Acquisitions and Divestitures

9 Months Ended

Sep. 30, 2011

Acquisitions and Divestitures [Abstract]

Acquisitions and Divestitures

3. Acquisitions and Divestitures

     The Corporation entered into agreements to acquire approximately 85,000 net acres in the Utica Shale play in eastern Ohio for $750 million, principally through the acquisition of Marquette Exploration LLC (Marquette), which closed in August 2011. This acquisition strengthens the Corporation’s portfolio of unconventional assets. The acquisition of Marquette has been accounted for as a business combination and the assets acquired and the liabilities assumed were recorded at fair value. The estimated fair value was based on a valuation approach using market related data which is a Level 3 measurement. The majority of the purchase price was assigned to unproved properties and the remainder to producing wells and working capital. This transaction is subject to normal post closing adjustments. See also Note 17, Subsequent Events.

     In August 2011, the Corporation completed the sale of its interests in the Snorre Field (Hess 1%), offshore Norway and the Cook Field (Hess 28%) in the United Kingdom North Sea for cash proceeds of $131 million, after closing adjustments. These disposals resulted in non-taxable gains totalling $103 million, which have been included in Other, net in the Statement of Consolidated Income. These assets were producing at a combined net rate of approximately 2,500 boepd at the time of sale. The total combined net book value of the disposed assets prior to the sale was $28 million, including allocated goodwill of $11 million.

     In February 2011, the Corporation completed the sale of its interests in the Easington Catchment Area (Hess 30%), the Bacton Area (Hess 23%), the Everest Field (Hess 19%) and the Lomond Field (Hess 17%) in the United Kingdom North Sea for cash proceeds of $359 million, after closing adjustments. These disposals resulted in pre-tax gains totalling $343 million ($310 million after income taxes), which have been included in Other, net in the Statement of Consolidated Income. These assets had a productive capacity of approximately 15,000 boepd. The total combined net book value of the disposed assets prior to the sale was $16 million, including allocated goodwill of $14 million.

     In September 2010, the Corporation completed the exchange of its interests in Gabon and the Clair Field in the United Kingdom for additional interests of 28% and 25%, respectively, in the Valhall and Hod fields in Norway. This exchange was recorded at fair value and resulted in a pre-tax gain of $1,150 million ($1,072 million after income taxes) which has been included in Other, net in the Statement of Consolidated Income. In September 2010, the Corporation also separately acquired additional interests of 8% and 13% in the Valhall and Hod fields, respectively, for $507 million in cash.