Hess Corporation (NYSE: HES) (“Hess” or “the Company”) today sent a
letter to all shareholders in connection with its 2013 Annual Meeting of
Shareholders, to be held on May 16, 2013.
The Board recommends that shareholders vote FOR the election of Hess’
highly qualified independent nominees on the WHITE proxy card.
For information about Hess’ transformation and the 2013 Annual Meeting,
please visit: www.transforminghess.com.
Included below is the full text of the letter to Hess shareholders:
Dear Fellow Shareholder:
HESS’ TRANSFORMATION IS WORKING
VOTE THE WHITE
PROXY CARD TODAY TO CONTINUE OUR MOMENTUM
Your vote at the May 16, 2013 Hess Annual Meeting will help determine
the future of your Company and the long-term value of your investment in
Hess. Please vote the enclosed WHITE
proxy card today to ensure you have an independent Board of Directors
committed to pursuing the right strategy on behalf of all
Hess shareholders.
In recent discussions with shareholders, we have reiterated our belief
that our strategy to transform Hess into a more focused, pure play
exploration and production (“E&P”) company is the right one. We
appreciate the strong support we have received, and promise to continue
working hard on your behalf.
“EXECUTION HAS CLEARLY BEEN OUTSTANDING”
-Asit Sen, Cowen, April 3, 2013
There is tremendous value in Hess, and we are taking decisive actions to
deliver that value to all Hess shareholders. Our core oil and gas assets
are some of the best in the industry, and our world class E&P team is
executing in the field to ensure that we are realizing the intrinsic
value of these assets.
In our leadership position in the Bakken oil shale, for example, we are
increasing production while achieving best in class drilling and
completion costs.
Hess appears to be drilling one of the best portfolios of wells in
the industry according to our analysis.
-Gil Yang, Discern, March 27, 2013
We also continue to significantly cut capital expenditures and
exploration spending, while driving production growth and maintaining a
focused exploration program. Our recent success in Ghana, where we
enjoyed a succession of seven discoveries, is proof that our focus on
higher growth, lower risk, oil-linked E&P assets will secure growth well
into the future.
Additionally, since beginning our five-year transformation in 2010, we
have been executing a successful asset divestiture program that has
enabled us to focus on our most promising higher growth, lower risk E&P
assets. Specifically, we have:
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Phase I (January 1, 2010 – July 25, 2012):
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Completed $1.7 billion in non-core E&P asset sales, including
Snohvit, Schiehallion, and Bittern.
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Closed the HOVENSA joint venture refinery in St. Croix, U.S.
Virgin Islands.
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Phase II (July 25, 2012 – March 4, 2013):
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Began the sale process for Beryl, Azerbaijan, Eagle Ford, Russia
(Samara-Nafta), and our terminal network.
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Completed exiting the refining business with the closure of Port
Reading.
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Phase III (March 4, 2013 – Ongoing):
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Announced the sale of our Russian subsidiary, Samara-Nafta, for
total after tax proceeds to Hess of $1.8 billion.
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Completed the sales of Beryl and Azerbaijan, respectively, and
announced the sale of Eagle Ford.
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Began a sale process for our mature E&P assets in Indonesia &
Thailand, as well as remaining downstream businesses.
So far in 2013, Hess has announced or completed asset sales worth $3.4
billion in total after tax proceeds, with more to come. By applying the
proceeds from these 2013 divestitures to reduce debt and strengthen our
balance sheet, we will have the financial flexibility both to fund
future growth and also to direct most of the proceeds from additional
asset sales to returning capital directly to shareholders through our
increased dividend and $4 billion share repurchase program.
The market has had an overwhelmingly positive response to these
transactions: Hess shares significantly outperformed the peer
index, rising from $43.93 to $73.58 per share, an increase of 67% in the
period between our mid-year strategy update on July 25, 2012 and the
April 1, 2013 announcement of the sale of Samara-Nafta.
DON’T LET ELLIOTT’S SHORT TERM AGENDA HALT OUR TRANSFORMATION
Unfortunately, Elliott Management, a hedge fund that recently acquired
shares in Hess, has its own agenda; it is seeking to disrupt our
progress in favor of a short-term exit. Having put forward a plan to
break up Hess that was widely discredited by Wall Street analysts and
industry observers, and most importantly many of our shareholders,
Elliott is now running a proxy contest to attempt to install five
hand-picked dissident directors to your Board in order to continue to
push forward with its flawed and ill-conceived plan.
The fact remains that Hess, under the leadership of its independent
directors, already has the right plan in place to deliver shareholder
value, and is executing well. Our transformation is working. With
your vote on the WHITE proxy card, you will
help ensure that Hess’ future is guided by an independent Board of
Directors that is accountable to all Hess shareholders. You may vote
by telephone, by Internet, or by signing, dating and returning the
enclosed WHITE proxy card in
the postage‐paid envelope provided. Please take a moment and vote your
shares today.
ELLIOTT’S VALUE DESTRUCTIVE IDEAS LACK CREDIBILITY
While we are making considerable progress and creating value, Elliott’s
plan undermines the potential for future real value creation. Astute
market commentators agree:
…we do not think breaking up the company into an onshore resource
player (Hess Resources) and international, mostly offshore, entity (Hess
Remainco) is the best way to generate value.
-Jeb Armstrong, Credit Agricole, March 26, 2013
Our long standing view on the shares is that Hess has provided
line of sight for investors that provides a route to release value and
underlines a balanced growth outlook that is competitive versus peers.
To separate the company in two introduces unnecessary risks and a level
of uncertainty that reasonably impacts our current view of the
investment case.
-Doug Leggate, Bank of America Merrill Lynch, April 1, 2013
ELLIOTT’S BACKWARD LOOKING ANALYSIS IS MISLEADING
Despite misleading shareholders by cherry picking data and using
deceptive statistics to suit its purpose, Elliott cannot hide from
the facts:
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Since 1995, Hess has delivered total returns of nearly 400% and
outperformed the S&P 500 – the gold standard benchmark index – by over
75%.
-
Further, notwithstanding the wide discretion Elliott takes in
mixing-and-matching peer sets, Hess – operating historically as an
integrated company – has outperformed its integrated proxy peers by
nearly 200% over the past decade, and in excess of 20% over the past
year.
We believe that the transformation of Hess into a pure-play E&P
company will deliver real, lasting value to Hess shareholders that
outstrips the flawed assumptions underlying Elliott’s short-term plan.
YOUR VOTE IS IMPORTANT – NO MATTER HOW MANY SHARES YOU OWN
MAKE
YOUR VOICE HEARD
PLEASE VOTE THE WHITE
PROXY CARD TODAY
Hess’ new, independent
director nominees John Krenicki Jr., Dr. Kevin Meyers,
Fredric Reynolds, William Schrader, and Dr. Mark Williams,
are highly credentialed senior executives with the seriousness of mind
and soundness of judgment to oversee the execution of a transformation
plan that the market views as clearly superior to the Elliott
alternative. We urge you to vote for them today on the WHITE
proxy card.
Whether or not you plan to attend the Annual Meeting, you have the
opportunity to protect your investment by promptly voting the WHITE
proxy card. We urge you to vote today by telephone, by Internet, or
by signing, dating and returning the enclosed WHITE
proxy card in the postage-paid envelope provided. We urge you to
reject Elliott’s short term, value destructive ideas by discarding any
proxy materials sent to you by Elliott Management or its representatives.
On behalf of the Board of Directors, we thank you for your continued
support, and we look forward to continuing to deliver outstanding value
to you in the future.
Sincerely,
John Hess
Chairman and CEO
Cautionary Statements
This document contains projections and other forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These projections
and statements reflect the Company’s current views with respect to
future events and financial performance. No assurances can be given,
however, that these events will occur or that these projections will be
achieved, and actual results could differ materially from those
projected as a result of certain risk factors. A discussion of these
risk factors is included in the Company’s periodic reports filed with
the Securities and Exchange Commission.
This document contains quotes and excerpts from certain previously
published material. Consent of the author and publication has not been
obtained to use the material as proxy soliciting material.
Important Additional Information
Hess Corporation, its directors and certain of its executive officers
may be deemed to be participants in the solicitation of proxies from
Hess shareholders in connection with the matters to be considered at
Hess’ 2013 Annual Meeting. Hess has filed a definitive proxy statement
and form of WHITE proxy card with the U.S. Securities and Exchange
Commission in connection with the 2013 Annual Meeting. HESS SHAREHOLDERS
ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING WHITE PROXY CARD AS THEY CONTAIN IMPORTANT INFORMATION.
Information regarding the identity of potential participants, and their
direct or indirect interests, by security holdings or otherwise, is set
forth in the proxy statement and other materials filed with the SEC.
Shareholders will be able to obtain any proxy statement, any amendments
or supplements to the proxy statement and other documents filed by Hess
with the SEC for no charge at the SEC’s website at www.sec.gov.
Copies will also be available at no charge at Hess’ website at www.hess.com,
by writing to Hess Corporation at 1185 Avenue of the Americas, New York,
NY 10036, by calling Hess’ proxy solicitor, MacKenzie Partners,
toll-free at (800) 322-2885 or by email at hess@mackenziepartners.com.
