA NJ Port Reading Port Reading Expand Hess brand in MD MD DE Retail and Energy VA VA Marketing on East Coast NC NC SC SC Maximize free cash flow GA 1,475 Miles from refining assets FL to New York FL 3,900 Miles 500 Miles to Los Angeles from Venezuela 19
  20. 20. Industry Leading Performance Per Site Averages Per Site Averages Volume (Mg/Mo) 225 225 215 215 208 208 200 200 204 204 191 191 175 175 178 178 170 170 150 150 125 125 100 100 02 03 04 05 06 07 02 03 04 05 06 07 C-Store Sales ($M/Mo) 125 118 116 114 113 100 104 96 75 50 02 03 04 05 06 07 Typical Major Typical Major 20
  21. 21. Energy Marketing Strong brand and reputation Strong brand and reputation Scale advantage Scale advantage More than 17,000 customers More than 17,000 customers • Fuel Oil Sales: 130 MB/D • Fuel Oil Sales: 130 MB/D • Natural Gas Sales: 1.6 BCF/D • Natural Gas Sales: 1.6 BCF/D • Electric Sales: 3,000 MWH (RTC) • Electric Sales: 3,000 MWH (RTC) Selective Growth Selective Growth 21
  22. 22. Hovensa Refinery 50/50 JV formed in 1998 by Hess 50/50 JV formed in 1998 by Hess and PDVSA and PDVSA Capacity Capacity • Crude 500 MB/D • Crude 500 MB/D • FCC 150 MB/D • FCC 150 MB/D • Coker 58 MB/D • Coker 58 MB/D World Class Merchant Refinery World Class Merchant Refinery • Competitive geographic position • Competitive geographic position • Economies of scale • Economies of scale • Long term PDVSA crude supply • Long term PDVSA crude supply 22
  23. 23. Summary ● Strategy in place ● Portfolio reshaped ● Delivering performance ● Exciting investment opportunities ● Sustainable growth ● Skilled management team 23
  24. 24. Forward-Looking Statements and Other Information Forward-Looking Statements and Other Information This presentation contains projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the company’s current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved, and actual results could differ materially from those projected as a result of certain risk factors. A discussion of these risk factors is included in the company’s periodic reports filed with the Securities and Exchange Commission. The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation relating to reserves other than proved, such as unproved resources, that the SEC’s guidelines prohibit registrants from including in filings with the SEC. Investors are urged to consider closely the disclosure in Hess’ Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system. This presentation contains certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in this presentation on our website at www.hess.com. 24

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