http://www.morningstar.com/earnings/19233588-hess-corp-hes-q3-2010.aspx

Hess Corp HES
Q3 2010 Earnings Call Transcript

Transcript Call Date 10/27/2010

Operator: Good day, ladies and gentlemen, and welcome to the third quarter 2010 Hess Corporation earnings conference call. My name is Melilla and I will be your coordinator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Jay Wilson, Vice President, Investor Relations. Please proceed.

Jay R. Wilson - VP, IR: Good morning everyone and thank you for participating in our third quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hess.com. Today's conference call contains projections and other forward-looking statements within the meaning of the Federal Securities Laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements.

With me today are John Hess, Chairman of the Board and Chief Executive Officer; Greg Hill, President, Worldwide Exploration and Production; and John Rielly, Senior Vice President and Chief Financial Officer.

I'll now turn the call over to John Hess.

John B. Hess - Chairman and CEO: Thank you, Jay, and welcome to our third quarter conference call. I will make a few brief comments after which John Rielly will review our financial results.

Net income for the third quarter of 2010 was $1.154 billion versus $341 million a year ago. Our third quarter operating results were positively impacted by higher crude oil and natural gas selling prices and sales volumes compared to the year ago quarter. This quarter’s results also included an after-tax gain of $1.072 billion associated with our strategic asset trade with Shell, which closed in September, as well as an after-tax charge of $347 million to write off the West Med Block 1 concession offshore Egypt.

Excluding these non-recurring items, Exploration and Production earned $552 million. Crude oil and natural gas production averaged 413,000 barrels of oil equivalent per day, which was 2% below the year ago period. Lower year-over-year production resulted primarily from natural field declines at the Ceiba Field in Equatorial Guinea and planned downtime at the Valhall Field in Norway, which was partially offset by higher production from our Bakken program in North Dakota.

Current net production from the Bakken is approximately 18,000 barrels of oil equivalent per day with nine rigs working. We plan to add one additional rig in November and expect to exit this year with net production of about 20,000 barrels of oil equivalent per day. Our acquisition of American Oil & Gas is progressing through the regulatory process and is expected to close by the end of the year.

In September, we closed on both the strategic asset trade with Shell and the acquisition of Total’s interests in the Valhall and Hod Fields in Norway, which together raised our interest in these fields to 64.05% and 62.5%, respectively. Also in September we announced the acquisition of an additional 20% interest in the Tubular Bells oil and gas field in the Gulf of Mexico from BP for $40 million. Following regulatory approval, Hess will have a 40% working interest and become the operator.

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