michal pelzig

ESG Risks and Opportunities:Marcellus Shale Gas Study

TBLI Conference Europe 2010

12 November, 2010

2

Hess Corporation Profile (2009)

Sales and other operating revenue USD 2.96 bnNet income USD 0.74 bnCapital and exploratory expenditures USD 3.25 bnTotal assets USD 2.95 bnTotal net hydrocarbons produced 408,000 BOE/DRefined petroleum product sales 473,000 BOE/D

2009 Operating Highlights

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Enterprise Risk Factors

• Commodity price

• Technical

• Oil & Gas reserves and discounted future net cash flow

• Political

• Environmental

• Climate Change (2009)

• Competitive

• Catastrophic

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U.S. Shale Gas Basins in the Lower 48 States

Source: US EIA

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Source: US EIA, Lippman Consulting (2010 estimated)

Shale Gas Production by Basin, 2000-2010

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Rapid Marcellus Development

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Drilling Permits Issued (through August, 2010)

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Information Resources

http://live.psu.edu/story/49699#rssMarcellus_shalePennsylvania State University Marcellus Center for Outreach and Research

FRACTRACKER http://www.fractracker.org/p/about-us.htmlUniversity of Pittsburgh Graduate School of Public Health

Center for Healthy Environments and Communities (CHEC)

Foundation for Pennsylvania Watersheds

Heinz Endowments

Backup Slides

Climate Change – Regulatory/Emissions Risk

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GHG Emissions Profile: Stationary Sources

Net Equity Greenhouse Gas Emissions (CO2e)

44

39

35

0

2

4

6

8

10

12

2008 2009 2013

Mill

ion

Tonn

es C

O2e

Mill

ion

Tonn

es C

O2e

/100

0 BO

E

M&R Operated E&P JDA JVSonaHess JV HOVENSA JV Non-operated E&PSamara Nafta Normalized GHG

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GHG Regulatory Risk Profile

Refinery

E&P Production

Gas Plant

EU ETS, Norway carbon taxes

US EPA GHG Reporting RuleEPA GHG Reporting Rule Coverage (Stationary Sources)

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Climate Change Physical Risk Profile

Refinery

E&P Production

Gas Plant

Terminals

Marketing