Elliott Management to Nominate Five Highly Experienced Executives to the Board of Hess Corporation
NEW YORK--(BUSINESS WIRE)--Elliott Management Corporation ("Elliott") nowadays sent instructions to end up being able to shareholders regarding Hess Corporation (NYSE: HES) urging these phones elect at the Company's 2013 Annual Meeting the particular following slate involving five independent directors for the Board:Rodney F. Chase - Former Deputy Chief Executive, BP plcHarvey Golub - Former Chief Executive Officer, American Express CompanyKarl F. Kurz - Former Chief Operating Officer, Anadarko Petroleum CorporationDavid McManus - Former Executive Vice President, Pioneer All-natural resources CompanyMarshall D. Smith - Chief financial Officer, Ultra Petroleum CorporationAlternate board nominees are:William Berry - Former Executive Vice President, ConocoPhillips CompanyJonathan R. Macey - Sam Harris Professor of Corporate Law, Corporate Finance, along with Securities Law, Yale Law SchoolElliott strongly advocates pertaining to Hess to always be able to perform a full strategic along with operational review to think about all pathways in order to maximize shareholder worth which usually could consist of implementing a substantial divestment program using a prospective spinoff in the Bakken asset to redouble its portfolio; improving operations and also accountability; along with bringing greater discipline for you to money allocation.Elliott, affiliates involving which usually beneficially personal 4% of the widespread stock associated with Hess Corporation, can become a multi-strategy investment firm using deep encounter buying public as well as private companies. Please visit www.reassesshess.com for further information. Complete text of the letter follows:January 29, 2013Dear Fellow Shareholder:We are composing to you in behalf involving Elliott Associates, L.P. along with Elliott International, L.P. (together, "Elliott" as well as "we"), collectively your advantageous owners of 4% in the widespread stock1 involving Hess Corporation ("Hess" or even the "Company"). after extensive study along with analysis, we have got been convinced which tremendous worth is actually trapped inside the actual Organization as being a result of poor oversight by means of a board associated with directors lacking each the knowledge as well as independence to always be able to set a clear, shareholder-focused, value-creating strategy. As the result, we have identified and are submitting for election at the Company's 2013 Annual Meeting any slate associated with five independent, extremely qualified nominees to turn out to be listed on Hess's board. Your Nominees every deliver significant expertise along with deep expertise as well as were selected specifically pertaining to their own capability to foster the actual boardroom dynamics in which are essential for you to unlock the Company's enormous potential. We think which unlocking this trapped value could outcome in the reveal expense of higher than $126 per share2, amounting in order to upside of over 150%3, as well as $26 billion involving enterprise worth creation.Our investment inside Hess Corporation can be Elliott's largest first equity investment in its greater than 35 12 months history. The Actual size of the position reflects our conviction that, using proper oversight and also guidance coming from the Shareholder Nominees, tremendous value can be unlocked. Inside this letter, we lay out our thoughts in how a board can easily reclaim shareholder worth through refocusing the particular Company. However, our overarching point is actually this: almost all in the billions wasted, just about all in the operational failures, and many types of of the opacity stems from 1 central problem: the particular board's failure to end up being able to oversee management and also maintain it accountable for upwards of a decade associated with failures.We note that upon receipt associated with notification associated with Elliott's intention in order to nominate directors Hess announced an exit via its refining and terminal enterprise (one regarding its numerous distractions, yet the financially insignificant step). However, the difficulties at the Organization go much deeper. Through seeking to restructure any minor business rather than address the larger problem, Hess will be highlighting its inability, about its own, in order to fix any 17 12 months reputation unrelenting underperformance. Because John Hess himself acknowledges, "you can't judge [Hess] on a one-year basis. you have got to complete it over the particular lengthy term." Hess's dreadful long lasting performance speaks for itself. Past words possess translated into inaction or even irrelevant actions--which is why new directors are usually necessary for real change.UnderperformanceAcross any kind of period frame and also against virtually any reasonable group of comparable companies, the actual stock of Hess Corporation has dramatically underperformed. This specific monitor record of woeful shareholder returns relative in order to peers extends back again to the date upon which in turn the actual present CEO assumed manage a lot more than 17 many years ago.John Hess Tenure17 Years5-Year4-Year3-Year2-Year1-YearHess234.7%(26.1)%(5.2)%(12.0)%(28.0)%(12.5)%Proxy Peers567.6%4.5%38.3%16.9%11.6%4.3%(Under) / More Than Performance(332.9)(30.6)(43.5)(28.9)(39.6)(16.8)Revised Proxy Peers694.4%19.1%58.2%31.6%18.6%7.1%(Under) / More Than Performance(459.7)(45.2)(63.4)(43.6)(46.6)(19.6)Bakken Operators236.8%979.1%171.9%42.0%3.1%(Under) / More Than PerformanceNA(262.8)(984.3)(183.9)(70.0)(15.6)energy Select Sector SPDR (XLE)5.1%51.5%30.9%16.5%7.5%(Under) / over PerformanceNA(31.2)(56.7)(42.9)(44.5)(20.0)SPDR S&P Oil & Gasoline Exploration & Production (XOP)13.0%75.4%40.0%11.0%2.4%(Under) / More Than PerformanceNA(39.0)(80.6)(52.0)(38.9)(14.9)This particular underperformance will be every 1 of the a lot more dramatic when it comes to that: (1) Hess Corporation's asset portfolio, unlike its peers', provides minimal exposure for you to North American all-natural gas, the actual price of which usually features collapsed more than the past 4 years; as well as (2) a new legacy position in the 1950's provided Hess using a substantial entry in for you to the Williston Basin ("Bakken"), one of the most productive unconventional plays being drilled today. Within light of these advantages, even shareholder returns in series together with peers (which Hess many certainly didn't achieve) would nevertheless have constituted inexcusably poor performance.Underperformance involving this magnitude, which is calculated against just about any reasonable group of peers, and that will exists over any time frame--up for you to and such as the complete 17 many a extended time of John Hess's term as CEO--demands adjust inside the boardroom.Whom Represents the interest of 90% with the Shareholders?Your Hess board provides the lowest rate regarding independence, least oil & gas operating experience, most management directors, and also one of the particular longest tenures regarding any one of Hess's peers. while the independent directors about the Hess board are generally accomplished inside their fields, none (as inside zero) get operating expertise in the oil along with gas industry. Further, the board can be characterized by extraordinarily long tenures, the typical involving which could be 50% higher than the typical tenure involving S&P 500 board members. Finally, many Hess board members have personal as well as monetary relationships with the Hess family. Your confluence of those dynamics calls in to extreme problem the capacity regarding this board for you to efficiently oversee John Hess.the Company slate that's up pertaining to election epitomizes these issues. of the actual five individuals expected to square for election: absolutely no impartial director offers E&P operating experience; 3 directors possess served upon the board for upwards of 15 years (two for more than twenty years); and the couple are usually joint executors in the Leon Hess estate (notably, these two long serving family members confidants certainly tend to be a member and chair in the Hess board's compensation committee).Shareholders tend to be frustrated with this not enough oversight and want to keep the board accountable:Shareholders get consistently withheld votes coming from directors despite there being absolutely no alternative: the last period current directors had been up regarding election 39%, 39%, as well as 33% regarding votes4 were withheld via Nicholas Brady, Thomas Kean, as well as Frank Olson, respectively (and this was the 3rd along with 2nd consecutive election along with higher compared to 20% associated with votes withheld against Brady along with Olson, respectively). With Regard To context, the typical percentage associated with votes withheld coming from directors within the S&P 500 is actually under 5%.Shareholders have furthermore overwhelmingly expressed opposition to become able to Hess's staggered board: inside the past 5 years, 90% involving non-insider shareholders have voted for proposals to become able to declassify the particular board upon three separate occasions.Shareholders recognize that Hess's compensation policy will be structured to be able to prize mediocrity: support for Hess's "Say in Pay" ranked 149th from 156 energy Companies and 427th out in the 450 S&P companies which throughout fact had "Say in Pay" votes.Simply By nominating 5 extremely accomplished executives with substantial expertise and deep experience, we desire to provide shareholders an alternative towards the poor performance and not enough accountability currently with Hess.Shareholder Nominees May Reassess and Redouble HessWe think that the Shareholder Nominees will deliver the actual high-quality, experienced, and also impartial company judgment that's desperately required within the Company's boardroom. While a new shareholder, we're excited in which specialists of this caliber possess stepped forward:Rodney Chase (Former Deputy group Chief Executive, BP): senior executive experience managing each along with every major business with a global integrated energy company. Retiring from BP throughout 2003, he served as CEO involving BP America, CEO associated with Marketing and Advertising & Refining, as well as CEO associated with E&P.Harvey Golub (Former Chairman & Chief Executive Officer, American Express): substantial experience with finance, operations, and strategic turnarounds. His refocusing involving American Express within the 1990s has been referred in order to as "one of the actual very impressive turnarounds of a big public corporation in history."Karl Kurz (Former Chief Operating http://www.amazon.com/Special-Occasion-Bobby-Valentino/dp/B000GPIPNI - http://www.amazon.com/Special-Occasion-Bobby-Valentino/dp/B000GPIPNI - Officer, Anadarko): helped to lead any main transformation of a huge impartial E&P. He was instrumental within building any top-tier exploration capability, instilling richesse discipline, and improving operational focus.David McManus (Former Executive Vice President, Pioneer All-natural Resources): substantial expertise overseeing international E&P assets, furthermore served as EVP with BG Team as well as President of Arco Europe. He oversaw any widely-hailed worth accreting divestiture program associated with Pioneer's international portfolio that has been known as "a text book repositioning of your portfolio."Mark Smith (Current Senior Vice President & Chief Economic Officer, Ultra Petroleum): manages lowest price operator inside resource play environment. Ultra will be widely recognized pertaining to delivering industry-leading operating performance along with prioritizing lucrative growth by means of cycles. He offers direct encounter monetizing infrastructure assets inside a tax effective way while maintaining strategic control.Leaders associated with this caliber would be the welcome add-on towards the board of just about any company. to Hess, that they deliver substantial, relevant experience of areas where the Business sorely lacks counsel as well as oversight.Exactly what is actually Hess Corporation and Exactly What Are the Problems and Solutions?Just what is actually Hess?Hess is an incredibly scattered organization. Because described inside its own 10-K:"Hess Corporation is a global integrated energy business in which operates inside a couple of segments, Exploration and Production (E&P) and Advertising and also Refining (M&R). Your E&P segment explores for, develops, produces, purchases, transports along with sells crude oil along with natural gas. These kinds of exploration and production actions just take place principally throughout Algeria, Australia, Azerbaijan, Brazil, Brunei, China, Denmark, Egypt, Equatorial Guinea, France, Ghana, Indonesia, the particular Kurdistan region regarding Iraq, Libya, Malaysia, Norway, Peru, Russia, Thailand, the United Kingdom and the united States (U.S.). the M&R segment manufactures refined petroleum goods as well as purchases, markets and trades refined petroleum products, gas along with electricity. Your Corporation owns 50% associated with HOVENSA L.L.C. (HOVENSA), the joint venture in the U.S. Virgin Islands. Throughout January 2012, HOVENSA announced a choice to always be able to shut down its refinery as well as function the particular complex as a possible oil storage terminal. The Actual Corporation in addition operates a refining facility, terminals, as well as store gasoline stations, most of which in turn include convenience stores which are found about the east Coast associated with the particular United States."Perhaps this rambling description doesn't mention that will Hess operates a hedge fund using shareholder capital, owns an electric generating station, along with funds the introduction of gasoline cell technology.Within our view, your breadth in the Company's operations causes it to be difficult for you to manage, produces an environment where distracted management help make poor decisions, renders meaningless just about any make an effort to articulate an obvious strategy, along with hinders any try the board hypothetically may make in order to hold management accountable for executing on a strategy, for the extent 1 existed. Through the actual outside, it helps create the Organization challenging for you to analyze.Yet, buried inside your Organization tend to be highly valuable, high-potential assets.Premier Situation in the BakkenHess owns one of probably your most useful acreage positions in the Bakken, a premier U.S. useful resource play. In addition for an extensive report on the actual significant well performance information that are available, Elliott retained W.D. Von Gonten & Co., an industry-leading petroleum engineering and geological services firm which is the acknowledged expert inside unconventional source play evaluations, to assist evaluate the actual relative worth of Hess's Bakken situation in order to peers such as Continental and also Oasis.Von Gonten discovered that Hess's Bakken asset has a higher for each acre value as compared to Continental and also Oasis and that the total price of Hess's acreage will be comparable to the total value of Continental's Bakken acreage. This particular view involving the caliber of the Company's acreage position has been supported by simply anecdotal commentary off their Bakken-focused operators. Additionally in order to its extraordinarily valuable, very coveted Bakken play, the actual Organization has potentially useful positions within each the actual Utica as well as the Eagle Ford.Crown Jewel Long-life Oil as well as Oil-Linked Offshore AssetsOffshore, the particular Organization owns substantial passions in many "crown jewel" assets, such as within the Gulf of Mexico, the actual North Sea, West Africa, as well as Southeast Asia. The Actual significant majority of they're really long-life assets, and also nearly each is oil as well as oil-linked. Furthermore in order to analyzing publicly accessible production data, Elliott employed Wood MacKenzie as well as Rystad data to construct out our valuation of each material asset within Hess's portfolio. Further diligence included discussing the actual assets together with publicly traded partners in the relevant concessions and also singling out particular material assets for a further review by simply an independent consultant.We Estimate that the Intrinsic value of Hess Might Be Up for you to $126 for each shareWhen managed appropriately, we think your equity value of Hess could be up to $126 per reveal - a new massive premium in order to where the shares presently trade in the market. but reclaiming this shareholder worth demands substantial strategic change.Absence regarding FocusGenerally there are truly the problems from Hess, and we believe they will stem from a insufficient emphasis and also strategy. Although over 90% of Hess's worth derives from its E&P operations, the particular company keeps a laundry set of downstream (and out involving just about any stream) distractions. Just put: Precisely what is surely an E&P company in 2013 carrying out in the hedge fund business? Why can the actual Organization fund gasoline cell technology? Just what is the strategic purpose of owning an electric generating station?This specific lack of focus pervades Hess's upstream portfolio as well. Hess is throughout over twenty countries. While John Hess features said: "We have the portfolio of your major, we possess the technical challenges of a major..." Yet Hess will be less when compared with 1/11th your sized the majors it lists as its proxy peers. The idea can be 1/23rd the particular size Exxon along with 1/12th the particular size of Chevron. Through definition, if Hess spreads itself as broad as a main using a fraction in the resources, it really will not have the wherewithal to always be able to compete.Absence regarding target results in poor capital allocation decisions as well as poor execution. Hess abounds together with examples of both.capital AllocationIn spite of Brent oil rates quadrupling over yesteryear decade, Hess features neither grown its dividend nor repurchased a new discuss regarding stock. where provides your capital gone? Wood Mackenzie estimates that within the last five years, Hess destroyed $4 billion of money via its failed exploration program--more when compared with 20% in the entire marketplace capitalization regarding the Company.over the past decade Hess described itself like a "high-impact explorer." The Organization frequently drilled rank exploration wells with 80% in order to 100% operating interest--counter towards the widely followed sector practice of farming out prospects. Farm-outs accomplish a pair of goals: (1) due for you to the very speculative nature involving exploration activities, spreading one's risk will be prudent (which would happen for you to be specially useful for Hess, due in order to the relatively few such bets a new company involving its size may place); as well as (2) maybe much more importantly, explorers are usually in the situation to validate his or her investment thesis within the marketplace. Ignoring exploration greatest practices, Hess disregarded the particular opportunity to understand which the remainder of the sector might not need thought also very in the holes directly into which the particular company had been pouring billions of bucks of shareholder capital.ExecutionHess's mismanagement with the Bakken has been striking.Within 2009, contrary to become able to each other operator inside the play, the company embarked about and persisted using a plan of drilling dual lateral wells (a technologies ill-suited towards the Bakken). Your subsequent well performance was substantially beneath business average.5 We spoke along with a range of sector executives whom think this is the effect involving attempting to deliver high-tech, complex drilling techniques in which characterizes deep drinking water exploration right in to a play that will necessary any low-cost lean manufacturing approach.Within 2012, the actual Company's well expenses in the Bakken spiraled from control. Regarding the first 50 % of the year, for each well drilling and also completion costs had been $3 million higher for each well than market typical (a 30% cost overrun that equates to within extra of $5.6 billion worthwhile destruction if left unchecked). We have usually heard anecdotal reviews regarding firms in which owned an interest in Hess acreage going "non-consent"--that is, passing around the option to participate in Hess-drilled wells (fairly remarkable given the Bakken will be certainly 1 of the highest return shale plays current today). Senior executives regarding Bakken-focused players also noted which they consistently make an effort to swap out of Hess-operated wells, even though directly into more serious acreage, so as in order to avoid these return-destroying price overruns. Although the actual Business may insist well expenses are usually trending down, it isn't clear whether as well as not this represents improvement coming from a really low base or just the particular migration to some reduced price completion technique (with Hess's price remaining substantially over sector players utilizing individuals lower price methods).Poor execution not only decreases the want for current assets, but within addition squanders the possible of corporate opportunities. in April 2010, as competitors had been centered on assembling positions within the Eagle Ford shale (the premier liquids resource play in the U.S.), Hess tied its extremely own hands with an ill-conceived joint venture using mysterious ZaZa energy that was predetermined for you to fail. ZaZa was paid by simply Hess for you to acquire acreage regardless of expense or quality as well as bore no danger regarding Hess's capital losses. two a long time later, after competitors had secured extremely valuable Eagle Ford positions, Hess realized its blunder and also attempted to obtain out with the joint venture. The Actual cumulative monetary loss was $175 million within money payments as well as the forfeiture well over 60,000 acres within the Eagle Ford. Further, there's still ongoing litigation associated to this transaction, as Hess paid out lease brokers pertaining to acreage that was never delivered (bespeaking insufficient capital controls). Nevertheless significantly even worse will end up being the foregone multi-billion dollar chance that Hess's competitors were able to seize.lack of Concentrate is RecurringThe purpose isn't whether or not necessarily the company offers modestly reduced its exploration program, halted making use of dual lateral wells inside the Bakken, or even determined to become able to stay away from long term contracting failures such since the ZaZa JV. The Particular point is usually that lack of target is a chronic issue at Hess that will remains unchecked from the board.in short: history will always repeat itself at Hess if action is actually not taken.An example:Inside April 2003 Hess management advised shareholders that the Hess exploration program would focus on deepwater Gulf of Mexico, West Africa, along with Southeast Asia. over the subsequent decade, Hess poured money as well as management moment directly into exploration inside Australia, Brazil, China, Colombia, Egypt, France, Kurdistan, Libya, as well as Peru using the value-destroying results in depth over through Wood Mackenzie.Again, within November 2012, Hess management apologized to end up being able to shareholders for any "strategy that didn't work" as well as explained it had "shifted our exploration strategy" to a new few http://giftideasforgirls.info - birthday gift ideas - primary target areas: Gulf of Mexico, West Africa, and Asia-Pacific--exactly what we were told a decade ago. This kind of occasion Hess management team went further and also stated they will would will absolutely no longer drill 80% for you to 100% working interest wells as well as instead would act inside accordance with almost all the industry's widely-followed risk management practice regarding farming out prospects described above. Just ten mere seconds later, Hess management was enthusiastically referring to seeing "lots of hydrocarbons" within Kurdistan where it might drill 85% working interest wells. 2 weeks later, Hess management reached an agreement to improve their publicity for you to Paris Basin exploration to an 85% operating interest.Precisely what will be occurring here? Neither France nor Kurdistan is within the "focus areas" as well as both are being drilled with 85% operating interest. where is the accountability with regard to broken promises to be able to shareholders?While Hess learned of our own intention for you to nominate directors, they responded with yet a lot more promises. Tend To Be we now to think that a hastily announced exit coming from its refining along with terminal organizations is really a credible commitment in order to refocusing the company?Hess's Configuration of Assets results within market Penalties and also Management ChallengesInside all industries the market penalizes insufficient emphasis and strategy along with returns clear focus and also execution--E&P isn't any different. given the history regarding mishaps, it is no surprise that will analysts write with regards to "investor skepticism" as well as "loss regarding confidence" within Hess management execution.Yet the particular price reduction industry relates to Hess will go deeper.Marketplace PenaltyBakken operators trade at substantially higher cash flow multiples when compared with large-cap internationals.6 The Particular typical Bakken pure play trades in 8.4x versus 4.3x with regard to large-cap internationals--nearly a new 100% higher multiple.Hess, a new mix involving both, trades with a shocking 3.0x. Why?Bakken operators possess substantial capital intensity and material totally free money flow gaps--two operating realities regarding source plays within the first stages of their particular development. Investors within Bakken pure plays are generally comfortable with richesse intensity along with manageable money flow gaps, since there's a higher amount of transparency regarding in which usually the money goes and also its expected return. Conversely, investors throughout large-cap internationals penalize money intensity and cash flow gaps as indicators associated with risk along with not enough money control.Rather as compared to receiving a new blended multiple, Hess will be penalized twice:Penalty #1: Hess is grouped together with other large cap internationals and thus will not find credit rating for its Bakken asset.Penalty #2: Hess receives a lower multiple than its large-cap international peers thanks for you to its capital intensity and money flow gap (which simply are credited to its Bakken operations). We think your absence of confidence within management further pressures Hess's multiple.The Actual double penalty can be exacerbated by the fact that twenty out with the 22 Wall Street analysts that cover Hess primarily include large cap internationals. Just a couple of analysts also cover Bakken operators, also it is actually absolutely no coincidence that will these two analysts use a 40% higher average price goal for Hess.by separating Hess straight into Hess Useful Resource Co. and Hess International, the actual Organization includes a tremendous possibility to obtain multiple expansion about each portions associated with its business.Management ChallengesPerception isn't the only real challenge introduced through Hess's combination of these sorts of assets. Source plays along with conventional offshore assets furthermore need completely different management capabilities being successful. successful useful resource play operators have a maniacal give interest to cost; the $100,000 expense overrun on the well, repeated 1,000 times on each as well as every well across the entire play, could possess a substantial impact on all round returns. Conversely, the undeniable fact that offshore basins need substantially fewer wells, combined with fiscal regimes that often provide beneficial recoupment of richesse outlays, make the economics associated with deep water oil extraction surprisingly insensitive to price overruns. The Particular conflicting management specifications involving useful resource plays and deep drinking water basins helps make managing each businesses inside the identical company fairly challenging.We believe Hess's illogical, difficult to worth configuration involving assets will be evidence of your lack of emphasis which breeds poor execution, encourages appalling richesse allocation, along with brings about perpetual undervaluation simply by your market.Redouble HessHess requires a thorough restructuring in which realigns its present multitude involving companies and also assets in to manageable, concentrated enterprises. to which end, we think the Hess board should:1. Spin off the actual Bakken together using the Eagle Ford along with Utica acreage2. Divest downstream assets along with monetize source play infrastructure3. Streamline the actual remaining international portfolioSpin off your Bakken--Creating Hess Useful Resource Co.Buried within Hess Corporation is certainly one of your premier U.S. useful resource play centered companies. Comparable in order to Continental, Pioneer, Range, as well as Cabot, along with based entirely in its existing asset base, Hess resource Co. would possess a substantial place in a main U.S. useful resource play in supplement to strong secondary positions (in Hess's case the actual Eagle Ford and also Utica).Alternatively involving being anchored simply by the reduced multiple associated using large-cap internationals, Hess Useful Resource Co. would receive the particular substantial multiple that will is a item regarding NAV-based valuation that will completely will take under consideration undeveloped acreage--as the marketplace is up to end up being able to date on the worth of the particular Bakken, Eagle Ford, as well as Utica.We estimate which the spin-off of Hess Source Co. could create more than $28 for each talk about regarding further worth with regard to Hess Corporation shareholders--a almost 60% increase in the Company's stock.Divest Downstream Distractions and also Monetize Midstream AssetsHess Corporation money will be tangled up in the multitude associated with companies it should exit: Hedge Funds, Electric Generation, List & Marketing, Distribution, Refining, along with others. Inside addition, Hess has poured more than $1 billion of shareholder money in to midstream assets around its Bakken acreage when you will find numerous cheaper associated with capital alternatives in which would allow Hess for you to maintain strategic control.Through divesting from downstream as well as tax effectively monetizing midstream assets by means of MLP or even REIT structures, Hess Corporation could launch up to $5.5 billion associated with richesse which might be returned for you to shareholders. We estimate that carrying out such transactions would generate more than $11 per discuss of further worth regarding shareholders--over a new 20% impact on the stock price. Throughout addition, we believe the marketplace will give Hess any higher general multiple as confidence was gained in which management had been credibly emphasizing its the majority of valuable assets and also getting rid of distractions.Streamline Hess InternationalSince a new consequence of the spin-off involving Hess resource Co. as well as the divestment and monetization regarding downstream as well as midstream, respectively, we believe Hess International would emerge like a marquee collection regarding long-life oil (or oil-linked) assets. We believe the particular reduced richesse intensity and also positive totally free cash flow would outcome inside the market assigning a new substantially higher multiple much more akin to Hess's new York and also London listed peers, leading to more than $36 for each discuss associated with extra worth to Hess Corporation shareholders--over a new 70% rise in shareholder value.We believe in which Refocusing Hess Could Generate over $76 per Discuss associated with Further value = More Than 150% UpsideMaking separate enterprises that can transparently execute against certain strategies will reclaim decades involving lost shareholder value. Focus, execution, and also accountability are generally powerful tenets regarding enterprise. They Will are needed at Hess.Elliott Looks Forward to Introducing your Shareholder Nominees for the Proprietors associated with HessYour suggestions put down over are the result of substantial investigation along with analysis simply by Elliott along with reflect our thoughts on the many promising path to maximize shareholder value. Our belief within the prospective associated with Hess will be demonstrated through the substantial investment we are making within the Company's stock.Although this letter presents Elliott's perspectives, Shareholder Nominees will form his or her own, independent views around the Company, its assets, as well as its strategy. These kind of five accomplished individuals bring deep knowledge and also experience in areas that are severely lacking within the current board. We appear forward in order to introducing these people towards the shareholders inside the weeks and several weeks ahead.Sincerely,John PikeQuentin Koffeyadditional InformationElliott Associates, L.P. and also Elliott International, L.P. ("Elliott") intend to produce the filing with almost all the Securities and Exchange Commission of the proxy statement as well as an accompanying proxy card to become utilized to solicit proxies in connection with the 2013 Annual Meeting associated with Stockholders (including just about any adjournments or even postponements thereof or even any particular meeting that will could always be known as in lieu thereof) (the "2013 Annual Meeting") of Hess Corporation (the "Company"). Info relating towards the participants in these proxy solicitation continues to end up being able to be included in supplies filed in January , 2013 by simply Elliott with most the Securities along with Exchange Commission pursuant to Rule 14a-12 under the actual Securities Exchange Act of 1934, as amended. Stockholders tend to be encouraged in order to study the definitive proxy statement as well as other documents associated towards the solicitation involving stockholders of the Organization with regard to use at the 2013 Annual Meeting after they become available since they'll contain important information, such as further info relating to the members such proxy solicitation. Whenever completed as well as available, Elliott's definitive proxy statement along together with a form of proxy will be mailed for you to stockholders associated with the particular Company. These kinds of materials as well as other supplies filed simply by Elliott in link with the solicitation of proxies will most likely be offered by zero charge at the Securities as well as Exchange Commission's web site with www.sec.gov. Your definitive proxy statement (when available) as well as other relevant documents filed through Elliott with all the Securities and Exchange Commission will even be available, without charge, by simply directing the request to Elliott's proxy solicitor, Okapi Partners, at its toll-free quantity (877) 796-5274 or perhaps by method of e-mail with email@example.com.Cautionary Statement regarding Forward-Looking StatementsThe Particular information herein contains "forward-looking statements." Certain forward-looking statements may be identified by the fact that they are usually doing not really relate strictly to end up being able to historical or existing facts along with include, without limitation, phrases like "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "seeks," "could" or maybe the negative involving such terms or another variations on such terms as well as comparable terminology. Similarly, statements in which describe our objectives, plans or perhaps objectives are forward-looking. Our forward-looking statements are depending on our existing intent, belief, expectations, estimates as well as projections relating to the company and projections relating to your market in which it operates. These statements aren't guarantees of long term performance and involve risks, uncertainties, assumptions as well as other aspects which are challenging to predict and also that will could trigger actual results in order to differ materially. Accordingly, an individual shouldn't rely upon forward-looking statements like a prediction associated with actual results and real results can vary materially from what is expressed in or even indicated through the forward-looking statements.Regarding Elliott AssociatesElliott Associates, L.P. and its sister fund, Elliott International, L.P. have got greater than $21 billion associated with money beneath management. Founded throughout 1977, Elliott is among the actual oldest hedge funds beneath constant management. The Particular Elliott funds' investors contain big institutions, high-net-worth people and families, along with employees of the firm.###one Elliott beneficially owns 13.76 million shares. Possession percentage depending on September 2012 10-Q share count associated with 341,547,049.two With Every Other with this particular letter we are today creating available to Hess shareholders an exhibition which explains along with supports within greater detail the actual factors we lay out below, including your sources for our statements and analysis. Which presentation, and all sorts of materials that individuals distribute to Hess shareholders, is likely to be available at our website www.ReassessHess.com. We encourage most shareholders in order to review these materials.3 Just About All percentages regarding stock value are calculated as of November 28, 2012--the date before that Elliott began for you to obtain a significant amount involving Hess stock.4 Percentage involving votes withheld; Hess estate will be assumed for you to have voted pertaining to nominees and it is excluded from calculation.5 Elliott estimate based on public well data through North Dakota Industrial Commission6 Bakken operators obtain a higher EBITDA multiple simply because they may well be typically valued on the NAV schedule that can take under consideration their particular substantial undeveloped acreage: analysts and also investors model out the drilling plan depending on single well economics. the repeatability with the drilling procedure (in the right play and also with almost all the correct operator) lends itself for you to such a valuation technique.