Hess Sends Second Letter to Shareholders
Encourages Shareholders to Preserve the Integrity of the Company′s
Transformation and Protect Long Term Value
Recommends Voting the WHITE Proxy Card for the Election of Hess′
Highly Qualified, Independent Nominees
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:
PLEASE VOTE THE WHITE PROXY CARD TODAY TO SUPPORT THE HESS BOARD
DON′T LET THE ELLIOTT HEDGE FUND PURSUE ITS SELF-SERVING SHORT-TERM
AGENDA AND DESTROY THE LONG TERM VALUE OF YOUR INVESTMENT
Hess′ upcoming 2013 Annual Meeting is vitally important for your Company
and the value of your investment. Hess is executing a transformation
into a focused, pure play exploration and production ('E&P?) company
that will create significant and lasting value for all Hess shareholders.
Hess has nominated five outstanding new, highly experienced and
independent candidates for election to the Board, and your vote in favor
of these nominees is critical to preserve the integrity of our
transformation and protect the long-term value of your investment.
Please vote the enclosed WHITE PROXY CARD
today in support of the Hess Nominees.
In contrast, Paul Singer′s hedge fund Elliott Management recently
acquired shares in Hess and is seeking to elect five of its own
directors to your Board without even making the effort to meet with us
to learn about Hess. The Elliott directors are being compensated
directly by Elliott through an unusual contingent payment scheme that
incentivizes them to support a short term break-up plan that will
effectively liquidate Hess.
The Elliott plan, which has been roundly criticized by Wall Street
analysts, would all but foreclose any opportunity for Hess to realize
its true long-term value as a pure play E&P company. Elliott′s
nominees have signed on to this flawed plan and even agreed to accept
short-term incentives from Elliott ? even if it means sacrificing
long-term value that rightly belongs to you.
Your vote on the WHITE PROXY CARD will help ensure that Hess has a
Board of Directors focused on our market-endorsed strategy to create
lasting value for 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.
HESS IS SUCCESSFULLY CREATING VALUE
We recently unveiled a number of decisive actions to advance our
previously announced transformation to a pure play E&P company with a
higher growth, lower risk, portfolio of world class assets. We are
selling non-core assets, paying down debt, strengthening our balance
sheet, and efficiently allocating capital to fund growth. We have
committed to increased dividends and have authorized a substantial share
repurchase program that will deliver real value to you.
Hess is Executing Its Transformation Strategy
We are making significant progress against our carefully vetted
transformation plan.
On April 1, we announced the sale of our Russian subsidiary Samara-Nafta
for a total consideration of $2.05 billion. Based on our 90 percent
interest in Samara-Nafta, we are expecting total after tax proceeds of
approximately $1.8 billion. Additionally, to date in 2013, Hess has
announced or completed the sale of its interests in the Beryl field in
the U.K. North Sea; the Eagle Ford play in Texas; and the Azeri, Chirag
and Guneshli fields in Azerbaijan and the associated pipeline. Including
Samara-Nafta, total after tax proceeds from these sales will amount to
approximately $3.4 billion.
The market recognizes that Hess is pursuing a superior path to create
value. 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.
Wall Street analysts have overwhelmingly supported the Hess strategy
over Elliott′s flawed plan:
With $3.4 Bn in announced proceeds, execution has been outstanding
thus far ? particularly as it relates to timing? We applaud the progress
made by HES thus far?
-Asit Sen, Cowen, April 3, 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
In short?we do not believe that [Elliott′s] plan provides the best
path forward. In our view, Hess's own plan makes more sense?
-Philip H. Weiss, Argus, March 27, 2013
We take management′s side in terms of the future course of the
company. As it stands, management has already laid out its intention to
do much of what Elliott Management would like. However, 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
At the same time, our field team, led by Greg Hill, President of
Worldwide E&P, is delivering superior operating performance. Analysts
have noted, for example, that we are among the most efficient operators
in the Bakken oil shale, with drilling and completion costs that are
among the best in the play:
It is this issue [Bakken drilling and completion costs] that
underlines our view that as an operator Hess has consistently bettered
well results of many of its peers, in stark contrast to the premise
presented by Elliott.
-Doug Leggate, Bank of America Merrill Lynch, April 1, 2013
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
?[The] Bakken wells that Hess was much punished for last year are
a thing of the past.
-Jeb Armstrong, Credit Agricole, March 26, 2013
We are convinced that we have the right assets, the right operators, the
right technology, the right strategy, and the right Board to create
substantial value for all Hess shareholders.
THE RIGHT BOARD FOR HESS
Execution and accountability are critical at this juncture of the
Company′s transformation. As such, you deserve a Board with seriousness
of purpose ? one that is independent and committed to the execution of a
strategy that has been overwhelmingly endorsed by the market. The six
new Hess directors we have named, including our five nominees up for
election this year, bring the skills and experience we need that bear
directly on all aspects of our transformation.
- Substantial E&P credentials. The Hess
nominees have played key roles in the exploration and development of
both conventional and shale assets:
Dr. Kevin Meyers has over 30 years of experience in E&P, both
domestic and international. He spearheaded ConocoPhillips′
development in the Eagle Ford shale play, moving it from
exploration to a twelve-rig development program in under a year,
and increased investment in both the Permian Basin and Bakken
shale plays.
Bill Schrader is an outstanding E&P executive responsible for
transforming BP′s best and most valued E&P assets, including those
in Azerbaijan, Indonesia and TNK-BP, which comprised 29% of BP′s
total production.
Dr. Mark Williams spent 21 years in US upstream and midstream
operations at Royal Dutch Shell, and was responsible for US
Western E&P operations, Gulf of Mexico engineering, and Shell′s US
pipeline network.
- Large-scale corporate restructurings and
transformations:
Fred Reynolds oversaw the transformation of what was once
Westinghouse Corporation into CBS, one of the world′s most
respected media companies.
Dr. Mark Williams transformed the US downstream by leading the
creation of Shell/Texaco/Saudi Aramco alliance in the late 1990s,
and later restructuring and globalizing Shell′s worldwide
Downstream following the 2008 financial crisis.
Jim Quigley oversaw meaningful transformations in a number of his
clients over his career at Deloitte, one of the world′s largest
accounting and consulting firms.
John Krenicki helped to double the revenue of GE Energy, building
it into one of the company′s largest businesses, representing
two-thirds of GE′s non-financial revenues.
- Significant asset sale programs:
Dr. Kevin Meyers helped divest $6 billion of low growth, low
margin assets at ConocoPhillips to focus capital into emerging
shale plays.
As CFO of CBS, Fred Reynolds led several significant asset
divestitures and spinoffs, including the sale of all of the legacy
industrials business of Westinghouse, as well as the 2005 spinoff
of MTV Networks. Additionally, as a Board member at Kraft Foods,
Mr. Reynolds played a significant role in the spin out of Kraft
Foods, now Mondelez International, from Kraft.
- Strategic and financial expertise directly
relevant to Hess′ balance sheet and capital allocation program,
including its dividend and share repurchase program:
Dr. Mark Williams has unparalleled executive management oversight
experience from his time at Royal Dutch Shell where, as a member
of the Executive Committee, he was of the top three operating
executives responsible for all strategic, capital, and operational
matters.
Fred Reynolds has significant financial management experience as
former CFO of CBS Corporation and its predecessors. During his
tenure as CFO of CBS, one of the world′s leading media
organizations, shareholders experienced substantial share
appreciation and return of capital.
Jim Quigley, in having counseled clients over his 38 year career
at Deloitte, has significant expertise in providing informed
advice on the sophisticated balance sheets of large corporations.
- A balanced, independent perspective
representing the expert views of accomplished senior executives with
broad strategic, operational and financial expertise:
With the election of our nominees, 13 of the 14 members of the
Company′s Board will be truly independent, acting in the best
interests of all Hess
shareholders.
We are confident that the Hess Board, including our five new nominees,
will continue to bring you: real execution; real accountability; no
conflicts; no distractions; and strong performance.
Our nominees have reviewed the Hess plan in detail and believe it is
vastly superior to the Elliott plan. They are committed to overseeing
the continued execution of our plan to create value for all
shareholders. In contrast, Elliott is offering conflicted directors
who signed onto a payoff scheme in which Elliott will potentially reward
them with millions of dollars if they pursue short sighted strategies,
including Elliott′s breakup plan.
YOUR VOTE IS IMPORTANT - NO MATTER HOW MANY SHARES YOU OWN - MAKE
YOUR VOICE HEARD
PLEASE VOTE THE WHITE PROXY CARD TODAY
The slate listed on the WHITE PROXY CARD
is comprised of serious, accomplished and dedicated senior executives
who are committed to doing what is in the best interests of all of Hess′
stockholders. We urge you to vote for them today.
There is a very stark choice in front of all of us as Hess shareholders. It
is also an easy choice. Your vote FOR our five highly
qualified and experienced Hess director nominees will ensure Hess
continues creating near term value and driving returns over the long
term for all Hess shareholders.
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 value destructive ideas by discarding any proxy
materials sent 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.
Investor Contact:
Hess Corporation
Jay Wilson, 212-536-8940
or
MacKenzie
Partners, Inc.
Dan Burch/Bob Marese, 212-929-5500
or
Media
Contacts:
Hess Corporation
Jon Pepper, 212-536-8550
or
Sard
Verbinnen & Co
Michael Henson/Patrick Scanlan, 212-687-8080
