(212) 536-8141 FAX NEW YORK, NY 10036

July 15, 2002

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

File No. S7-16-02

Dear Mr. Katz:

We are pleased to respond to the proposed rule Disclosure in Management's Discussion and Analysis about the Application of Critical Accounting Policies. Amerada Hess Corporation (the Corporation) is a global, independent energy company with worldwide exploration and production activities and domestic refining and marketing operations.

We generally agree with the proposed disclosures for initial adoption of accounting policies. However, we believe that the proposed disclosure of critical accounting estimates will not "improve the quality and transparency of corporate disclosure." The Corporation's specific comments on the proposal follow.

Disclosure of Alternative Accounting Policies

You asked whether companies should disclose the estimated effects of adopting accounting policies that the companies could have adopted, but did not adopt, on initial adoption of an accounting policy. We believe that once a company chooses an accounting policy, the quantitative impact of alternative policies should not be reported in periodic filings. To do so would undermine the credibility and reliability of earnings determined in accordance with generally accepted accounting principles. We also believe that it would confuse average investors. This disclosure could also have the effect of contributing to "pro forma" earnings calculations by analysts and investors, who favor different accounting policies or assumptions. If the Commission or private sector standard setters believe that alternative accounting policies should be amended or eliminated, revised accounting standards should be addressed through the normal standard setting process.

Sensitivity Analysis of Accounting Estimates

For similar reasons, we believe that quantitative disclosures that demonstrate sensitivities of accounting estimates should not be disclosed. For example, in the oil and gas business, management bases its asset impairment calculations on its view of future oil and gas prices. We believe that it is appropriate to disclose asset impairments and the related price assumptions. Nevertheless, sensitivity disclosures will have the unintended effect of undermining the credibility and reliability of earnings determined in accordance with generally accepted accounting principles. We believe that sensitivity disclosures using other assumed prices will also foster the trend toward "pro-forma" results. In addition, we believe that such information is proprietary and could be harmful to the reporting entity.


We do not believe that the extensive disclosures of critical accounting estimates required by the proposed rule will help the average investor. The proposal estimates that the new disclosures will add 6 pages to the average annual report. This will increase the burden on the average investor to read and understand the annual report. In addition, the separate disclosures of critical accounting estimates are repetitive, rather than clear and concise. We do not believe that the extensive disclosure requirements lend themselves to clear, concise and understandable disclosures for the average investor.


We believe that the proposed disclosures will be extremely costly and doubt that the benefits will exceed the costs. In addition, we estimate that the cost to comply with the proposals will exceed the cost estimates published as part of the proposed rules.

Senior Management's Discussion with the Audit Committee

Quarterly, the Corporation's senior management discusses critical accounting policies and estimates with our audit committee. The audit committee reports in the proxy statement that management has reviewed accounting policies and significant judgements with the committee. We believe that the audit committee report is the appropriate place to disclose senior management's discussion of critical accounting estimates with the audit committee. The audit committee is independent of management and their statement adds credibility. Additional disclosure would be duplicative.

Once a company and its audit committee are satisfied with the content of these disclosures, no further public disclosure should be made about the unresolved concerns of the committee. Although we do not anticipate unresolved concerns, to disclose them could inhibit the open discussion of issues between management, the auditors and the committee and would undermine this important review process.

Auditor Examination of MD&A

We believe that auditor examination of MD&A should continue to be a management option. The quality of MD&A would not increase through an examination; therefore, the additional costs would exceed any benefits of an examination. Auditors read MD&A and make suggestions currently, but cannot be expected to see the company through the eyes of management.


In summary, we agree that the initial adoption of accounting policies should be disclosed; however, disclosing the quantitative impact of alternative accounting policies will undermine the credibility and reliability of earnings and confuse the average investor. In addition, disclosing critical accounting estimates will not improve the quality and transparency of corporate disclosure; sensitivity disclosures will undermine the credibility and reliability of earnings; and the costs of compliance are high.

Thank you for considering our views. We would be pleased to answer any questions or discuss these issues further. I can be reached at (212) 536-8550.

Very truly yours,

/s/ John Y. Schreyer

John Y. Schreyer
Executive Vice President
and Chief Financial Officer