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Hess Corporation
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The Hess Corporation (known as Amerada Hess Corporation prior to May 8, 2006, and Amerada Oil and Chemical Company in 1919) is an integrated oil company based in New York City. The company explores, produces, transports, and refines crude oil as well as natural gas. Vertically completing the logistical chain, over 1,200 filling stations market gas to consumers primarily on the East Coast of the United States. Although towered over in size by enormous global players in the same industry, Hess placed a formidable #77 in the 2008 Fortune 500 rankings.
ed in 1919, the Amerada Corporation was a holding company for its principal subsidiary, the Amerada Petroleum Corporation.
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Encyclopedia
The Hess Corporation (known as Amerada Hess Corporation prior to May 8, 2006, and Amerada Oil and Chemical Company in 1919) is an integrated oil company based in New York City. The company explores, produces, transports, and refines crude oil as well as natural gas. Vertically completing the logistical chain, over 1,200 filling stations market gas to consumers primarily on the East Coast of the United States. Although towered over in size by enormous global players in the same industry, Hess placed a formidable #77 in the 2008 Fortune 500 rankings.
History
Formed in 1919, the Amerada Corporation was a holding company for its principal subsidiary, the Amerada Petroleum Corporation. The oil producer experienced solid growth during most of the 1920s, hitting a peak in 1926 with a net income of USD 4.9 million. However, in the years leading to the Great Depression, weakness in the oil markets contributed to sluggish profits. The aftermath of the market crash aggravated the unsteady oil industry. In the first quarter of 1930, the company experienced a minor loss. The early years of the Depression was a struggle against wavering demand and overproduction in some regions. Later into the 1930s, the financial forecast became more sanguine for Amerada.
In December 1941, the company reorganized by merging the holding company with the principal operating subsidiary, Amerada Petroleum Corporation, into a simplified operating company. The new entity also adopted the former subsidiary's name.
Robust postwar growth rocketed the company past USD 100 million in sales in 1955.
Hess Oil and Chemical, an oil refiner and marketer founded by Leon Hess (who later owned the New York Jets), in 1966 acquired 10% of the company for USD 100 million after the British government sold its stake, which was amassed during World War II. Hess and Amerada would announce plans for a merger in December 1968. Some Amerada stockholders led by Morton Adler criticized the arrangement as being too favorable for Hess. Adler argued Amerada's oil reserves would contribute the lion's share of assets for the proposed company, so Amerada stockholders should retain more control of the new company. Before the stockholder vote on the matter, Phillips Petroleum, an integrated oil firm, approached Amerada with its own merger proposal, but the offer was declined in March. Still interested, Phillips nonetheless stated it would not carry out a proxy fight against the proposed Hess deal. Hess fearing such a strategy, made a cash tender offer of USD 140 million for an additional 1.1 million shares of Amerada, which would double its holding in the company. The new shares would be employed in a May stockholder vote deciding the merger's fate. The vote took place amidst shareholder rancor that in addition to echoing Adler's arguments, objected to Amerada's financing of the recently completed tender offer. Hess planned to cancel the shares and the cost of the acquisition would be absorbed by the newly formed company. One shareholder at the meeting quipped, "It looks to me as if Hess is buying Amerada with Amerada's money." Proponents of the deal won, and the USD 2.4 billion merger combining a purely production company with a refinery and marketer operation was completed. Although, controversy was not yet extinguished by the stockholder confirmation. A class action federal lawsuit in 1972 claiming the proxy vote information was misleading. In 1976, a court agreed that the company falsely claimed to have considered each company's assets as a reason for the merger.
In 2001, Amerada Hess purchased Triton Energy Limited in a cash tender deal valued at approximately USD 3.2 billion. Triton, one of the largest independent oil and natural gas exploration and production companies in the U.S., had earned a reputation as a maverick oil company due to its highly successful yet potentially risky overseas exploration.. According to Amerada Hess press releases at the time, Triton's major oil and gas assets in West Africa, Latin America and Southeast Asia would strengthen its exploration and production business and give it access to long life international reserves. Hess also stated that the purchase was expected to immediately increase the company's per-day barrel output by more than 25 percent.
Following on the heels of the Triton purchase, energy prices fell and global economies weakened. Amerada Hess struggled through the following years, posting a USD 218 million loss in 2002 due primarily to a USD 530 million charge relating to its write-down of the Ceiba oil field, but then posting steadily increasing profits from 2003 through 2006, when the company posted USD 1.920 billion in net income.
Environmental record
New York Times reported on October 28, 1990, that a barge, with a load of 31,000 barrels of kerosene, struck a reef in the Hudson river spilling 163,000 gallons of fuel. Immediately, Hess assumed responsibility for the cleanup; the Coast Guard worked alongside the Red Star company to clean and to contain the spill to one area. Coast Guard official Mr. Holmes said "The weather and wind conditions are almost as close to perfect as they could get," and this contributed to a quicker and surer cleanup than could otherwise be. According to New York Times, Mr. Holmes also said that 70 percent of the spill would be gone in 3 days due to the natural evaporation rate of Kerosene. Even though most Kerosene evaporates, toxic chemicals such as benzene stay in the water and harm certain fish. Hess claims that their corporate policy has "long stressed" their "fundamental commitment to comply with applicable environment, health and safety laws and regulations," and they claim to clean every spill made.
In accordance with a New York State Department of Environmental Conservation (DEC) agreement the Hess Corporation will pay $1.1 million in fines and also "bring 65 gasoline stations and oil storage facilities into compliance with state requirements." The agreement addresses more than 100 violations at 65 gas stations and Hess's Brooklyn major oil storage facility. The agreement is aimed at resolving Hess's violations in the DEC's New York City and lower Hudson Valley regions.
In a recent water contamination case against several major US oil companies, the Hess Corporation will pay part of a $422 million settlement. The case was filed by 153 public water providers in 17 states against the oil companies "over water over drinking water contamination caused by the gasoline additive Methyl Tertiary Butyl Ether (MTBE)." The settlement also stipulates that the settling parties pay their share of treatment costs of the plaintiff's wells that may become contaminated or require treatment for the next 30 years.
In regard to greenhouse gas emissions Hess outlined in their 2006 Corporate Sustainability Report a "four element" strategy to reduce and control emissions. The strategy's steps include monitoring, measuring, managing, and mitigating. Through reporting results, energy efficiency and recovery, and carbon capture and trading the company intends to improve it's environmental impact.
Hess toy trucks
Since 1964, Hess gas stations have sold a toy truck around Christmas time. Each year, the model changes to a new design. Older models are considered collectibles and typically sell for a few hundred or even thousands of dollars. For example, the 1964 truck sells for about $1,400-2,000, depending on condition. Hess periodically has a rare truck such as the 1995 and 2002 chrome which were given away at a stockholder meeting and, more recently, the 2006 truck given to New York Stock Exchange employees to commemorate its name change from Amerada Hess Corporation to Hess Corporation. Since 1998 Hess has produced a mini truck every year as well as the regular toy trucks.
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