Financial Study By Lekan Andrew

Overview/Introduction:
This project focuses on financial scrutiny of Hess. Extensive research will be done to analyze and elaborate on Hess` stock price and commodity price in the last 6 years. The commodity of focus will be crude oil (from their Exploration and Production practice) and regular gas (from their Marketing and Refining practice). The commodity prices will be benchmarked against oil prices in New York to represent the East coast where most of Hess` operations are conducted.

Graph of Hess` stock price between 2004-2010

From this graph, we notice an upward trend in the stock price and it reaches its peak in 2008. There is a sharp drop afterwards which can be explained by a series of financial crisis that ensued during the 2008 American recession. Through year 2009 up until mid-2010, Hess struggles to keep a high stock price and we notice a gradual recovery from then on.

Graph of Hess` commodity price between 2004-2010

From this chart we are able to compare regular gas prices of New York (which represents Hess` East coast benchmark) with the average price of the U.S. We notice that Hess` regular gas price is slightly higher than the average U.S. price. At some points, the prices match up and are the same but through out the 6 year spread, the average U.S. gas price is never higher than Hess`. The crude oil price increases gradually from 2005. In 2008 it reaches its peak and drops rapidly which like Hess` stock price can be explained by the 2008 financial crisis or recession. Just like Hess` stock price, the price of crude oil gradually recover s from 2009 till present. It is safe to say that Hess`s stock price mirrors the performance of its commodity price.

Table showing highs and lows of Hess` stock price between 2004-2010 and relevant events YEAR HIGH : Date, Price LOW: Date, Price RELEVANT EVENTS

2008

June 8th , $126

November 8th , $52

1) CAUSING HIGH:

2) CAUSING LOW:

On June 6th, the New York Mercantile Exchange saw a huge increase in energy prices caused by depreciating value of the U.S. dollar and military threats against Iranian nuclear facilities. 43 states report a decrease in gas price of less than $2.50 with a drop in the east coast of 44.5%.

3)

Generally, recession fears caused energy prices to plummet. All energy sectors were affected; wholesale electricity prices dropped sharply by 77% since its peak in June.

CAUSING LOW:

Graph showing Hess` stock price against the price of NYMEX futures Crude oil

This graph overlays the price of Hess stock over the last 5 years against the price of its commodity, crude oil.

Graph showing Hess` stock price against the price of NYMEX futures Natural Gas

This graph overlays the price of Hess stock over the last 5 years against the price of its commodity, natural gas.

http://www.gasbuddy.com/gb_retail_price_chart.aspx?city1=USA%20Average&city2= NewYorkState&city3=&crude=y&tme=72&units=us http://tools.morningstar.com/charts/mcharts.aspx?security=HES&CountryId=USA http://phx.corporate-ir.net/phoenix.zhtml?c=101801&p=irolnewsArticle&ID=750683&highlight= http://phx.corporate-ir.net/phoenix.zhtml?c=101801&p=irolnewsArticle&ID=691537&highlight= http://energymarketmaker.com/files/Energy_Market_Maker_Newsletter__June_8_2008.pdf http://money.cnn.com/2008/11/08/news/economy/gas_prices/index.htm http://online.wsj.com/quotes/stock_charting.html?symbol=HES&type=usstock&osymb= HES&x=63&y=10&time=100&startdate=1/1/2005&freq=1dy&enddate=12/09/2010&wtype =64&compidx=NG11F~2171376&comp=&ma=0&maval=200&uf=0&sid=2310573&symb= HES&lf=1&lf2=0&lf3=0 http://online.wsj.com/quotes/stock_charting.html?symbol=HES&type=usstock&osymb= HES&x=68&y=11&time=100&startdate=1/1/2005&freq=1dy&enddate=12/09/2010&wtype =64&compidx=CL11F~2271839&comp=&ma=0&maval=200&uf=0&sid=2310573&symb= HES&lf=1&lf2=0&lf3=0