Ellio

tt M

anag

emen

t’s P

ersp

ectiv

es:

Ther

e A

re F

unda

men

tal,

Dee

p-R

oote

dPr

oble

ms

atH

ess

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Apr

il 20

13

ww

w.R

eass

essH

ess.

com

Add

ition

alIn

form

atio

n

Elli

ott A

ssoc

iate

s, L

.P. a

nd E

lliot

t Int

erna

tiona

l, L.

P. (

“Elli

ott”)

file

d a

defin

itive

pro

xy s

tate

men

t and

an

acco

mpa

nyin

g pr

oxy

card

with

the

Sec

uriti

es a

nd E

xcha

nge

Com

mis

sion

on

Apr

il 3,

201

3 to

be

used

to s

olic

it pr

oxie

s in

con

nect

ion

with

the

2013

Ann

ual M

eetin

g of

Add

ition

al In

form

atio

n

Sto

ckho

lder

s (in

clud

ing

any

adjo

urnm

ents

or p

ostp

onem

ents

ther

eof o

r any

spe

cial

mee

ting

that

may

be

calle

d in

lieu

ther

eof)

(the

“201

3 A

nnua

l Mee

ting”

) of H

ess

Cor

pora

tion

(the

“Com

pany

”). In

form

atio

n re

latin

g to

the

parti

cipa

nts

in s

uch

prox

y so

licita

tion

is a

vaila

ble

in

the

defin

itive

pro

xy s

tate

men

t file

d by

Elli

ott w

ith th

e S

ecur

ities

and

Exc

hang

e C

omm

issi

on o

n A

pril

3, 2

013

and

in a

ny a

men

dmen

ts to

th

at d

efin

itive

pro

xy s

tate

men

t. S

tock

hold

ers

are

advi

sed

to re

ad th

e de

finiti

ve p

roxy

sta

tem

ent a

nd o

ther

doc

umen

ts re

late

d to

the

solic

itatio

n of

sto

ckho

lder

s of

the

Com

pany

for u

se a

t the

201

3 A

nnua

l Mee

ting

beca

use

they

will

con

tain

impo

rtant

info

rmat

ion,

incl

udin

g p

yg

yp

,g

addi

tiona

l inf

orm

atio

n re

latin

g to

the

parti

cipa

nts

in s

uch

prox

y so

licita

tion.

Elli

ott’s

def

initi

ve p

roxy

sta

tem

ent a

nd a

form

of p

roxy

will

be

mai

led

to s

tock

hold

ers

of th

e C

ompa

ny. T

hese

mat

eria

ls a

nd o

ther

mat

eria

ls fi

led

by E

lliot

t in

conn

ectio

n w

ith th

e so

licita

tion

of p

roxi

es

will

be

avai

labl

e at

no

char

ge a

t the

Sec

uriti

es a

nd E

xcha

nge

Com

mis

sion

’s w

ebsi

te a

t ww

w.s

ec.g

ov. T

he d

efin

itive

pro

xy s

tate

men

t and

ot

her r

elev

ant d

ocum

ents

file

d by

Elli

ott w

ith th

e S

ecur

ities

and

Exc

hang

e C

omm

issi

on w

ill a

lso

be a

vaila

ble,

with

out c

harg

e,by

dire

ctin

g a

requ

estt

oE

lliot

t’spr

oxy

solic

itor

Oka

piP

artn

ers

atits

toll

free

num

ber(

877)

796

5274

orvi

aem

aila

tinf

o@ok

apip

artn

ers

com

a re

ques

t to

Elli

ott’s

pro

xy s

olic

itor,

Oka

pi P

artn

ers,

at i

ts to

ll-fre

e nu

mbe

r (87

7) 7

96-5

274

or v

ia e

mai

l at i

nfo@

okap

ipar

tner

s.co

m.

Cau

tiona

ry S

tate

men

t Reg

ardi

ng F

orw

ard-

Look

ing

Stat

emen

ts

The

info

rmat

ion

here

in c

onta

ins

“forw

ard-

look

ing

stat

emen

ts.”

Spe

cific

forw

ard-

look

ing

stat

emen

ts c

an b

e id

entif

ied

by th

e fa

ct th

at th

ey

dono

trel

ate

stric

tlyto

hist

oric

alor

curr

entf

acts

and

incl

ude

with

outl

imita

tion

wor

dssu

chas

“may

”“w

ill”“

expe

cts

”“be

lieve

s”

do n

ot re

late

stri

ctly

to h

isto

rical

or c

urre

nt fa

cts

and

incl

ude,

with

out l

imita

tion,

wor

ds s

uch

as m

ay,

will

, ex

pect

s, b

elie

ves,

“a

ntic

ipat

es,”

“pla

ns,”

“est

imat

es,”

“pro

ject

s,” “

targ

ets,

” “fo

reca

sts,

” “se

eks,

” “co

uld”

or t

he n

egat

ive

of s

uch

term

s or

oth

erva

riatio

ns o

n su

ch te

rms

or c

ompa

rabl

e te

rmin

olog

y. S

imila

rly, s

tate

men

ts th

at d

escr

ibe

our o

bjec

tives

, pla

ns o

r goa

ls a

re fo

rwar

d-lo

okin

g. O

ur

forw

ard-

look

ing

stat

emen

ts a

re b

ased

on

our c

urre

nt in

tent

, bel

ief,

expe

ctat

ions

, est

imat

es a

nd p

roje

ctio

ns re

gard

ing

the

Com

pany

and

pr

ojec

tions

rega

rdin

g th

e in

dust

ry in

whi

ch it

ope

rate

s. T

hese

sta

tem

ents

are

not

gua

rant

ees

of fu

ture

per

form

ance

and

invo

lve

risks

, un

certa

intie

s, a

ssum

ptio

ns a

nd o

ther

fact

ors

that

are

diff

icul

t to

pred

ict a

nd th

at c

ould

cau

se a

ctua

l res

ults

to d

iffer

mat

eria

lly.

Acc

ordi

ngly

, you

sho

uld

not r

ely

upon

forw

ard-

look

ing

stat

emen

ts a

s a

pred

ictio

n of

act

ual r

esul

ts a

nd a

ctua

l res

ults

may

var

y m

ater

ially

fro

m w

hat i

s ex

pres

sed

in o

r ind

icat

ed b

y th

e fo

rwar

d-lo

okin

g st

atem

ents

.

[ 1]

Tabl

eof

Con

tent

sTa

ble

of C

onte

nts

(1) C

hang

e is

Nec

essa

ry3

Th

ere

Are

Fun

dam

enta

l Pro

blem

s at

Hes

s7

C

ultu

re o

f Avo

idin

g A

ccou

ntab

ility

53

H

ess

Rea

cts

Def

ensi

vely

and

Fai

ls to

Add

ress

Its

Pro

blem

s84

(2) S

hare

hold

er N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m10

9

H

arve

y G

olub

: Set

ting

a Fo

cuse

d S

trate

gy11

4

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e11

9

Mar

k S

mith

: Ove

rsee

ing

Ope

ratio

nal E

xcel

lenc

e12

3

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estru

ctur

ing

127

R

odne

y C

hase

: Ins

tillin

g O

vers

ight

& A

ccou

ntab

ility

131

S

uper

ior N

omin

ees

with

Unp

aral

lele

d E

xper

ienc

e13

6

Add

itili

fti

Add

ition

al in

form

atio

n

C

ompe

nsat

ion

145

P

eer G

roup

Sel

ectio

n15

1

[ 2]

Tim

elin

eof

Even

ts:H

ess

Rel

ativ

ePe

rfor

man

ceSi

nce

Janu

ary

2011

(1)

110

4Q12

Ear

ning

s:

Com

pany

ann

ounc

es th

at m

ajor

mov

es to

re

sha p

e po

rtfol

io h

ave

been

ann

ounc

ed

Hes

s A

nnou

nces

on

Mar

ch 4

, 201

3:

Pla

n to

div

est E

nerg

y M

arke

ting,

Ret

ail,

Het

co, a

nd c

erta

in E

&P

ass

ets

and

to

MLP

Bak

ken

infra

stru

ctur

e. P

ortio

n of

Tim

elin

e of

Eve

nts:

Hes

s R

elat

ive

Perf

orm

ance

Sin

ce J

anua

ry 2

011(

1)

100

pp

E

nerg

y M

arke

ting

“stra

tegi

c”pr

ocee

ds p

rom

ised

to g

o to

sha

re

buyb

ack

and

incr

ease

d di

vide

nd

Sam

Nun

n to

ste

p do

wn

and

5 ne

w

nom

inee

s fo

und

for 2

013

AG

M

John

Mul

lin, H

ess

fam

ily e

stat

e ex

ecut

or,

is n

ew L

ead

Inde

pend

ent D

irect

or (p

rior

3Q12

Ear

ning

s, C

ompa

ny a

nnou

nces

:

Bak

ken

infra

stru

ctur

eis

“not

som

ethi

ng

90

p(p

LID

als

o se

rved

on

CE

O’s

fam

ily e

stat

e)

Cla

ims

plan

was

in p

lace

dat

ing

back

to

star

t of “

trans

form

atio

n”

Ba

kken

infra

stru

ctur

e is

not

som

ethi

ng

we

wou

ld b

e in

tere

sted

in M

LPin

g”

Ene

rgy

Mar

ketin

g &

Ret

ail a

re a

“lon

g-te

rm s

trate

gic

part

of o

ur p

ortfo

lio”

80

Sam

Nun

n ap

poin

ted

to B

oard

Ellio

tt re

leas

es

“Per

spec

tives

on

Hes

s”

70

Ellio

tt re

leas

es

seco

nd

pres

enta

tion

2Q12

Ei

60

Elli

ott b

egin

s to

acq

uire

su

bsta

ntia

lpor

tion

ofH

ess

stoc

k

2Q12

Ear

ning

s:

Afte

r mis

sing

con

sens

us E

PS

for 6

stra

ight

qu

arte

rs, a

stri

ng o

f exp

lora

tion

failu

res,

and

su

bsta

ntia

l cap

exov

erru

ns, J

ohn

Hes

s an

noun

ces

that

the

Com

pany

is in

mid

st o

f tra

nsfo

rmat

ion

that

st

arte

d in

200

9 (la

ter r

evis

ed to

201

0 st

art).

Thi

s is

co

mpa

ny’s

7th

rest

ruct

urin

gun

derc

urre

ntC

EO

Afte

r rec

eivi

ng E

lliott’

s pr

ivat

e le

tter,

Hes

s an

noun

ces

that

Ellio

tt in

tend

s to

nom

inat

e di

rect

ors

and

Hes

sw

ill50

[ 3]

subs

tant

ial p

ortio

n of

Hes

s st

ock

com

pany

’s 7

thre

stru

ctur

ing

unde

r cur

rent

CEO

.di

rect

ors

and

Hes

s w

ill

sell

term

inal

s

1. R

elat

ive

perfo

rman

ce v

ersu

s re

vise

d pe

ers,

see

slid

e 10

Ellio

tt ow

ns 4

.52%

of H

ess

stoc

k, v

alue

d at

ove

r $1

billi

on.

Hes

sis

ourl

arge

stin

itial

equi

tyin

vest

men

tin

our3

6ye

arH

ess

is o

ur la

rges

t ini

tial e

quity

inve

stm

ent i

n ou

r 36-

year

hi

stor

y. O

ur b

elie

f in

the

pote

ntia

l of H

ess

is d

emon

stra

ted

by

the

subs

tant

ial i

nves

tmen

t we

have

mad

e in

the

Com

pany

.

[ 4]

Gre

atA

sset

sW

orth

$39

to$5

0bi

llion

inVa

lue

/$96

to12

8pe

rSha

re(1

)G

reat

Ass

ets

Wor

th $

39 to

$50

bill

ion

in V

alue

/ $9

6 to

128

per

Sha

re(1

)

$88

$90

$92

Unc

onve

ntio

nals

Larg

e, u

n-re

plic

able

and

hig

hly

desi

rabl

e po

sitio

n in

cor

e of

Bak

ken,

a p

rem

ier U

.S. o

il re

sour

ce p

lay

W

DV

onG

onte

nst

udy

conc

lude

dH

ess

has

high

er

Bak

ken

Valu

e C

ontin

ues

to In

crea

se

TEV

Ellio

tt Es

timat

es

$80

$82

$84

$86 25

-Jan

1-Fe

b8-

Feb

15-F

eb22

-Feb

1-M

ar8-

Mar

W

.D. V

on G

onte

nst

udy

conc

lude

d H

ess

has

high

er

per a

cre

valu

e an

d is

ver

y co

mpa

rabl

e to

CLR

in

abso

lute

val

ueA

dditi

onal

cor

e po

sitio

n in

Utic

a sh

ale,

pro

mis

ing

emer

ging

liqu

ids

play

E

xten

sive

acr

eage

loca

ted

in c

ore

liqui

ds-r

ich

zone

TEV

~$13

.0 b

illio

n to

$ 14

.4 b

illio

n

Wal

lSt

NA

VA

vera

geof

Ellio

ttTE

V

$10

$20

$30

$40

$billions

Con

vent

iona

lsLo

ng-li

fe, o

il-w

eigh

ted

rese

rves

in “

crow

n je

wel

” as

sets

and

favo

rabl

e oi

l-lin

ked

gas

asse

ts in

So

uthe

ast A

sia

V

alha

ll (N

orw

ay),

She

nzi(

GO

M),

Cei

ba&

Oku

me

(Equ

ator

ial G

uine

a), J

DA

(Mal

aysi

a-Th

aila

nd)

Wal

l St.

NA

V A

vera

ge o

f Elli

ott T

EV

TEV

~$21

.4 b

illio

n to

$0E

lliott

Low

:A

vera

geE

lliott

Hig

h:

Woo

d M

acke

nzie

Sel

l-Sid

eR

ysta

d

$2$3

H

ighl

y de

sira

ble

asse

t bas

e to

num

erou

s pa

rties

Valu

able

mid

stre

am in

fras

truc

ture

in B

akke

n

Tiog

a ga

s pl

ant (

ultim

ate

capa

city

of 2

50m

mcf

/d) –

Wal

lSte

xpec

ts$2

00m

mof

annu

alca

shflo

w

$30.

2 bi

llion

Wal

l St.

NA

V Ex

ceed

s El

liott

TEV

TEV

Mid

stre

am

$0$1

Ellio

tt Lo

wE

lliott

Hig

hAv

erag

e Se

ll-S

ide

$billionsS

lbl

dt

bi

id

Wal

l St e

xpec

ts $

200m

m o

f ann

ual c

ash

flow

B

akke

n ra

il te

rmin

al w

ith c

apac

ity o

f 54,

000

bbl/d

ge

nera

ting

aver

age

$14+

upl

ift p

er b

bl th

roug

h th

e th

ird q

uarte

r –re

sults

in $

285m

m a

nnua

lized

Wal

l St.

NA

V Ex

ceed

s El

liott

TEV

TEV

~$2.

0 bi

llion

to

$2.5

bill

ion

Dt

$1

$2

$3

$4

$5

$billionsSa

leab

le d

owns

trea

m b

usin

esse

s –

upsi

de

pote

ntia

l fro

m u

nloc

king

wor

king

cap

ital

1,

360

reta

il st

atio

ns

20 p

etro

leum

term

inal

s

Ene

rgy

mar

ketin

g &

dis

tribu

tion

G

as fi

red

pow

er p

lant

s

TEV

~$3.

1 bi

llion

to

$3.5

bill

ion

Dow

nstr

eam

[ 5]

$0

Ellio

tt Lo

wE

lliott

Hig

hAv

erag

e Se

ll-Si

de

Sou

rces

: see

Elli

ott’s

Mar

ch P

rese

ntat

ion

to H

ess

Sha

reho

lder

s1.

Ellio

tt’s

estim

ates

, see

Elli

ott’s

Mar

ch P

rese

ntat

ion

to H

ess

Sha

reho

lder

s

The

sim

ple

trut

h is

one

wid

ely

reco

gniz

ed in

the

oil &

gas

in

dust

ry: t

here

are

fund

amen

tal p

robl

ems

at H

ess .

Des

pite

terr

ific

asse

ts, t

he C

ompa

ny c

ontin

ues

to

lack

a fo

cuse

d st

rate

gy,

to

exp

erie

nce

pers

iste

nt o

pera

tiona

l iss

ues,

to

enga

gein

woe

fully

flaw

edca

pita

lallo

catio

nan

d

to e

ngag

e in

woe

fully

flaw

ed c

apita

l allo

catio

n, a

nd

to

hav

e a

cultu

re o

f den

ial a

t the

top

of th

e or

gani

zatio

n th

at re

war

ds

unde

rper

form

ance

and

avoi

dsac

coun

tabi

lity.

unde

rper

form

ance

and

avo

ids

acco

unta

bilit

y.

Thes

e pr

oble

ms

mus

t be

ackn

owle

dged

if th

ey w

ill e

ver b

e fix

ed.

[ 6]

Ther

e A

re F

unda

men

tal P

robl

ems

at H

ess

Fund

amen

talP

robl

ems

atH

ess

Fund

amen

tal P

robl

ems

at H

ess

Unr

elen

ting

Und

erpe

rfor

man

ce

Lack

of F

ocus

Ue

et

gU

depe

oa

ce

Und

isci

plin

ed C

apita

l Allo

catio

n

Ope

ratio

nal M

ism

anag

emen

t

Endl

ess

Inef

fect

ive

Res

truc

turin

gsEn

dles

s In

effe

ctiv

e R

estr

uctu

rings

Aby

smal

Gov

erna

nce

Cul

ture

[8]

Hes

sH

asFa

iled

toD

eliv

erR

etur

nsto

Shar

ehol

ders

Hes

s H

as F

aile

d to

Del

iver

Ret

urns

to S

hare

hold

ers.

Hes

sH

asU

nder

perf

orm

ed:

Hes

s H

as U

nder

perf

orm

ed:

B

y A

ny O

bjec

tive

Mea

sure

,

O

ver A

ny R

elev

ant T

ime

Perio

d, a

nd

A

gain

st A

ny P

ertin

ent B

ench

mar

k

[ 9]

Unr

elen

ting

Und

erpe

rfor

man

ce, I

nclu

ding

Mos

t Rec

ent “

Tran

sfor

mat

ion”

M

eanw

hile

, CEO

Shi

fts T

ime

Perio

d H

e W

ants

Sha

reho

lder

s to

Eva

luat

e

“You

can

't ju

dge

us o

n a

one-

year

bas

is. Y

ou h

ave

to d

o it

over

the

long

term

.”-J

ohn

Hes

s,Ja

nuar

y20

10(1

)

“Sin

ce J

uly

24, 2

012,

the

last

day

of t

radi

ng b

efor

e w

e an

noun

ced

our u

pdat

ed s

trat

egy,

Hes

s sh

ares

hav

e in

crea

sed.

..”Jo

hnH

ess

Janu

ary

2013

(2)

Hes

s O

ver (

Und

er)P

erfo

rman

ce(3

)

John

Hes

s

John

Hes

s, J

anua

ry 2

010

120

Rel

ativ

e Pe

rfor

man

ce S

ince

Sta

rt o

f “Tr

ansf

orm

atio

n”(4

)

-Joh

n H

ess,

Jan

uary

201

3(2)

Tenu

re17

Yea

rs5-

Year

4-Ye

ar3-

Year

2-Ye

ar1-

Year

vs P

roxy

Pee

rs(3

33)%

(31)

%(4

3)%

(29)

%(4

0)%

(17)

%

vs R

evis

ed P

roxy

Pee

rs(4

60)%

(45)

%(6

3)%

(44)

%(4

7)%

(20)

%

100

110

Elli

ott’s

inte

ntto

nom

inat

ey

()%

()%

()%

()%

()%

()%

vs B

akke

n O

pera

tors

NA

(263

)%(9

84)%

(184

)%(7

0)%

(16)

%

vs X

LEN

A(3

1)%

(57)

%(4

3)%

(44)

%(2

0)%

vs X

OP

NA

(39)

%(8

1)%

(52)

%(3

9)%

(15)

%

80

90

Elli

otts

inte

nt to

nom

inat

e di

rect

ors

anno

unce

d

()

()

()

()

()

60

70

Ann

ounc

emen

t of l

ates

t stra

tegi

c pl

an th

at s

tarte

d in

“200

9” (l

ater

re

vise

d to

201

0 st

art)

50

25-Jan-10

25-Jul-10

25-Jan-11

25-Jul-11

25-Jan-12

25-Jul-12

25-Jan-13

Elli

ott b

egin

s to

acc

umul

ate

Sou

rce:

Blo

ombe

rg, C

ompa

ny fi

lings

1.H

ess

4Q 2

009

Ear

ning

s ca

ll2.

Hes

s pr

ess

rele

ase,

Jan

uary

28,

201

33.

As

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial

amou

nt o

f Hes

s st

ock

Pro

xy p

eers

: Use

d by

Hes

s fo

r mgm

t com

pens

atio

n: A

nada

rko,

Apa

che,

BP

,

Che

vron

, Con

ocoP

hilli

ps, D

evon

, EO

G, E

xxon

, Mar

atho

n, M

urph

y, O

ccid

enta

l, S

hell,

Sta

toil,

Tal

ism

an a

nd T

otal

; R

evis

ed p

roxy

pee

rs: e

xclu

des

Dev

on &

Ta

lism

an d

ue to

hig

h N

orth

Am

eric

a ga

s w

eigh

ting;

exc

lude

s B

P, S

hell,

Sta

toil,

To

tal d

ue to

Eur

opea

n su

per m

ajor

sta

tus;

incl

udes

Nob

le a

s ad

ditio

nal r

elev

ant

com

petit

or;

Bak

ken

Ope

rato

rs: I

nclu

des

Con

tinen

tal,

Oas

is a

nd K

odia

k4.

P

erfo

rman

ce v

ersu

s R

evis

ed p

roxy

pee

rs

gsu

bsta

ntia

l am

ount

of s

tock

[ 10

]

Hes

s Sh

ould

Hav

e Ea

sily

Out

perf

orm

ed G

iven

Its

Low

Exp

osur

e to

Nor

th

Am

eric

anN

atur

alG

asan

dH

ighe

stO

ilW

eigh

ting

ofA

nyPe

er

100%

Am

eric

an N

atur

al G

as a

nd H

ighe

st O

il W

eigh

ting

of A

ny P

eer…

$9.0

0%

Pro

duct

ion

from

N. A

mer

ican

Gas

& N

GLs

(2)

U.S

. Nat

ural

Gas

Pric

es S

ince

200

8(1)

Hes

s’s

low

exp

osur

e to

N.A

. nat

ural

gas

mea

ns m

inim

al im

pact

from

col

laps

ing

natu

ral g

as p

rices

52%

68%

79%

60%

70%

80%

90%

100%

$6.0

0

$7.0

0

$8.0

0

2%4%

8%8%

9%9%

15%

16%

23%

27%

34%

36%

37%

41%

10%

20%

30%

40%

50%

$2.0

0

$3.0

0

$4.0

0

$5.0

0

2%0%

TOT

STL

CVX

BP

RDS

HES

MRO

XOM

MUR

OXY

COP

APA

NBL

TLM

EOG

APC

DVN

Pro

xy &

Rev

ised

Pro

xy P

eers

% P

rodu

ctio

n fr

om O

il(2)

Bre

nt P

rices

Sin

ce 2

008(

3)

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Nov-12U

S N

atur

al G

as

Hig

hest

exp

osur

e of

pee

rs to

oil

mea

ns fa

vora

ble

impa

ct fr

om e

scal

atin

g oi

l pric

es

55%

55%

58%

61%

63%

64%

68%

70%

60%

70%

80%

$100

.00

$110

.00

$120

.00

32%

34%

35%

37%

45%

45%

51%

52%

55%

55%

30%

40%

50%

$70.

00

$80.

00

$90.

00

21%

20%

DVN

APC

EOG

TLM

NBL

COP

APA

RDS

XOM

STL

TOT

MUR

OXY

BP

MRO

CVX

HES

Pro

xy &

Rev

ised

Pro

xy P

eers

$60.

00

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Bre

nt O

il[ 1

1]

Sou

rces

:Com

pany

Fili

ngs,

Blo

ombe

rg1.

Janu

ary

2013

Nat

ural

Gas

2.%

of 2

012

Pro

duct

ion

3.Ja

nuar

y 20

13 B

rent

Oil

And

Mat

eria

lPos

ition

inth

eB

akke

na

Prem

ierU

SO

ilR

esou

rce

Play

…A

nd M

ater

ial P

ositi

on in

the

Bak

ken,

a P

rem

ier U

.S. O

il R

esou

rce

Play

D

espi

te s

tock

pric

e of

Bak

ken

oper

ator

s in

crea

sing

~1,

100%

sin

ce 2

008…

D

espi

teC

ontin

enta

lRes

ourc

es(a

Bakk

enpu

repl

ayw

itheq

uiva

lent

acre

age

toH

ess)

crea

ting

$10

billio

nof

mar

ket

Des

pite

Con

tinen

tal R

esou

rces

(a B

akke

n pu

re p

lay

with

equ

ival

ent a

crea

ge to

Hes

s) c

reat

ing

$10

billio

n of

mar

ket

capi

taliz

atio

n ov

er th

e la

st fo

ur y

ears

thro

ugh

effe

ctiv

e ex

ecut

ion

in th

e B

akke

n…

D

espi

te H

ess

havi

ng o

ne o

f the

lead

ing

acre

age

posi

tions

in th

e B

akke

n….

…

. Hes

s’s

stoc

k pe

rform

ance

has

lang

uish

ed

1,20

0

Lead

ing

Publ

ic B

akke

nO

pera

tors

by

Acr

eage

(2)

Hes

s is

one

of t

he la

rges

t acr

eage

1,

400%

Bkk

Ot

H

Stoc

k Pe

rfor

man

ce o

f Bak

ken

Ope

rato

rs(1

)

800

1,00

0

gg

hold

ers

in th

e B

akke

n.

W.D

. Von

Gon

ten

deta

iled

stud

y co

nclu

ded

valu

e of

Hes

s B

akke

n po

sitio

n ve

ry c

ompa

rabl

e to

Con

tinen

tal’s

.80

0%

1,00

0%

1,20

0%

Bak

ken

Ope

rato

rsH

ess

400

600

200%

400%

600%

0

200

CLR

HES

WLL

COP

EOG

XOM

MRO

STO

OXY

OAS

SM

KOG

0%

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Nov-12

[ 12

]S

ourc

es:C

ompa

ny F

iling

s, B

loom

berg

1.B

akke

nop

erat

ors

incl

udes

CLR

, OA

S, a

nd K

OG

2.C

ompa

ny fi

lings

and

pre

sent

atio

ns

Hes

sC

onst

antly

Switc

hes

Prox

yPe

ers

But

Con

tinue

sto

Und

erpe

rfor

mH

ess

Con

stan

tly S

witc

hes

Prox

y Pe

ers

But

Con

tinue

s to

Und

erpe

rfor

m

Ove

r the

last

five

yea

rs, H

ess

has

drop

ped

6 pe

ers

and

adde

d 5

new

pee

rs o

ut o

f an

orig

inal

pee

r se

t of 1

6 co

mpa

nies

(a c

hurn

of 6

9%).(

1)St

ill, u

nder

perf

orm

ance

is c

lear

.

1-Ye

ar3-

Year

5-Ye

ar

Hes

s O

ver (

Und

er)P

erfo

rman

ce v

sPr

oxy

Peer

s(2) 20

12 P

roxy

P

eers

2010

Pro

xy

Pee

rs20

08 P

roxy

P

eers

1Ye

ar

2012

Pro

xy

Pee

rs20

10 P

roxy

P

eers

2008

Pro

xy

Pee

rs

3-Ye

ar

2012

Pro

xy

Pee

rs20

10 P

roxy

P

eers

2008

Pro

xy

Pee

rs

5-Ye

ar

(17)

%

(27)

%(3

1)%

(29)

%(3

1)%

(30)

%(3

2)%

(58)

%

(70)

%

[ 13

]S

ourc

e: B

loom

berg

, Com

pany

filin

gs1.

From

200

8 pr

oxy

peer

s th

roug

h 20

12 p

roxy

pee

rs2.

As

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial a

mou

nt o

f Hes

s st

ock

Und

erpe

rfor

ms

Even

Aga

inst

Mor

e In

tegr

ated

Pee

rs—

Peer

s W

ho H

ave

Dow

nstr

eam

Ope

ratio

nsTh

atH

ave

Not

Ben

efite

dFr

omO

ilPr

ice

Incr

ease

Dow

nstr

eam

Ope

ratio

ns T

hat H

ave

Not

Ben

efite

d Fr

om O

il Pr

ice

Incr

ease

In re

cent

mat

eria

ls to

Sha

reho

lder

s, H

ess

mea

sure

s its

elf o

n a

10 y

ear b

asis

aga

inst

onl

y 6

of it

s 9

inte

grat

ed p

roxy

pee

rs.

Aver

age

mar

ket c

ap o

f the

se 6

is o

ver 1

1x g

reat

er th

an H

ess(

1)

5-Y

ear

3-Y

ear

1-Y

ear

5-Y

ear

3-Y

ear

1-Y

ear

Und

erpe

rfor

man

ce v

s. H

ess

Che

rry-

Pick

ed In

tegr

ated

Pee

rs(1

,3)

Und

erpe

rfor

man

ce v

s. In

tegr

ated

Pee

rs fr

om P

roxy

(1,2

)

(21)

%

(20)

%

(32)

%(3

2)%

(21)

%(3

5)%

(40)

%

5 Ye

ar R

elat

ive

Perf

orm

ance

(2)

5 Ye

ar R

elat

ive

Perf

orm

ance

(3)

90

100

110

120

130

140

90

100

110

120

130

140

40

50

60

70

80

40

50

60

70

80

[ 14

]S

ourc

e: B

loom

berg

1.A

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k2.

Incl

udes

BP

, CV

X, C

OP

, XO

M, M

RO

, OX

Y, R

DS

, STL

and

TO

T. C

OP

and

MR

O w

ere

inte

grat

ed u

ntil

May

201

2 &

Jul

y 20

11 re

spec

tivel

y3.

Incl

udes

BP

, CV

X, X

OM

, RD

S, S

TL, a

nd T

OT,

as

per H

ess

pres

enta

tion

filed

on

4/5/

13

Mos

t Rel

evan

t Pee

rs a

re A

nada

rko,

Nob

le, C

onoc

o, a

nd M

arat

hon

Hes

sH

asD

ram

atic

ally

Und

erpe

rfor

med

Them

All

17Y

ears

5-Y

ear

4-Y

ear

3-Y

ear

2-Y

ear

1-Y

ear

17Y

ears

5-Y

ear

4-Y

ear

3-Y

ear

2-Y

ear

1-Y

ear

Hes

s H

as D

ram

atic

ally

Und

erpe

rfor

med

The

m A

ll

Ana

dark

oC

onoc

oPhi

llips

(CO

P / P

SX)

(52)

%(8

9)%

(90)

%(7

4)%

(38)

%

17 Y

ears

5Y

ear

4Y

ear

3Y

ear

2Y

ear

1Y

ear

(60)

%(8

9)%

(35)

%(4

4)%

(9)%

17 Y

ears

5Y

ear

4Y

ear

3Y

ear

2Y

ear

1Y

ear

(328

)%(2

77)%

“Ana

dark

ope

rhap

sH

ess’

mos

tcom

para

ble

peer

”In

tegr

ated

pee

r tha

t tra

nsfo

rmed

to p

ure-

play

E&

P

17Y

ears

5-Y

ear

4-Y

ear

3-Y

ear

2-Y

ear

1-Y

ear

17Y

ears

5-Y

ear

4-Y

ear

3-Y

ear

2-Y

ear

1-Y

ear

Ana

dark

o, p

erha

ps H

ess

mos

t com

para

ble

peer

…W

ood

Mac

kenz

ie (S

epte

mbe

r 201

2)

Nob

le E

nerg

yM

arat

hon

(MR

O /

MPC

)

gp

pp

y

(51)

%(1

64)%

(113

)%(1

17)%

(32)

%

17 Y

ears

5Y

ear

4Y

ear

3Y

ear

2Y

ear

1Y

ear

(68)

%(9

8)%

(66)

%(4

8)%

(19)

%

17 Y

ears

5Y

ear

4Y

ear

3Y

ear

2Y

ear

1Y

ear

(683

)%(3

98)%

“In

part

icul

ar, w

e be

lieve

Nob

le E

nerg

y pr

ovid

es th

e m

ost

it

bh

k”

Inte

grat

ed p

eer t

hat t

rans

form

ed to

pur

e-pl

ay E

&P

[ 15

]

appr

opria

te b

ench

mar

k…”

Ban

k of

Am

eric

a M

erril

l Lyn

ch (A

pril

1, 2

013)

Sou

rce:

Blo

ombe

rgA

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k

Hes

s’s

Mos

t Rel

evan

t Com

para

ble

in th

e B

akke

n is

Con

tinen

tal

Con

tinen

talG

ener

ated

$10

Bill

ion

inM

arke

tCap

Whi

leH

ess

Wen

tNow

here

Con

tinen

tal G

ener

ated

$10

Bill

ion

in M

arke

t Cap

Whi

le H

ess

Wen

t Now

here

2009

-201

2(1)

Hes

sC

ontin

enta

l

Incr

ease

inB

akke

nPr

oduc

tion

~55

000

boe/

d~5

670

0bo

e/d

Des

pite

sim

ilarp

rodu

ctio

ngr

owth

Incr

ease

in B

akke

n Pr

oduc

tion

~55,

000

boe/

d~5

6,70

0bo

e/d

Bak

ken

EBIT

DA

Gen

erat

ed$2

.4bn

$2.5

bn

Des

pite

sim

ilar p

rodu

ctio

n gr

owth

… a

nd c

ompa

rabl

e eq

uity

issu

ance

Equi

ty Is

sued

$0.7

bn$1

.0bn

… a

nd c

ompa

rabl

e E

BIT

DA

gene

ratio

n

Tota

l Ret

urn

1%25

5%

Cha

nge

in M

arke

t Cap

italiz

atio

n+$

0.6b

n+

$10.

1bn

Con

tinen

tal h

as c

reat

ed $

10 b

illion

of

equi

ty v

alue

, whi

le H

ess

stoo

d st

ill. W

HY

?

350%

400%

450%

CLR

HE

S

200%

250%

300%

50%

100%

150%

09

09

09

09

09

09

0

0

10

10

0

10

1

1

11

11

1

11

2

2

12

12

2

12

3

3[ 1

6]

Jan-0

Mar-0

May-0

Jul-0

Sep-0

Nov-0

Jan-1

Mar-1

May-1

Jul-1

Sep-1

Nov-1

Jan-1

Mar-1

May-1

Jul-1

Sep-1

Nov-1

Jan-1

Mar-1

May-1

Jul-1

Sep-1

Nov-1

Jan-1

Mar-1S

ourc

e: C

ompa

ny F

iling

s, B

loom

berg

1.S

ee s

lide

65

Fund

amen

talP

robl

ems

atH

ess

Fund

amen

tal P

robl

ems

at H

ess

Unr

elen

ting

Und

erpe

rfor

man

ce

Lack

of F

ocus

Ue

et

gU

depe

oa

ce

Und

isci

plin

ed C

apita

l Allo

catio

n

Ope

ratio

nal M

ism

anag

emen

t

Endl

ess

Inef

fect

ive

Res

truc

turin

gsEn

dles

s In

effe

ctiv

e R

estr

uctu

rings

Aby

smal

Gov

erna

nce

Cul

ture

[17

]

Mul

titud

e of

Bus

ines

ses

and

Geo

grap

hies

Dem

onst

rate

s La

ck o

f Foc

us T

hat

Res

ults

inH

ess

Bei

ngSu

bsca

lein

Nea

rlyEv

ery

Are

ain

Whi

chIt

Com

pete

sR

esul

ts in

Hes

s B

eing

Sub

scal

e in

Nea

rly E

very

Are

a in

Whi

ch It

Com

pete

s

Laun

dry

List

of N

on-U

pstr

eam

Dis

trac

tions

Laun

dry

List

of U

pstr

eam

Loc

atio

ns

Ups

tream

ope

ratio

ns in

17

coun

tries

(1)in

clud

ing:

CC

D

otte

d lin

e in

dica

tes

dive

stitu

re a

nnou

nced

afte

r Jan

25,

201

3 (d

ate

Ellio

ttse

ntpr

ivat

ele

ttert

oH

ess)

Al

geria

, Aus

tralia

, Bru

nei,

Chi

na, C

olom

bia,

Den

mar

k, E

gypt

, E

quat

oria

l Gui

nea,

Fra

nce,

Gha

na, I

ndon

esia

, the

Kur

dist

an

regi

on o

f Ira

q, L

ibya

, Mal

aysi

a, N

orw

ay, T

haila

nd, a

nd th

e U

nite

d S

tate

s

Ann

ounc

ed in

tent

ion

to s

ell I

ndon

esia

and

Tha

iland

on

Mh

4th

(dat

e E

lliott

sent

priv

ate

lette

r to

Hes

s)

G

reen

sha

ding

indi

cate

s bu

sine

ss d

ecla

red

“long

term

stra

tegi

c” in

N

ovem

ber 2

012

and

Janu

ary

2013

bef

ore

anno

unce

men

t to

sell

Mar

ch 4

th

G

eogr

aphi

c sp

an o

f a m

ajor

, yet

Hes

s is

a fr

actio

n in

siz

e:

Mar

ket c

ap is

und

er 1

/11t

hth

e av

erag

e of

maj

ors

in it

s pr

oxy

peer

s(2)

1/23

rdof

Exxo

n(2)

Hed

ge F

und

Fuel

Cel

l

LNG

1/

23of

Exx

on(

)

1/

12th

of C

hevr

on(2

)

Hes

s U

pstr

eam

Ope

ratio

ns(3

)R

etai

l

LNG

Ref

inin

g

Gen

erat

ion

Prop

Tra

ding

?

Term

inal

s

Mar

ketin

g

[ 18

]S

ourc

es: C

ompa

ny F

iling

s, B

loom

berg

1.H

ess

2012

10-

K, p

ro fo

rma

for d

ives

titur

es a

nnou

nced

or c

ompl

eted

thro

ugh

Apr

il 12

, 201

3

2.A

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k3.

Hes

s w

ebsi

te J

anua

ry 2

013

Com

pare

d to

Pee

rs o

f Sim

ilar M

arke

t Cap

Siz

e an

d Ev

en P

ro F

orm

a fo

r Hes

s D

ives

titur

es A

nnou

nced

or C

ompl

eted

,H

ess

Ups

trea

mO

pera

tions

Rem

ain

Spre

adA

cros

s4x

As

Man

yC

ount

ries

Hes

s U

pstr

eam

Ope

ratio

ns R

emai

n Sp

read

Acr

oss

4x A

s M

any

Cou

ntrie

s

Com

pany

Mar

ket C

ap(1

)C

ount

ries

List

ed in

10K

Cou

ntrie

sw

ith S

igni

fican

t O

pera

tions

(2)

Siz

eM

ultip

le o

f H

Num

ber

%of

Hes

sN

umbe

r%

of H

ess

Hes

s

Hes

s$1

6.8

17(3

)12

(3)

Anad

arko

$36.

82.

2x16

94%

542

%

Apa

che

$30.

41.

8x7

40%

650

%

Cb

t$1

01

06

16%

18%

Cab

ot$1

0.1

0.6x

16%

18%

Che

sape

ake

$11.

20.

7x1

6%1

8%

Con

cho

$8.1

0.5x

16%

18%

Con

tinen

tal

$12.

50.

7x1

6%1

8%

D$2

15

13

212

%2

17%

“We’

ve b

een

clea

r. W

e ar

e ve

ry

prou

d of

the

glob

al p

ortfo

lio w

e ha

ve.”

Dev

on$2

1.5

1.3x

212

%2

17%

Enca

na$1

6.0

1.0x

212

%2

17%

EO

G$3

1.5

1.9x

635

%3

25%

Mar

atho

n$2

1.9

1.3x

1271

%7

58%

Mh

$11

20

712

71%

433

%

John

Hes

s

Janu

ary

2013

(4)

Mur

phy

$11.

20.

7x12

71%

433

%

Nob

le$1

7.2

1.0x

1165

%6

50%

Pion

eer

$12.

90.

8x1

6%1

8%

Ran

ge

$10.

70.

6x1

6%1

8%

Sth

t$1

24

07

212

%2

17%

Sout

hwes

tern

$12.

40.

7x2

12%

217

%

Talis

man

$11.

90.

7x12

71%

867

%

Rel

ativ

e to

the

aver

age

of s

imila

r siz

ed p

eers

:•H

ess

oper

ates

in3x

asm

any

coun

tries

[ 19

]

Hes

s op

erat

es in

3x

as m

any

coun

tries

•Hes

s ha

s si

gnifi

cant

ope

ratio

ns in

4x

as m

any

coun

tries

Sou

rces

: H

ess

Web

site

, Com

pany

Filin

gs, B

loom

berg

1.A

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k2.

Cou

ntrie

s w

ith s

igni

fican

t ope

ratio

ns b

ased

on

each

com

pany

's d

iscl

osur

e in

the

10K

. In

clud

es

coun

tries

that

eac

h co

mpa

ny d

escr

ibes

as

“cor

e”.

If th

e C

ompa

ny d

id n

ot d

escr

ibe

any

coun

tries

as

“cor

e”, c

ount

ries

with

mea

ning

ful r

eser

ves,

pro

duct

ion

and/

or E

&P

cap

ital s

pend

w

ere

incl

uded

.3.

Pro

For

ma

for a

nnou

nced

or c

ompl

eted

div

estit

ures

4.4Q

Ear

ning

s C

all,

Janu

ary

30, 2

013

Man

agem

entH

asFa

iled

toA

rtic

ulat

ea

Rat

iona

lStr

ateg

yfo

rPor

tfolio

Man

agem

ent H

as F

aile

d to

Art

icul

ate

a R

atio

nal S

trat

egy

for P

ortfo

lio

Man

agem

ent w

ants

to ru

n a

glob

al c

ongl

omer

ate

“In te

rms

of e

xplo

ratio

n an

d pr

oduc

tion,

we

are

diffe

rent

th

an th

e ot

her i

ndep

ende

nts.

We

are

the

mos

t glo

bal.”

Jh

HC

hi

&C

EOH

“We

wan

t to

mai

ntai

n ou

r glo

bal p

rese

nce

and

our g

loba

l re

ach

beca

use

we

belie

ve th

at th

e gl

obe

prov

ides

man

y op

portu

nitie

s no

w a

nd w

ill al

so in

the

futu

re. S

o w

e w

ant t

o m

aint

ain

that

glo

bal s

cale

and

cap

abilit

y.”

-Joh

n H

ess,

Cha

irman

& C

EO H

ess

June

201

0(1)

-Gre

gory

Hill,

EV

P W

orld

wid

e E

&P

Hes

sN

ovem

ber 2

012(

2)

Ana

lyst

s do

ubtfu

l of s

trat

egic

ratio

nale

“In m

ultip

le c

lient

con

vers

atio

ns

thro

ugho

ut th

e da

y w

e fo

und

liter

ally

no

one

that

def

ende

d th

e sh

ape,

nor

gl

obal

str

ateg

y of

Hes

s.”

“We

are

skep

tical

that

Hes

s’s

curr

ent

glob

al g

row

th s

trat

egy

will

yie

ld

supe

rior r

etur

ns o

r gro

wth

, as

its

orga

niza

tion

appe

ars

to b

e sp

read

thin

an

d w

e th

ink

it is

unl

ikel

y th

at H

ess

“On

the

upst

ream

sid

e, w

e qu

estio

n w

heth

er th

e co

mpa

ny h

as th

e ba

ndw

idth

to o

pera

te in

ove

r 20

coun

trie

s…W

e do

not

bel

ieve

a

com

pany

of H

ess’

s si

ze w

ill g

et c

redi

t

–D

euts

che

Ban

k (J

anua

ry 3

0, 2

013)

yca

n ha

ve a

com

petit

ive

adva

ntag

e in

al

l the

are

as it

is p

ursu

ing.

”–

Gol

dman

Sac

hs (J

une

11, 2

012)

py

gin

the

mar

ket f

or a

sho

tgun

app

roac

h to

inve

stin

g ac

ross

the

wor

ld…

”–

Citi

grou

p (J

uly

20, 2

012) [ 2

0]

1.B

erns

tein

Con

fere

nce,

Jun

e 20

102.

Ban

k of

Am

eric

a M

erril

l Lyn

ch C

onfe

renc

e, N

ovem

ber 2

012

Hes

sIs

Not

aM

ajor

and

Shou

ldN

otbe

Run

Like

One

Hes

s Is

Not

a M

ajor

and

Sho

uld

Not

be

Run

Lik

e O

ne

“We

have

the

portf

olio

ofa

maj

orw

eha

veth

ete

chni

calc

halle

nges

ofa

maj

or”

We

have

the

portf

olio

of a

maj

or, w

e ha

ve th

e te

chni

cal c

halle

nges

of a

maj

or…

John

Hes

s, J

une

2010

(1)

Hes

s is

NO

T a

maj

or

It

is 1

/23r

d th

e si

ze o

f Exx

on a

nd 1

/12t

h th

e si

ze o

f Che

vron

Ye

t, C

EO is

ada

man

t in

runn

ing

Hes

s as

thou

gh it

wer

e of

sim

ilar s

ize

Th

e re

sult

is a

dis

trac

ted

orga

niza

tion:

Su

bsca

le in

nea

rly e

very

bas

in in

whi

ch it

com

pete

s

La

ckin

g ca

pita

l dis

cipl

ine

gp

p

O

verw

helm

ed b

y op

erat

iona

l mis

step

s re

sulti

ng in

furt

her d

istr

actio

n

[ 21

]

1.B

erns

tein

Con

fere

nce

June

201

0

Fund

amen

talP

robl

ems

atH

ess

Fund

amen

tal P

robl

ems

at H

ess

Unr

elen

ting

Und

erpe

rfor

man

ce

Lack

of F

ocus

Ue

et

gU

depe

oa

ce

Und

isci

plin

ed C

apita

l Allo

catio

n

Ope

ratio

nal M

ism

anag

emen

t

Endl

ess

Inef

fect

ive

Res

truc

turin

gsEn

dles

s In

effe

ctiv

e R

estr

uctu

rings

Aby

smal

Gov

erna

nce

Cul

ture

[22

]

Why

Cap

italA

lloca

tion

IsC

ritic

alat

Hes

sW

hy C

apita

l Allo

catio

n Is

Crit

ical

at H

ess

…M

ore

than

25%

of S

hare

hold

ers’

inve

stm

ent i

s re

inve

sted

eac

h ye

ar:

y

2008

2009

5 Ye

ar

Aver

age

2012

2011

2010

Cap

ital S

pend

ing

as %

of

Ave

rage

Mar

ket C

ap17

%18

%30

%47

%32

%28

%

2013

Cap

ital S

pend

ing

as %

of

Cur

rent

Mar

ket C

apita

lizat

ion(

1)=

26%

Futu

re c

apita

l allo

catio

n de

cisi

ons

by th

e B

oard

and

CEO

det

erm

ine

retu

rns

for c

urre

nt S

hare

hold

ers

[ 23

]S

ourc

e:C

apita

l IQ

, Com

pany

filin

gs1.

Mar

ket c

apita

lizat

ion

as o

f 4/1

2/20

13; C

apita

l spe

ndin

g is

$6.

2bn

pro

form

a fo

r all

trans

actio

ns; A

ctua

l cap

ital s

pend

ing

guid

ance

was

$6.

8bn,

28%

of c

urre

nt m

arke

t cap

No

Dis

cipl

ine

ofR

etur

ning

Cas

hto

Shar

ehol

ders

No

Dis

cipl

ine

of R

etur

ning

Cas

h to

Sha

reho

lder

s…

B

otto

mqu

artil

eam

ong

peer

sin

retu

rnin

gca

shto

shar

ehol

ders

Des

pite

Bre

nt p

rices

mor

e th

an q

uadr

uplin

g…

Bot

tom

qua

rtile

am

ong

peer

s in

retu

rnin

g ca

sh to

sha

reho

lder

s

H

ess

has

not r

epur

chas

ed s

hare

s in

ove

r a d

ecad

e

90%

88%

80%

90%

100%

21%

21%

25%

2002

-201

2 D

ivid

end

CA

GR

2002

-201

2 C

ash

Ret

urn

as %

of C

urre

nt M

arke

t Cap

(1)

75%

57%

43%

42%

50%

60%

70%

80%

14%

14%

12%

12%

11%

15%

20%

43%

42%

39%

39%

35%

22%

19%

12%

7%6%

10%

20%

30%

40%

9%9%

8%8%

7%

4%3%

3%5%10%

%6%

4%

0%

BP

COP

TOT

XOM

RDSA

STL

DVN

TLM

MRO

CVX

OXY

MUR

APC

APA

HES

EOG

0%0%

EOG

Devon

Occidental

Talisman

Apache

Murphy

Conoco

Chevron

Exxon

Anadarko

Statoil

Total

Marathon

Shell

BP

Hess

[ 24

]S

ourc

es: C

ompa

ny F

iling

s, C

apita

l IQ

1.M

arke

t cap

italiz

atio

n as

of 4

/12/

13

Lost

Ove

r$4

Bill

ion

inEx

plor

atio

nin

Last

Five

Year

sLo

st O

ver $

4 B

illio

n in

Exp

lora

tion

in L

ast F

ive

Year

s

W

ood

Mac

kenz

ie c

alcu

late

s th

at H

ess

has

lost

$4

billio

n of

val

ue fr

om it

s ex

plor

atio

n in

vest

men

t ove

r the

last

5 y

ears

(1)

H

ess

has

squa

nder

edbi

llions

and

prov

ided

zero

reco

gniti

onor

expl

anat

ion

Hes

s ha

s sq

uand

ered

bill

ions

on

adve

ntur

es a

roun

d th

e gl

obe

H

ess

has

squa

nder

ed b

illion

s an

d pr

ovid

ed z

ero

reco

gniti

on o

r exp

lana

tion

M

anag

emen

t has

per

sist

ed in

dril

ling

high

cos

t, hi

gh ri

sk p

rosp

ects

with

80+

% w

orki

ng in

tere

st

S

ell-s

ide

anal

ysts

hav

e in

clud

ed p

enal

ties

in th

eir H

ess

valu

atio

ns fo

r exp

ecte

d co

ntin

ued

expl

orat

ion

failu

re

D

euts

che

Ban

k ha

s in

the

past

dis

coun

ted

its N

AV b

y 20

% to

acc

ount

for H

ess’

s hi

gh e

xplo

ratio

n sp

endi

ng(2

)

Expl

orat

ion

Valu

e C

reat

ion(

1)Ex

plor

atio

n Va

lue

Cre

atio

n as

% o

f Cur

rent

Mar

ket C

ap(1

)(4)

$12.

0 40

%

C

itigr

oup

has

in th

e pa

st in

clud

ed a

$6

per s

hare

exp

lora

tion

pena

lty fo

r Hes

s(3)

$40

$6.0

$8.0

$10.

0

Exploration)

10%

20%

30%

Exploration($

2.0)

$0.0

$2.0

$4.0

Value Creation from ($ billions)

(10%

)

0%

Value Creation from

Bre

akin

g w

ith in

dust

ry b

est p

ract

ices

, Hes

s dr

illed

80+

% w

orki

ng in

tere

st w

ells

in n

umer

ous

regi

ons.

($6.

0)

($4.

0)

APC

STO

RDS

NBL

APA

TOT

BP

CVX

OXY

XOM

MUR

TLM

COP

MRO

HES

(30%

)

(20%

)

APC

NBL

STO

APA

RDS

TOT

MUR

BP

OXY

CVX

XOM

TLM

COP

MRO

HES

[ 25

]

The

resu

lt w

as d

estr

uctio

n of

20+

% o

f its

mar

ket c

apita

lizat

ion

1.S

ourc

e: W

ood

Mac

kenz

ie

2.D

euts

che

Ban

k 11

/6/2

012

3.C

itigr

oup

11/2

/201

24.

Mar

ket c

apita

lizat

ion

as o

f 11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k

Lost

$67

Bill

ion

ina

Hed

ging

Prog

ram

Nin

eTi

mes

Wor

seTh

anIts

Peer

sLo

st $

6.7

Bill

ion

in a

Hed

ging

Pro

gram

Nin

e Ti

mes

Wor

se T

han

Its P

eers

Rea

lized

Gai

ns

(Los

ses)

Hed

ging

Cum

ulat

ive

Rea

lized

Gai

ns

(Los

ses)

as

% o

f E&

PR

($20

0)$0

2002

2004

2006

2008

2010

2012

Rea

lized

Hed

ging

Per

form

ance

200

2-20

12(1

)E&

P R

even

ues

Ana

dark

o$1

.4bn

1%

Apa

che

($0.

4)bn

0%

BP

Non

e/N

MN

A

($1

000)

($80

0)

($60

0)

($40

0)

($20

0)

millions

Che

vron

Non

e/N

MN

A

Con

ocoP

hilli

psN

one/

NM

NA

Dev

on$0

.8bn

1%

EO

G$2

.2bn

5%

($1

800)

($1,

600)

($1,

400)

($1,

200)

($1,

000)

$

Exx

onN

one/

NM

NA

Mar

atho

n($

0.1)

bn0%

Mur

phy

Non

e/N

MN

A

Nob

le($

01)

bn0%

($1,

800)

Hes

s’s

cum

ulat

ive

real

ized

hed

ging

loss

essi

nce

2002

equi

vale

ntto

9%of

E&P

Rev

enue

s

Nob

le($

0.1)

bn0%

Occ

iden

tal

Non

e/N

MN

A

She

llN

one/

NM

NA

Sta

toil

Non

e/N

MN

A

Tli

($0

5)b

(1%

)si

nce

2002

equ

ival

ent t

o 9%

of E

&P

Rev

enue

s

Ove

r the

sam

e pe

riod,

pee

rs(2

)re

aliz

ed c

umul

ativ

e ga

ins

equa

l to

1%of

E&

P re

venu

es

Talis

man

($0.

5)bn

(1%

)

Tota

lN

one/

NM

NA

Ave

rage

1%

Hes

s($

6.7)

bn(9

%)

[ 26

]S

ourc

e: C

ompa

ny fi

lings

1.P

re-ta

x ga

ins/

loss

es o

n co

mm

odity

der

ivat

ives

2.P

roxy

or R

evis

ed P

eers

who

eng

age

in h

edgi

ng fo

r ups

tream

bus

ines

s in

clud

ing

Ana

dark

o, A

pach

e, D

evon

, EO

G, M

arat

hon,

Nob

le a

nd T

alis

man

Sym

ptom

atic

ofPo

orC

apita

lDis

cipl

ine

Hes

sEn

gage

sin

Prop

Trad

ing

Sym

ptom

atic

of P

oor C

apita

l Dis

cipl

ine,

Hes

s En

gage

s in

Pro

p Tr

adin

g

Sepa

rate

from

hed

ging

pro

duct

ion,

Hes

s al

so o

wns

a h

edge

fund

(HET

CO

) and

eng

ages

in p

rop

trad

ing.

W

HY?

Hed

ging

Pro

duct

ion

Lost

9%

of E

&P

reve

nue

whi

le p

eers

gai

ned

~1%

of E

&P

reve

nue

HET

CO

(Hed

ge F

und)

Trad

es p

ublic

equ

ities

as

wel

l as

com

mod

ities

. Gua

rant

eed

by H

ess

bala

nce

shee

t

Prop

rieta

ry T

radi

ng

Car

ried

out i

n co

rpor

ate

offic

e, s

epar

ate

from

H

ETC

O.

Hes

s re

fuse

s to

dis

clos

e its

resu

lts fr

om c

orpo

rate

pro

p tr

adin

g an

d co

nsol

idat

es

resu

lts w

ith H

ETC

O

Dis

clos

ure

sugg

ests

~$4

00m

m in

pro

p tr

adin

g lo

sses

sin

ce 2

009(

1)or

ver

y hi

gh

oper

atin

g co

sts

at H

ETC

O o

r…?

Why

do

shar

ehol

ders

hav

e to

gue

ss?

Wha

t is

this

doi

ng a

t H

ess?

($40

)

($20

)

$0

2009

2010

2011

2012

Impl

ied

Prop

Tra

ding

Los

ses

2009

-201

2(1)

($14

0)

($12

0)

($10

0)

($80

)

($60

)

($40

)

$ millions

[ 27

]S

ourc

e:C

ompa

ny fi

lings

1.10

K (p

g. 7

4) g

roup

s to

geth

er 1

00%

of t

radi

ng re

venu

es fo

r HE

TCO

and

cor

pora

te p

ropr

ieta

ry tr

adin

g. 1

0K (p

g. 2

8) a

lso

grou

ps to

geth

er 1

00%

of n

et in

com

e fo

r pro

prie

tary

trad

ing

and

50%

of i

ncom

e fro

m H

ETC

O. U

sing

cor

pora

te e

ffect

ive

tax

rate

, thi

s im

plie

s lo

sses

at c

orpo

rate

pro

prie

tary

trad

ing.

200

9 is

firs

t yea

r dis

clos

ure

incl

udes

reve

nues

. Why

doe

s H

ess

grou

p th

ese

toge

ther

rath

er th

an c

lear

ly s

how

ing

wha

t is

goin

g on

at e

ach

grou

p?

($16

0)

($14

0)

Fund

amen

talP

robl

ems

atH

ess

Fund

amen

tal P

robl

ems

at H

ess

Unr

elen

ting

Und

erpe

rfor

man

ce

Lack

of F

ocus

Ue

et

gU

depe

oa

ce

Und

isci

plin

ed C

apita

l Allo

catio

n

Ope

ratio

nal M

ism

anag

emen

t

Endl

ess

Inef

fect

ive

Res

truc

turin

gsEn

dles

s In

effe

ctiv

e R

estr

uctu

rings

Aby

smal

Gov

erna

nce

Cul

ture

[28

]

Why

Is H

ess

Hea

dqua

rter

ed in

Man

hatta

n?R

esul

ting

inTo

pLe

ader

ship

Bei

ngO

utof

Touc

hw

ithEn

ergy

Indu

stry

Res

ultin

g in

Top

Lea

ders

hip

Bei

ng O

ut o

f Tou

ch w

ith E

nerg

y In

dust

ry

S R

New

Yor

k Ci

ty

~25%

of C

VX

201

2 U

.S. P

rodu

ctio

n in

CA

klh

Los

Ang

eles

San

Ram

onD

enve

r

Tuls

a

~20%

of O

XY

201

2 P

rodu

ctio

n in

CA

Okl

ahom

a Ci

ty

Irvi

ng

El D

orad

o

Fort

Wor

thM

idla

nd

Plan

o Hou

ston

The

Woo

dlan

ds

[ 29

]

Sou

rce:

Blo

ombe

rg

Una

ble

to C

ontr

ol W

ell C

osts

in R

esou

rce

Play

s, H

ess

Has

Sw

itche

d to

aC

ompl

etio

nD

esig

nPe

ers

Ref

use

toU

sein

Sim

ilarA

crea

geto

a C

ompl

etio

n D

esig

n Pe

ers

Ref

use

to U

se in

Sim

ilar A

crea

ge

Plug

and

Per

fCom

plet

ion

Des

ign(

1)

In 1

H 2

012,

Hes

s w

ell c

osts

wer

e 39

% a

bove

Con

tinen

tal w

hen

drill

ing

sam

e ty

pe o

f wel

l

Frac

Met

hod

Plug

& P

erf

Plug

& P

erf

(3)

60%

San

d40

% to

50%

Sa

nd$1

0.5

$11.

0

$11.

5

$12.

0

$12.

5

$13.

0

well

+39%

Pro

ppan

t(3)

60%

San

d,

40%

Cer

amic

Sand

, re

mai

nder

Cer

amic

Rig

s20

16

% P

ad D

rillin

g30

%?

“Hes

s ha

s 30

% h

ighe

r w

ell c

osts

on

the

exac

t sa

me

rock

… w

hene

ver

we

are

in a

wel

l with

th

em,w

eal

way

str

yto

$8.0

$8.5

$9.0

$9.5

$10.

0

$10.

5

$million per w

In 4

Q 2

012,

Hes

s w

ell c

osts

17%

-38%

abo

ve W

hitin

g w

hen

drill

ing

sam

e ty

pe o

f wel

l

Slid

ing

Slee

ve C

ompl

etio

n D

esig

n(2)

them

, we

alw

ays

try

to

swap

out

eve

n if

it is

into

w

orse

acr

eage

.”

–Se

nior

Exe

cutiv

e of

M

a jor

Bak

ken

Ope

rato

r

$7.0

$7.5

Sd

gS

eee

Co

pet

oes

gSa

nish

O

nly

Frac

Met

hod

Slid

ing

Slee

veSl

idin

g Sl

eeve

Slid

ing

Slee

ve

Ran

geof

70%

jp

(Dec

embe

r 201

2)

$8.5

$9.0

$9.5

Pro

ppan

t(3)

100%

San

d

Ran

geof

70%

to

100

% S

and,

re

mai

nder

Cer

amic

95+%

Sand

Rig

s6

2014

%P

dD

illi10

0%50

%95

%

$7.0

$7.5

$8.0

+17%

+38%

[ 30

]

Sou

rces

: Com

pany

filin

gs, p

rese

ntat

ions

, ear

ning

s ca

ll tra

nscr

ipts

, Nor

th D

akot

a In

dust

rial C

omm

issi

on d

ata

1.1Q

and

2Q

ear

ning

s tra

nscr

ipts

and

pre

sent

atio

ns2.

4Q e

arni

ngs

trans

crip

ts a

nd p

rese

ntat

ions

3.D

ata

from

Nor

th D

akot

a In

dust

rial C

omm

issi

on

% P

ad D

rillin

g10

0%50

%~9

5%

$6.0

$6.5

Sani

sh

Onl

y

Abi

lity

toC

ontr

olW

ellC

ostI

sC

ritic

alto

Rea

lizin

gA

sset

Valu

efo

rSha

reho

lder

sA

bilit

y to

Con

trol

Wel

l Cos

t Is

Crit

ical

to R

ealiz

ing

Ass

et V

alue

for S

hare

hold

ers

H

ess

aste

dm

illion

son

Bak

ken

ellc

osts

Res

ourc

e pl

ays

requ

ire h

igh

num

ber o

f wel

ls to

be

drill

ed e

ffici

ently

. Hes

s ha

s st

rugg

led.

H

ess

was

ted

milli

ons

on B

akke

n w

ell c

osts

In

201

2, H

ess

unde

rest

imat

ed it

s B

akke

n co

sts

by $

1 bi

llion;

hav

ing

to ra

ise

guid

ance

from

$2

billio

n to

$3

billio

n in

spe

ndin

g w

hile

als

o re

duci

ng p

rodu

ctio

n gu

idan

ce

Ever

y$5

0000

0of

Cos

tOve

rrun

son

aB

akke

nW

ell

Ever

y $5

00,0

00 o

f C

ost O

verr

uns

on a

Bak

ken

Wel

l

Res

ults

in ~

$50

0 m

illio

n of

Val

ue L

ost i

f Not

Che

cked

(2)

In 1

H20

12 H

ess

wel

l cos

ts e

xcee

ded

like

peer

s by

$3.

5mm

per

wel

l(1)

($1.

0)

$0.0

$0

.5$1

.0$1

.5$2

.0$2

.5$3

.0$3

.5$4

.0

In 4

Q20

12 H

ess

wel

l cos

ts e

xcee

ded

like

peer

s by

$1.

5-$2

.5m

m(1

)

Ifun

chec

ked

cost

over

runs

coul

d($

4.0)

($3.

0)

($2.

0)

Hess NAVns

If un

chec

ked,

cos

t ove

rruns

cou

ld

resu

lt in

billi

ons

lost

for S

hare

hold

ers

($8

0)

($7.

0)

($6.

0)

($5.

0)

Redcution to H$ billion

($8.

0)In

crem

enta

l Cap

ex p

er W

ell

($ m

illion

s)

[ 31

]S

ourc

es: P

ublic

com

pany

filin

gs, c

orpo

rate

pre

sent

atio

ns a

nd e

arni

ngs

call

trans

crip

ts1.

See

slid

e 30

2.P

rese

nt v

alue

of a

dditi

onal

$3

mill

ion

cost

for e

ach

wel

l acr

oss

750,

000

net a

cres

, exc

ludi

ng a

crea

ge d

rille

d th

roug

h 3Q

. A

ssum

es 8

wel

ls p

er s

paci

ng u

nit (

4 B

akke

n, 4

TF

S),

14 ri

g pr

ogra

m, a

ddin

g 1

rig p

er y

ear u

ntil

20 ri

gs; P

reta

x va

lue

at 1

0% d

isco

unt r

ate

Una

ble

to M

anag

e R

ig P

rogr

am C

omm

ensu

rate

with

Siz

e of

Acr

eage

Pos

ition

Res

ulti

sD

estr

uctio

nof

NPV

Pote

ntia

land

Dec

eler

atin

gPr

oduc

tion

Gro

wth

Res

ult i

s D

estr

uctio

n of

NPV

Pot

entia

l and

Dec

eler

atin

g Pr

oduc

tion

Gro

wth

Hes

s’s

inab

ility

to o

pera

te a

rig

prog

ram

com

para

ble

to

peer

s of

its

size

resu

lts in

$2.

5 bi

llion

of f

orgo

ne v

alue

…

…as

evi

denc

ed b

y sl

ower

pro

duct

ion

grow

th

$12.

5

$13.

0

NPV

Impa

ct fr

om R

educ

ing

Bak

ken

Rig

Pro

gram

(1)

22

Rig

s20

R

igs

14

Rig

s

Bak

ken

Ope

rato

rPr

oduc

tion

Gro

wth

(2)

2012

2013

E

Con

tinen

tal

80%

38%

$11.

0

$11.

5

$12.

0

Hess NAVllions

$25

billi

on

Hes

s R

educ

ing

Rig

Cou

nt fr

om 1

6 to

14

Oas

is11

0%42

%

Kod

iak

267%

109%

Hes

s87

%20

%

$10.

0

$10.

5

Impact on$ bi

$2.5

bill

ion

$9.5

14

16

18

20

22

O

pera

ted

Rig

Pro

gram

In c

ontr

ast,

best

-in-c

lass

Bak

ken

oper

ator

s ar

e fo

cuse

d on

acc

eler

atin

g va

lue

Que

stio

n: “A

nd if

you

do

com

e in

bel

ow th

at ta

rget

or b

udge

t, I m

ean

do y

ou th

ink

–w

ould

we

expe

ct to

see

you

dril

l in

crem

enta

l wel

ls fo

r the

sam

e C

apE

xov

er th

e ye

ar, o

r jus

t com

e ou

t with

a lo

wer

Cap

Ex

budg

et?”

Ric

k B

ott,

Con

tinen

tal P

resi

dent

& C

OO

: “…

our g

oal i

s to

acc

eler

ate

valu

e.W

e ha

ve a

dee

p m

ulti-

deca

de in

vent

ory

and

we

wan

tto

brin

gas

muc

hof

that

valu

efo

rwar

dS

oou

rpla

nw

ould

beto

leve

rage

thos

eef

ficie

ncie

san

dbe

able

to

[ 32

]

and

we

wan

t to

brin

g as

muc

h of

that

val

ue fo

rwar

d. S

o, o

ur p

lan

wou

ld b

e to

leve

rage

thos

e ef

ficie

ncie

s an

d be

abl

e to

dr

ill ad

ditio

nal w

ells

…”(3

)

1.P

rese

nt v

alue

of a

dditi

onal

or l

esso

rrig

hel

d in

per

petu

ity a

cros

s 57

5,00

0 ne

t acr

es, e

xclu

ding

acr

eage

dril

led

thro

ugh

YE20

12.

Ass

umes

8 w

ells

per

spa

cing

uni

t (4

Bak

ken,

4 T

FS),

$6.5

mill

ion

NP

V p

er w

ell;

28 d

ay s

pud

to s

pud

time

(Hes

s 4Q

); P

reta

x va

lue

at 1

0% d

isco

unt r

ate

2.P

rodu

ctio

n gr

owth

gui

danc

e fo

r 201

3 fo

r Bak

ken

or c

orpo

rate

if n

ot d

iscl

osed

3.C

ontin

enta

l Res

ourc

es 4

Q12

Ear

ning

s ca

ll

Bur

dene

d by

Yes

terd

ay’s

Issu

es, H

ess

Is N

ot M

atch

ing

its P

eers

in W

orki

ng

toM

axim

ize

Bak

ken’

sFu

ture

Pote

ntia

lto

Max

imiz

e B

akke

ns

Futu

re P

oten

tial

Con

tinen

tal

Al

tiL

ThAc

cele

ratin

g Lo

wer

Thr

ee

Fork

s E

xplo

ratio

n P

rogr

am

Hig

h D

ensi

ty P

ilot A

ppra

isal

P

roje

ct

•20

wel

ls to

def

ine

the

prod

uctiv

ity o

f 2nd

, 3rd

and

4th

benc

hes

of th

e Th

ree

Fork

s ac

ross

75x

60 m

iles(

1)

•4 p

ilot d

ensi

ty p

roje

cts

to te

st 3

20 a

nd 1

60 a

cre

spac

ing

(14

and

28 w

ells

per

uni

t)(1

)

Whi

ting

Hid

den

Ben

ch L

ower

B

akke

nS

ilt T

estin

g•T

estin

g ad

ditio

nal t

arge

t zon

e si

tuat

ed b

etw

een

Mid

dle

Bak

ken

and

Thre

e Fo

rks

(2)

Hig

h D

ensi

ty P

ilot A

ppra

isal

P

roje

ct•I

nitia

ting

high

er d

ensi

ty p

ilots

in S

anis

h, P

rong

horn

, Hid

den

Ben

ch a

nd M

isso

uri B

reak

s(2

)

Test

ing

Addi

tiona

lThr

ee•T

estin

gth

e2n

dbe

nch

ofth

eTh

ree

Fork

sin

the

Cas

sand

ra

Whi

ting

Test

ing

Add

ition

al T

hree

Fo

rks

Zone

s•T

estin

g th

e 2

benc

h of

the

Thre

e Fo

rks

in th

e C

assa

ndra

an

d Ta

rpon

are

as(2

)

Oas

isH

igh

Den

sity

Pilo

t App

rais

al

Pro

ject

•Lau

nchi

ng in

fill p

ilots

in 2

2 sp

acin

g un

its(3

)

“We'

re d

oing

a v

ery

smal

l am

ount

of a

ppra

isal

wor

k in

th

e Th

ree

Fork

s…”

Gre

g H

ill, J

anua

ry 2

013(

5)

Pro

ject

Exte

nsio

nal A

crea

ge T

estin

g•T

estin

g Th

ree

Fork

s w

ells

in N

orth

Cot

tonw

ood,

Red

Ban

k an

d ex

tens

iona

l Mon

tana

acr

eage

(3)

Low

er T

hree

For

ks

Exp

lora

tion

Pro

gram

•Dril

ling

6 ve

rtica

l wel

ls in

to lo

wer

Thr

ee F

orks

ben

ches

in

1Q13

to d

eter

min

e ar

eas

for h

oriz

onta

l pilo

ts in

late

201

3(3)

Kod

iak

Hig

h D

ensi

ty P

ilot A

ppra

isal

P

roje

ct•2

pilo

t pro

ject

s te

stin

g 12

wel

ls p

er u

nit i

nclu

ding

6 M

iddl

e B

akke

n w

ells

and

6 T

hree

For

ks(4

)

Low

er T

hree

For

ks In

terv

als

Exp

lora

tory

Tes

ting

•Exp

lora

tory

test

ing

of th

e up

per,

mid

dle

and

TF3

Thre

e Fo

rks

inte

rval

s(4)

Sou

rces

: Pub

lic c

ompa

ny fi

lings

, cor

pora

te p

rese

ntat

ions

and

ear

ning

s ca

ll tra

nscr

ipts

1.C

ontin

enta

l 4Q

12 E

arni

ngs

call

2.W

hitin

g 4Q

12 E

arni

ngs

call

and

pres

enta

tion

3.O

asis

4Q

12 E

arni

ngs

call

4.K

odia

k 4Q

12 E

arni

ngs

call

5.H

ess

4Q 2

012

Ear

ning

s C

all

[ 33

]

Inab

ility

to M

ake

Mos

t of C

orpo

rate

Opp

ortu

nitie

s D

emon

stra

ted

in E

agle

For

dH

ess

Not

Onl

yFa

iled

toC

aptu

reO

ppor

tuni

tyH

ess

Lost

$771

Mill

ion

Hes

s N

ot O

nly

Faile

d to

Cap

ture

Opp

ortu

nity

, Hes

s Lo

st $

771

Mill

ion

Hes

s en

tere

d th

e Ea

gle

Ford

in 2

010

and

lost

mon

ey. T

he E

agle

For

d is

one

of t

he p

rem

ier U

.S. l

iqui

ds re

sour

ce p

lays

an

d ha

s se

en a

dra

mat

ic ri

se in

val

ue o

ver t

he p

ast f

ew y

ears

. Hes

s’s

loss

is th

e eq

uiva

lent

of l

osin

g m

oney

in th

e 19

90s

buyi

ng te

chno

logy

sto

cks—

hard

to d

o ev

en if

you

trie

d.y

ggy

y

Cap

ital D

estr

oyed

in E

agle

For

d

Leas

e A

cqui

sitio

n C

osts

(1)

($36

6)m

m

Dril

ling

&C

ompl

etio

nC

osts

(2)

($50

4)m

m

JV

with

unk

now

n Za

ZaE

nerg

y ha

d m

isal

igne

d in

cent

ives

:

Za

Zaw

aspa

idto

acqu

ireac

reag

ere

gard

less

ofco

stor

qual

ityD

rillin

g &

Com

plet

ion

Cos

ts(2

)($

504)

mm

Add

ition

al C

apita

lExp

endi

ture

s(3)

($14

9)m

m

Cas

h P

aym

ents

to Z

aZa(

4)($

124)

mm

Tota

l Cap

ital I

nves

ted

in E

agle

For

d($

1,14

2)m

m

ZaZa

was

pai

d to

acq

uire

acr

eage

rega

rdle

ss o

f cos

t or q

ualit

y an

d bo

re n

o ris

k to

Hes

s ca

pita

l los

ses

Za

Zare

ceiv

ed 1

0% c

ash

bonu

s an

d 10

% c

arrie

d w

orki

ng

inte

rest

whi

le p

uttin

g no

cap

ital a

t ris

k fo

r acq

uire

d ac

res

A

fter 2

yea

rs, H

ess

real

ized

its

mis

take

and

exi

ted

JV:

Sal

es P

roce

eds

in M

arch

201

3(5)

$265

mm

Eag

le F

ord

Cas

h Fl

ows(

6)$1

07m

m

Tota

l Cas

hG

ener

ated

by

Eagl

e Fo

rd$3

72m

m

Za

Zaw

alke

d aw

ay w

ith h

alf o

f Hes

s’s

Eag

le F

ord

acre

age

and

over

$10

0mm

of H

ess’

s ca

sh

In

dica

tive

of la

ck o

f cap

ital c

ontro

ls, l

itiga

tion

is o

ngoi

ng fr

om th

e JV

as

Hes

s pa

id le

ase

brok

ers

for a

crea

ge th

at w

as n

ever

de

liver

edTo

tal C

ash

Lost

in

Eagl

e Fo

rd($

771)

mm

deliv

ered

H

ess

does

not

dis

clos

e th

e ex

tent

of t

hese

loss

es. S

hare

hold

ers

mus

t loo

k to

dis

clos

ures

of Z

aZa

and

San

chez

in

orde

r to

lear

n ho

w S

hare

hold

er c

apita

l was

lost

Whi

le o

ther

s ca

ptur

ed tr

emen

dous

wea

lth in

the

Eagl

e Fo

rd (A

PC, C

OP,

EO

G, M

RO

, MU

R, R

DSA

, TLM

, etc

.),

Hes

s no

t onl

y fa

iled

to c

reat

e va

lue

but l

ost $

771m

m

[ 34

]

Sou

rces

: Hes

s an

d Za

ZaC

ompa

ny F

ilings

1.Za

Za20

12 1

0K (p

.F92

)2.

53 W

ells

dril

led

as o

f 3/1

/13;

50

wel

ls in

Cot

ulla

are

a pe

r San

chez

pre

sent

atio

n, 3

wel

ls o

utsi

de C

otul

la

area

ZaZ

a2Q

201

2 10

Q (p

.45)

; Wel

l cos

ts a

ssum

ed to

be

$10.

3mm

in 2

010/

2011

and

$8.

9mm

in

2012

/201

3 as

per

Hes

s 2Q

201

2 ea

rnin

gs c

all;

23 w

ells

dril

led

as o

f YE

2011

as

per Z

aZa

10K

201

1 (p

.3)

3.$3

80m

m in

Eag

le F

ord

cape

xin

201

2 pe

r 2Q

Hes

s ea

rnin

gs c

all;

Leas

e ac

quis

ition

cos

ts $

0 in

201

2 pe

r 20

12/2

011

ZaZa

10K

; 26

wel

ls d

rille

d in

201

2; re

mai

nder

is $

149m

m fo

r non

-D&

C c

apita

l exp

endi

ture

s

4.$2

4.8m

m in

ZaZ

ale

ase

bonu

ses

per Z

aZa

2012

10K

(p.5

3), $

14.8

mm

in Z

aZa

G&

A re

imbu

rsem

ent p

er

ZaZa

2012

10K

(p.5

4), $

84m

m in

ZaZ

aJV

dis

solu

tion

paym

ents

per

ZaZ

a3Q

201

2 10

Q (p

.12)

5.S

anch

ez p

ress

rele

ase,

Mar

ch 1

8, 2

013

6.20

10 th

roug

h 2Q

201

2 pr

oduc

tion,

real

ized

pric

es, l

ease

ope

ratin

g co

sts

from

ZaZ

afil

ings

; 3Q

2012

th

roug

h 1Q

2013

pro

duct

ion

from

San

chez

acq

uisi

tion

pres

enta

tion,

Cot

ulla

Onl

y re

aliz

ed p

rices

and

leas

e op

erat

ing

cost

s pe

r ZaZ

afil

ings

in 1

Q a

nd 2

Q 2

012

10Q

s an

d he

ld c

onst

ant;

G&

A p

er B

OE

at H

ess

U.S

. E

&P

ave

rage

; no

corp

orat

e ov

erhe

ad in

clud

ed

Fund

amen

talP

robl

ems

atH

ess

Fund

amen

tal P

robl

ems

at H

ess

Unr

elen

ting

Und

erpe

rfor

man

ce

Lack

of F

ocus

Ue

et

gU

depe

oa

ce

Und

isci

plin

ed C

apita

l Allo

catio

n

Ope

ratio

nal M

ism

anag

emen

t

Endl

ess

Inef

fect

ive

Res

truc

turin

gsEn

dles

s In

effe

ctiv

e R

estr

uctu

rings

Aby

smal

Gov

erna

nce

Cul

ture

[ 35

]

Endl

ess

Inef

fect

ive

Res

truc

turin

gsTh

atR

esul

tin

Furt

herU

nder

perf

orm

ance

Endl

ess

Inef

fect

ive

Res

truc

turin

gs T

hat R

esul

t in

Furt

her U

nder

perf

orm

ance

“Will

per

petu

al re

stru

ctur

ing

mod

e ev

er e

nd?”

-Gol

dman

Sac

hs, O

ctob

er 2

003(

1) (n

early

10

year

s ag

o!)

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Span

of

Ann

ounc

edR

estr

uctu

ring

“Aft

th3

1996

to 1

999

“Rep

ositi

onin

g”

“We

have

done

a

2001

to 2

003

“Res

hapi

ng”

“Ove

rthe

last

five

2001

to 2

006

Con

tinue

d“R

esha

ping

”

“So

abou

ttw

o

2008

to 2

010

“Reb

alan

cing

”

“We

have

done

a

2001

to 2

011

“Res

truc

turin

g”

“im

porta

nt

2009

to 2

014

“Im

port

ant

Cha

nge”

“We

wou

ldno

teth

at

2010

to ?

“Mul

tiyea

r Tr

ansf

orm

atio

n”

Res

truc

turin

g

Prom

ises

“Afte

r mor

e th

an 3

ye

ars

of

aggr

essi

vely

re

posi

tioni

ng it

s as

set b

ase

and

slas

hing

cos

ts, w

e ex

pect

Am

erad

a

We

have

don

e a

lot o

f wor

k th

ela

st

two

year

sto

re

shap

e ou

r po

rtfol

io...

It's

st

artin

g to

st

abili

ze.”

Ove

r the

last

five

ye

ars

our c

ompa

ny

has

done

a lo

t of

wor

k to

resh

ape

our p

ortfo

lio…

W

e‘re

sta

rting

to

deliv

er a

con

sist

ent

track

reco

rdof

“So

abou

t tw

o ye

ars

ago,

we

real

ly s

tarte

d to

pu

sh a

mor

e ba

lanc

ed a

ppro

ach

betw

een

acce

ssin

g un

conv

entio

nal…

to

bala

nce

the

high

We

have

don

e a

lot o

f wor

k ov

er th

e la

st 1

0 ye

ars

to

rest

ruct

ure

our

own

Com

pany

si

gnifi

cant

ly…

”

John

Hes

sJu

ly

…im

porta

nt

chan

ge fo

r H

ess…

This

ch

ange

ess

entia

lly

bega

n in

200

9 an

d sh

ould

be

larg

ely

com

plet

e in

2014

”

“We

wou

ld n

ote

that

ou

r cur

rent

boa

rd is

co

mpr

ised

of h

ighl

y ac

com

plis

hed

dire

ctor

s w

ho

dese

rve

cred

it fo

r in

itiat

ing

the

mul

tiyea

rPr

omis

esex

pect

Am

erad

a H

ess

will

fina

lly

deliv

er…

” -Leh

man

, M

ay 1

999(

2)

-Joh

n H

ess,

O

ctob

er 2

003(

3)

track

reco

rd o

f pe

rform

ance

.”

-Joh

n H

ess,

Se

ptem

ber 2

006(

4)

bala

nce

the

high

im

pact

exp

lora

tion

prog

ram

..” -Joh

n H

ess,

N

ovem

ber 2

010(

5)

-Joh

n H

ess,

Jul

y 20

11(6

)in

201

4. -Joh

n H

ess,

Ju

ly 2

012(

7)

mul

tiyea

r tr

ansf

orm

atio

nth

at

star

ted

in 2

010

and

that

con

tinue

s to

day.

”

-Jon

Pep

per,

Hes

s sp

okes

man

(9)

spok

esm

an,

Febr

uary

201

3(8)

[ 36

]

Res

ults

(9)

(21)

%(2

4)%

(87)

%(1

7)%

(167

)%(6

3)%

(43)

%

Sou

rce:

Com

pany

tran

scrip

ts, W

all S

t. R

esea

rch

1.G

oldm

an S

achs

, Oct

ober

14,

200

32.

Lehm

an B

roth

ers,

May

28,

199

93.

Hes

s 3Q

200

3 E

arni

ngs

Cal

l4.

Lehm

an B

roth

ers

Con

fere

nce,

Sep

tem

ber 2

006

5.B

ank

of A

mer

ica

Mer

rill L

ynch

Con

fere

nce,

Nov

embe

r 20

106.

Hes

s 2Q

11 E

arni

ngs

Cal

l7.

Hes

s 2Q

12 E

arni

ngs

Cal

l8.

Blo

ombe

rg: “

Hes

s Ta

ngle

d Fa

mily

Tie

s Ta

rget

ed in

Sha

reho

lder

Rev

olt”,

Feb

ruar

y 27

, 201

39.

Und

erpe

rform

ance

vs.

Rev

ised

pro

xy p

eers

; cal

cula

ted

over

per

iod

refe

rred

to in

quo

te

Toda

y Sh

areh

olde

rs A

re T

old

of H

ess’

s 7t

hA

ttem

pted

Res

truc

turin

gLi

kePr

iorR

estr

uctu

rings

Ther

eIs

No

Cle

arB

egin

ning

orEn

dLi

ke P

rior R

estr

uctu

rings

, The

re Is

No

Cle

ar B

egin

ning

or E

nd

Whe

n w

ill it

end

?W

hen

did

this

“5”

yea

r res

truc

turin

g be

gin

and

whe

n w

ill it

end

?

“…th

e m

ajor

mov

es to

resh

ape

our

portf

olio

… w

ill h

ave

been

com

plet

ed

by th

e en

d of

201

3.”

John

Hes

s,

Janu

ary

2013

(4)

Igno

re c

omm

ents

fro

m 2

010

and

2011

As

said

in J

uly

2012

: fiv

e ye

ar p

lan

Wha

t?

It be

gan

in 2

010?

W

e th

ough

t it b

egan

in

200

9? W

ell,

we

also

use

d to

thin

k it

bega

nin

2008

Did

it s

tart

B

ut it

has

bee

n on

goin

g si

nce

2001

?

No,

it

star

ted

in 2

009

and

will

en

din

2014

2009

to

2014

…bu

t co

mpl

eted

in 2

013

a fo

urye

ar p

lan

that

we

call

bega

n in

200

8…

So

is it

a th

ree

year

pl

an?

2010

-20

13?

Wha

teve

r it i

s, it

ism

ultiy

ear a

nd

“we’

d sa

y 12

to 1

8 m

onth

s [M

arch

20

14 to

Sep

tem

ber 2

014]

.”Jo

hn R

ielly

,S

VP

& C

FO, H

ess

“So

abou

t tw

o ye

ars

ago,

we

real

ly s

tarte

d

in 2

008

?20

01?

end

in 2

014

that

we

call

a “f

ive”

yea

r pla

n

“..ou

r cur

rent

boa

rd is

co

mpr

ised

of h

ighl

y

cont

inue

s to

day

,M

arch

201

3(6)

“…I m

ean,

it’s

ear

ly in

the

proc

ess,

bu

t our

gui

danc

e w

ould

be

that

we’

d co

mpl

ete

thes

e sa

les

by th

e en

d of

20

14”

“mon

etiz

atio

nof

ourB

akke

n

to p

ush

a m

ore

bala

nced

app

roac

h be

twee

n ac

cess

ing

unco

nven

tiona

l hy

droc

arbo

n re

sour

ces,

oil

and

gas,

to

bal

ance

the

high

i

tl

ti

“We

have

don

e a

lot o

f w

ork

over

the

last

10

year

sto

rest

ruct

ure

our o

wn

Com

pany

si

gnifi

cant

ly…

”

- Joh

nH

ess

“Thi

s ch

ange

es

sent

ially

beg

an in

20

09 a

nd s

houl

d be

la

rgel

y co

mpl

ete

in

2014

.”

Jh

H

“On

our J

uly

call,

we

expl

aine

d th

at H

ess

was

in th

e m

idst

of a

fiv

e-ye

ar tr

ansi

tion.

.. co

mpl

eted

by

the

end

of 2

013.

”

acco

mpl

ishe

d di

rect

ors

who

des

erve

cr

edit

for i

nitia

ting

the

mul

tiyea

r tr

ansf

orm

atio

nth

at

star

ted

in 2

010

and

that

con

tinue

s t

d”

2014

.”Jo

hn R

ielly

,S

VP

& C

FO, H

ess

Mar

ch 2

013(

6)

mon

etiz

atio

n of

our

Bak

ken

mid

stre

am a

sset

s ex

pect

ed in

201

5.”

John

Hes

s,

Mar

ch 2

013(

6)

impa

ct e

xplo

ratio

n pr

ogra

m...

”

-Joh

n H

ess,

N

ovem

ber 2

010(

1)

John

Hes

s,

July

201

1(2)

-Joh

n H

ess,

Ju

ly 2

012(

3)-J

ohn

Hes

s,

Janu

ary

2013

(4)

toda

y.”

-Jon

Pep

per,

Hes

s sp

okes

man

, Fe

brua

ry 2

013(

5)

[ 37

]

2008

2009

2010

2011

2012

2013

2014

Sou

rce:

Com

pany

tran

scrip

ts1.

Ban

k of

Am

eric

a M

erril

l Lyn

ch C

onfe

renc

e, N

ovem

ber

2010

2.H

ess

2Q 2

011

Ear

ning

s C

all

3.H

ess

2Q 2

012

Ear

ning

s C

all

4.H

ess

4Q 2

012

Ear

ning

s ca

ll, J

anua

ry 3

0, 2

013

5.B

loom

berg

: “H

ess

Tang

led

Fam

ily T

ies

Targ

eted

in

Sha

reho

lder

Rev

olt”,

Feb

ruar

y 27

, 201

36.

Hes

s bu

sine

ss u

pdat

e ca

ll, M

arch

4, 2

013

Con

trad

icto

ry S

tate

men

ts P

rove

s Th

at R

ecen

t Pla

n Is

Not

Pro

duct

of

Thor

ough

and

Thou

ghtfu

lRev

iew

Thor

ough

and

Tho

ught

ful R

evie

w

“…th

e st

rate

gic

infr

astr

uctu

re w

e ha

ve in

Nor

th D

akot

a, h

avin

g co

ntro

l of t

hat

adds

a lo

t of v

alue

…th

at’s

not

som

ethi

ng w

e w

ould

be

inte

rest

ed in

M

LPin

g…E

nerg

y M

arke

ting

and

Ret

ail M

arke

ting

rem

ain

a lo

ng-te

rm

stra

tegi

c pa

rt o

f our

por

tfolio

that

… b

uild

s up

on o

ur s

trong

bra

nd...

”-J

ohn

Hes

s, N

ovem

ber 2

012(

1,3)

“We

have

ast

rong

bran

d…it

enha

nces

the

com

pany

from

afin

anci

alan

dre

puta

tiona

lpoi

ntof

view

….a

nen

ergy

mar

ketin

gbu

sine

ss…

will

help

usif

Unt

il M

arch

201

3

Hes

s: M

arke

ting,

Ret

ail a

nd

If

tt

pp

gyg

pw

efin

dga

sin

the

Utic

a…S

oth

ey’re

goin

gto

beso

me

stra

tegi

cbe

nefit

s…”

-Joh

n H

ess,

Jan

uary

201

3(2,

4)In

fras

truc

ture

long

-term

str

ateg

ic

“…m

onet

izat

ion

of o

ur B

akke

n m

idst

ream

ass

ets

expe

cted

in 2

015…

We

have

ha

d th

is s

trate

gic

trans

form

atio

n un

derw

ay re

ally

… p

redo

min

atel

y w

hen

we

As

of M

arch

4th

2013

:

Hes

s: M

arke

ting,

Ret

ail a

nd

Infr

astr

uctu

re

star

ted

to b

uild

out

our

Bak

ken

posi

tion

in 2

010.

So

this

is n

ot s

omet

hing

th

at ju

st h

appe

ned

over

nigh

t…”

-Joh

n H

ess,

Mar

ch 2

013(

5)

“…in

ter

ms

of

purs

uing

stra

tegi

c o

ptio

ns t

o m

axim

ize

val

ue,

be i

t th

e

til

kti

bi

kti

bi

lti

Infr

astr

uctu

re

shou

ld b

e m

onet

ized

reta

il m

arke

ting

bus

ines

s o

r en

ergy

mar

ketin

g bu

sine

ss, w

e a

re e

valu

atin

g

seve

ral

optio

ns t

o m

onet

ize

thes

e b

usin

esse

s to

max

imiz

e s

hare

hold

er

valu

e. A

nd w

e a

re j

ust

star

ting

that

pro

cess

.”-J

ohn

Rie

lly, S

VP

& C

FO, M

arch

201

3(5)

[ 38

]S

ourc

e: C

ompa

ny tr

ansc

ripts

1.3Q

201

2 E

arni

ngs

call,

Nov

embe

r 2, 2

012

2.4Q

201

2 E

arni

ngs

call

Janu

ary

30, 2

013

3.E

lliot

t vie

w: O

il &

gas

are

com

mod

ities

-th

ey d

on’t

requ

ire b

rand

ing

4.E

lliot

t vie

w: O

il &

gas

are

com

mod

ities

-th

ey d

on’t

requ

ire c

ontro

lled

dist

ribut

ion

5.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

3

Not

Cap

able

ofR

efoc

usin

gEx

plor

atio

nN

ot C

apab

le o

f Ref

ocus

ing

Expl

orat

ion

“We

wer

e kn

own

as a

ver

y hi

gh-im

pact

exp

lore

r. I t

hink

we

can

say

that

“W

e ar

e tra

nsiti

onin

g aw

ay fr

om a

pro

gram

that

exi

sted

for u

s in

the

Expl

orat

ion

Stra

tegy

200

3Ex

plor

atio

n St

rate

gy 2

012

that

stra

tegy

did

n’t w

ork.

We

spen

t abo

ut $

5 bi

llion

on

high

impa

ct

expl

orat

ion

and

we

certa

inly

did

n’t d

isco

ver e

noug

h re

sour

ces

to

gene

rate

acc

epta

ble

retu

rns

on th

at $

5 bi

llion

inve

stm

ent.

So

we

have

sh

ifted

our

exp

lora

tion

stra

tegy

…

[Fi

t]O

thi

f

past

, and

tow

ards

a p

rogr

am w

hich

con

cent

rate

s on

hig

h-im

pact

pr

ospe

cts.

I th

ink

the

area

s of

focu

s fo

r us

will

stil

l be

the

deep

wat

er G

ulf o

f Mex

ico,

de

epw

ater

offs

hore

Wes

t Afr

ica,

and

S

[Firs

t] O

ur th

ree

prim

ary

focu

s ar

eas

are

Gul

f of M

exic

o,

Wes

t Afr

ica

and

Asi

a-Pa

cific

…

The

seco

ndch

ange

Hes

sus

edto

drill

wel

lsat

high

wor

king

inte

rest

deep

wat

er S

outh

east

Asi

a.”

–Jo

hn O

’Con

nor,

FmrP

resi

dent

Wor

ldw

ide

E&

P H

ess,

Apr

il 20

03(1

)

The

seco

nd c

hang

e …

Hes

s us

ed to

dril

l wel

ls a

t hig

h w

orki

ng in

tere

st,

80%

to 1

00%

wor

king

inte

rest

. We

are

not g

oing

to d

o th

at a

nym

ore.

”–

Gre

gory

Hill

, EV

P W

orld

wid

e E

&P

Hes

s, N

ovem

ber 2

012(

2)

Less

than

ten

seco

nds

late

r :“T

here

is o

ne la

st a

rea

… th

at is

Kur

dist

an. W

e se

e lo

ts o

f hyd

roca

rbon

s

Less

than

thre

e m

onth

s la

ter:

On

Janu

ary

22, 2

013,

Hes

s’s

agre

emen

t to

acqu

ire a

dditi

onal

acr

eage

in

the

Par

isB

asin

and

carr

yE

gdon

Res

ourc

eson

Hui

ron-

1ex

plor

atio

nw

ell

ther

e, a

nd w

e’re

sho

otin

g se

ism

ic th

is y

ear a

nd w

e w

ill d

rill o

ur fi

rst w

ell

next

yea

r in

2013

.”(2

)

Aus

tral

iaB

razi

lC

olom

bia

Egyp

tK

urdi

stan

Liby

a

Rea

lity

sinc

e: u

nabl

e to

sta

y w

ithin

“fo

cus

area

”

the

Par

is B

asin

and

car

ry E

gdon

Res

ourc

es o

n H

uiro

n1

expl

orat

ion

wel

l w

as a

nnou

nced

. Hes

s ha

s 85

% w

orki

ng in

tere

st.(3

)C

hina

Fran

cePe

ru

Rea

lity:

una

ble

to s

tay

with

in “

focu

s ar

ea”

nor

avoi

d hi

gh w

orki

ng in

tere

st d

rillin

g

[ 39

]

Nei

ther

Kur

dist

an n

or F

ranc

e ar

e in

“fo

cus

area

s” a

nd a

re b

eing

dr

illed

at 8

0% a

nd 8

5% w

orki

ng in

tere

st re

spec

tivel

yS

ourc

e: C

ompa

ny F

iling

s, E

arni

ngs

Cal

l Tra

nscr

ipts

,1.

1Q 2

003

Ear

ning

s C

all

2.B

ank

of A

mer

ica

Mer

rill L

ynch

Con

fere

nce,

Nov

embe

r 201

23.

Egd

onR

esou

rces

pre

ss re

leas

e Ja

nuar

y 22

, 201

3

Una

ble

toLi

veW

ithin

Cas

hFl

owU

nabl

e to

Liv

e W

ithin

Cas

h Fl

ow

“…Th

e ke

y to

[pro

fitab

le g

row

th] w

ill be

[tha

t] w

e w

ill b

e ab

le to

live

with

in o

ur m

eans

and

deliv

er, I

thin

k, v

ery

attra

ctiv

e fin

anci

al

retu

rns

on a

goi

ng fo

rwar

d ba

sis

as I

said

.”-J

ohn

Hes

sJu

ly20

12(1

)Jo

hn H

ess,

Jul

y 20

12

“Our

Com

pany

has

alw

ays

been

dis

cipl

ined

, alw

ays

has

had

the

goal

ofliv

ing

with

inou

rmea

ns”

Shar

ehol

ders

hav

e he

ard

this

too

man

y tim

es b

efor

eH

isto

rical

cas

h flo

ws

tell

a di

ffere

nt s

tory

(6)

2011

2012

goal

of l

ivin

g w

ithin

our

mea

ns.

-Joh

n H

ess,

Feb

ruar

y 20

09(2

)

“We

wan

t to

live

with

in o

ur c

ash

flow

. We

usua

lly m

oder

ate

the

spen

ding

base

d up

on w

hat w

e ex

pect

the

cash

flow

to b

e fo

r th

eye

ar”

2008

-20

12

2010

-20

12

the

year

.-J

ohn

Hes

s, F

ebru

ary

2008

(3)

“Our

fina

nces

, we

wan

t to

live

with

in o

ur c

ash

flow

. If y

ou lo

ok

at o

ur c

ompa

ny's

pas

t you

'll se

e th

at w

e're

pre

tty d

isci

plin

ed

abou

ttha

t”

(50.

0%)

(40.

0%)

(30.

0%)

(20.

0%)

(10.

0%)

0.0%

10

.0%

20

.0%

2003

-20

12

Cl

tiF

Ch

Fl%

fOti

Ch

Fl

abou

t tha

t.-J

ohn

Hes

s, S

epte

mbe

r 200

6(4)

“…W

e ba

sica

lly h

ave

a ph

iloso

phy

of m

anag

ing

the

capi

tal s

pend

fo

r the

Cor

pora

tion

with

in th

e ca

sh fl

ows

that

the

busi

ness

es

thro

wof

f”C

umul

ativ

e Fr

ee C

ash

Flow

as

a %

of O

pera

ting

Cas

h Fl

ow

HE

SR

evis

ed P

roxy

Pee

r Med

ian

Pro

xy P

eer M

edia

n

thro

w o

ff.”

-Joh

n O

’Con

nor,

FmrP

resi

dent

Wor

ldw

ide

E&

P H

ess,

Ja

nuar

y 20

05(5

)

[ 40

]1.

Hes

s 2Q

201

2 E

arni

ngs

Con

fere

nce

Cal

l, Ju

ly 2

5, 2

012

2.C

redi

t Sui

sse

Gro

up E

nerg

y S

umm

it, F

ebru

ary

5, 2

009

3.C

redi

t Sui

sse

Gro

up E

nerg

y C

onfe

renc

e, F

ebru

ary

7, 2

008

4.Le

hman

Bro

ther

s C

EO

Ene

rgy

Con

fere

nce,

Sep

tem

ber 5

, 200

65.

Hes

s 4Q

200

4 E

arni

ngs

Con

fere

nce

Cal

l, Ja

nuar

y 26

, 200

56.

Com

pany

Fili

ngs.

Fre

e C

ash

Flow

def

ined

as

Ope

ratin

g C

ash

Flow

less

Cap

ex

Pers

ista

ntIn

abili

tyto

Del

iver

Ret

urns

toSh

areh

olde

rsPe

rsis

tant

Inab

ility

to D

eliv

er R

etur

ns to

Sha

reho

lder

s

“It s

houl

d be

obv

ious

that

we

have

mad

e a

lot o

f mov

es w

ith a

mul

ti-ye

ar s

trate

gy to

put

our

com

pany

in a

pos

ition

to g

ener

ate

long

-term

sha

reho

lder

val

ue,t

hat w

e lo

ok a

t thi

ngs

for a

ll sh

areh

olde

rs b

enef

it.”

-Jo

hn H

ess,

Jan

uary

201

3(1)

Hes

sR

evis

ed P

roxy

Pee

rsR

elat

ive

Perf

orm

ance

(2) :

“The

mos

t im

porta

nt p

art o

f our

fina

ncia

l stra

tegy

is,

obvi

ousl

y, u

ltim

atel

y, w

e w

ant t

o bu

ild a

com

pany

to

hb

ith

tdli

fit

tilfi

il

Wha

t is

obvi

ous

is th

at d

espi

te J

ohn

Hes

s’s

pere

nnia

l cla

ims,

yea

r afte

r yea

r sto

ck p

erfo

rman

ce fa

ils

Sep

tem

ber 2

011

-N

ovem

ber 2

012

(28%

)

have

a b

usin

ess

that

del

iver

s fir

stqu

artil

efin

anci

al

shar

ehol

der r

etur

ns”

Sep

tem

ber 2

011(

3)

“As

apo

tent

ials

hare

hold

eror

curr

ents

hare

hold

er

Sep

tem

ber 2

010

-N

ovem

ber 2

012

(40%

)

As

a po

tent

ial s

hare

hold

er o

r cur

rent

sha

reho

lder

yo

u sh

ould

feel

ver

y go

od a

bout

the

grow

th b

eing

ca

ptur

ed…

”S

epte

mbe

r 201

0(4)

Janu

ary

2009

-N

ovem

ber 2

012

(75%

)

“We

are

prou

d of

our

org

aniz

atio

n's

abilit

y to

del

iver

pe

rform

ance

and

rem

ain

conf

iden

t tha

t our

futu

re

inve

stm

ent o

ppor

tuni

ties

will

cre

ate

valu

e fo

r ou

rsha

reho

lder

s.”

Janu

ary

2009

(5)

Febr

uary

200

8 -

(66%

)“W

e th

ink

[hig

h-im

pact

exp

lora

tion]

is th

e be

st w

ay to

cr

eate

shar

ehol

derv

alue

and

we'

ve b

een

deliv

erin

g on

that

.”Fe

brua

ry20

08(6

)

(60%

)(3

0%)

0%

30%

60

% N

ovem

ber 2

012

[41

]1.

4Q 2

012

Ear

ning

s ca

ll, J

anua

ry 3

0, 2

013

2.R

evis

ed p

roxy

pee

rs fr

om th

e da

te o

f quo

te th

roug

h 11

/28/

12, d

ate

befo

re w

hich

E

lliott

bega

n to

pur

chas

e a

subs

tant

ial a

mou

nt o

f Hes

s st

ock

3.B

arcl

ays

Con

fere

nce,

Sep

tem

ber 8

, 201

1

4.B

arcl

ays

Con

fere

nce,

Sep

tem

ber 1

6, 2

010

5.4Q

200

8 E

arni

ngs

call,

Jan

uary

28,

200

96.

Cre

dit S

uiss

e C

onfe

renc

e, F

ebru

ary

7, 2

008

Febr

uary

200

8(6)

Fund

amen

talP

robl

ems

atH

ess

Fund

amen

tal P

robl

ems

at H

ess

Unr

elen

ting

Und

erpe

rfor

man

ce

Lack

of F

ocus

Ue

et

gU

depe

oa

ce

Und

isci

plin

ed C

apita

l Allo

catio

n

Ope

ratio

nal M

ism

anag

emen

t

Endl

ess

Inef

fect

ive

Res

truc

turin

gsEn

dles

s In

effe

ctiv

e R

estr

uctu

rings

Aby

smal

Gov

erna

nce

Cul

ture

[ 42

]

His

tory

ofA

bysm

alG

over

nanc

eC

ultu

reat

Hes

sH

isto

ry o

f Aby

smal

Gov

erna

nce

Cul

ture

at H

ess

Std

BdC

orpo

rate

gov

erna

nce

failu

res

unde

r Joh

n H

ess’

s te

nure

St

agge

red

Boa

rd

M

ultip

le a

ttem

pts

by S

hare

hold

ers

to d

esta

gger

Boa

rd li

kely

blo

cked

by

John

Hes

s

C

ompe

nsat

ion

p M

anag

emen

t and

dire

ctor

s aw

arde

d $5

40 m

illion

whi

le u

nder

perfo

rmin

g pe

ers

by 4

60%

(1)

$8

mill

ion

paid

dire

ctly

to B

oard

mem

bers

by

CEO

’s fa

mily

est

ate

for s

ervi

ce a

s ex

ecut

ors(

2)

D

irect

or te

nure

17

yea

r ave

rage

tenu

re o

f non

-man

agem

ent d

irect

ors

at re

tirem

ent

N

o ef

fort

to e

ver r

efre

sh th

e B

oard

: las

t ret

irem

ent o

f non

-man

agem

ent d

irect

or w

as in

200

3

O

il &

Gas

ope

ratin

g ex

perie

nce

N

ever

eve

n on

ein

depe

nden

t dire

ctor

with

oil

& g

as o

pera

ting

expe

rienc

e

Le

ast i

ndep

ende

nce

C

onsi

sten

tly 3

join

t-exe

cuto

rs o

f Hes

s es

tate

ser

ved

as d

irect

ors

C

ontin

ually

inte

rlock

ing

dire

ctor

and

man

agem

ent r

elat

ions

hips

(3)

N

ever

few

erth

an3

dire

ctor

sth

atar

em

anag

emen

tmem

bers

atan

yon

etim

e

[ 43

]S

ourc

es:C

ompa

ny F

iling

s, B

loom

berg

1.S

ee s

lide

462.

See

slid

e 50

3.S

ee s

lide

49

N

ever

few

er th

an 3

dire

ctor

s th

at a

re m

anag

emen

t mem

bers

at a

ny o

ne ti

me

Cur

rent

Boa

rd E

xem

plifi

es L

ack

of A

dequ

ate

Dire

ctor

Ove

rsig

htC

ontin

ues

Tren

d Th

at H

as B

een

in P

lace

Dur

ing

Entir

e Te

nure

of C

urre

nt

Cha

irman

&C

EOC

hairm

an &

CEO

30%

35%

14 y

rsH

ess

Peer

Ave

rage

(3)

Leas

t ind

epen

dent

, lea

st e

nerg

y ex

perie

nce,

mos

t man

agem

ent d

irect

ors

and

one

of th

e lo

nges

t ten

ures

5%10%

15%

20%

25%

30%

10 y

rs

12 y

rs0%

fo

r H

ess

?!?!

3 M

anag

emen

t Dire

ctor

svs

.

0%5%

Oil

& G

as O

pera

ting

Exp

erie

nce

Tenu

re8

yrs

Pee

r Ave

rage

of 1

.4

Nam

eA

ge (2)

Tenu

re(2

)R

elat

ive

Perf

orm

ance

Ove

r Ten

ure(

3)

Oil

& G

as

Ope

ratin

g Ex

perie

nce

Bac

kgro

und

(1)

John

Hes

s58

35 /

17(4

60%

)H

ess

Man

agem

ent

Hes

s C

hairm

an&

CEO

Thom

as H

. Kea

n77

23(1

,022

%)

Non

eG

over

nmen

t; Jo

int e

xecu

tor H

ess

esta

te; D

irect

or &

Sec

. of H

ess

Cha

ritab

le T

rust

Edith

Hol

iday

6120

(589

%)

Non

eG

over

nmen

t

Nic

hola

s F.

Bra

dy82

19(5

50%

)N

one

Gov

ernm

ent/F

inan

ce; J

oint

exe

cuto

rHes

s es

tate

; inv

ests

for H

ess

Cha

ritab

le T

rust

Rob

ert W

ilson

7217

(335

%)

Non

eH

ealth

care

; Joh

nson

-Hes

s fa

mily

con

nect

ion

Fran

k A

. Ols

on80

15(3

96%

)N

one

Auto

Ren

tal

Cra

ig M

atth

ews

6911

(153

%)

Non

eE

lect

ricity

Ern

st v

on M

etzs

ch73

10(4

4%)

Non

eFi

nanc

e

Ris

aLa

vizz

onM

oure

y58

9(6

8%)

Non

eN

onpr

ofit;

John

son

Hes

sfa

mily

conn

ectio

nR

isa

Lavi

zzon

-Mou

rey

589

(68%

)N

one

Non

-pro

fit; J

ohns

on-H

ess

fam

ily c

onne

ctio

n

F. B

orde

n W

alke

r(4)

599

(68%

)H

ess

Man

agem

ent

Hes

sE

VP

& P

resi

dent

, Mar

ketin

g an

d R

efin

ing

John

Mul

lin II

I71

6(5

6%)

Non

eFi

nanc

e; J

oint

exe

cuto

r of H

ess

esta

te

Sam

uelB

odm

an74

4(4

7%)

Non

eG

over

nmen

t/Che

mic

als

Gre

gory

P. H

ill52

4(4

7%)

Hes

s M

anag

emen

tH

ess

EV

P &

Pre

side

nt, W

orld

wid

e Ex

plor

atio

n an

d Pr

oduc

tion

[ 44

]

gy

()

g,

p

Sam

uel A

. Nun

nJr

.74

6 m

oN

AN

one

Gov

ernm

ent;

Cha

irman

CS

ISof

whi

ch J

ohn

Hes

s is

a T

rust

eeS

ourc

es:C

ompa

ny F

iling

s, B

loom

berg

1.N

on-m

anag

emen

t dire

ctor

s2.

Age

and

tenu

re c

alcu

late

d as

of d

ate

of 2

013

annu

al g

ener

al m

eetin

g; T

enur

e fo

r Joh

n H

ess

show

s bo

th a

s di

rect

or a

nd a

s C

EO

, res

pect

ivel

y3.

Rev

ised

pro

xy p

eers

: Ana

dark

o, A

pach

e, E

OG

, Che

vron

, Con

ocoP

hillip

s, E

xxon

, Mar

atho

n, M

urph

y, N

oble

, Occ

iden

tal.

Und

erpe

rform

ance

cal

cula

ted

from

1st

day

of th

e ye

ar fo

llow

ing

appo

inte

d to

th

e B

oard

thro

ugh

11/2

8/12

, dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial a

mou

nt o

f sto

ck. J

ohn

Hes

s ca

lcul

ated

from

the

year

he

was

app

oint

ed C

EO

4.O

n M

arch

4, 2

013,

F. B

orde

n W

alke

r was

repl

aced

with

out a

vot

e by

Jam

es H

. Qui

gley

Hes

s H

as M

ade

No

Atte

mpt

to R

efre

sh It

s B

oard

Unt

ilSh

areh

olde

rNom

inee

sSt

eppe

dFo

rwar

dU

ntil

Shar

ehol

der N

omin

ees

Step

ped

Forw

ard

N

ot a

sin

gle

non-

man

agem

ent d

irect

or h

as re

tired

from

the

Hes

s B

oard

sin

ce 2

003

Th

e av

erag

e te

nure

of a

dire

ctor

whe

n st

eppi

ng o

ff th

e H

ess

Boa

rd is

17

year

s

H

ess

has

neve

r had

eve

n on

e in

depe

nden

t dire

ctor

with

oil

& g

as o

pera

ting

expe

rienc

e Hes

s ha

s ne

ver r

efre

shed

its

Boa

rd d

espi

te d

espe

rate

nee

d fo

r new

idea

s

[ 45

]

Boa

rd a

nd M

anag

emen

t Rec

eive

d $5

40 M

illio

n in

Com

pens

atio

n W

hile

Del

iver

ing

Unr

elen

ting

Und

erpe

rfor

man

ceW

hile

Del

iver

ing

Unr

elen

ting

Und

erpe

rfor

man

ce

Hes

s O

ver (

Und

er)P

erfo

rman

ce(2

,3)

$540

mm

Pai

d to

Boa

rd a

nd M

anag

emen

tJo

hn H

ess

Tenu

re17

Yea

rs5-

Year

4-Ye

ar3-

Year

2-Ye

ar1-

Year

vs P

roxy

Pee

rs(3

33)%

(31)

%(4

3)%

(29)

%(4

0)%

(17)

%

C

ompe

nsat

ion

to J

ohn

Hes

s: $

195m

m(1

)

vs R

evis

ed P

roxy

Pee

rs(4

60)%

(45)

%(6

3)%

(44)

%(4

7)%

(20)

%

vs B

akke

n O

pera

tors

NA

(263

)%(9

84)%

(184

)%(7

0)%

(16)

%

vs X

LEN

A(3

1)%

(57)

%(4

3)%

(44)

%(2

0)%

C

ompe

nsat

ion

to M

anag

emen

t exc

l. C

EO: $

313m

m(1

)

C

ompe

nsat

ion

to B

oard

: $32

mm

(1)

vs X

OP

NA

(39)

%(8

1)%

(52)

%(3

9)%

(15)

%

Des

pite

hig

hest

oil

wei

ghtin

g of

any

pee

r……

and

mat

eria

l pos

ition

in th

e B

akke

n, le

adin

g U

.S. o

il pl

ay

In 3

of t

he la

st 5

yea

rs, J

ohn

Hes

s ha

s ra

nked

in th

e To

p 25

Hig

hest

Pai

d C

EOs(

4)...

…de

spite

und

erpe

rfor

min

g pe

ers

by (5

5%)(5

)

[ 46

]

Sou

rce:

Blo

ombe

rg, C

ompa

ny fi

lings

1.A

djus

ted

for i

nfla

tion

usin

g B

loom

berg

Urb

an C

PI;

Joh

n H

ess

com

pens

atio

n ca

lcul

ated

ove

r his

te

nure

as

CE

O, e

xclu

ding

infla

tion

John

Hes

s w

as p

aid

a cu

mul

ativ

e $1

65 m

illio

n; N

EO

’s

com

pens

atio

n ca

lcul

ated

ove

r Joh

n H

ess’

s te

nure

as

CE

O, e

xclu

ding

infla

tion

NE

Os

wer

e pa

id a

cu

mul

ativ

e $2

46 m

illio

n; D

irect

or c

ompe

nsat

ion

over

the

tenu

re o

f eac

h di

rect

or, e

xclu

ding

infla

tion

com

pens

atio

n to

tale

d $2

6 m

illio

n2.

As

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial a

mou

nt o

f Hes

s st

ock

3.P

roxy

pee

rs: U

sed

by H

ess

for m

gmt c

ompe

nsat

ion:

Ana

dark

o, A

pach

e, B

P, C

hevr

on,

Con

ocoP

hillip

s, D

evon

, EO

G, E

xxon

, Mar

atho

n, M

urph

y, O

ccid

enta

l, S

hell,

Sta

toil,

Tal

ism

an a

nd

Tota

l ; R

evis

ed p

roxy

pee

rs: e

xclu

des

Dev

on &

Tal

ism

an d

ue to

hig

h N

orth

Am

eric

a ga

s w

eigh

ting;

ex

clud

es B

P, S

hell,

Sta

toil,

Tot

al d

ue to

Eur

opea

n su

per m

ajor

sta

tus;

incl

udes

Nob

le a

s ad

ditio

nal

rele

vant

com

petit

or;

Bak

ken

Ope

rato

rs: I

nclu

des

Con

tinen

tal,

Oas

is a

nd K

odia

k4.

ww

w.F

orbe

s.co

m; A

ccor

ding

to F

orbe

s, J

ohn

Hes

s co

mpe

nsat

ion

rank

ed #

23, #

132,

#94

, #3

and

#25

in 2

012,

201

1, 2

010,

200

9, 2

008

resp

ectiv

ely

for a

ll S

&P

500

com

pani

es5.

Ver

sus

revi

sed

prox

y pe

ers;

Fro

m J

anua

ry 1

, 200

8 th

roug

h D

ecem

ber 3

1,20

12

Unr

espo

nsiv

eto

Wid

eC

ritic

ism

That

Com

pany

Lack

sPa

yfo

rPer

form

ance

Unr

espo

nsiv

e to

Wid

e C

ritic

ism

Tha

t Com

pany

Lac

ks P

ay fo

r Per

form

ance

…

2012

Say

onPa

ySu

ppor

t(1)

Shar

ehol

ders

obj

ect t

o H

ess

com

pens

atio

nPr

oxy

advi

sors

crit

ical

of H

ess

pay

polic

ies

2012

Say

on

Pay

Supp

ort(1

)“S

hare

hold

er re

turn

s co

ntin

ue to

und

erpe

rfor

m p

eers

sim

ilar

in s

ize

and

indu

stry

(as

wel

l as

the

broa

d in

dust

ry a

nd m

arke

t in

dex)

ove

r the

last

1-a

nd 3

-fisc

al y

ear p

erio

ds, w

hile

CEO

co

mpe

nsat

ion

outr

anke

d m

ost p

eers

. Whi

le th

e co

mpa

ny

has

chan

ged

its a

ppro

ach

to lo

ng-te

rm e

quity

aw

ards

as

of

S&P

500

2012

, goa

ls fo

r per

form

ance

sha

res

(whi

ch re

plac

ed s

tock

op

tions

with

resp

ect t

o ha

lf of

the

awar

d va

lue)

do

not a

ppea

r rig

orou

s re

lativ

e to

his

toric

al a

war

d op

portu

nitie

s.”

ISS

Pro

xy A

dvis

ory

Ser

vice

s, 2

012

Hes

s C

ore

Rep

ort(4

)

Ener

gy

Com

pani

es

O

nly

51%

supp

orto

nH

ess

Say

onP

ay(1

)

“The

Com

pany

has

bee

n de

ficie

nt in

link

ing

exec

utiv

e pa

y to

cor

pora

te p

erfo

rman

cein

the

past

yea

r, as

indi

cate

d by

th

e "D

" gra

de re

ceiv

ed b

y th

e C

ompa

ny in

Gla

ss L

ewis

' pay

-fo

r-per

form

ance

mod

el. A

pro

perly

stru

ctur

ed p

ay p

rogr

am

shou

ldm

otiv

ate

exec

utiv

esto

driv

eco

rpor

ate

perfo

rman

ce40

%60

%80

%10

0%

Hes

s

O

nly

51%

sup

port

on H

ess

Say

on P

ay(1

)

42

7th

out o

f 450

in S

&P 5

00(2

)

14

9th

out o

f 156

Ene

rgy

com

pani

es(2

)

Av

erag

e S

&P

500

supp

ort f

or “S

ay o

n P

ay”

vote

s in

201

2 w

as 8

7%(2

)

shou

ld m

otiv

ate

exec

utiv

es to

driv

e co

rpor

ate

perfo

rman

ce,

thus

alig

ning

exe

cutiv

e an

d lo

ng-te

rm s

hare

hold

er in

tere

sts.

In

this

cas

e, th

e C

ompa

ny h

as n

ot im

plem

ente

d su

ch a

pr

ogra

m. F

urth

erm

ore,

we

note

that

the

Com

pany

rece

ived

pa

y-fo

r-per

form

ance

gra

des

of "D

" and

"D" i

n ou

r 201

1 an

d 20

10P

roxy

Pape

rsre

spec

tivel

yIn

ourv

iew

shar

ehol

ders

H

ess’

s cu

mul

ativ

e C

EO

com

pens

atio

n ov

er th

e pa

st 5

ye

ars

rank

s in

the

73rd

perc

entil

ere

lativ

e to

pee

rs,

whi

le to

tal s

hare

hold

er re

turn

s ov

er th

e sa

me

5 ye

ar

perio

d ra

nk in

the

20th

perc

entil

e(3)

2010

Pro

xy P

aper

s, re

spec

tivel

y. In

our

vie

w, s

hare

hold

ers

shou

ld b

ede

eply

con

cern

ed w

ith th

e co

mpe

nsat

ion

com

mitt

ee's

sus

tain

ed fa

ilure

in th

is a

rea.

”

Gla

ss L

ewis

201

2 H

ess

Cor

pora

tion

Pro

xy P

aper

(5)

[ 47

]

Sou

rces

: Com

pany

Fili

ngs,

Blo

ombe

rg1.

Hes

s es

tate

is a

ssum

ed to

sup

port

Say

on

Pay

and

is e

xclu

ded

from

cal

cula

tion

2.O

ther

com

pani

es d

id n

ot h

ave

say

on p

ay v

otes

; Hes

s es

tate

is n

ot e

xclu

ded

from

cal

cula

tion

3.S

hare

hold

er re

turn

s an

d m

arke

t cap

italiz

atio

n as

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial a

mou

nt o

f sto

ck4.

ISS

com

men

tary

on

Hes

s, H

ess

Cor

pora

tion

2012

Cor

e R

esea

rch

Rep

ort

5.G

lass

Lew

is c

omm

enta

ry o

n H

ess,

Hes

s C

orpo

ratio

n 20

12 P

roxy

Pap

er

pp

And

Mis

alig

ned

Com

pens

atio

nH

asPe

rsis

ted

forY

ears

… A

nd M

isal

igne

d C

ompe

nsat

ion

Has

Per

sist

ed fo

r Yea

rs

“ISS

' qua

ntita

tive

anal

ysis

indi

cate

s th

at C

EO

pay

sig

nific

antly

out

rank

ed p

eer c

ompa

nies

with

in s

imila

r sec

tor a

nd s

ize

rang

es, w

hile

1-a

nd 3

-yea

r TS

Rs

wer

e at

or n

ear t

he b

otto

m ra

nkin

g of

the

sam

e pe

er g

roup

. Spe

cific

ally,

rela

tive

TSR

pe

rfor

man

ce h

as b

een

at th

e lo

wer

end

of t

he b

otto

m q

uart

ile o

f pee

rs w

hile

CEO

pay

has

bee

n in

the

top

quar

tile.

”IS

SP

Ad

iS

iH

CR

t201

2

“The

Com

pany

has

bee

n de

ficie

nt in

link

ing

exec

utiv

e pa

y to

cor

pora

te p

erfo

rman

ce in

the

past

yea

r…. A

pro

perly

st

ruct

ured

pay

pro

gram

sho

uld

mot

ivat

e ex

ecut

ives

to d

rive

corp

orat

e pe

rform

ance

, thu

s al

igni

ng e

xecu

tive

and

long

-term

sh

areh

olde

r int

eres

ts. I

n th

is c

ase,

the

Com

pany

has

not

impl

emen

ted

such

a p

rogr

am…

In o

ur v

iew

, sha

reho

lder

ssh

ould

bede

eply

conc

erne

dw

ithth

eco

mpe

nsat

ion

com

mitt

ee's

sust

aine

dfa

ilure

inth

isar

eaIn

light

ofth

e

ISS

Pro

xy A

dvis

ory

Ser

vice

s, H

ess

Cor

e R

epor

t 201

2

shou

ld b

e de

eply

con

cern

ed w

ith th

e co

mpe

nsat

ion

com

mitt

ees

sust

aine

d fa

ilure

in th

is a

rea.

.. In

ligh

t of t

he

Com

pany

's fa

ilure

to a

lign

exec

utiv

e pa

y w

ith p

erfo

rman

ce, w

e be

lieve

the

issu

es li

sted

abo

ve a

re g

rave

eno

ugh

to

war

rant

a v

ote

agai

nst t

he C

ompa

ny's

exe

cutiv

e co

mpe

nsat

ion

prog

ram

…”

Gla

ss L

ewis

, Hes

s P

roxy

Pap

er 2

012

“Whi

le th

e co

mpe

nsat

ion

com

mitt

ee h

as m

ade

som

e ch

ange

s to

the

exec

utiv

e co

mpe

nsat

ion

prog

ram

…it

is n

ot c

lear

that

“Our

ana

lysi

s fin

ds th

at th

e C

ompa

ny h

as n

ot a

dequ

ate

linke

d ex

ecut

ive

com

pens

atio

n w

ith p

erfo

rman

ce, m

uch

like

the

prev

ious

yea

r. S

hare

hold

ers

shou

ld b

e ve

ry c

once

rned

by

this

tren

d, e

spec

ially

due

to th

e la

ck o

f tra

nspa

renc

y in

th

C’

lldi

lfh

itd

ti”

thes

e w

ill im

prov

e th

e si

gnifi

cant

his

toric

al p

ay-fo

r-pe

rfor

man

ce m

isal

ignm

ent e

vide

nced

at t

he c

ompa

ny.”

ISS

Pro

xy A

dvis

ory

Ser

vice

s, H

ess

Cor

e R

epor

t 201

2

the

Com

pany

’s o

vera

ll di

sclo

sure

of h

ow it

aw

ards

com

pens

atio

n….”

Gla

ss L

ewis

, Hes

s P

roxy

Pap

er 2

011

“…sh

areh

olde

rs s

houl

d co

ntin

ue to

mon

itor t

he p

ay-fo

r-pe

rform

ance

alig

nmen

t at H

ess,

in li

ght o

f the

CE

O's

abo

ve

med

ian

pay

and

lack

of p

erfo

rman

ce-c

ondi

tione

d lo

ng-te

rm in

cent

ives

.” ISS

Pro

xyA

dvis

ory

Ser

vice

sH

ess

Cor

eR

epor

t201

1IS

S P

roxy

Adv

isor

y S

ervi

ces,

Hes

s C

ore

Rep

ort 2

011

“Hes

s’ e

xecu

tive

com

pens

atio

n re

ceiv

ed a

D g

rade

in o

ur p

ropr

ieta

ry p

ay-fo

r-pe

rform

ance

mod

el…

”G

lass

Lew

is, H

ess

Pro

xy P

aper

201

0

Gla

ss L

ewis

His

toric

al H

ess

Com

pens

atio

n Sc

ore

[ 48

]

2006

2007

2008

2009

2010

2011

2012

CD

CC

DD

D

Sou

rces

: IS

S P

roxy

Ser

vice

s an

d G

lass

Lew

is

Cul

ture

of C

ozin

ess

Und

erm

ines

Cre

dibi

lity

of B

oard

to S

elec

t Nom

inee

s;

Exte

rnal

Nom

inee

sR

equi

red

Exte

rnal

Nom

inee

s R

equi

red

Fran

klin

Le

on H

ess

Mul

lin II

I

Kea

n

Wal

ker

Mut

ual

Esta

te

Hill

Bra

dy

Whi

te

Mou

ntai

n In

sura

nce

Dill

on R

ead

Ols

onH

olid

ayJo

hnH

ess

NU

IG

over

nmen

t

John

Hes

s

NU

IO

verla

pM

atth

ews

Bod

man

John

son

Fam

ilyW

eath

erfo

rd

Lavi

zzo-

Mou

rey

Wils

onvo

n M

etzs

ch

Nun

n

[ 49

]

Cen

ter f

or

Stra

tegi

c &

In

t’l

Stud

ies

Bev

erly

En

terp

rises

Hes

s’s

Boa

rdro

om D

eem

s Th

is A

ppro

pria

te:

3 “I

ndep

ende

nt”

Dire

ctor

s A

re P

aid

Mill

ions

to S

erve

As

Join

t Exe

cuto

rs o

f Jo

hnH

ess’

sFa

mily

Esta

teJo

hn H

ess

s Fa

mily

Est

ate

Nic

hola

s B

rady

John

Mul

lin II

ITh

omas

Kea

ny

Lead

Inde

pend

ent D

irect

orLe

adIn

depe

nden

t Dire

ctor

Inde

pend

ent D

irect

orp A

ND

Join

t-Exe

cuto

r, H

ess

Esta

te

p AN

D

Join

t-Exe

cuto

r, H

ess

Esta

te

p

AN

D

Join

t-Exe

cuto

r, H

ess

Esta

te

Com

pens

atio

n pa

id b

y Jo

hn H

ess’

s fa

mily

est

ate

for s

ervi

ng a

s ex

ecut

or(1

) :

$8 m

illio

ndi

rect

ly to

Boa

rd m

embe

rs

$3 m

illio

n di

rect

ly to

Lea

d In

depe

nden

t Dire

ctor

s

[ 50

]S

ourc

e: C

ompa

ny fi

lings

1.C

ompe

nsat

ion

calc

ulat

ed a

s pe

r Las

t Will

& T

esta

men

t of L

eon

Hes

s

Shar

ehol

ders

Hav

eTr

ied

toH

old

Hes

sA

ccou

ntab

leSh

areh

olde

rs H

ave

Trie

d to

Hol

d H

ess

Acc

ount

able

With

hold

ing

vote

s on

dire

ctor

s %

of T

otal

Sha

res

Vote

d fo

r Dec

lass

ifica

tion(

3)

Tryi

ng to

de-

stag

ger B

oard

Obj

ectin

g vi

a Sa

y on

Pay

Mos

t Rec

ent V

otes

With

held

Fro

m D

irect

ors(

1)Sa

y on

Pay

Sup

port

(4)

Brad

y

Kea

n

2010

2012

S&P

500

Ols

on

Hol

iday

Bod

man

2011

2008

Ener

gy

Com

pani

es

S&

PA

vera

geB

odm

an

Von

Met

zsch

2012

0%10

%20

%30

%40

%50

%

90

+%of

outs

ide

shar

ehol

ders

vote

dto

39

%39

%an

d33

%of

vote

sw

ithhe

ldag

ains

t

0%20

%40

%60

%80

%10

0%

2007

40%

60%

80%

100%

Hes

s

O

nly

51%

supp

orto

nH

ess

Say

onP

ay(4

)

S&

P A

vera

ge

90

+% o

f out

side

sha

reho

lder

s vo

ted

to

decl

assi

fy th

e H

ess

Boa

rd in

3 s

epar

ate

vote

s

C

harte

r/byl

aws

requ

ire 8

0% o

f out

stan

ding

. In

2008

, Boa

rd re

com

men

ded

ford

e-st

agge

ring:

24

6mm

sha

res

vote

d to

de-

stag

ger

76

%of

outs

tand

ing

shar

es

39

%, 3

9% a

nd 3

3% o

f vot

es w

ithhe

ld a

gain

st

Bra

dy, K

ean

and

Ols

on, r

espe

ctiv

ely(

1)

14

%, 1

4%, a

nd 1

4% o

f vot

es w

ithhe

ld a

gain

st

Hol

iday

, Bod

man

, and

von

Met

zsch

(1)

Fo

rcon

text

in20

12th

eav

erag

epe

rcen

tage

O

nly

51%

sup

port

on H

ess

Say

on

Pay

(4)

42

7th

out o

f 450

in S

&P

500

(5)

14

9th

out o

f 156

Ene

rgy

com

pani

es(5

)

A

vera

ge S

&P

500

sup

port

for “

Say

on

Pay

” vot

es in

201

2 w

as 8

7%(5

)

76

% o

f out

stan

ding

sha

res

87

% o

f vot

ing

shar

es

37 m

m s

hare

s vo

ted

agai

nst d

ecla

ssifi

catio

n (J

ohn

Hes

s co

ntro

lled

37m

m s

hare

s)D

id J

ohn

Hes

s vo

te a

gain

st h

is b

oard

’s

reco

mm

enda

tion

and

agai

nst

Fo

r con

text

, in

2012

the

aver

age

perc

enta

ge

of v

otes

with

held

from

a n

omin

ee in

a n

on-

cont

este

d S

&P

500

ele

ctio

n w

as 3

.7%

(2)

H

ess’

s cu

mul

ativ

e C

EO

com

pens

atio

n ov

er

the

past

5 y

ears

rank

s in

the

73rd

perc

entil

ere

lativ

e to

pee

rs, w

hile

tota

l sha

reho

lder

re

turn

s ov

er th

e sa

me

5 ye

ar p

erio

d ra

nk in

th

e 20

thpe

rcen

tile(

6)

[ 51

]

gde

clas

sific

atio

n?

Sou

rces

:Com

pany

Filin

gs, F

acts

et, I

SS

Vot

ing

Ana

lytic

s1.

% o

f vot

ed s

hare

s w

ithhe

ld; H

ess

esta

te is

ass

umed

to h

ave

vote

d fo

r nom

inee

s an

d is

exc

lude

d fro

m c

alcu

latio

n2.

Fact

setS

hark

Rep

elle

nt3.

Hes

s es

tate

is a

ssum

ed to

hav

e vo

ted

agai

nst d

ecla

ssifi

catio

n an

d is

exc

lude

d fro

m c

alcu

latio

n

4.H

ess

esta

te is

ass

umed

to s

uppo

rt S

ay o

n P

ay a

nd is

exc

lude

d fro

m c

alcu

latio

n5.

Oth

er c

ompa

nies

did

not

hav

e sa

y on

pay

vot

es; H

ess

esta

te is

not

excl

uded

from

cal

cula

tion

6.S

hare

hold

er re

turn

s an

d m

arke

t cap

italiz

atio

n as

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pu

rcha

se a

sub

stan

tial a

mou

nt o

f sto

ck

37m

m S

hare

s Pr

even

ted

All

Dire

ctor

s fr

om B

ecom

ing

Acc

ount

able

And

John

Hes

sH

ad37

mm

Shar

es…

And

Joh

n H

ess

Had

37m

m S

hare

s

How

did

Joh

n H

ess

vote

in 2

008?

How

will

Joh

n H

ess

vote

this

yea

r?

D

e-st

agge

ring

the

Hes

s B

oard

requ

ires

80%

of o

utst

andi

ng (n

ot ju

st v

otin

g)

shar

es

In

200

7, S

hare

hold

ers’

bac

ked

de-

ti

thH

Bd

ith97

%

% o

f Tot

al S

hare

s Vo

ted

for

Dec

lass

ifica

tion(

1)

In

201

2, S

hare

hold

ers

agai

n ba

cked

de-

stag

gerin

g th

e B

oard

with

ove

r 94%

of o

utsi

de

vote

rs e

lect

ing

to d

e-st

agge

r(1)

N

ow,t

he H

ess

Boa

rd a

gain

has

reco

mm

ende

d FO

Rd

ti

thB

dst

agge

ring

the

Hes

s Bo

ard

with

ove

r 97%

of

out

side

vot

ers

elec

ting

to d

e-st

agge

r(1)

In

200

8, th

e H

ess

Boa

rd re

com

men

ded

FOR

de-

stag

gerin

g th

e B

oard

(had

they

20

12

FOR

de-

stag

gerin

g th

e Bo

ard

Ye

t, at

the

sam

e tim

e th

e B

oard

opp

oses

a

shar

ehol

der p

ropo

sal t

o re

mov

e th

e 80

% v

otin

g re

quire

men

t tha

t pre

vent

ed d

e-st

agge

ring

the

Boa

rd th

ree

times

bef

ore

not,

they

may

hav

e ha

d go

vern

ance

ag

enci

es re

com

men

d w

ithho

lds

on a

ll of

th

eir n

omin

ees)

24

5.7m

m s

hare

s vo

ted

to d

e-st

agge

r

76

%of

outs

tand

ing

shar

es

2008

76

% o

f out

stan

ding

sha

res

87

% o

f vot

ing

shar

es

1.

8mm

sha

res

abst

aine

d

37

.1 m

m s

hare

s vo

ted

agai

nst

decl

assi

ficat

ion

(Joh

nH

ess

0%20

%40

%60

%80

%10

0%

2007

decl

assi

ficat

ion

(Joh

n H

ess

cont

rolle

d 36

.6m

m s

hare

s)

Did

Joh

n H

ess

vote

aga

inst

the

reco

mm

enda

tion

of h

is O

WN

BO

AR

D o

f whi

ch h

e is

Cha

irman

?

How

will

hevo

teth

isye

ar?

[ 52

]

How

will

he

vote

this

yea

r?

Sou

rces

:Com

pany

Filin

gs, F

acts

et, I

SS

Vot

ing

Ana

lytic

s1.

Hes

s es

tate

is a

ssum

ed to

hav

e vo

ted

agai

nst d

ecla

ssifi

catio

n an

d is

exc

lude

d fro

m c

alcu

latio

n

Cul

ture

of A

void

ing

Acc

ount

abili

ty

With

Dis

clos

ure

Com

es A

ccou

ntab

ility

:D

enia

lIs

Easy

Whe

nTh

ere

IsN

oD

iscl

osur

eD

enia

l Is

Easy

Whe

n Th

ere

Is N

o D

iscl

osur

e

Nb

fAl

tDU

dt

Cll

2007

2013

(1)

No

Ana

lyst

Day

for n

early

7 y

ears

Num

ber o

f Ana

lyst

Day

s or

Upd

ate

Cal

ls 2

007-

2013

(1)

6 7 8 2 3 4 5

0 fo

r

0 1

Hes

sP

roxy

Pee

rsR

evis

ed P

roxy

Pee

rs

Hes

s?!

?!

Num

ber o

f Pag

es in

Mos

t Det

aile

d Pr

esen

tatio

n in

Pas

t Yea

r(1)

ube

oag

esos

tet

aed

ese

tato

ast

ea

100

120 4060

80

[54

]S

ourc

es: B

loom

berg

, Cap

IQan

d C

ompa

ny W

ebsi

tes

1.20

07 th

roug

h 3/

1/13

20

40

Hes

sPr

oxy

Pee

rsR

evis

ed P

roxy

Pee

rs

Cul

ture

ofA

void

ing

Acc

ount

abili

tyC

ultu

reof

Avo

idin

g A

ccou

ntab

ility

Den

y La

ck o

f Foc

us

Den

y St

ock

Perf

orm

ance

y

Den

y U

ndis

cipl

ined

Cap

ital A

lloca

tion

Den

y O

pera

tiona

l Mis

man

agem

ent

Den

y A

bysm

al G

over

nanc

e C

ultu

re

Rec

ogni

tion

of re

ality

, and

the

acco

unta

bilit

y th

at c

omes

with

it a

t a p

ublic

com

pany

, see

m to

be

prec

isel

y w

hat H

ess’

s M

anag

emen

t and

Boa

rd a

re d

oing

eve

ryth

ing

in th

eir p

ower

to a

void

[55

]

Des

pite

17

Year

Ten

ure

of C

EO a

nd 1

3 Ye

ar A

vera

ge T

enur

e of

the

Boa

rd,

Hes

sTe

llsSh

areh

olde

rsto

Onl

yR

emem

berL

astS

ixM

onth

sH

ess

Tells

Sha

reho

lder

s to

Onl

y R

emem

ber L

ast S

ix M

onth

s

“Sin

ce J

uly

24, 2

012,

the

last

day

of t

radi

ng b

efor

e w

e an

noun

ced

our u

pdat

ed s

trat

egy,

Hes

s sh

ares

hav

e in

crea

sed.

..”-J

ohn

Hes

sJa

nuar

y28

2013

(1)

120

John

Hes

s, J

anua

ry 2

8, 2

013

100

110

1/25

/13

date

bef

ore

Ellio

tt’s

inte

ntio

n to

no

min

ate

dire

ctor

s be

cam

e pu

blic

7080

90

47%

Und

erpe

rform

ance

(2,4

)

5% O

utpe

rform

ance

(2,5

)

$0.7

bn o

f Mar

ket C

ap

Reg

aine

d(3,

5)

50

60

70

$9.4

bn o

f Mar

ket C

ap

Fore

gone

(3,4

)

11/2

9/12

dat

e E

llitt

bt

50E

lliott

bega

n to

pu

rcha

se

subs

tant

ial

stoc

k

[ 56

]1.

Hes

s pr

ess

rele

ase,

Jan

uary

28,

201

32.

Und

erpe

rform

ance

cal

cula

ted

vers

us R

evis

ed p

roxy

pee

rs: A

nada

rko,

Apa

che,

Che

vron

, C

onoc

oPhi

llips,

Exx

on, M

arat

hon,

Mur

phy,

Nob

le, O

ccid

enta

l3.

Mar

ket c

apita

lizat

ion

impl

ied

by R

evis

ed P

roxy

Pee

r per

form

ance

less

act

ual m

arke

t cap

italiz

atio

n

4.Ja

nuar

y 25

, 201

0 to

Jul

y 24

, 201

2, d

ate

befo

re w

hich

man

agem

ent c

laim

s to

hav

e up

date

d th

eir

stra

tegy

(als

o co

inci

dent

ally

the

stoc

k’s

low

est p

oint

)5.

July

24,

201

2 to

Nov

embe

r 28,

201

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

subs

tant

ial a

mou

nt o

f H

ess

stoc

k

Hes

s C

hoos

es J

uly

Star

t Dat

e B

ecau

se It

Is N

ear 5

Yea

r Low

…A

ndin

Mat

eria

lsto

Shar

ehol

ders

Hes

sIg

nore

sIm

pact

ofD

ivid

ends

…A

nd in

Mat

eria

ls to

Sha

reho

lder

s, H

ess

Igno

res

Impa

ct o

f Div

iden

ds

$85

$90

Dat

e ch

osen

by

Hes

s to

sta

rt c

alcu

latio

n of

its

perf

orm

ance

$65

$70

$75

$80

$ $45

$50

$55

$60

$65

$35

$40

$45 34

%

35%

36%

40

%

+1%

+7%

Sinc

e H

ess

has

paid

lim

ited

divi

dend

s, e

xclu

sion

of d

ivid

ends

dis

tort

s pe

er re

turn

s

21%

28%

20%

24

%

28%

32

%

Hes

sR

etur

nA

sA

ctua

lHes

sM

urph

yR

etur

nA

sA

ctua

lMur

phy

Hes

s R

etur

n A

s R

epre

sent

ed b

y H

ess

Act

ual H

ess

Incl

udin

g D

ivid

ends

Mur

phy

Ret

urn

As

Rep

rese

nted

by

Hes

s

Act

ual M

urph

y In

clud

ing

Div

iden

ds

[ 57

]

Sou

rce:

Hes

s M

arch

4, 2

013

pres

enta

tion

In M

ater

ials

to S

hare

hold

ers,

Hes

s U

ses

Mis

lead

ing

Cha

rt T

hat I

gnor

es

Rel

evan

tPee

rsan

dH

ides

Impa

ctof

Oil

Pric

es

800%

Bren

t Pric

eS&

P 50

0

Rel

evan

t Pee

rs a

nd H

ides

Impa

ct o

f Oil

Pric

es

John

Hes

sT

Abs

olut

e pe

rfor

man

ce a

nd c

ompa

rison

to S

&P

500

inap

prop

riate

ly ig

nore

s dr

amat

ic in

crea

se in

oil

pric

es a

nd m

ater

ial u

nder

perf

orm

ance

ver

sus

peer

s

400%

600%

Oil

pric

es o

utpe

rform

S

&P

500

by

220%

Tenu

re17

Yea

rs

Hess

235%

Prox

y Pe

ers

568%

(Und

er)/

Ove

r Per

form

ance

(333

)%

0%

200%

(Und

er)/

Ove

r Per

form

ance

()

Revi

sed

Pro

xy P

eers

694%

(Und

er) /

Ove

r Per

form

ance

(460

)%

“Hes

s ha

s…ou

tper

form

ed th

e S

&P

500

–th

e go

ld s

tand

ard

benc

hmar

k in

dex…

”

John

Hes

s:H

ess’

sC

herr

yPi

cked

Av

erag

e pe

er m

arke

t cap

ove

r 11x

gre

ater

Com

paris

onto

Inte

grat

ed P

eers

inap

prop

riate

ly ig

nore

s si

ze a

nd c

apita

l em

ploy

ed o

utsi

de u

pstr

eam

Hes

s Le

tter,

Apr

il 20

13(1

)

“…w

e ar

e E

&P

led.

88%

of o

ur

capi

tal e

mpl

oyed

is E

&P.

..” July

201

1(3)

“…w

e've

com

plet

ed o

ur tr

ansi

tion

to b

eing

a p

redo

min

antly

ex

plor

atio

nan

dpr

oduc

tion

Hes

s’s

Che

rry-

Pick

edIn

tegr

ated

Pee

rs

BPR

DS

CVX

STL

OO

gp

pg

than

Hes

s(2)

N

ot a

sin

gle

one

of th

ese

com

pani

es w

as in

H

ess’

s pr

oxy

peer

s a

deca

de a

go

4 of

6 n

on-U

.S. b

ased

; 2 o

f whi

ch w

ere

not i

n pr

oxy

peer

s un

til la

st y

ear

All

thhi

ltit

lit

ti“D

lii

Shh

ldV

l”

expl

orat

ion

and

prod

uctio

n co

mpa

ny...

[with

] ove

r 90%

of o

ur

capi

tal e

mpl

oyed

.” Nov

embe

r 201

2(4)

XOM

TOT

py

py

E

xclu

des

MR

O, C

OP

and

OX

Y: p

eers

in

tegr

ated

for m

ost,

if no

t all,

of t

he c

ited

10

year

per

iod

[ 58

]

All

the

whi

le ti

tling

pre

sent

atio

n: “

Del

iver

ing

Shar

ehol

der V

alue

”

Sou

rce:

Hes

s A

pril

4, 2

013

pres

enta

tion

1.H

ess

Lette

r to

Sha

reho

lder

s A

pril

15, 2

013

2.A

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k3.

2Q 2

011

Ear

ning

s ca

ll4.

3Q 2

012

Ear

ning

s ca

ll

And

Eve

n If

Hes

s D

oes

Wan

t to

Be

Com

pare

d A

gain

st th

e S&

P 50

0It

Has

Und

erpe

rfor

med

Dra

mat

ical

lyO

vert

heLa

st5

Year

sIt

Has

Und

erpe

rfor

med

Dra

mat

ical

ly O

ver t

he L

ast 5

Yea

rs

Ove

r the

last

five

yea

rs, H

ess

has

unde

rper

form

ed th

e S&

P 50

0 by

33%

to 5

8%, d

espi

te B

rent

oil

pric

es in

crea

sing

ove

r 20%

dur

ing

this

per

iod(

1)–

3x th

e pe

rfor

man

ce o

f the

S&

P 50

0(2)

5-Y

ear

3-Y

ear

1-Y

ear

5-Y

ear

3-Y

ear

1-Y

ear

Und

erpe

rfor

man

ce v

s. S

&P

500

as o

f Jan

uary

201

3(3)

Und

erpe

rfor

man

ce v

s. S

&P

500

as o

f Nov

embe

r 201

2(2)

(12)

%

(33)

%(3

3)%

(58)

%

(45)

%(4

9)%

[59

]

Sou

rce:

Blo

ombe

rg1.

S&

P50

0 to

tal r

etur

n ca

lcul

ated

usi

ng S

PD

R S

&P

500

ETF

(SP

Y); 1

mon

th fo

rwar

d B

rent

pric

e; F

rom

1/2

5/20

08 to

1/2

5/20

13, B

rent

incr

ease

d by

25%

, fro

m 1

1/29

/200

7 to

11

/28/

2012

, Bre

nt in

crea

sed

by 2

1%2.

As

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial a

mou

nt o

f Hes

s st

ock

3.A

s of

1/2

5/13

, dat

e be

fore

whi

ch E

lliot

t int

entio

n to

nom

inat

e di

rect

ors

beca

me

publ

ic

Hes

sH

ides

Beh

ind

Ana

lyst

Pric

eTa

rget

sTh

atPr

ice

inM

anag

emen

tMed

iocr

ityH

ess

Hid

es B

ehin

d A

naly

st P

rice

Targ

ets

That

Pric

e in

Man

agem

ent M

edio

crity

Hes

s’s

Mar

ch 4

thpr

esen

tatio

n po

ints

to W

all S

tree

t pric

e ta

rget

s as

just

ifica

tion

that

not

hing

is w

rong

…

Yet t

hese

targ

ets

mer

ely

refle

ct H

ess’

s po

or e

xecu

tion

Tw

o ye

ars

ago,

Hes

s’s

pric

e ta

rget

was

$10

0 / s

hare

P

oor e

xecu

tion

drov

e th

at p

rice

targ

et d

own

35%

to $

65 /

shar

e pr

ior t

o E

lliott’

s pu

blic

invo

lvem

ent

Sp

ecte

r of a

ccou

ntab

ility

pus

hing

cha

nge

at H

ess

incr

ease

d th

e ta

rget

pric

e by

23%

to $

80

/ sha

re

N

ti

lh

tlit

ft

Mt

dB

dh

tl

thb

N

o m

ater

ial c

hang

e to

qua

lity

of a

sset

s. M

anag

emen

t and

Boa

rd h

ave

no e

xcus

e to

low

er th

e ba

r…

$128

$130

$140

Hes

s Av

erag

e Se

ll-si

de T

arge

t Pric

e

$100

$128

$$110

$120

$130

Pot

entia

l for

acc

ount

abilit

y to

Pro

duct

ion

mis

ses

and

Cap

Ex

over

runs

dro

ve p

rice

targ

et d

own

$80

$96

$80

$90

$100

Ove

r sam

e tim

e pe

riod,

maj

ority

of P

eer p

rice

targ

ets

have

ris

enshar

ehol

ders

resu

lting

in v

alue

en

hanc

ing

actio

ns li

fts p

rice

targ

et

$65

$60

$70

Nea

rly 2

Y

ears

Ago

25-J

an-1

3To

day

Ellio

tt Lo

w

Cas

eE

lliott

Hig

h C

ase

…H

ess

cann

ot e

xcus

e th

is a

way

(1)

(2)

Aft

it

dth

iti

Mh

13t

il

Hd

dth

lidf

thi

tti

[ 60

]S

ourc

e:B

loom

berg

1.M

ay 2

011

2.A

pril

12, 2

013

Afte

r we

poin

ted

this

out

in o

ur M

arch

13

mat

eria

ls, H

ess

drop

ped

the

slid

e fr

om th

eir p

rese

ntat

ion

Cul

ture

ofA

void

ing

Acc

ount

abili

tyC

ultu

re o

f Avo

idin

g A

ccou

ntab

ility

Den

y La

ck o

f Foc

us

Den

y St

ock

Perf

orm

ance

y

Den

y U

ndis

cipl

ined

Cap

ital A

lloca

tion

Den

y O

pera

tiona

l Mis

man

agem

ent

Den

y A

bysm

al G

over

nanc

e C

ultu

re

Rec

ogni

tion

of re

ality

, and

the

acco

unta

bilit

y th

at c

omes

with

it a

t a p

ublic

com

pany

, see

m to

be

prec

isel

y w

hat H

ess’

s M

anag

emen

t and

Boa

rd a

re d

oing

eve

ryth

ing

in th

eir p

ower

to a

void

[61

]

Cla

imin

gA

bsur

dSy

nerg

ies

Hes

sVi

ews

Dis

para

teA

sset

Bas

eas

aSt

reng

thC

laim

ing

Abs

urd

Syne

rgie

s, H

ess

View

s D

ispa

rate

Ass

et B

ase

as a

Str

engt

h

Hes

s cl

aim

s it

is “

real

izin

g sy

nerg

ies

from

the

tran

sfer

of t

echn

ical

ski

lls a

nd o

pera

ting

capa

bilit

ies

glob

ally

.”(1

)

If th

at is

the

case

, the

n…

Why

is H

ess

a le

ss e

ffici

ent o

pera

tor i

n un

conv

entio

nal p

lays

than

inde

pend

ents

with

out

glob

al o

ffsho

re a

sset

s?

Con

tinen

tal

Pi

onee

r

EOG

Why

has

Hes

s ha

d si

gnifi

cant

ly le

ss e

xplo

ratio

n su

cces

s th

an e

xplo

ratio

n fo

cuse

d in

depe

nden

ts w

ithou

t unc

onve

ntio

nal a

sset

s?

Tullo

w

Kos

mos

C

obal

t

Rea

lity:

Hes

s Sh

areh

olde

rs h

ave

only

see

n di

s-sy

nerg

ies.

In 2

009,

con

trar

y to

eve

ry o

ther

ope

rato

r in

the

play

, Hes

s em

bark

ed o

n an

d pe

rsis

ted

with

a p

rogr

am o

f dril

ling

dual

late

ral w

ells

.(2)

The

subs

eque

nt w

ell p

erfo

rman

ce w

as s

ubst

antia

lly b

elow

indu

stry

ave

rage

.(3)

This

exp

erim

ent w

as th

e re

sult

of a

ttem

ptin

g to

brin

g hi

gh-te

ch, c

ompl

ex d

rillin

g te

chni

ques

that

char

acte

rizes

deep

wat

erde

velo

pmen

tint

oa

play

that

requ

ired

alo

w

1.H

ess’

s “D

eliv

erin

g S

hare

hold

er V

alue

” pre

sent

atio

n M

arch

4, 2

013

2.N

orth

Dak

ota

Indu

stria

l Com

mis

sion

3.E

lliot

t est

imat

e ba

sed

on p

ublic

wel

l dat

a fro

m N

orth

Dak

ota

Indu

stria

l Com

mis

sion

[ 62

]

tech

niqu

es th

at c

hara

cter

izes

dee

p w

ater

dev

elop

men

t int

o a

play

that

requ

ired

a lo

w-

cost

lean

man

ufac

turin

g ap

proa

ch.

Cul

ture

ofA

void

ing

Acc

ount

abili

tyC

ultu

re o

f Avo

idin

g A

ccou

ntab

ility

Den

y La

ck o

f Foc

us

Den

y St

ock

Perf

orm

ance

y

Den

y U

ndis

cipl

ined

Cap

ital A

lloca

tion

Den

y O

pera

tiona

l Mis

man

agem

ent

Den

y A

bysm

al G

over

nanc

e C

ultu

re

Rec

ogni

tion

of re

ality

, and

the

acco

unta

bilit

y th

at c

omes

with

it a

t a p

ublic

com

pany

, see

m to

be

prec

isel

y w

hat H

ess’

s M

anag

emen

t and

Boa

rd a

re d

oing

eve

ryth

ing

in th

eir p

ower

to a

void

[63

]

Hes

sFa

lsel

yC

laim

sC

onve

ntio

nalA

sset

sFu

nded

Bak

ken

Opp

ortu

nity

Hes

s Fa

lsel

y C

laim

s C

onve

ntio

nal A

sset

s Fu

nded

Bak

ken

Opp

ortu

nity

“…ou

r con

vent

iona

l por

tfolio

gen

erat

e[s]

the

cash

nee

ded

to fu

nd th

e un

conv

entio

nal g

row

th th

at w

e ha

ve in

the

Bak

ken

and

the

Utic

a.”

John

Hes

s, J

anua

ry 2

013(

1)

[ 64

]

1.4Q

201

2 E

arni

ngs

call

Janu

ary

30, 2

013

Rea

lity:

Bak

ken

Was

Fund

edB

yH

ess

Bal

ance

Shee

tR

ealit

y: B

akke

nW

as F

unde

d B

y H

ess

Bal

ance

She

et

Rea

lity

Dit

iil

dti

thd

2009

-201

2H

ess(

1)C

ontin

enta

l(2)

Incr

ease

inB

akke

nPr

oduc

tion

~55

000

boe/

d~5

670

0bo

e/d

Des

pite

sim

ilar p

rodu

ctio

ngr

owth

, and

acqu

iring

72%

few

er a

cres

Incr

ease

in B

akke

n Pr

oduc

tion

55,0

00 b

oe/d

56,7

00bo

e/d

Incr

ease

in B

akke

n N

et A

crea

ge~1

55,0

00~5

60,0

00

Cap

ital E

xpen

ditu

res

$5.4

bn$4

.6bn

Infra

stru

ctur

eS

pend

$1.2

bn

di

dd

bi

d

…H

ess

spen

t 44%

mor

e ca

pita

l…Ac

quis

ition

s$1

.8bn

$1.2

bn

Tota

l Bak

ken

Spen

d$8

.4bn

$5.8

bn

Deb

t Iss

ued

$4.2

bn$3

.1bn

… a

nd is

sued

mor

e de

bt, i

ssue

d co

mpa

rabl

e eq

uity

, sol

d m

ore

asse

tsE

quity

Issu

ed$0

.7bn

$1.0

bn

Ass

etSa

les

$1.5

bn$0

.3bn

Tota

l$6

.4bn

$4.4

bn

Bak

ken

EBIT

DA

Gen

erat

ed(3

)$2

.4bn

$2.5

bn

Sha

reho

lder

s ha

ve n

ot s

een

the

sam

e be

nefit

Tota

l Ret

urn

1%25

5%

Cha

nge

in M

arke

t Cap

italiz

atio

n+$

0.6b

n+

$10.

1bn

Hes

s co

nglo

mer

ate

stru

ctur

e ha

s yi

elde

d co

st o

verr

uns,

ope

ratio

nal h

iccu

ps, a

nd a

n af

finity

for o

verb

uild

ing.

Pure

pla

y C

LR a

chie

ved

sim

ilar p

rodu

ctio

n gr

owth

and

acq

uire

d m

ore

acre

s at

low

er c

ost a

nd g

reat

er b

enef

it [ 65

]S

ourc

es: C

ompa

ny F

iling

s, E

arni

ngs

Tran

scrip

ts, B

loom

berg

, Cap

IQ1.

Hes

s co

mpa

ny fi

lings

, ear

ning

s tra

nscr

ipts

2.C

ontin

enta

l com

pany

filin

gs, e

arni

ngs

call

trans

crip

ts3.

Ellio

tt es

timat

e ba

sed

on a

vera

ge o

f OA

S, K

OG

and

NO

G E

BIT

DA

bef

ore

G&

A p

er B

OE

less

CLR

G

&A

per

BO

E fo

r eac

h pe

riod;

exc

lude

s im

pact

of i

nfra

stru

ctur

e

Whe

reD

idC

ash

From

Con

vent

iona

lAss

ets

Go?

Whe

re D

id C

ash

From

Con

vent

iona

l Ass

ets

Go?

Cas

h di

d no

t go

to s

hare

hold

ers…

2009

-201

2 C

ash

Ret

urn

as %

of C

urre

nt M

arke

t Cap

(1)

46%

28%

25%

21%

0%5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

CO

P

XOM

TOT

DVN

19%

18%

17%

14%

13%

12%

STL

RD

SA BP

CVX

MU

R

MR

OIn

stea

dca

shus

edon

12%

10%

10%

3%

2% 2% 2%

MR

O

OXY

TLM

APA

HES

EOG

APC

Expl

orat

ion

Valu

e C

reat

ion

as %

of C

urre

nt M

arke

t Cap

(2)(3

)

30%

40%Inst

ead,

cas

h us

ed o

n…

2%AP

CC

ash

Spen

t 200

9-20

12(4

)

Exp

lora

tion

$4.3

bn

Acq

uisi

tions

of

Con

vent

iona

l$1

.9bn

10%

20%

tion from Exploration

Dow

nstre

amS

pend

ing

$1.3

bn

Hed

ging

$2.3

bn(2

0%)

(10%

)

0%

Value Creat

[ 66

]

(30%

)

APC

NBL

STO

APA

RDS

TOT

MUR

BP

OXY

CVX

XOM

TLM

COP

MRO

HES1.

As

of 4

/12/

132.

Mar

ket c

apita

lizat

ion

as o

f 11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k

3.S

ourc

e: W

ood

Mac

kenz

ie4.

Com

pany

filin

gs

Cul

ture

ofA

void

ing

Acc

ount

abili

tyC

ultu

re o

f Avo

idin

g A

ccou

ntab

ility

Den

y La

ck o

f Foc

us

Den

y St

ock

Perf

orm

ance

y

Den

y U

ndis

cipl

ined

Cap

ital A

lloca

tion

Den

y O

pera

tiona

l Mis

man

agem

ent

Den

y A

bysm

al G

over

nanc

e C

ultu

re

Rec

ogni

tion

of re

ality

, and

the

acco

unta

bilit

y th

at c

omes

with

it a

t a p

ublic

com

pany

, see

m to

be

prec

isel

y w

hat H

ess’

s M

anag

emen

t and

Boa

rd a

re d

oing

eve

ryth

ing

in th

eir p

ower

to a

void

[ 67

]

Hes

sFa

lsel

yC

laim

sIt

IsLo

wes

tCos

tBak

ken

Ope

rato

rH

ess

Fals

ely

Cla

ims

It Is

Low

est C

ost B

akke

nO

pera

tor

“…ou

r wel

l cos

ts n

ow ra

nk u

s am

ong

the

low

est c

ost a

nd b

est i

n ou

r pee

r gr

oup

”gr

oup.

John

Hes

s, M

arch

201

3(1)

[ 68

]

1.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

3

Rea

lity:

Hes

sIs

Not

Low

Cos

tOpe

rato

r;Li

kefo

rLik

eH

ess

Rem

ains

Hig

herC

ost

Hes

s Is

Not

Low

Cos

t Ope

rato

r; L

ike

for L

ike,

Hes

s R

emai

ns H

ighe

r Cos

t

Slid

ing

Slee

ve C

ompl

etio

n D

esig

n(2)

Plug

and

Per

fCom

plet

ion

Des

ign(

1)

Hes

s w

ell c

osts

39%

abo

ve C

ontin

enta

lH

ess

wel

l cos

ts 1

7% to

38%

abo

ve W

hitin

g

1H’1

2 dr

illing

the

sam

e ty

pe o

f wel

l4Q

’12

drilli

ng th

e sa

me

type

of w

ell:

“In th

e fir

st h

alf o

f the

yea

r, w

etra

nsiti

oned

from

a$1

1.5

$12.

0

$12.

5

$13.

0

$8.5

$9.0

$9.5

we

trans

ition

ed fr

om a

hi

gher

cos

t 38-

stag

e hy

brid

co

mpl

etio

n de

sign

to a

lo

wer

cos

t slid

ing

slee

ve

desi

gn.” –

Gre

gH

illP

resi

dent

$8.5

$9.0

$9.5

$10.

0

$10.

5

$11.

0

$million per well

$7.0

$7.5

$8.0

+39%

+38%

+17%

Gre

g H

ill, P

resi

dent

H

ess,

Jan

uary

201

3(3)

$7.0

$7.5

$8.0

$6.0

$6.5

Sani

sh

Onl

y

Frac

Met

hod

Plug

& P

erf

Plug

& P

erf

40%

to50

%

Sani

sh

Onl

y

Frac

Met

hod

Slid

ing

Slee

veSl

idin

g Sl

eeve

Slid

ing

Slee

ve

Ran

geof

70%

Pro

ppan

t(4)

60%

San

d,

40%

Cer

amic

40%

to 5

0%

Sand

, re

mai

nder

Cer

amic

Rig

s20

16

%Pa

dD

rillin

g30

%?

Pro

ppan

t(4)

100%

San

d

gto

100

% S

and,

re

mai

nder

Cer

amic

95+%

Sand

Rig

s6

2014

%Pa

dD

rillin

g10

0%50

%~9

5%

[ 69

]

% P

ad D

rillin

g30

%?

% P

ad D

rillin

g10

0%50

%95

%

Sou

rces

: Pub

lic c

ompa

ny fi

lings

, cor

pora

te p

rese

ntat

ions

, ear

ning

s ca

ll tra

nscr

ipts

and

Nor

th D

akot

a In

dust

rial C

omm

issi

on d

ata

1.1Q

and

2Q

ear

ning

s tra

nscr

ipts

and

pre

sent

atio

ns2.

4Q e

arni

ngs

trans

crip

ts a

nd p

rese

ntat

ions

3.H

ess

4Q e

arni

ngs

call

4.D

ata

from

Nor

th D

akot

a In

dust

rial C

omm

issi

on

Cul

ture

ofA

void

ing

Acc

ount

abili

tyC

ultu

re o

f Avo

idin

g A

ccou

ntab

ility

Den

y La

ck o

f Foc

us

Den

y St

ock

Perf

orm

ance

y

Den

y U

ndis

cipl

ined

Cap

ital A

lloca

tion

Den

y O

pera

tiona

l Mis

man

agem

ent

Den

y A

bysm

al G

over

nanc

e C

ultu

re

Rec

ogni

tion

of re

ality

, and

the

acco

unta

bilit

y th

at c

omes

with

it a

t a p

ublic

com

pany

, see

m to

be

prec

isel

y w

hat H

ess’

s M

anag

emen

t and

Boa

rd a

re d

oing

eve

ryth

ing

in th

eir p

ower

to a

void

[ 70

]

Hes

s C

laim

s It

is “

Min

dful

” of

Gov

erna

nce,

Yet

…N

ewLe

ad“I

ndep

ende

nt”

Dire

ctor

Just

as“I

ndep

ende

nt”

asth

eLa

stO

neN

ew L

ead

Inde

pend

ent

Dire

ctor

Jus

t as

Inde

pend

ent

as

the

Last

One

On

Mar

ch 4

thH

ess

anno

unce

d th

e ap

poin

tmen

t of a

new

lead

“in

depe

nden

t” d

irect

or…

Nic

hola

s B

rady

Form

er L

ead

Inde

pend

ent D

irect

or

John

Mul

lin II

I

New

Lea

d In

depe

nden

t Dire

ctor

Lead

Inde

pend

ent D

irect

orLe

ad In

depe

nden

t Dire

ctor

AN

D

Join

t-Exe

cuto

r, H

ess

esta

te

AN

D

Join

t-Exe

cuto

r, H

ess

esta

te

C

olle

ctiv

ely

rece

ived

$3

mill

ion

dire

ctly

from

Joh

n H

ess’

s fa

mily

est

ate.

P

aper

wor

kfo

rJoh

nM

ullin

tost

epdo

wn

asex

ecut

orw

asfil

edtw

ow

eeks

afte

rHes

san

noun

ced

P

aper

wor

k fo

r Joh

n M

ullin

to s

tep

dow

n as

exe

cuto

r was

file

d tw

o w

eeks

afte

r Hes

s an

noun

ced

Mul

lin’s

new

pos

ition

.

D

oes

Hes

s th

ink

this

was

hes

clea

n Jo

hn M

ullin

’s re

latio

nshi

p w

ith th

e H

ess

fam

ily?

Suc

h cl

osen

ess

ough

t to

be in

appr

opria

te fo

r boa

rd m

embe

rshi

p, le

t alo

ne le

ad d

irect

orsh

ip…

[ 71

]

D

oes

the

Boa

rd b

elie

ve it

is m

eetin

g its

obl

igat

ions

to s

hare

hold

ers?

Sou

rce:

Com

pany

filin

gs, N

ew Y

ork

Sta

te C

ourt

Filin

gs

Man

agem

ent N

omin

ees

App

ear t

o B

e Pi

cked

for T

heir

Con

curr

ence

on

a Pl

an

That

Supp

osed

lyPr

edat

esTh

emby

3to

17Ye

ars

That

Sup

pose

dly

Pred

ates

The

m b

y 3

to 1

7 Ye

ars

Shar

ehol

derN

omin

ees:

Man

agem

entN

omin

ees:

Shar

ehol

der N

omin

ees:

Inde

pend

ent

Man

agem

ent N

omin

ees:

Han

dpic

ked

for C

oncu

rren

ce?

“The

se i

ndep

ende

ntdi

rect

ors

agr

eed

to

joi

n o

ur b

oard

, be

caus

e th

ey

belie

ve i

n o

ur o

utst

andi

ng p

lan,

and

th

ey r

ecog

nize

tha

t ou

r pl

an is

the

“W

hile

this

lette

r pre

sent

s E

lliot

t’s

yg

prig

ht p

lan

for

all

of o

ur s

hare

hold

ers.

”

“We

have

had

this

str

ateg

ic

tran

sfor

mat

ion,

asm

yre

mar

ksno

ted,

ppe

rspe

ctiv

es, S

hare

hold

er N

omin

ees

will

form

thei

r ow

n, in

depe

nden

t vie

ws

on th

e C

ompa

ny, i

ts a

sset

s, a

nd it

s st

rate

gy. T

hese

five

acc

ompl

ishe

d in

divi

dual

sbr

ing

deep

know

ledg

ean

dtr

ansf

orm

atio

n, a

s m

y re

mar

ks n

oted

, un

derw

ay, r

eally

goi

ng b

ack…

sinc

e I

beca

me

Cha

irman

…In

fact

, Elli

ott g

ot o

n th

e tr

ain

afte

r it

real

ly l

eft

the

st

atio

n…Th

is i

s a

cul

min

atio

nof

a

mul

tiye

arst

rate

gy”

indi

vidu

als

brin

g de

ep k

now

ledg

e an

d ex

perie

nce

in a

reas

that

are

sev

erel

y la

ckin

g in

the

exis

ting

boar

d.”

-Elli

ott L

ette

r to

Sha

reho

lder

s,

Janu

ary

29th

2013

(2)

mul

ti y

ear

stra

tegy

…

-Joh

n H

ess,

Mar

ch 4

th20

13(1

)

Janu

ary

2920

13

[ 72

]S

ourc

e:C

ompa

nytra

nscr

ipts

1.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

32.

Elli

ott L

ette

r to

Sha

reho

lder

s Ja

nuar

y 29

, 201

3

Qui

gley

Was

Pla

ced

on B

oard

in M

arch

201

3 W

ithou

t a V

ote,

Des

pite

Sh

areh

olde

rsC

ontin

ually

Cal

ling

forD

esta

gger

ing

ofth

eB

oard

Shar

ehol

ders

Con

tinua

lly C

allin

g fo

r Des

tagg

erin

gof

the

Boa

rd

Man

agem

ent N

omin

ee

Jam

es H

. Qui

gley

Fo

rmer

CE

O, D

eloi

tte

Ups

trea

m O

il &

Gas

O

pera

ting

Expe

rienc

eR

estr

uctu

ring

Expe

rienc

e

For o

ver 5

yea

rs, s

hare

hold

ers

have

bee

n as

king

to v

ote

on d

irect

ors

annu

ally

;

Non

eN

one

y,

gy;

For o

ver 5

yea

rs, s

hare

hold

ers

have

bee

n ig

nore

d

% o

f Tot

al S

hare

s Vo

ted

for D

ecla

ssifi

catio

n(1)

In3

sepa

rate

vote

s90

+%of

outs

ide

shar

ehol

ders

In 3

sep

arat

e vo

tes,

90+

% o

f out

side

sha

reho

lder

s vo

ted

to d

ecla

ssify

the

Hes

s B

oard

60%

80%

100%

“The

abi

lity

to e

lect

dire

ctor

s is

the

sing

le m

ost i

mpo

rtant

0%20%

40%

2007

2008

2012

use

of th

e sh

areh

olde

r fra

nchi

se, a

nd a

ll di

rect

ors

shou

ld

be a

ccou

ntab

le o

n an

ann

ual b

asis

.”

IS

S Pr

oxy

Adv

isor

y Se

rvic

es(2

)

[ 73

]S

ourc

es: C

ompa

ny F

iling

s, F

acts

et, I

SS

Ana

lytic

s1.

Hes

s es

tate

is a

ssum

ed to

vot

e ag

ains

t dec

lass

ifica

tion

and

is e

xclu

ded

from

ca

lcul

atio

n; C

ompa

ny fi

lings

, Fac

tset

, IS

S V

otin

g A

naly

tics;

2.IS

S c

omm

enta

ry o

n H

ess,

Hes

s C

orpo

ratio

n 20

12 C

ore

Res

earc

h R

epor

t

Cul

ture

ofA

void

ing

Acc

ount

abili

tyC

ultu

re o

f Avo

idin

g A

ccou

ntab

ility

Den

y La

ck o

f Foc

us

Den

y St

ock

Perf

orm

ance

y

Den

y U

ndis

cipl

ined

Cap

ital A

lloca

tion

Den

y O

pera

tiona

l Mis

man

agem

ent

Den

y A

bysm

al G

over

nanc

e C

ultu

re

Rec

ogni

tion

of re

ality

, and

the

acco

unta

bilit

y th

at c

omes

with

it a

t a p

ublic

com

pany

, see

m to

be

prec

isel

y w

hat H

ess’

s M

anag

emen

t and

Boa

rd a

re d

oing

eve

ryth

ing

in th

eir p

ower

to a

void

[ 74

]

Whi

le H

ess

May

Den

y Th

ese

Prob

lem

s,

Ever

yone

Els

e A

ckno

wle

dges

The

ir Ex

iste

nce.

[ 75

]

Mar

ketH

asA

ckno

wle

dged

That

Fund

amen

talP

robl

ems

Exis

tatH

ess

Mar

ket H

as A

ckno

wle

dged

Tha

t Fun

dam

enta

l Pro

blem

s Ex

ist a

t Hes

s…

“HE

S h

as b

een

wha

t we

call

a ‘v

alue

trap

’ for

som

e tim

e.”

Soc

iete

Gen

eral

e(J

anua

ry 3

0, 2

013)

“In m

ultip

le c

lient

con

vers

atio

ns th

roug

hout

the

day

we

foun

d lit

eral

ly n

o on

e th

at d

efen

ded

the

shap

e, n

or g

loba

l str

ateg

y of

“The

sim

ple

fact

is th

e m

arke

t doe

sn’t

trus

t Hes

s to

run

its b

usin

ess

wel

l, an

d th

us p

lace

s a

disc

ount

on

ever

ythi

ng th

e co

mpa

ny

cont

rols

.”M

orni

ngst

ar(J

anua

ry29

,201

3)

Hes

s.”

Deu

tsch

e B

ank

(Jan

uary

30,

201

3)

“And

so,

one

of t

he p

robl

ems

is th

e bo

ard

is s

tuffe

d w

ith in

cred

ibly

long

-ser

ving

mem

bers

, non

e of

who

m s

eem

to h

ave

any

it

idth

iil

th’

llk

fil

id

td

thh

Ad

iid

tll

th

Mor

ning

star

(Jan

uary

29,

201

3)

“Thi

s is

the

mos

t und

erm

anag

ed m

ajor

oil

com

pany

in th

e w

orld

.”Ji

m C

ram

er, C

NB

C F

aber

Rep

ort (

Janu

ary

29, 2

013)

expe

rienc

e ou

tsid

e th

e co

mpa

ny ru

nnin

g an

oil

com

pany

, so

ther

e’s

a re

al la

ck o

f oil

indu

stry

dep

th h

ere.

And

coi

ncid

enta

lly,t

hey

also

hap

pen

to h

ave

very

str

ong

finan

cial

con

nect

ions

with

the

Hes

s fa

mily

, hel

ping

to ru

n th

e ch

arita

ble

boar

d, h

elpi

ng to

run

the

esta

te o

f the

foun

ders

.”R

eute

rs B

reak

ingv

iew

s(J

anua

ry 2

9, 2

013)

“…H

ess'

boa

rd h

as c

onsi

sten

tly fa

iled

its s

hare

hold

ers

and

has

neve

r bro

ught

man

agem

ent t

o ta

sk, e

ver…

. In

light

of t

he

com

pany

’s p

oor p

erfo

rman

ce th

e la

st d

ecad

e, th

is is

cle

arly

a b

oard

that

giv

es J

ohn

Hes

s w

hat h

e w

ants

, rat

her t

han

doin

g w

hat

is g

ood

for s

hare

hold

ers.

”M

orni

ngst

ar (J

anua

ry 2

9, 2

013)

“The

sto

ck p

rice

refle

cts

conc

ern

abou

t bal

loon

ing

capi

tal c

osts

, chr

onic

lack

of f

ree

cash

flow

, a h

igh

oil p

rice

brea

keve

n,an

d re

cent

di

fficu

lty e

xecu

ting

agai

nst g

uida

nce

and

expe

ctat

ions

.”

“We

thin

k th

e m

arke

t will

larg

ely

adop

t a w

ait a

nd s

ee a

ppro

ach

and

not g

ive

any

free

pass

es to

man

agem

ent u

ntil

clea

r pat

h to

war

ds th

eir c

ash

flow

targ

ets

and

exec

utio

n ca

pabi

lity

is e

vide

nced

…Fr

om a

val

uatio

n pe

rspe

ctiv

e, w

e th

ink

the

stoc

k is

rela

tivel

y ch

eap

as a

resu

lt of

the

com

pany

’s le

ss-th

an-s

tella

r his

toric

al p

erfo

rman

ce re

cord

and

per

ceiv

ed e

xecu

tion

risk.

”B

arcl

ays

(Jul

y26

2012

)

yg

gg

pD

euts

che

Ban

k (O

ctob

er 1

7, 2

012)

Bar

clay

s (J

uly

26, 2

012) [ 7

6]

And

Has

Don

eSo

Fora

Long

Tim

e…

And

Has

Don

e So

For

a L

ong

Tim

e

“The

larg

e va

riabi

lity

in c

apex

vers

us o

rigin

al g

uida

nce

(just

set

six

mon

ths

ago)

dem

onst

rate

s so

me

lack

of c

apita

l dis

cipl

ine

with

in th

e co

mpa

ny.”

Citi

grou

p (J

uly

25, 2

012)

“The

key

issu

e fo

r HE

S in

our

min

d is

cap

ital i

nten

sity

and

the

inab

ility

of m

anag

emen

t in

rece

nt y

ears

to li

ve w

ithin

the

limits

of i

ts

cash

flow

sFu

rther

mor

egi

ven

the

lack

ofgr

owth

inoi

land

gas

prod

uctio

nov

erth

ela

st5

year

sth

ere

isa

case

tobe

mad

eth

atth

e

“On

the

upst

ream

sid

e, w

e qu

estio

n w

heth

er th

e co

mpa

ny h

as th

e ba

ndw

idth

to o

pera

te in

ove

r 20

coun

tries

… W

e do

not

bel

ieve

aco

mpa

ny o

f Hes

s’s

size

will

get c

redi

t in

the

mar

ket f

or a

sho

tgun

app

roac

h to

inve

stin

g ac

ross

the

wor

ld.” C

itigr

oup

(Jul

y 20

, 201

2)

cash

flow

s. F

urth

erm

ore,

giv

en th

e la

ck o

f gro

wth

in o

il an

d ga

s pr

oduc

tion

over

the

last

5 y

ears

, the

re is

a c

ase

to b

e m

ade

that

the

com

pany

sho

uld

retu

rn m

ore

cash

bac

k to

sha

reho

lder

s in

stea

d of

atte

mpt

ing

to g

row

at a

ll.”

Citi

grou

p (J

uly

20, 2

012)

“We

are

skep

tical

that

Hes

s’s

curr

ent g

loba

l gro

wth

stra

tegy

will

yiel

d su

perio

r ret

urns

or g

row

th, a

s its

org

aniz

atio

n ap

pear

s to

be

spre

ad th

in a

nd w

e th

ink

it is

unl

ikel

y th

at H

ess

can

have

a c

ompe

titiv

e ad

vant

age

in a

ll th

e ar

eas

it is

pur

suin

g.”

“We

belie

ve H

ess

shou

ld c

onsi

der f

urth

er re

duci

ng it

s ex

plor

atio

n pr

ogra

m b

eyon

d w

hat h

as a

lread

y be

en a

nnou

nced

. It i

s no

t cle

ar

to u

s gi

ven

the

leve

ls o

f exp

lora

tion

spen

ding

ver

sus

cash

flow

s th

at a

mid

-siz

ed o

il co

mpa

ny c

an s

ucce

ssfu

lly p

ursu

e a

glob

al

expl

orat

ion

stra

tegy

as

Hes

s ha

s at

tem

pted

….T

he c

ompa

ny’s

hig

h-ris

k/hi

gh-p

oten

tial e

xplo

ratio

n an

d ac

reag

e st

rate

gy s

ince

200

9 is

thus

farn

otyi

eldi

ngfa

vora

ble

resu

lts”

Gol

dman

Sac

hs (J

une

11, 2

012)

“The

7%

pul

lbac

k in

the

stoc

k w

as s

ever

e, a

nd in

our

vie

w, is

indi

cativ

e of

a lo

ss o

f inv

esto

r con

fiden

ce in

HE

S’s

exe

cutio

n ca

pabi

litie

s, fo

llow

ing

a st

ring

of p

rodu

ctio

n m

isse

s an

d a

lack

of n

otab

le e

xplo

ratio

n su

cces

s, in

add

ition

to a

gro

win

g de

ficit

betw

een

cape

xan

d ca

sh fl

ow. E

nter

ing

1Q’1

2, H

ES

had

mis

sed

its p

rodu

ctio

n gu

idan

ce fo

r fou

r of t

he p

rece

ding

5 q

uarte

rs,

mea

ning

eec

tion

asat

apr

emi

m”

is th

us fa

r not

yie

ldin

g fa

vora

ble

resu

lts.

Gol

dman

Sac

hs (J

une

11, 2

012)

“Alth

ough

we

thin

k th

e co

mpa

ny’s

und

erly

ing

asse

t val

ue is

wor

th s

igni

fican

tly h

ighe

r tha

n ou

r nea

r-te

rm p

rice

targ

et, w

e no

w

belie

ve th

e sh

ares

will

likel

y co

ntin

ue to

stru

ggle

thro

ugho

ut th

is y

ear a

nd w

ill tra

de s

ubst

antia

lly b

elow

our

est

imat

e of

its

fair

asse

t va

lue

due

to th

e la

ck o

f vis

ible

cat

alys

ts a

s w

ell i

ncre

ased

inve

stor

ske

ptic

ism

ove

r man

agem

ent’s

exe

cutio

n re

cord

…”

mea

ning

exe

cutio

n w

as a

t a p

rem

ium

.” S

imm

ons

(Apr

il 26

, 201

2) [ 77

]

yp

gB

arcl

ays

(Apr

il 26

, 201

2)

AR

eally

Long

Tim

e…

A R

eally

Lon

g Ti

me

“To

sum

mar

ize,

the

key

grow

th a

sset

s un

derp

erfo

rm, e

xpec

tatio

ns a

re lo

wer

ed, a

nd a

key

inve

stor

fear

–H

ess’

s pr

open

sity

to

outs

pend

cas

h flo

w –

is s

toke

d by

an

early

upw

ard

revi

sion

to th

e 20

12 b

udge

t.”D

euts

che

Ban

k (A

pril

25, 2

012)

“Fl

ith

hf

thhi

hd

lth

thh

thl

ti

ldd

ltd

iid

dth

biti

“The

com

pany

has

con

tinue

d to

be

a ne

t iss

uer o

f equ

ity…

at a

tim

e w

hen

mos

t of t

he o

ther

maj

ors

have

bee

n bu

ying

sto

ck b

ack…

an

d ha

s pr

oduc

ed lo

w re

turn

on

capi

tal e

mpl

oyed

for m

ost o

f the

pre

sent

dec

ade.

”

“Flo

win

g th

roug

h fro

m th

e hi

gh c

apex

and

low

gro

wth

, the

com

pany

has

the

low

est y

ield

and

low

est d

ivid

end

grow

th c

ombi

natio

n am

ongs

t maj

or o

ils.”

Deu

tsch

e B

ank

(Jul

y 27

, 201

1)

Ber

nste

in (O

ctob

er 2

2, 2

009)

“The

com

pany

’s re

finin

g an

d m

arke

ting

asse

ts re

mai

n em

phat

ical

ly n

ot fo

r sal

e, d

espi

te th

e fa

ct th

at re

depl

oyin

g do

wns

tream

in

vest

ed c

apita

l…to

the

muc

h hi

gher

retu

rnin

g up

stre

am w

ould

mak

e so

lid b

usin

ess

sens

e.”

JP M

orga

n (S

epte

mbe

r 17,

200

9)

“Hin

dsig

ht:W

eca

n’tb

elie

veyo

u’re

back

tom

ore

hedg

ing

”

“Not

with

stan

ding

the

rom

ance

of L

eon

Hes

s’s

deve

lopm

ent o

f the

com

pany

from

one

oil

deliv

ery

truck

into

a m

ulti-

billio

n do

llar

ente

rpris

e, b

y th

e ea

rly 2

000’

s th

e co

mpa

ny’s

repu

tatio

n w

ith in

vest

ors

was

one

of a

stru

gglin

g oi

l ess

entia

lly ru

n as

if it

wer

e pr

ivat

e.”

Deu

tsch

e B

ank

(Aug

ust 7

, 200

7)

Hin

dsig

ht: W

e ca

nt b

elie

ve y

oure

bac

k to

mor

e he

dgin

g.D

euts

che

Ban

k (S

epte

mbe

r 29,

200

8)

“The

chan

gein

2008

estim

ated

EP

Sis

due

toou

rbel

iefi

nth

ein

dust

ry-w

ide

cost

pres

sure

sbe

ing

sust

aine

din

tone

xtye

aran

dth

e

“His

toric

mis

trus

t, w

ith c

erta

in m

ajor

pot

entia

l sha

reho

lder

s re

luct

ant t

o in

vest

bas

ed o

n th

e is

sues

the

com

pany

face

d in

the

past

w

ith a

dis

tinct

ly m

ixed

reco

rd o

f sha

reho

lder

val

ue c

reat

ion

to s

ay th

e le

ast.

Ulti

mat

ely,

Joh

n H

ess

is s

till i

n ch

arge

, and

th

at p

rovi

des

a m

ajor

link

to th

e pa

st. H

ess

has

hist

oric

ally

sho

wn

poor

per

form

ance

on

oper

atio

nal m

etric

s…”

Deu

tsch

e B

ank

(Aug

ust 6

, 200

7)Th

e ch

ange

in 2

008

estim

ated

EPS

is d

ue to

our

bel

ief i

n th

e in

dust

ryw

ide

cost

pre

ssur

es b

eing

sus

tain

ed in

to n

ext y

ear a

nd th

e co

mpa

ny’s

inab

ility

to m

anag

e th

em q

uite

as

succ

essf

ully

as

do th

e M

ajor

s.”

Ban

k of

Am

eric

a (A

pril

26, 2

007)

“Con

tinue

d ex

plor

atio

n lo

sses

are

val

ue d

estr

uctiv

e.”

Deu

tsch

e B

ank

(Oct

ober

25,

200

6) [ 78

]

“It is

impo

rtant

to h

ighl

ight

that

the

high

est p

aid

com

pani

es a

re a

lso

the

best

per

form

ers,

with

the

argu

able

exc

eptio

n of

Hes

s.H

e is

a

dyna

stic

exe

cutiv

e le

ft in

a b

usin

ess

that

reso

nate

s w

ith fa

mily

fortu

nes…

”D

euts

che

Ban

k (A

ugus

t 24,

200

6)

AR

eally

Rea

llyLo

ngTi

me

…A

Rea

lly, R

eally

Lon

g Ti

me

“The

key

que

stio

n, in

our

vie

w, g

oing

forw

ard

is w

heth

er H

ess

is s

tarti

ng to

spr

ead

itsel

f too

thin

via

a g

row

ing

proj

ect p

ortfo

lio li

st.”

“We

thin

k th

e fre

quen

cy o

f HE

S’s

ana

lyst

mee

tings

cou

ld b

e in

crea

sed.

How

abo

ut b

iann

ual?

”M

erril

l Lyn

ch (M

ay 2

2, 2

006)

yq

,,g

gg

pg

gp

jp

Gol

dman

Sac

hs (A

pril

26, 2

006)

“The

agg

ress

ive

upst

ream

exp

lora

tion

stor

y dr

iven

by

John

O’C

onno

r is

unde

r pre

ssur

e, a

s a

run

of d

ry h

oles

is lo

omin

g la

rger

. With

no

com

plet

ion

targ

et, t

he s

tory

has

an

unce

rtain

futu

re, c

osts

are

risi

ng a

nd p

rosp

ects

are

pus

hed

from

this

yea

r to

next

.”D

euts

che

Ban

k (A

pril

26, 2

006)

“Des

pite

a n

ew re

cord

qua

rterly

oil

pric

e en

viro

nmen

t and

seq

uent

ially

muc

h hi

gher

pro

duct

ion

leve

ls, w

orld

wid

e un

it pr

ofita

bilit

y ro

seon

lym

argi

nally

beca

use

ofco

ntin

ued

heav

yhe

dgin

glo

ss(n

osu

rpris

ehe

re)a

nda

shar

pin

crea

seof

cost

s”

“Thi

s co

mpa

ny h

as n

ot h

isto

rical

ly s

how

n go

od c

apita

l dis

cipl

ine,

del

iver

ing

one

of th

e hi

ghes

t F&D

cos

ts in

the

sect

or a

nd o

ne

of th

e lo

wer

retu

rns

on c

apita

l.”B

ank

of A

mer

ica

(Jan

uary

27,

200

5)

rose

onl

y m

argi

nally

… b

ecau

se o

f con

tinue

d he

avy

hedg

ing

loss

(no

surp

rise

here

) and

a s

harp

incr

ease

of c

osts

.Le

hman

Bro

ther

s (J

anua

ry 2

7, 2

005)

“Hes

s’s

long

-term

sha

re p

erfo

rman

ce h

as b

een

ham

pere

d by

an

inab

ility

to s

how

sus

tain

able

vol

ume

grow

th a

nd v

alue

cre

atio

n in

th

e up

stre

am…

As

a re

sult,

Hes

s’s

10-y

ear s

hare

pric

e pe

rform

ance

has

bee

n th

e w

eake

st a

mon

g th

e in

tegr

ated

oils

.”M

erril

l Lyn

ch (O

ctob

er 2

1, 2

004)

ey

c(O

ctob

e,

00)

“Fol

low

ing

seve

ral y

ears

of m

isse

d ta

rget

s, [H

ess]

has

refra

ined

from

offe

ring

prod

uctio

n gu

idan

ce m

uch

beyo

nd th

e cu

rrent

yea

r.W

hils

t thi

s pl

ays

to it

s be

nefit

by

avoi

ding

the

risk

of o

ver p

rom

isin

g / u

nder

del

iver

y, it

als

o cl

ouds

the

outlo

ok o

ver t

heco

min

g ye

ars.

HE

S’s

relu

ctan

ce to

com

mit

to a

ny lo

ng-te

rm p

rodu

ctio

n ob

ject

ives

is u

nder

stan

dabl

e in

the

cont

ext o

f a p

oor t

rack

reco

rd

whe

re a

suc

cess

ion

of a

ggre

ssiv

e gr

owth

targ

ets

has

been

mis

sed.

”C

itigr

op

Smith

Bar

ne(O

ctob

er11

2004

)C

itigr

oup

Sm

ith B

arne

y (O

ctob

er 1

1, 2

004)

“…H

ess

need

s to

spe

nd a

ggre

ssiv

ely

to a

rrest

its

impl

odin

g pr

oduc

tion

prof

ile. T

he ri

sk is

whe

ther

thes

e ca

pita

l inv

estm

ents

will

gene

rate

com

petit

ive

retu

rns,

a c

once

rn to

inve

stor

s gi

ven

the

rece

nt h

isto

ry o

f pro

duct

ion

and

rese

rve

disa

ppoi

ntm

ents

…”

Mer

rill L

ynch

(Apr

il 29

, 200

4)

“The

ques

tion

inou

rvie

wis

whe

ther

Hes

sis

truly

crea

ting

acu

lture

that

isfo

cuse

don

prof

itabi

lity

first

”

[ 79

]

The

ques

tion,

in o

ur v

iew

, is

whe

ther

Hes

s is

trul

y cr

eatin

g a

cultu

re th

at is

focu

sed

on p

rofit

abilit

y fir

st.

Gol

dman

Sac

hs (F

ebru

ary

6, 2

004)

Not

e:Fo

r all

repo

rts p

rior t

o M

ay 2

006,

Am

erad

a H

ess

or A

HC

, was

cha

nged

nam

e to

Hes

s or

HE

S

AR

eally

Rea

llyR

eally

Long

Tim

e…

A R

eally

, Rea

lly, R

eally

Lon

g Ti

me

“Hes

s’s

near

-term

stra

tegi

c ou

tlook

is fa

irly

clea

r-cu

t: th

e co

mpa

ny m

ust i

mpr

ove.

[H

ess]

will

need

to re

gain

pro

ject

man

agem

ent

cred

ibilit

y af

ter d

isap

poin

ting

resu

lts…

”B

ank

of A

mer

ica

(Jan

uary

6, 2

004)

“Hav

ing

lagg

ed th

e re

cent

rebo

und

in th

e se

ctor

—ad

ding

to w

hat h

as b

een

long

-term

sec

ular

und

erpe

rfor

man

ce…

”G

oldm

an S

achs

(Dec

embe

r 9, 2

003)

“We

belie

ve H

ess

had

four

issu

es it

nee

ded

to o

verc

ome:

Top

man

agem

ent w

as n

ot a

s st

rong

as

at it

s co

mpe

titor

s; E

&P

asse

t ba

se w

as v

ery

mat

ure

and

shor

t-liv

ed; B

alan

ce s

heet

was

wea

k; C

apita

l dis

cipl

ine

was

exp

ress

ed in

wor

ds, b

ut n

ot p

ract

iced

in

actio

ns”

in a

ctio

ns.

Gol

dman

Sac

hs (D

ecem

ber 9

, 200

3)

“Hes

sre

leas

edan

othe

rqua

rtero

fdis

appo

intin

gea

rnin

gs…

Whi

leof

fsho

rede

velo

pmen

tdel

ays

are

notu

ncom

mon

forl

arge

oila

nd

“Will

per

petu

al re

stru

ctur

ing

mod

e ev

er e

nd?”

Gol

dman

Sac

hs (O

ctob

er 1

4, 2

003)

Hes

s re

leas

ed a

noth

er q

uarte

r of d

isap

poin

ting

earn

ings

…W

hile

offs

hore

dev

elop

men

t del

ays

are

not u

ncom

mon

for l

arge

oil

and

gas

proj

ects

, H

ess

has

cons

iste

ntly

dis

appo

inte

d th

e m

arke

t with

ope

ratio

nal p

erfo

rman

ce o

ver t

he p

ast s

ever

al q

uarte

rs.”

Ban

k of

Am

eric

a C

redi

t Res

earc

h (J

uly

29, 2

003)

“…[H

ess]

a c

ompa

ny th

at w

e co

nsid

er th

e m

ost f

unda

men

tally

flaw

ed E

&P

or in

tegr

ated

in o

ur in

vest

men

t gra

de u

nive

rse…

U

nfor

tuna

tely,

thes

e da

ys a

lack

of a

stou

ndin

gly

bad

new

s is

cau

se fo

r cel

ebra

tion!

”M

Stl

Cdi

tRh

(M1

2003

)

“With

bel

ow c

ost o

f cap

ital R

OA

CE,

hig

h up

stre

am c

osts

, and

stra

tegi

c im

pedi

men

ts d

ue to

recu

rring

hig

h de

bt le

vels

, we

belie

ve

the

Hes

s sh

ares

sho

uld

cont

inue

to tr

ade

at a

mat

eria

l dis

coun

t vs.

the

inte

grat

ed p

eer g

roup

. Mor

eove

r…w

e re

mai

n un

conv

ince

dth

at th

e co

mpa

ny’s

pla

nned

ups

tream

gro

wth

will

lead

to im

prov

ed p

rofit

abili

ty a

nd re

turn

s.”

UB

S W

arbu

r g (A

pril

30, 2

003)

Mor

gan

Stan

ley

Cre

dit R

esea

rch

(May

1, 2

003)

g(

p,

)

“The

bur

den

of h

igh

debt

leve

ls a

nd lo

w re

turn

s, w

ith a

band

oned

targ

ets

and

a w

eak

near

-term

pro

duct

ion

prof

ile, l

eave

s th

e m

anag

emen

t in

need

of r

eest

ablis

hing

cre

dibi

lity

and

shar

e pr

ice

perf

orm

ance

.”D

euts

che

Ban

k (A

pril

8, 2

003)

“The

mat

eria

l ero

sion

of s

hare

hold

er e

quity

so

soon

afte

r the

com

plet

ion

of th

ese

two

acqu

isiti

ons

is a

cle

ar d

isap

poin

tmen

t... [ 8

0]

[It] a

lso

mus

t rai

se q

uest

ions

as

to th

e ac

quis

ition

due

dilig

ence

pro

cess

with

in H

ess…

We

belie

ve in

vest

ors’

con

fiden

ce in

the

com

pany

has

bee

n m

ater

ially

und

erm

ined

…”

UB

S W

arbu

rg (F

ebru

ary

3, 2

003)

Not

e:Fo

r all

repo

rts p

rior t

o M

ay 2

006,

Am

erad

a H

ess

or A

HC

, was

cha

nged

nam

e to

Hes

s or

HE

S

Bac

kin

toth

eEa

rlyPa

rtof

the

Last

Dec

ade

…B

ack

into

the

Early

Par

t of t

he L

ast D

ecad

e

“We

belie

eH

ess

sho

ldtra

deat

a5%

10%

disc

ont

toth

eD

omes

ticO

ilsba

sed

on[a

nd]3

)Dam

aged

man

agem

entc

redi

bilit

”

“The

con

tinue

d st

ring

of n

egat

ive

new

s ha

s le

ft m

anag

emen

t with

som

e w

ork

to d

o to

rebu

ild in

vest

or c

onfid

ence

.”B

ank

of A

mer

ica

Cre

dit R

esea

rch

(Jan

uary

31,

200

3)

“We

belie

ve H

ess

shou

ld tr

ade

at a

5%

-10%

dis

coun

t to

the

Dom

estic

Oils

bas

ed o

n…[a

nd] 3

) Dam

aged

man

agem

ent c

redi

bilit

y.”

JP M

orga

n (J

anua

ry 3

0, 2

003)

“Cre

dibi

lity

mat

ters

, and

Hes

s ha

s lit

tle o

f it l

eft.”

Cre

dit S

uiss

e (J

anua

ry 3

0, 2

003)

“W

hil

it

ii

dth

t’i

ll

ttit

dt

hh

ld’

itW

“RE

ITE

RAT

E U

ND

ER

PE

RFO

RM

; E&

P D

ETER

IOR

ATIO

N A

SER

IOU

S IS

SUE

Ther

e is

no

chan

ge to

our

Und

erpe

rform

ratin

g fo

r H

ess

desp

ite th

e co

ntin

ued

slid

e in

its

shar

es. W

e be

lieve

larg

e w

rite

dow

ns a

t its

LLO

G a

nd T

riton

acq

uisi

tions

cou

pled

with

cont

inue

d er

osio

n in

its

base

E&

P pr

oper

ties

poin

t to

serio

us p

robl

ems

with

the

com

pany

's e

xplo

ratio

n an

d pr

oduc

tion

busi

ness

.”G

oldm

an S

achs

(Jan

uary

30,

200

3)

“…W

e be

lieve

eve

n if

the

disp

osal

pro

gram

is c

ompl

eted

the

portf

olio

impr

ovem

ent i

s un

likel

y to

be

suffi

cien

t to

resu

lt in

retu

rns

“…W

hile

inve

stor

s re

mai

n w

orrie

d ov

er th

e m

anag

emen

t’s s

eem

ingl

y sl

oppy

atti

tude

to s

hare

hold

ers’

equ

ity…

We

are

incr

easi

ngly

con

cern

ed o

ver H

ess’

s co

ntin

uing

abi

lity

to g

ener

ate

thes

e ‘n

on re

curri

ng’

char

ges

…C

arel

essn

ess

with

sha

reho

lder

seq

uity

is a

wor

ryin

g tra

it in

any

cor

pora

tion.

”C

redi

t Sui

sse

(Jan

uary

30,

200

3)

in e

xces

s of

Hes

s’s

cost

of c

apita

l.”U

BS

War

burg

(Nov

embe

r 5, 2

002)

“…P

rodu

ctio

n fo

reca

sts

wer

e re

vise

d lo

wer

sup

port

ing

conc

erns

that

we

have

had

rega

rdin

g ec

onom

ic v

alue

cre

atio

n…”

Mor

gan

Sta

nley

(Oct

ober

25,

200

2)

“Hes

s’s

stoc

k fe

ll 12

% to

day

on th

e ba

ck o

f a d

owng

rade

to 2

003

and

2004

pro

duct

ion

expe

ctat

ions

and

a fu

rther

writ

e-do

wn

of th

eLL

OG

pro

perti

es .

Whi

le n

eith

er o

f the

se th

ings

is d

evas

tatin

g to

the

com

pany

’s v

alue

, we

belie

ve th

at m

anag

emen

t cre

dibi

lity

at

Hes

s ha

s be

en s

tret

ched

ver

y th

in…

This

cha

rge

will

be s

een

by in

vest

ors

as a

con

tinua

tion

of a

dis

turb

ing

patte

rn o

f spe

cial

ch

arge

s at

Hes

s…ag

ain

calli

ng in

to q

uest

ion

the

com

pany

’s ju

dgm

ent…

”C

redi

t Sui

sse

(Oct

ober

24,

200

2) [ 81

]

()

Not

e:Fo

r all

repo

rts p

rior t

o M

ay 2

006,

Am

erad

a H

ess

or A

HC

, was

cha

nged

nam

e to

Hes

s or

HE

S

Even

Bac

kin

toth

eTw

entie

thC

entu

ry…

Even

Bac

k in

to th

e Tw

entie

th C

entu

ry

“In 2

003,

Hes

s’s

RO

AC

E o

f 7.6

% is

the

low

est i

n its

pee

r gro

up a

nd is

wel

l bel

ow H

ess’

s co

st o

f cap

ital o

f 10%

-12%

.”U

BS

War

burg

(Sep

tem

ber 2

2, 2

000)

“Hes

s an

noun

ced

a br

oad-

base

d re

stru

ctur

ing

prog

ram

invo

lvin

g re

duct

ions

in o

verh

ead

and

capi

tal e

xpen

ditu

res…

Reg

ardi

ng th

e st

ock,

we

mai

ntai

n ou

r lon

gsta

ndin

g N

eutra

l rat

ing.

Inv

esto

r int

eres

t is

not e

xpec

ted

to b

ecom

e m

ater

ial i

n th

is c

ompa

ny u

ntil

“Hes

s’s

cons

iste

ntly

poo

r ret

urns

…”

UB

S W

arbu

rg (S

epte

mbe

r 22,

200

0)

retu

rns

rese

mbl

e th

e co

st o

f cap

ital o

n a

sust

aina

ble

basi

s.”

Mor

gan

Sta

nley

(Dec

embe

r 14,

199

8)

“Exp

lora

tion

expe

nse

is s

igni

fican

tly a

bove

ave

rage

…H

ess,

with

a m

arke

t cap

italiz

atio

n of

$4.

5 bi

llion,

had

199

7 ex

plor

atio

n ex

pens

e of

$37

3 m

illion

; in

com

paris

on, E

xxon

, with

a m

arke

t cap

italiz

atio

n of

$17

5 bi

llion,

had

exp

lora

tion

expe

nse

of $

753

milli

on.

(Inot

herw

ords

Exxo

n’s

expl

orat

ion

expe

nse

ison

lytw

ice

ashi

ghas

Hes

s’s

whi

leits

mar

ketc

apita

lizat

ion

isal

mos

t40

times

as(In

oth

er w

ords

, Exx

ons

expl

orat

ion

expe

nse

is o

nly

twic

e as

hig

h as

Hes

ss,

whi

le it

s m

arke

t cap

italiz

atio

n is

alm

ost 4

0 tim

esas

hi

gh).”

Gol

dman

Sac

hs (S

epte

mbe

r 4, 1

998)

“Whi

le H

ess

has

not b

een

an e

arni

ngs

stor

y fo

r man

y ye

ars

now,

the

abs

ence

of p

rofit

s is

get

ting

stal

e.” U

BS (J

anua

ry 2

3, 1

998

)

“Hes

s co

ntin

ues

to b

e th

e pe

renn

ial t

urna

roun

dst

ory.

”

“Giv

en th

e co

ntin

ued

inco

nsis

tenc

y in

Hes

s re

sults

…w

e w

ould

not

add

to p

ositi

ons

at th

ese

leve

ls” S

mith

Bar

ney

(Oct

ober

23,

1997

)

US

(Ja

uay

3,99

8)

py

Pai

ne W

ebbe

r (M

ay 7

, 199

7) [ 82

]

Not

e:Fo

r all

repo

rts p

rior t

o M

ay 2

006,

Am

erad

a H

ess

or A

HC

, was

cha

nged

nam

e to

Hes

s or

HE

S

Hes

s’s

prob

lem

sar

ede

eply

root

ed,p

erva

sive

,and

fund

amen

tal.

Hes

ss

prob

lem

s ar

e de

eply

root

ed, p

erva

sive

, and

fund

amen

tal.

[ 83

]

Ellio

tt Pu

t For

war

d a

Prop

osal

in J

anua

ry:

Hes

s R

eact

ed D

efen

sive

ly a

nd H

as F

aile

d to

Add

ress

Its

Prob

lem

s

Ellio

tt Pu

t For

war

d a

Prop

osal

and

Hes

s R

eact

ed D

efen

sive

ly w

ith N

o En

gage

men

torG

enui

neA

naly

sis

Enga

gem

ent o

r Gen

uine

Ana

lysi

s

Hes

s R

espo

nse

Mar

ch 4

thEl

liott

Pres

enta

tion

Janu

ary

29th

Shar

ehol

der

Nom

inee

s

Ele

ctth

e fiv

ew

orld

-cla

ss n

omin

ees

R

ejec

ted

P

ushe

d ou

t all

five

dire

ctor

s or

igin

ally

up

for e

lect

ion

Fo

und

five

new

nom

inee

sw

hoFo

und

five

new

nom

inee

s w

ho

prea

ppro

ved

Hes

s re

spon

se

Com

plet

eR

evie

wof

All

“Con

duct

a fu

ll st

rate

gic

and

oper

atio

nal

revi

ew to

con

side

r all

path

way

s to

max

imiz

e l

il

di”

Min

or a

dopt

ion

Rev

iew

of A

ll Pa

thw

ays

to

Max

imiz

e Va

lue

valu

e –

incl

udin

g:”

I.“S

ubst

antia

l res

truct

urin

g pr

ogra

m

(incl

udin

g a

pote

ntia

l spi

n of

f of [

the]

B

akke

n as

set)

to re

focu

s [th

e] p

ortfo

lio

I.P

rom

ised

to s

ell d

owns

tream

and

m

onet

ize

mid

stre

am a

sset

s al

l the

whi

le

clai

min

g it

was

alw

ays

the

plan

.an

d M

anag

emen

t”

II.R

evie

w to

“im

prov

e op

erat

ions

and

ac

coun

tabi

lity

to h

alt [

a] h

isto

ry o

f poo

r

Dis

mis

sed

furt

her r

estr

uctu

ring

with

fa

lse

excu

ses,

cal

ling

it a

“liq

uida

tion”

II.D

enie

d an

y op

erat

iona

l iss

ues

and

calle

d th

e re

view

“irr

elev

ant”

exec

utio

n,” a

nd

III.R

evie

w to

“brin

g di

scip

line

to c

apita

l al

loca

tion.

”III

.Den

ied

any

capi

tal a

lloca

tion

issu

es

and

calle

d th

e re

view

“irr

elev

ant”

but

prom

ised

up

to a

$4

billi

on s

hare

[ 85

]

pp

repu

rcha

se a

nd a

n in

crea

sed

divi

dend

(n

eith

er h

ad b

een

done

in a

dec

ade)

Fello

w S

hare

hold

er A

lso

Find

s H

ess

Rea

ctio

n “M

isle

adin

g, S

elf-S

ervi

ng,

and

Def

ensi

ve”

and

Def

ensi

ve

“…W

e fin

d m

any

of y

our r

espo

nses

to th

e sh

areh

olde

rs’ c

once

rns

to b

e m

isle

adin

g,

self

serv

ing,

and

def

ensi

ve…

Giv

en th

e in

cons

iste

ncie

s in

man

y of

you

r rec

ent

com

mun

icat

ions

, we

expe

ct th

at th

e sh

areh

olde

rs w

ould

wel

com

e E

lliott’

s no

min

ees

toth

eB

oard

toen

sure

prop

eran

dtim

ely

exec

utio

nan

dto

avoi

dris

kof

back

slid

ing

”to

the

Boa

rd to

ens

ure

prop

er a

nd ti

mel

y ex

ecut

ion

and

to a

void

risk

of b

acks

lidin

g.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LCM

arch

201

3(1)

[ 86

]

1.R

elat

iona

l Let

ter t

o Jo

hn H

ess,

Mar

ch 5

, 201

3

Hes

s Pu

lled

Slat

e O

rigin

ally

Up

for E

lect

ion

Foun

dN

ewN

omin

ees

Will

ing

toA

gree

toH

ess

Plan

Foun

d N

ew N

omin

ees

Will

ing

to A

gree

to H

ess

Plan

Hes

sSl

ate

Oil

&G

asTe

nre

Inde

pend

ence

Shar

ehol

derV

ote

Orig

inal

sla

te s

ever

ely

lack

ed o

pera

ting

expe

rienc

e, in

depe

nden

ce, a

nd h

ad lo

ng te

nure

Hes

s Sl

ate

Oil

& G

asO

pera

ting

Expe

rienc

e

Tenu

reIn

depe

nden

ce??

?Sh

areh

olde

rVot

eW

ithhe

ld in

Las

t El

ectio

n (2

010)

(1)

Nic

hola

s F.

Bra

dyN

one

19 Y

ears

Join

t exe

cuto

rHes

s es

tate

; inv

ests

for H

ess

Cha

ritab

le T

rust

38

.8%

Gre

gory

P. H

illH

ess

4 Ye

ars

Offi

cer o

fHes

s1.

2%

Thom

as H

. Kea

nN

one

23 Y

ears

Join

t exe

cuto

r Hes

s es

tate

; Dire

ctor

& S

ec. o

f H

ess

Trus

t39

.2%

Sam

uel A

. Nun

nJr

.N

one

6 M

onth

sC

hairm

anC

SIS,

of w

hich

Joh

n H

ess

is a

Tru

stee

NA

Fran

k A

. Ols

onN

one

15 Y

ears

33.2

%

In re

spon

se to

Elli

ott,

Hes

s fo

und

five

new

nom

inee

s w

illin

g to

agr

ee w

ith H

ess

plan

“The

se i

ndep

ende

nt d

irect

ors

agr

eed

to j

oin

our

boa

rd,

beca

use

they

bel

ieve

in

our

out

stan

ding

pla

n, a

nd t

hey

re

cogn

ize

that

our

pla

n is

the

righ

t pl

an f

or a

ll o

f ou

r sh

areh

olde

rs.”

“We

have

had

this

str

ateg

ic tr

ansf

orm

atio

n, a

s m

y re

mar

ks n

oted

, und

erw

ay, r

eally

goi

ng b

ack…

sinc

e I b

ecam

e C

hairm

an…

In

fact

, Elli

ott g

ot o

n th

e tr

ain

afte

r it

real

ly l

eft

the

sta

tion…

This

is

a c

ulm

inat

ion

of a

mul

ti y

ear

stra

tegy

…”

-Joh

n H

ess,

Mar

ch 2

013(

2)

[87

]S

ourc

e: C

ompa

ny F

iling

s1.

% o

f vot

ed s

hare

s w

ithhe

ld; H

ess

esta

te is

ass

umed

to v

ote

for n

omin

ees

and

is

excl

ude

from

cal

cula

tion;

Com

pany

filin

gs, F

acts

et, I

SS

Vot

ing

Ana

lytic

s2.

Hes

s bu

sine

ss u

pdat

e ca

ll, M

arch

4, 2

013

How

gen

uine

and

sus

tain

able

is H

ess’

s ch

ange

in re

spon

se to

Elli

ott?

Wha

t Sha

reho

lder

s R

eally

Wan

t Is

For A

ll D

irect

ors

to B

e A

ccou

ntab

lePr

oper

Com

paris

onIs

Hes

s’s

New

Nom

inee

sA

gain

stIn

cum

bent

Boa

rdPr

oper

Com

paris

on Is

Hes

ss

New

Nom

inee

s A

gain

st In

cum

bent

Boa

rd

Will

iam

Sch

rade

r

Hes

s’s

New

Nom

inee

s

Nam

eA

ge (1)

Ret

urn

Ove

r Te

nure

(2)

Tenu

re(2

)Ba

ckgr

ound

Incu

mbe

nts

John

Kre

nick

iJr.

Dr.

Kev

in M

eyer

s

John

Hes

s58

(460

%)

35 /

17H

ess

Cha

irman

& C

EO

Edith

Hol

iday

61(5

89%

)20

Gov

ernm

ent;

Wor

ked

dire

ctly

for N

icho

las

Brad

y in

Sen

ate

and

Trea

sury

;

Rob

ert

Wils

on72

(335

%)

17H

ealth

care

; Joh

nson

-Hes

s fa

mily

con

nect

ion

Dr.

Mar

k W

illia

ms

Jh

Qi

l

Fred

eric

Rey

nold

s

()

;y

Cra

ig M

atth

ews

69(1

53%

)11

Ele

ctric

ity

Ern

st v

on M

etzs

ch73

(44%

)10

Fina

nce

Ris

aLa

vizz

o-M

oure

y58

(68%

)9

Non

-pro

fit;J

ohns

on-H

ess

fam

ily c

onne

ctio

n

Jh

Mlli

III71

(56%

)6

FiJ

it

tfH

tt

John

Qui

gley

John

Mul

lin II

I71

(56%

)6

Fina

nce;

Joi

nt e

xecu

tor o

f Hes

s es

tate

Sam

uelB

odm

an74

(47%

)4

Gov

ernm

ent/C

hem

ical

s

Ave

rage

Ten

ure(

2)

Ups

trea

mO

il&

Gas

Lead

“In

depe

nden

t”

14 y

ears

Ups

trea

m O

il &

Gas

O

pera

ting

Expe

rienc

eea

dde

pede

tD

irect

or A

ND

Joi

nt

Exec

utor

of H

ess

Esta

teN

one

Non

eR

estr

uctu

ring

Expe

rienc

e

“We

wou

ld u

rge

the

boar

d to

con

side

r mor

e pr

oact

ivel

y w

heth

er th

ese

nom

inee

s m

ight

be

mor

e su

itabl

e fo

r the

com

pany

at t

his

poin

t in

its d

evel

opm

ent t

han

som

e of

the

long

-ser

ving

in

cum

bent

s w

ho d

o no

t see

m to

hav

e be

en a

ble

to c

halle

nge

man

agem

ent s

uffic

ient

ly to

ave

rt

the

com

pany

’s e

xten

ded

decl

ine

in p

erfo

rman

ce a

nd s

hare

pric

e.”

ISS

PA

di

Si

[ 88

]

Sou

rces

:Com

pany

Fili

ngs,

Blo

ombe

rg1.

Tenu

re c

alcu

late

d as

of d

ate

of 2

013

annu

al g

ener

al m

eetin

g; T

enur

e fo

r Joh

n H

ess

show

s bo

th a

s di

rect

or a

nd a

s C

EO

, res

pect

ivel

y2.

Tenu

re e

xclu

ding

Joh

n H

ess

is 1

1 ye

ars

-ISS

Pro

xy A

dvis

ory

Serv

ices

, R

ecom

men

datio

n: B

arne

s &

Nob

le P

roxy

Con

test

, Sep

tem

ber 2

010

Hes

s C

laim

s Pr

oces

s to

Upd

ate

Dire

ctor

s B

egan

Las

t Aug

ust

But

Hes

sPu

shed

Out

Sam

Nun

nW

hoW

asA

ctua

llyA

dded

inA

ugus

tB

ut H

ess

Push

ed O

ut S

am N

unn

Who

Was

Act

ually

Add

ed in

Aug

ust

Bef

ore

Shar

ehol

derN

omin

eeIn

volv

emen

tA

fterS

hare

hold

erN

omin

eeIn

volv

emen

t

“We

are

also

add

ing…

dire

ctor

s to

the

boar

d. L

ast

“Hes

s C

orpo

ratio

n (N

YS

E: H

ES)

ann

ounc

ed

Bef

ore

Shar

ehol

der N

omin

ee In

volv

emen

tA

fter S

hare

hold

er N

omin

ee In

volv

emen

t

gA

ugus

t, w

e m

et w

ith a

sea

rch

firm

to b

egin

id

entif

ying

can

dida

tes…

.”

Bef

ore

I con

tinue

, I w

ould

like

to re

cogn

ize

our

exis

ting

dire

ctor

sfo

rmer

Sen

ator

Sam

p(

)to

day

the

elec

tion

of fo

rmer

U.S

. Sen

ator

Sam

N

unn

to it

s B

oard

of D

irect

ors.

”

exis

ting

dire

ctor

s…fo

rmer

Sen

ator

Sam

N

unn…

will

be

retir

ing

from

our

boa

rd.”

John

Hes

sM

arch

201

3(2)

Aug

ust2

012(

1)

[ 89

]S

ourc

e: C

ompa

ny tr

ansc

ripts

1.P

ress

rele

ase

Aug

ust 2

, 201

22.

Hes

s bu

sine

ss u

pdat

e ca

ll M

arch

4, 2

013

Hes

sC

laim

edIts

Rea

ctio

nW

asa

Plan

That

Had

Bee

nin

Plac

efo

rYea

rsH

ess

Cla

imed

Its

Rea

ctio

n W

as a

Pla

n Th

at H

ad B

een

in P

lace

for Y

ears

“We

have

had

this

stra

tegi

ctra

nsfo

rmat

ion

unde

rway

real

lygo

ing

back

noto

nly

We

have

had

this

stra

tegi

c tra

nsfo

rmat

ion…

unde

rway

real

ly g

oing

bac

k, n

ot o

nly

sinc

e I b

ecam

e C

hairm

an a

nd w

e st

arte

d to

shi

ft to

E&

P, b

ut p

redo

min

antly

whe

n w

e st

arte

d to

bui

ld o

ur B

akke

npo

sitio

n in

201

0. S

o th

is is

not

som

ethi

ng th

at ju

st

happ

ened

ove

rnig

ht a

nd is

resp

onse

to a

n ac

tivis

t. In

fact

, Ellio

tt go

t on

the

train

af

teri

trea

llyle

ftth

est

atio

nTh

isis

aca

refu

llyst

ruct

ured

stra

tegy

that

'sbe

engi

ven

afte

r it r

eally

left

the

stat

ion.

Thi

s is

a c

aref

ully

stru

ctur

ed s

trate

gy th

ats

been

giv

en

a lo

t of t

houg

ht, a

nd it

's re

ally

the

natu

ral c

ulm

inat

ion

of th

e st

rate

gic

trans

form

atio

n I w

ent t

hrou

gh in

my

rem

arks

...”

John

Hes

sM

arch

2013

(1)

Mar

ch 2

013(

1)

[ 90

]

1.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

3

Yet

This

Isth

eFi

rstD

ivid

end

Incr

ease

orSh

are

Buy

back

ina

Dec

ade

$

Yet,

This

Is th

e Fi

rst D

ivid

end

Incr

ease

or S

hare

Buy

back

in a

Dec

ade

Hes

s D

ivid

ends

(1)

Aut

horiz

ed S

hare

Buy

back

s as

% o

f Mar

ket C

ap(1

)(2)

12%

14%

16%

18%

$0.8

0

$0.9

0

$1.0

0

4%6%8%10%

$0.5

0

$0.6

0

$0.7

0

0%2%

2002

2004

2006

2008

2010

2012

2013

-201

5$0

.30

$0.4

0

2002

2004

2006

2008

2010

2012

2014

E

As

a re

sult

of S

hare

hold

er N

omin

ee in

volv

emen

t, H

ess:

R

aise

d its

div

iden

d by

150

%, t

he fi

rst d

ivid

end

incr

ease

in o

ver a

dec

ade

A

utho

rized

a s

hare

buy

back

of u

p to

$4

billi

on, t

he fi

rst H

ess

buyb

ack

in o

ver a

dec

ade

[ 91

]S

ourc

es: C

ompa

ny fi

lings

, tra

nscr

ipts

1.Fo

reca

sts

as p

er m

anag

emen

t com

men

tary

, Hes

s bu

sine

ss u

pdat

e ca

ll, M

arch

4, 2

013

2.M

arke

t cap

italiz

atio

n as

of 4

/12/

13

Bef

ore

Sha

reho

lder

Nom

inee

Invo

lvem

ent:

Hes

sH

adC

alle

dR

estr

uctu

ring

Plan

Com

plet

eH

ess

Had

Cal

led

Res

truc

turin

gPl

an C

ompl

ete

Bef

ore

Shar

ehol

der N

omin

ee In

volv

emen

tA

fter S

hare

hold

er N

omin

ee In

volv

emen

t

Que

stio

n on

Jan

uary

201

3 ea

rnin

gs c

all:

“ So

Igue

ssth

equ

estio

nis

dow

ela

rgel

ykn

ow

“We

have

had

this

stra

tegi

c tra

nsfo

rmat

ion…

un

derw

ay re

ally

goi

ng b

ack…

sinc

e I b

ecam

e C

hairm

an…

In fa

ct, E

lliot

t got

on

the

trai

n a

fter

itre

ally

left

the

stat

ion

This

isa

So, I

gue

ss th

e qu

estio

n is

do

we

larg

ely

know

al

l of t

he la

rger

mov

ing

piec

es a

t thi

s ju

nctu

re?

Is th

at a

fair

stat

emen

t?”

it re

ally

lef

t th

e s

tatio

n… T

his

is a

cu

lmin

atio

n o

f a

mul

ti-ye

ar s

trate

gy…

”

John

Hes

sM

arch

201

3(2)

John

Hes

s R

espo

nse:

“Abs

olut

ely,

that

is th

e co

rrec

t und

erst

andi

ng o

f m

y re

mar

ks, t

hat t

he m

ajor

mov

es to

resh

ape

ourp

ortfo

lioin

term

sof

dive

stitu

reto

com

plet

eou

r por

tfolio

in te

rms

of d

ives

titur

e to

com

plet

e th

e st

rate

gic

resh

apin

g of

our

por

tfolio

, will

hav

e be

en c

ompl

eted

by

the

end

of 2

013.

”

“…th

ese

dive

stitu

res

will

com

plet

e th

e t

ti

hi

ftf

li”

stra

tegi

c re

shap

ing

of o

ur p

ortfo

lio…

”

John

Hes

sJa

nuar

y 20

13(1

)

[ 92

]S

ourc

e: C

ompa

ny tr

ansc

ripts

1.4Q

201

2 E

arni

ngs

call

Janu

ary

30, 2

013

2.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

3

Bef

ore

Sha

reho

lder

Nom

inee

Invo

lvem

ent:

Bak

ken

Mid

stre

amM

LPW

asIn

appr

opria

teB

akke

n M

idst

ream

MLP

Was

Inap

prop

riate

Bef

ore

Shar

ehol

der N

omin

ee In

volv

emen

tA

fter S

hare

hold

er N

omin

ee In

volv

emen

t

“Tod

ay w

e ar

e an

noun

cing

the

culm

inat

ion

of

that

pro

cess

…S

peci

fical

ly, w

e w

ill b

e… p

ursu

ing

the

mon

etiz

atio

n of

our

Bak

ken

mid

stre

am

asse

ts”

“…th

e st

rate

gic

infra

stru

ctur

e w

e ha

ve in

Nor

th D

akot

a…th

e Ti

oga

Gas

Pla

nt…

that

's n

ot

som

ethi

ng th

at w

e w

ould

be

inte

rest

ed in

M

LPin

g”

asse

ts.

John

Hes

sM

arch

201

3(3)

MLP

ing.

John

Hes

sN

ovem

ber 2

012(

1)

“But

we

certa

inly

do

not b

elie

ve th

at a

n M

LP in

the

Bak

ken

is a

ppro

pria

te a

t thi

s tim

e.”

John

Hes

sJo

hn H

ess

Janu

ary

2013

(2)

[ 93

]S

ourc

e: C

ompa

ny tr

ansc

ripts

1.3Q

201

2 E

arni

ngs

call,

Nov

embe

r 2, 2

012

2.4Q

201

2 E

arni

ngs

call

Janu

ary

30, 2

013

3.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

3

Bef

ore

Sha

reho

lder

Nom

inee

Invo

lvem

ent:

Ener

gyM

arke

ting

and

Ret

ailW

asSt

rate

gic

Ener

gy M

arke

ting

and

Ret

ail W

as S

trat

egic

Bef

ore

Shar

ehol

der N

omin

ee In

volv

emen

tA

fter S

hare

hold

er N

omin

ee In

volv

emen

t

“Tod

ay w

e ar

e an

noun

cing

the

culm

inat

ion

of

that

pro

cess

by

exiti

ng o

ur d

owns

tream

bu

sine

sses

and

bec

omin

g a

pure

pla

y E

&P

com

pany

Spec

ifica

llyw

ew

illbe

dive

stin

gou

r

“Our

Ene

rgy

Mar

ketin

g an

d R

etai

l Mar

ketin

g bu

sine

sses

rem

ain

a lo

ng-te

rm s

trat

egic

par

t of

our

por

tfolio

…S

o w

e ar

e ve

ry h

appy

hav

ing

it in

the

portf

olio

and

itis

ast

rate

gic

part

ofth

eco

mpa

ny. S

peci

fical

ly, w

e w

ill b

e di

vest

ing

our

reta

il, e

nerg

y m

arke

ting,

and

ene

rgy

tradi

ng

busi

ness

es…

”

John

Hes

s

in th

e po

rtfol

io a

nd it

is a

stra

tegi

c pa

rt of

the

portf

olio

.”

John

Hes

sN

ovem

ber 2

012(

1)

Mar

ch 2

013(

3)

“…w

e ha

ve m

orph

ed o

ur fu

el m

arke

ting

busi

ness

into

an

ener

gy m

arke

ting

busi

ness

…

whi

ch o

bvio

usly

will

hel

p us

if w

e fin

d ga

s in

th

eU

tica

So

they

'rego

ing

tobe

som

eth

e U

tica…

So

they

re g

oing

to b

e so

me

stra

tegi

c be

nefit

s th

ere…

We

have

a s

trong

br

and.

We

thin

k it

–if

anyt

hing

it e

nhan

ces

the

com

pany

from

a fi

nanc

ial a

nd re

puta

tiona

l poi

nt

of v

iew.

”

John

Hes

sJa

nuar

y 20

13(2

)

[ 94

]S

ourc

e: C

ompa

ny tr

ansc

ripts

1.3Q

201

2 E

arni

ngs

call,

Nov

embe

r 2, 2

012

2.4Q

201

2 E

arni

ngs

call

Janu

ary

30, 2

013

3.H

ess

busi

ness

upd

ate

call,

Mar

ch 4

, 201

3

Hes

s R

efus

ed to

Con

side

r a M

ore

Fuls

ome

Rev

iew

and

Res

orte

d to

Sca

re

Tact

ics

ofC

allin

gIt

an“A

ttem

ptto

Liqu

idat

eth

eC

ompa

ny”

Tact

ics

of C

allin

g It

an

Atte

mpt

to L

iqui

date

the

Com

pany

In a

lette

r to

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs:

“Wh

hill

Elli

ili

idh

”

“…liq

uida

te H

ess

as q

uick

ly a

s po

ssib

le.”

“We

hope

that

you

will

urg

e E

lliot

t to

ceas

e its

atte

mpt

to li

quid

ate

the

com

pany

…”

John

Hes

s, M

arch

201

3(1)

Hes

s Le

tter t

o S

hare

hold

ers,

Mar

ch 2

013(

2)

Ellio

tt ha

s ne

ver s

ugge

sted

liqu

idat

ing

the

com

pany

.

“th

ebo

ard

has

back

hand

edly

dism

isse

d[s

hare

hold

er’s

anal

ysis

]as

apl

anto

“liqu

idat

e”

ggq

gp

y

Publ

ic s

hare

hold

ers

have

see

n th

is b

efor

e…

… th

e bo

ard

has

back

hand

edly

dis

mis

sed

[sha

reho

lder

s an

alys

is] a

s a

plan

to l

iqui

date

th

e co

mpa

ny…

“Li

quid

atio

n” is

wha

t res

ults

whe

n a

boar

d ta

kes

its e

ye o

ff th

e bu

sine

ss e

quat

ion

for t

oo lo

ng, n

ot w

hat h

appe

ns w

hen

shar

ehol

ders

insi

st o

n ta

king

a lo

ok fo

r the

mse

lves

.”

“ [The

com

pany

]with

itsrh

etor

icab

out“

liqui

datio

n”a

ppea

rsto

have

dug

inits

heel

son

[The

com

pany

] with

its

rhet

oric

abo

ut l

iqui

datio

n, a

ppea

rs to

hav

e du

g in

its

heel

s on

ex

actly

the

dry-

eyed

, dis

cipl

ined

bus

ines

s an

alys

is w

hich

will

be

criti

cal t

o st

ream

linin

g th

e bu

sine

ss a

nd a

lloca

ting

capi

tal e

ffect

ivel

y.”

-IS

S P

roxy

Adv

isor

y S

ervi

ces,

R

ecom

men

datio

n:A

OL

Inc

Pro

xyC

onte

stJu

ne20

12

[ 95

]1.

Mar

ch 5

, 201

3 Le

tter t

o R

elat

iona

l Inv

esto

rs2.

Hes

s Le

tter t

o S

hare

hold

ers,

Mar

ch 2

6, 2

013

Rec

omm

enda

tion:

AO

L In

c P

roxy

Con

test

, Jun

e 20

12

Spec

ifica

lly, W

e Su

gges

ted

The

Cre

atio

n of

Man

agea

ble

Ente

rpris

es

Acc

ount

able

toSh

areh

olde

rsA

ccou

ntab

le to

Sha

reho

lder

s

Unc

onve

ntio

nal

Cre

ate

Hes

s R

esou

rce

Co.

Inst

ead

of a

n op

aque

, unm

anag

eabl

e co

nglo

mer

ate

Unl

ock

grea

t com

pani

es th

at w

ill b

e ac

coun

tabl

e to

sha

reho

lder

s

Unc

onve

ntio

nal

72

5,00

0 ne

t acr

es in

the

Bak

ken

17

7,00

0 ne

t acr

es in

the

Utic

a S

hale

Bak

ken

and

Utic

a w

ith d

ropd

own

of m

idst

ream

ass

ets

TEV

= $

13.0

to $

14.4

billi

on(1

)

Glo

bal O

ffsho

re a

nd O

ther

Con

vent

iona

l

Long

-life

, oil-

wei

ghte

d re

serv

es in

“cro

wn

jew

el”

asse

ts in

clud

ing

She

nzi(

GO

M),

Valh

all(

Nor

way

),

Cei

ba&

Oku

me

(Equ

ator

ial G

uine

a)

Cre

ate

Hes

s In

tern

atio

nal

Focu

s re

mai

ning

con

vent

iona

l por

tfolio

on

core

are

as o

f co

mpe

titiv

e ad

vant

age

thro

ugh

dive

stitu

re o

f non

-cor

e as

sets

Fa

vora

ble

gas

asse

ts in

Sou

thea

st A

sia

incl

udin

g JD

A &

Nat

una

Sea

Blo

ck

Mon

etiz

e re

sour

ce p

lay

infr

astr

uctu

reTEV

= $

21.4

to $

30.2

billi

on(1

)

Mid

stre

am

Valu

able

Bak

ken

infra

stru

ctur

e in

clud

ing

Tiog

a ga

s

Dow

nstr

eam

& N

o-St

ream

M

isce

llane

ous

busi

ness

es -

man

y w

ith c

apita

l tie

d up

at l

ow ra

tes

of re

turn

TEV

= $

2.0

to $

2.5

billio

n(1)

gg

gpl

ant a

nd B

akke

n ra

il te

rmin

al

Div

est d

owns

trea

m a

sset

s

TEV

=$3

1to

$35

billio

n(1)

p

Shar

e Pr

ice

= $9

5.70

to $

128.

46(1

)

TEV

= $3

.1 to

$3.

5 bi

llion(

1)

Hes

s’s

Mar

ch p

rom

ises

(if

del

iver

ed) a

ffect

less

th

an 1

0% o

f pot

entia

l sh

are

uplif

t (1)

over

TE

V =

$39

to $

50 b

illio

n(1)

Sou

rce:

Com

pany

filin

gs1.

Elli

ott e

stim

ates

; Per

sha

re v

alue

s ca

lcul

ated

net

of d

ebt,

cash

pro

form

a fo

r ann

ounc

ed/c

ompl

eted

tran

sact

ions

(Aze

rbai

jan

&U

Kas

sets

), pe

nsio

n, ta

x at

tribu

tes,

inte

rest

tax

shie

ld

[ 96

]

pan

othe

r 2 y

ear p

erio

d

We

Thin

k It

Mak

es S

ense

Bec

ause

…D

iffer

entA

sset

sR

equi

reD

iffer

entM

anag

emen

tCap

abili

ties

Diff

eren

t Ass

ets

Req

uire

Diff

eren

t Man

agem

ent C

apab

ilitie

s

H

igh

sens

itivi

tyto

capi

talc

osts

Res

ourc

e Pl

ays

Lo

wse

nsiti

vity

toca

pita

lcos

t

Offs

hore

Ass

ets

Hig

hse

nsiti

vity

to c

apita

l cos

ts

Man

ylo

w c

ost w

ells

Le

an m

anuf

actu

ring

proc

ess

Low

sens

itivi

ty to

cap

ital c

ost

Fe

whi

gh c

ost w

ells

Ta

x re

gim

es a

nd/o

r PS

Cs

allo

w fo

r cos

t re

cove

ry th

at m

utes

impa

ct o

f cos

t ove

rrun

Req

uire

sre

lent

less

focu

son

cost

Req

uire

ste

chno

logi

calf

ocus

&pl

anni

ng

30%

40%

Illus

tativ

e R

esou

rce

Pla

y N

PV

Illus

trativ

e O

ffsh

ore

Ass

et N

PV

Illus

trat

ive

Sens

itivi

ty o

f NAV

to C

hang

es in

Cap

ital E

xpen

ditu

res(

1)

Req

uire

s re

lent

less

focu

s on

cos

tR

equi

res

tech

nolo

gica

l foc

us &

pla

nnin

g

0%10%

20%

30%

ge in NPV (30)

%

(20)

%

(10)

%0%

% Chang (40)

%(5

0)%

(40)

%(3

0)%

(20)

%(1

0)%

0%10

%20

%30

%40

%50

%%

Cha

nge

in C

apita

l Cos

ts

Res

ourc

epl

ays

and

offs

hore

asse

tsar

em

anag

eddi

ffere

ntly

;

[ 97

]

Res

ourc

e pl

ays

and

offs

hore

ass

ets

are

man

aged

diff

eren

tly;

Hes

s is

inca

pabl

e of

man

agin

g bo

th (e

vide

nced

by

seve

re c

ost o

verr

uns

in th

e B

akke

n)

1.E

lliot

t est

imat

es

We

Thin

k It

Mak

es S

ense

Bec

ause

…C

urre

ntPo

rtfo

lioM

ixU

nder

valu

edan

dPe

naliz

edby

Ana

lyst

sC

urre

nt P

ortfo

lio M

ix U

nder

valu

ed a

nd P

enal

ized

by

Ana

lyst

s

B

akke

nO

pera

tors

: NA

V-ba

sed

valu

atio

n

Focu

s on

acr

eage

val

ue s

ees

thro

ugh

initi

al c

apita

l int

ensi

ty

O

nly

2H

ess

anal

ysts

cov

er o

ther

Bak

ken

oper

ator

s

Bak

ken

Ope

rato

rs (1

)H

ess

Larg

e C

ap

Int’l

(2)

Mor

e Im

porta

ntLe

ss Im

porta

nt

La

rge-

cap

Inte

rnat

iona

ls: h

eavy

relia

nce

on m

ultip

le-b

ased

valu

atio

n

Per

ceiv

ed ri

sk o

f FC

F ga

p an

d ca

pita

l int

ensi

ty re

duce

mul

tiple

20

of 2

2H

ess

anal

ysts

cov

er la

rge

cap

inte

rnat

iona

ls

8.4x

$128

.47

2012

E EB

ITD

AX

Mul

tiple

(3)

Cap

ital

Inte

nsity

(4)

3.0x

$34.

60

4.3x

$19.

01

Hes

s: B

akke

nis

a m

ater

ial p

erce

ntag

e of

val

ue b

ut h

idde

n w

ithin

in

tern

atio

nal m

ix

Res

ult i

s H

ess

is p

enal

ized

twic

e:

Pen

alty

#1:

Mul

tiple

-bas

ed v

alua

tion

unde

rval

ues

Bak

ken

P

enal

ty #

2: H

ess

give

n lo

wer

mul

tiple

than

pee

rs d

ue in

par

t to

Inte

nsity

(4)

FCF

Gap

/ M

arke

t C

ap(5

)(2

5)%

(19)

%

NtA

tE

asy

to

(1)%

Bak

ken

easy

to

Hes

s Se

ll-si

de A

naly

sts

Cov

erin

g B

akke

n-F

ocus

ed C

ompa

nies

(6)

Hes

s Se

ll-si

de A

naly

sts

Cov

erin

g La

rge

Cap

Inte

rnat

iona

ls

high

er c

apita

l int

ensi

ty a

nd c

ash

flow

gap

(par

tially

cau

sed

by

Bak

ken

build

-out

)N

et A

sset

Va

lue

calc

ulat

e du

e to

re

peat

abili

ty o

f w

ell r

esul

ts

Diff

icul

t to

calc

ulat

eca

lcul

ate,

oth

er

asse

ts m

ore

chal

leng

ing

BA

ML

Cdi

tAi

l[n

ull]

Wel

ls F

argo

Bar

clay

sC

apita

l One

Citi

grou

pG

oldm

an S

achs

Edd

JD

th

Bk

How

ard

Wei

l

Opp

enhe

imer

JP M

orga

nIS

I Gro

up

Si

tG

l

Tudo

r Pic

kerin

gU

BS

Cre

dit A

gric

ole M

orga

n S

tanl

ey

Avg

Targ

etA

vgTa

rget

Dah

lman

Ros

e

Edw

ard

Jone

sD

euts

che

Bank

Cre

dit S

uiss

eS

imm

ons

Ray

mon

d Ja

mes

Soci

ete

Gen

eral

e

Glo

bal H

unte

r

[ 98

]

Avg

Tar

get

Pric

e(7)

= $6

3A

vgTa

rget

Pr

ice(

7)=$

88

Sou

rces

: Blo

ombe

rg, C

ap IQ

, Com

pany

Fili

ngs

1.B

akke

nO

pera

tors

incl

udes

Con

tinen

tal,

Oas

is a

nd K

odia

k2.

Larg

e C

ap in

clud

e A

PC

, AP

A, C

VX

, CO

P, X

OM

, MR

O, M

UR

, NB

L, O

XY

3.20

12 E

BIT

DA

X m

ultip

le is

Ent

erpr

ise

valu

e di

vide

d by

Con

sens

us E

BITD

AX; a

s of

11/

28/1

2

4.C

apita

l Int

ensi

ty is

201

1 D

evel

opm

ent C

apex

divi

ded

by 2

011

BO

E P

rodu

ctio

n5.

FCF

as %

of M

arke

t Cap

is C

onse

nsus

201

2 fre

e ca

sh fl

ow d

ivid

ed b

y m

arke

t cap

; as

of 1

1/28

/12

6.B

akke

nfo

cuse

d co

mpa

nies

incl

ude

Con

tinen

tal,

Oas

is, K

odia

k an

d W

hitin

g7.

As

of 1

/25/

13

How

ever

, Whi

le E

lliot

t Put

For

war

d Th

is P

ropo

sal F

or C

onsi

dera

tion,

Shar

ehol

derN

omin

ees

Are

Trul

yIn

depe

nden

tSh

areh

olde

r Nom

inee

s A

re T

ruly

Inde

pend

ent

“Whi

leth

isle

tterp

rese

nts

Elli

ott’s

pers

pect

ives

Shar

ehol

der

Whi

le th

is le

tter p

rese

nts

Elli

otts

per

spec

tives

, Sha

reho

lder

N

omin

ees

will

form

thei

r ow

n, in

depe

nden

t vie

ws

on th

e C

ompa

ny, i

ts a

sset

s, a

nd it

s st

rate

gy.T

hese

five

acc

ompl

ishe

d in

divi

dual

s br

ing

deep

kno

wle

dge

and

expe

rienc

e in

are

as th

at a

re

seve

rely

lack

ing

in th

e ex

istin

g bo

ard.

” Elli

ott L

ette

r to

Sha

reho

lder

s,

Janu

ary

29th

2013

“Sha

reho

lder

Nom

inee

s ar

e co

mpl

etel

y in

depe

nden

t, w

ould

Janu

ary

2920

13

cons

titut

e a

min

ority

of d

irect

ors,

and

, unl

ike

Hes

s’s

nom

inee

s,

have

not

pre

appr

oved

any

pla

n. If

ele

cted

to th

e B

oard

, eac

h of

th

ese

exec

utiv

es w

ill b

ring

subs

tant

ial e

xper

tise,

exp

erie

nce,

and

in

depe

nden

ceth

atw

ebe

lieve

isso

rely

need

edat

Hes

s”

inde

pend

ence

that

we

belie

ve is

sor

ely

need

ed a

t Hes

s.

Elli

ott L

ette

r to

Sha

reho

lder

s,

Mar

ch 2

6th

2013

[ 99

]

And

Sha

reho

lder

Nom

inee

s H

ave

Hel

ped

Lead

Ver

y D

iffer

ent T

ypes

of

Tran

sfor

mat

ions

Tran

sfor

mat

ions

Dav

idM

cMan

usK

arlK

urz

Dav

id M

cMan

us

(For

mer

EVP

, Pio

neer

)

Kar

l Kur

z

(For

mer

CO

O, A

nada

rko)

Kar

l Kur

z he

lped

lead

a

trans

form

atio

n of

Ana

dark

o D

avid

McM

anus

hel

ped

Pio

neer

N

atur

alR

esou

rces

exec

ute

aP

etro

leum

ear

lier i

n th

e de

cade

th

at s

aw A

nada

rko

high

gra

de it

s po

rtfol

io w

hile

man

agin

g bo

th U

.S.

onsh

ore

reso

urce

pla

ys a

nd

Nat

ural

Res

ourc

es e

xecu

te a

re

stru

ctur

ing

and

then

div

estm

ent

of it

s in

tern

atio

nal p

ortfo

lio s

o th

at

the

com

pany

cou

ld fo

cus

on it

s U

Sre

sour

cepl

ayas

sets

yde

epw

ater

offs

hore

ass

ets.

U.S

. res

ourc

e pl

ay a

sset

s.

“Pio

neer

man

agem

ent h

as d

eliv

ered

[a] t

ext b

ook

repo

sitio

ning

of a

por

tfolio

pre

viou

sly

spre

ad

acro

ss m

ore

than

sev

en c

ount

ries

to b

ecom

e a

100%

U.S

. foc

used

reso

urce

pla

yer.”

“We

belie

ve th

at A

nada

rko

has

trans

form

ed it

self

from

a c

ompa

ny w

ith a

n in

ferio

r ass

et b

ase

and

ques

tiona

ble

capi

tal a

lloca

tion

succ

ess

into

a

com

pany

with

a s

trong

ass

et b

ase.

The

com

pany

co

ntin

ues

to d

eliv

er a

t-or-a

bove

exp

ecta

tions

and

w

ebe

lieve

that

itca

nco

ntin

ueto

surp

rise

toth

e

[ 100

]

Ban

k of

Am

eric

a M

erril

l Lyn

ch (O

ctob

er 2

, 201

2)

we

belie

ve th

at it

can

con

tinue

to s

urpr

ise

to th

e up

side

..”Le

hman

Bro

ther

s (M

ay 7

, 200

8)

Hes

s’s

Kne

e-Je

rk R

eact

ion

Is In

dica

tive

of a

Boa

rd T

hat H

as D

ug in

Its

Hee

ls

onEx

actly

the

Dry

eyed

Dis

cipl

ined

Bus

ines

sA

naly

sis

That

IsSo

rely

Nee

ded

on E

xact

ly th

e D

ry-e

yed,

Dis

cipl

ined

Bus

ines

s A

naly

sis

That

Is S

orel

y N

eede

d

Inst

ead

of a

thou

ghtfu

l res

pons

e, b

ased

on

an d

ispa

ssio

nate

an

alys

is o

f the

fact

s, H

ess

has

resp

onde

d w

ith d

emon

stra

bly

y,

py

fals

e fu

ndin

g an

d ta

x ar

gum

ents

in o

rder

to a

void

an

obje

ctiv

e re

view

of n

ew id

eas

It is

cle

ar th

at m

anag

emen

t has

nei

ther

take

n th

e sh

areh

olde

r pr

opos

al s

erio

usly

nor

eva

luat

ed it

in a

ny d

epth

[ 101

]

Mis

lead

ing

Stat

emen

tson

Fund

ing

Mis

lead

ing

Stat

emen

ts o

n Fu

ndin

g

“And

just

hav

ing

the

Bak

ken

or U

tica

stan

dalo

ne, t

hey

wou

ld n

ot b

e se

lf-fu

ndin

g. T

hey

coul

d no

t get

acc

ess

to th

e cr

edit

mar

kets

and

that

's a

real

is

sue

”is

sue.

John

Hes

sJa

nuar

y 20

13(1

)

“Eve

n w

ithou

t any

initi

al d

ebt,

Sin

ger’s

Res

ourc

eCo

wou

ld li

kely

be

a su

b-in

vest

men

t gra

de c

redi

t with

lim

ited

stan

d-al

one

debt

cap

acity

. As

a re

sult,

R

esou

rceC

o’s

abilit

y to

fund

gro

wth

in th

e B

akke

n an

d he

nce

real

ize

futu

re

valu

e fo

r Hes

s sh

areh

olde

rs w

ould

be

harm

ed.”

Hes

s P

rese

ntat

ion

to S

hare

hold

ers

Mar

ch 2

013(

2)

[ 102

]1.

4Q 2

012

Ear

ning

s ca

ll Ja

nuar

y 30

, 201

32.

Hes

s pr

esen

tatio

n “D

eliv

erin

g S

hare

hold

er V

alue

”, M

arch

4, 2

013

Rea

lity:

St

anda

lone

Hes

sR

esou

rce

Co

Cou

ldEa

sily

Fund

Itsel

fin

the

Cap

italM

arke

tsSt

anda

lone

Hes

s R

esou

rce

Co.

Cou

ld E

asily

Fun

d Its

elf i

n th

e C

apita

l Mar

kets

N

umer

ous

exam

ples

of U

.S. r

esou

rce

focu

sed

com

pani

es w

ith n

egat

ive

free

cash

flow

Man

agem

ent e

ither

has

not

don

e its

hom

ewor

k or

doe

s no

t und

erst

and

the

cred

it m

arke

ts

A

ll ab

le to

fund

them

selv

es in

the

publ

ic m

arke

ts a

nd a

ll tra

de a

t pre

miu

m m

ultip

les

to H

ess

C

ontin

enta

l has

had

neg

ativ

e fre

e ca

sh fl

ow fo

r the

pas

t 5 y

ears

yet

has

:

$2

.9bn

of p

ublic

deb

t tra

ding

at a

n av

erag

e yi

eld

unde

r 3.5

%

Ent

erpr

ise

valu

eof

over

$20b

nan

dtra

des

at~1

13x

EB

ITD

A

Com

pany

(1)

Mar

ket C

apEV

/ LT

M

EBIT

DA

X(2,

3)N

etD

ebt /

LTM

EB

ITD

AX(

3)20

13 F

CF

as %

of

Mar

ket C

apW

eigh

ted

Avg

. Yi

eld(

4)

Con

tinen

tal

$16.

9bn

11.3

x2.

1x(7

)%3.

3%

E

nter

pris

e va

lue

of o

ver $

20bn

and

trad

es a

t ~11

.3x

EB

ITD

A

Hal

con

$2.6

bn12

.6x

5.7x

(24)

%7.

2%

Kod

iak

$2.5

bn11

.7x

3.8x

(6)%

4.6%

Oas

is$3

.6bn

9.1x

2.0x

(10)

%4.

7%

SM

Ene

rgy

$3.9

bn5.

2x1.

4x(9

)%4.

8%

Bak

ken

Ope

rato

rs

Pio

neer

$17.

1bn

9.1x

1.1x

(4)%

2.8%

Cab

ot$1

3.6b

n18

.5x

1.3x

1%N

/A

Ran

ge$1

2.8b

n18

.1x

3.3x

(3)%

4.1%

Hes

s R

esou

rce

Co.

$13.

0bn

to $

14.4

bn10

.0x

to 1

1.1x

(5)

(2)%

/ (3

)%(6

)

Bes

t-in-

Cla

ss

Res

ourc

e P

ure

play

s

“..th

ere

will

be

times

whe

n C

LR m

ay o

utsp

end

its in

tern

ally

gen

erat

ed c

ash

flow

.How

ever

, so

long

as

it is

ear

ning

the

retu

rns

on in

vest

men

t in

the

incr

emen

tal b

arre

l pro

duce

d by

thes

e bo

rrow

ings

… th

is

shou

ld b

e of

min

or c

once

rn.

Moo

dy’s

Mar

ch20

12(7

)

[ 103

]

-Moo

dys

Mar

ch 2

012(

7)

Sou

rces

: Blo

ombe

rg, C

apIQ

1.A

ll va

lues

as

of 3

/8/1

32.

Adj

uste

d fo

r pub

lic e

quity

and

deb

t iss

uanc

es p

ost1

2/31

/12

if a

pplic

able

3.P

ro fo

rma

adju

stm

ents

mad

e fo

r add

ition

al a

mou

nts

borr

owed

on

revo

lvin

g fa

cilit

ies

if ap

plic

able

4.A

vera

ge o

f yie

ld to

wor

st b

ased

on

ask

pric

e fo

r eac

h bo

nd5.

Ellio

tt es

timat

es:

LTM

EB

ITD

AX

cal

cula

ted

usin

g H

ess

Bak

ken

prod

uctio

n, a

vera

ge o

f OA

S, K

OG

and

NO

G E

BIT

DA

X p

re-G

&A

per

qua

rter a

nd H

ess

U.S

. E&

P G

&A

/BO

E p

lus

allo

catio

n of

cor

pora

te

over

head

; exc

lude

s U

tica

6.E

lliott

estim

ates

: (2)

% e

xclu

des

Utic

a; (3

)% in

clud

es U

tica;

Bot

h nu

mbe

rs c

alcu

late

d of

f Elli

ott l

ow c

ase

of $

13.0

bn7.

Moo

dy’s

Con

tinen

tal C

redi

t Opi

nion

, Mar

ch 6

, 201

2

Rea

lity:

R

esou

rce

Co.

Wou

ld B

e O

ne o

f the

Bes

t Fun

ded

U.S

. Unc

onve

ntio

nal P

ure

Play

sPl

ays

Giv

en a

bilit

y to

rais

e ca

pita

l via

deb

t mar

kets

or r

aise

pro

ceed

s fr

om in

fras

truc

ture

, Hes

s R

esou

rce

Co.

ha

s am

ple

cash

to s

tand

alon

e

Bak

ken

Stan

dalo

ne

Uni

t20

1320

1420

1520

1620

17B

akke

n P

rodu

ctio

nM

BO

E/D

68

87

105

120

131

Bak

ken

EB

ITD

A$m

m$1

432

$185

3$2

218

$253

7$2

780

Cas

h flo

w g

ap d

ue to

hig

h-re

turn

inve

stm

ents

in

itiat

edb

acr

edib

leop

erat

ordo

esno

tlim

itde

bt(1

)

(2)

Bak

ken

EB

ITD

A$m

m$1

,432

$1,8

53$2

,218

$2,5

37$2

,780

Wel

l Cap

ex$m

m(1

,700

)

(1,9

18)

(2

,141

)

(2,1

48)

(2

,141

)

Cas

h Ta

xes

$mm

-

-

-

-

(111

)

Free

Cas

h Fl

ow$m

m($

268)

($64

)$7

7$3

89$5

29

initi

ated

by

a cr

edib

le o

pera

tor d

oes

not l

imit

debt

ca

paci

ty o

r fin

anci

al fl

exib

ility

()

(3)

(4)

$4,0

00

Free

Cas

h Fl

owM

onet

izat

ion

of 5

0% o

f Mid

stre

amIn

itial

Deb

t Cap

acity

Per m

anag

emen

t pro

duct

ion

guid

ance

:

Bak

ken

Free

Cas

h Fl

ow &

Sou

rces

of C

ash

(6)

(5)

$1,5

00

$2,0

00

$2,5

00

$3,0

00

$3,5

00

sh Flow ($mm)

Bak

ken

shou

ld b

e ca

sh fl

ow b

reak

even

YE

2014

Th

is d

oes

not i

nclu

de th

e su

bsta

ntia

l cas

h ge

nera

ted

by m

idst

ream

ass

ets

($50

0)$0

$500

$1,0

00

$1,5

00

2013

2014

2015

2016

Sou

rces

of

Cas

h

Free Cas

$3

+ bi

llion

of e

xces

s ca

sh c

an b

e us

ed to

fu

nd U

tica

deve

lopm

ent

[ 104

]

1.M

anag

emen

t gui

danc

e fo

r 201

3; th

erea

fter E

lliot

t est

imat

es b

ased

on

Con

tinen

tal 6

00 E

UR

type

cur

ve; R

ig p

rogr

am b

ased

on

achi

evin

g m

anag

emen

t gui

danc

e of

120

MB

OE

/D b

y m

id-d

ecad

e2.

Ellio

tt es

timat

e ba

sed

on a

vera

ge o

f OA

S, K

OG

and

NO

G 4

Q E

BIT

DA

bef

ore

G&

A p

er B

OE

; les

s al

loca

tion

of H

ess

E&

P G

&A

and

cor

pora

te o

verh

ead;

OA

S, K

OG

and

NO

G d

o no

t con

trol m

idst

ream

in

frast

ruct

ure;

ther

efor

e th

ere

is n

o m

eani

ngfu

l dou

ble

coun

ting

in v

alue

of M

LP s

pino

ff3.

Ellio

tt es

timat

es: C

apex

is m

anag

emen

t gui

danc

e fo

r 201

3; th

erea

fter E

lliot

t est

imat

es fo

r rig

pro

gram

usi

ng a

wel

l cap

exof

$8.

2m;

$8.2

m w

ell c

apex

is C

ontin

enta

l’s e

stim

ate

for t

heir

wel

l cos

t by

YE20

134.

Ass

ume

75%

of w

ell c

apex

is in

tang

ible

with

100

% ID

C; t

angi

ble

cape

xde

prec

iate

d at

MA

CR

s 7;

35%

tax

rate

on

taxa

ble

inco

me

5.V

alua

tion

assu

mes

50%

of E

lliot

t low

cas

e m

idst

ream

val

uatio

n6.

2x L

TM E

BIT

DA

Mis

lead

ing

Stat

emen

tson

Tax

Mis

lead

ing

Stat

emen

ts o

n Ta

x

“Bak

ken

capi

tal s

pend

ing

gene

rate

s su

bsta

ntia

l exc

ess

tax

dedu

ctio

ns th

at

are

used

to o

ffset

taxa

ble

inco

me

gene

rate

d by

oth

er U

.S. a

sset

s. S

inge

r’s

Res

ourc

eCo

wou

ld b

e ge

nera

ting

unus

ed ta

x de

duct

ions

and

Inte

rnat

iona

lCo

wou

ldbe

payi

ngta

xes

onot

herw

ise

shie

lded

inco

me

”w

ould

be

payi

ng ta

xes

on o

ther

wis

e sh

ield

ed in

com

e.

Hes

s P

rese

ntat

ion

to S

hare

hold

ers

Mar

ch 2

013(

1)

[ 105

]

1.H

ess

pres

enta

tion

“Del

iver

ing

Sha

reho

lder

Val

ue”,

Mar

ch 4

, 201

3

Rea

lity:

Valu

eof

Tax

Savi

ngs

from

Ded

uctio

nsis

Imm

ater

ial

Valu

e of

Tax

Sav

ings

from

Ded

uctio

ns is

Imm

ater

ial

Impa

ct o

f Tax

Shi

eld

from

Bak

ken

= $0

.13

per s

hare

(1)

Tax

Cal

cula

tions

Uni

t20

1320

1420

1520

1620

17B

akke

n P

rodu

ctio

nM

BO

E/D

68

87

10

5

120

13

1

Bak

ken

EB

ITD

A$m

m$1

,432

$1,8

53$2

,218

$2,5

37$2

,780

TD

iti

Bkk

$(1

776)

(202

0)(2

225)

(225

1)(2

231)

(2)

(3)

(4)

Hes

s B

akke

n sh

ould

be

com

e a

taxp

ayer

in

2017

per

man

agem

ent

Tax

Dep

reci

atio

n B

akke

n$m

m(1

,776

)

(2

,020

)

(2,2

25)

(2

,251

)

(2,2

31)

Ta

xabl

e In

com

e$m

m($

345)

($16

7)($

7)$2

86$5

49

Cas

h Ta

xes

$mm

$0$0

$0$0

($11

1)

(4)

pg

prod

uctio

n gu

idan

ce

B

akke

n op

erat

ions

sho

uld

beco

me

a ta

xpay

er in

201

7

N

PV

of s

hifti

ng 4

yea

rs o

f dec

linin

g de

duct

ions

out

to

the

year

s w

hen

Bak

ken

is ta

xpay

er is

~$0

.13

/ sha

re

Ta

x an

alys

is o

f the

Utic

a is

hig

hly

depe

nden

t on

wel

l ty

pe c

urve

, liq

uid

cont

ent a

nd d

evel

opm

ent r

amp

assu

mpt

ions

–w

hich

man

agem

ent h

as n

ever

dis

clos

ed

Bak

ken

Utic

a

E

xist

ing

NO

Ls c

an re

mai

n at

Hes

s In

tern

atio

nal p

ost-

spin

off.(

5)Ta

x an

alys

is is

lim

ited

to fu

ture

ded

uctio

ns

In

the

even

t the

NO

Ls m

ust t

rave

l with

the

Bak

ken,

im

pact

wou

ld b

e an

add

ition

al ~

$0.0

8 pe

r sha

re(6

)

U

sing

Utic

a pe

ers’

type

cur

ve e

stim

ates

and

a

reas

onab

le d

evel

opm

ent p

rogr

am, t

he v

alue

of t

ax

shie

ld w

ould

be

an a

dditi

onal

$0.

10 p

er s

hare

(7)

B

y th

e tim

e de

velo

pmen

t ram

ps in

the

Utic

a, th

e re

sulti

ng ta

x de

duct

ions

shou

ld b

e a

usef

ul ta

x sh

ield

Nei

ther

taxa

ble

inco

me

nor d

epre

ciat

ion

from

Bak

ken

mid

stre

am a

sset

s in

clud

ed (i

f fun

ded

appr

opria

tely

in

MLP

mar

ket,

asse

ts w

ould

gen

erat

e in

com

e ta

x no

t de

duct

ions

)

1E

llitt

tit

bd

bl

ll

ti

gfo

r an

inco

me

gene

ratin

g B

akke

n

D

oes

not i

nclu

de u

nnec

essa

ry in

frast

ruct

ure

spen

d

[ 106

]

1.E

lliott

estim

ates

bas

ed o

n be

low

cal

cula

tions

2.M

anag

emen

t gui

danc

e fo

r 201

3; th

erea

fter E

lliot

t est

imat

es b

ased

on

Con

tinen

tal 6

00 E

UR

type

cur

ve; R

ig p

rogr

am b

ased

on

achi

evin

g m

anag

emen

t gui

danc

e of

120

MB

OE

/D b

y m

id-d

ecad

e3.

Ellio

tt es

timat

e ba

sed

on a

vera

ge o

f OA

S, K

OG

and

NO

G 4

Q E

BIT

DA

bef

ore

G&

A p

er B

OE

; les

s al

loca

tion

of H

ess

E&

P G

&A

and

cor

pora

te o

verh

ead;

OA

S, K

OG

and

NO

G d

o no

t con

trol m

idst

ream

in

frast

ruct

ure;

ther

efor

e th

ere

is n

o m

eani

ngfu

l dou

ble

coun

ting

in v

alue

of M

LP s

pino

ff4.

Ellio

tt es

timat

es: C

apita

l exp

endi

ture

s ar

e m

anag

emen

t gui

danc

e fo

r 201

3; th

erea

fter E

lliot

t est

imat

es fo

r rig

pro

gram

usi

ng a

wel

l cap

exof

$8.

2m;

$8.2

m w

ell c

apex

is C

ontin

enta

l’s e

stim

ate

for t

heir

wel

l cos

t by

YE20

13; A

ssum

e 75

% o

f wel

l cap

exis

inta

ngib

le w

ith 1

00%

IDC

; tan

gibl

e ca

pex

depr

ecia

ted

at M

AC

Rs

7; H

isto

rical

dep

reci

atio

n is

cal

cula

ted

usin

g 70

% ID

C5.

Ellio

tt vi

ew b

ased

on

coun

sel f

rom

tax

and

acco

untin

g ad

viso

rs6.

Ass

umes

$91

mill

ion

of fe

dera

l tax

loss

car

ry fo

rwar

ds a

re re

cogn

ized

imm

edia

tely

ver

sus

reco

gniz

ed in

201

7+ fr

om B

akke

n ge

nera

ted

inco

me

7.A

ssum

es 7

5% o

f wel

l cap

exis

inta

ngib

le w

ith 1

00%

IDC

; tan

gibl

e ca

pex

depr

ecia

ted

at M

AC

Rs

7

Mis

lead

ing

Stat

emen

tson

Inte

rnat

iona

lCo

Fina

ncia

lFle

xibi

lity

Mis

lead

ing

Stat

emen

ts o

n In

tern

atio

nalC

oFi

nanc

ial F

lexi

bilit

y

“…In

tern

atio

nalC

ow

ould

be

forc

ed to

ass

ume

all o

f Hes

s’ e

xist

ing

debt

and

th

eref

ore

rest

rict I

nter

natio

nalC

o’s

finan

cial

flex

ibilit

y, fu

ture

gro

wth

rate

, and

ab

ility

to re

turn

cas

h to

sha

reho

lder

s.”

Hes

s P

rese

ntat

ion

to S

hare

hold

ers

Mar

ch 2

013(

1)

[ 107

]

1.H

ess

pres

enta

tion

“Del

iver

ing

Sha

reho

lder

Val

ue”,

Mar

ch 4

, 201

3

Rea

lity:

Hes

s In

tern

atio

nal W

ould

Gen

erat

e B

illio

ns in

Cas

h Fl

ow A

nd R

etai

n In

vest

men

tGra

deR

atin

gIn

vest

men

t Gra

de R

atin

g

“

Stro

ng C

ash

Flow

; Inv

estm

ent G

rade

Rat

ing

Lo

ng li

ved

oil a

sset

s pr

oduc

ing

subs

tant

ial c

ash

flow

W

ood

Mac

kenz

ie a

nd R

ysta

dbo

th p

roje

ct H

ess

Inte

rnat

iona

l wou

ld a

vera

ge ~

$2.8

bill

ion

of fr

ee c

ash

flow

per

yea

rbef

ore

expl

orat

ion

for t

he n

ext d

ecad

e(1,

2)

“We

note

that

stra

tegi

c in

itiat

ives

sug

gest

ed b

y El

liott

are

not n

eces

saril

y le

vera

ging

or d

etrim

enta

l to

cred

it qu

ality

. A

s su

ch, w

e be

lieve

the

com

pany

co

uld

carr

y ou

t the

se s

teps

whi

le m

aint

aini

ng a

n in

vest

men

t gra

de ra

ting.

”

-J.P

. Mor

gan

Cre

dit R

esea

rch,

Febr

uary

201

3(3)

HES

HES

A

PAA

PCC

OP

DVN

EOG

MR

OM

UR

NB

LO

XYTL

MH

ESS

Intl(

3)A

PAA

PCC

OP

DVN

EOG

MR

OM

UR

NB

LO

XYTL

M

Rat

ing

Baa

2/B

BB

A3/

A-

Baa

3/B

BB

-A

1/A

B

aa1/

BB

B+

A3/

A-

Baa

2/B

BB

Baa

3/B

BB

Baa

2/B

BB

A

1/A

B

aa2/

BB

B

Deb

t ($b

n)$8

.1$8

.1$1

2.3

$13.

3$2

1.7

$11.

6$6

.3$6

.9$2

.2$4

.1$7

.6$4

.4

Deb

t / E

BIT

DA

X(4)

1.0x

1.3x

1.0x

1.

6x

1.0x

2.

6x

1.4x

0.

7x

0.6x

1.

4x

0.5x

1.

1x

Acc

ordi

ng to

JP

Mor

gan’

s an

alys

is, H

ess

Inte

rnat

iona

l Co’

s le

vera

ge w

ould

fall

with

in th

e ra

nge

of H

ess’

s ap

plic

able

pro

xy p

eers

and

wou

ld re

ceiv

e an

inve

stm

ent g

rade

ratin

g fr

om th

e ra

ting’

s ag

enci

es

[ 108

]S

ourc

es: W

ood

Mac

kenz

ie, S

ell-s

ide

repo

rts, R

ysta

dU

cube

, Cap

italIQ

1.S

ourc

e: W

ood

Mac

kenz

ie2.

Rys

tad

UC

ube

3.JP

Mor

gan

Febr

uary

4, 2

013

4.20

12 E

BIT

DA

X

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Shar

ehol

derN

omin

eeIn

volv

emen

tBeg

ins

toLi

ftM

anag

emen

tDis

coun

t

110Sh

areh

olde

r Nom

inee

Invo

lvem

ent B

egin

s to

Lift

Man

agem

ent D

isco

unt

Hes

s R

elat

ive

Perf

orm

ance

vs.

Rev

ised

Pee

rs

90100

110

Hes

s M

anag

emen

t an

noun

ces

Ellio

tt

80

90

inte

ntio

n to

nom

inat

e di

rect

ors;

sal

e of

te

rmin

al n

etw

ork

60

70

Ellio

ttbe

gins

toE

lliott

rele

ases

50

Ellio

tt be

gins

to

acqu

ire H

ess

stoc

k“P

ersp

ectiv

es o

n H

ess”

Sin

ce S

hare

hold

er N

omin

ee in

volv

emen

t ann

ounc

ed o

n Ja

nuar

y 28

th:

H

ess

has

outp

erfo

rmed

Pro

xy P

eers

by

23%

H

ess

has

outp

erfo

rmed

Rev

ised

Pro

xyPe

ers

by22

%

[ 110

]

Hes

s ha

s ou

tper

form

ed R

evis

ed P

roxy

Pee

rs b

y 22

%

H

ess

has

outp

erfo

rmed

Bak

ken

Ope

rato

rs b

y 26

%

Per

form

ance

cal

cula

ted

thro

ugh

4/12

/13

Favo

rabl

eR

eact

ion

toSh

areh

olde

rNom

inee

Invo

lvem

ent

Favo

rabl

e R

eact

ion

to S

hare

hold

er N

omin

ee In

volv

emen

t

“Ellio

tt’s

nom

inee

s as

sure

gre

ater

acc

ount

abilit

y an

d ar

e m

ore

likel

y to

con

tinue

to e

xplo

re a

ll av

enue

s to

enh

ance

sha

reho

lder

val

ue

whi

le p

rovi

ding

mor

e pe

rtine

nt E

&P

expe

rienc

e.”

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

“We

curr

ently

bel

ieve

the

best

way

for H

ess

shar

ehol

ders

to m

axim

ize

thei

r val

ue is

thro

ugh

the

elec

tion

of E

lliott

Man

agem

ent’s

nom

inee

s to

the

boar

d.”

Citi

grou

p (A

pril

5, 2

013)

“Ellio

tt di

sclo

sed

5 im

pres

sive

can

dida

tes

for t

he B

oard

...”

UB

S (J

anua

ry 3

0, 2

013)

“…a

who

’s w

ho li

st o

f cor

pora

te fi

xers

and

exp

erie

nced

oil

exec

s.”

Ban

kof

Am

eric

aM

erril

lLyn

ch(J

anua

ry31

2013

)B

ank

of A

mer

ica

Mer

rill L

ynch

(Jan

uary

31,

201

3)

“In o

ur v

iew,

the

indu

stry

exp

erie

nce

avai

labl

e in

the

slat

e of

nom

inee

s E

lliott

is p

ropo

sing

for H

ES

’s B

oard

of D

irect

ors

isim

pres

sive

an

d as

a re

sult,

the

nom

inee

s co

uld

brin

g in

dust

ry in

sigh

t una

vaila

ble

on th

e cu

rrent

Boa

rd.”

JP M

orga

n (J

anua

ry 3

0, 2

013)

“…[W

e] b

elie

ve th

at th

e sl

ate

of n

ew d

irect

ors

that

it h

as p

ropo

sed

can

brin

g a

lot t

o th

e ta

ble.

”S

ocie

teG

ener

ale

(Jan

uary

31,

201

3)

“We

belie

vea

new

inve

stor

with

the

inte

ntto

mak

ene

wno

min

atio

nsto

the

boar

dis

am

ove

inth

erig

htdi

rect

ion

forH

ess’

sco

rpor

ate

We

belie

ve a

new

inve

stor

with

the

inte

nt to

mak

e ne

w n

omin

atio

ns to

the

boar

d is

a m

ove

in th

e rig

ht d

irect

ion

for H

ess

s co

rpor

ate

gove

rnan

ce.”

Citi

grou

p (J

anua

ry 2

8, 2

013)

“Pro

pose

d di

rect

ors

have

stre

et c

red.

In p

ropo

sing

its

alte

rnat

e sl

ate

of d

irect

ors,

Elli

ott n

omin

ated

four

indi

vidu

als

with

var

ious

tb

kd

ith

ilt

hd

HG

lb

thf

CE

OfA

iE

”

[ 111

]

man

agem

ent b

ackg

roun

ds in

the

oil p

atch

and

Har

vey

Gol

ub, t

he fo

rmer

CEO

of A

mer

ican

Exp

ress

.”B

ank

of A

mer

ica

Mer

rill L

ynch

, Cre

dit R

esea

rch

(Jan

uary

29,

201

3)

Shar

ehol

der N

omin

ees

Hav

e Ex

act S

kills

Nec

essa

ry to

R

eass

ess

and

Ref

ocus

Hes

s

[ 112

]

The

Rig

htN

omin

ees

ForS

hare

hold

erVa

lue

atH

ess

The

Rig

ht N

omin

ees

For S

hare

hold

er V

alue

at H

ess

Shar

ehol

derN

omin

ees

Hes

s ne

eds

dire

ctor

s th

at (1

) will

ack

now

ledg

e is

sues

, and

(2) a

re c

apab

le o

f fix

ing

them

Shar

ehol

der N

omin

ees

Expe

rienc

eH

ess

Nee

dsR

odne

y C

hase

Har

vey

Gol

ubK

arl

Kur

zD

avid

M

cMan

usM

ark

Smith

Rec

ogni

tion

ofPr

oble

ms

atH

ess

Rec

ogni

tion

of P

robl

ems

at H

ess

True

Inde

pend

ence

Stro

ng S

hare

hold

er V

alue

Orie

ntat

ion

Sen

ior O

il &

Gas

Ups

tream

Ope

ratin

g E

xper

ienc

e

Sub

stan

tial R

estru

ctur

ing

Expe

rienc

e

Sen

iorM

anag

emen

t Con

vent

iona

l E&

P E

xper

ienc

e

Sen

iorM

anag

emen

t Unc

onve

ntio

nal E

&P

Exp

erie

nce

Mid

stre

am E

xper

ienc

e

[ 113

]

Pub

lic B

oard

Exp

erie

nce

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e

Har

vey

Gol

ub: S

ettin

g a

Focu

sed

Stra

tegy

gp

p

Mar

k Sm

ith: O

vers

eein

g O

pera

tiona

l Exc

elle

nce

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estr

uctu

ring

Supe

rior N

omin

ees

With

Unp

aral

lele

d Ex

perie

nce

Rod

ney

Cha

se: I

nstil

ling

Ove

rsig

ht &

Acc

ount

abili

ty

Supe

oo

ees

tU

paa

eed

pee

ce

We

wan

t to

be c

lear

that

we

inte

nd to

sup

port

all o

f the

Ellio

tt no

min

ees

at th

e up

com

ing

annu

al m

eetin

g of

sha

reho

lder

s. O

urre

ason

ing

is th

at w

hile

the

com

pany

’s n

ew n

omin

ees

are

an im

prov

emen

t ove

r the

incu

mbe

nt d

irect

ors,

Ellio

tt’s

nom

inee

s as

sure

grea

ter a

ccou

ntab

ility

and

are

mor

e lik

ely

to c

ontin

ue to

exp

lore

all

aven

ues

to e

nhan

ce s

hare

hold

er v

alue

whi

le p

rovi

ding

mor

e

[ 114

]

gy

yp

pg

perti

nent

E&

P ex

perie

nce.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

Har

vey

Gol

ubH

arve

y G

olub F

orm

er C

hairm

an &

CE

O, A

mer

ican

Exp

ress

For

mer

Non

-Exe

c C

hairm

an A

IG, C

ampb

ell S

oup

Co,

Rea

ders

Dig

est,

Rip

plew

ood

Cha

irman

of M

iller

Buc

kfire

, Adv

isor

y B

oard

of K

lein

wor

t Ben

son

Inve

stor

sF

orm

er D

irect

or D

ow J

ones

, RH

JI In

tern

atio

nal

Leg

enda

ry A

bilit

y to

Foc

us O

rgan

izat

ions

(s

ubje

ct o

f bus

ines

s sc

hool

cas

e st

udie

s)

Unp

aral

lele

d Tu

rnar

ound

Exp

erie

nce

His

tory

of A

ccom

plis

hing

Mea

ning

ful R

etur

ns

for S

hare

hold

ers

as D

irect

orS

trong

Sha

reho

lder

Val

ue O

rient

atio

n

Rel

evan

cyto

H

ess

Har

vey’

s un

para

llele

d ex

ecut

ive,

adv

isor

y an

d pu

blic

boa

rd e

xper

ienc

e re

stru

ctur

ing,

refo

cusi

ng a

nd tu

rnin

g-ar

ound

st

rugg

ling

ente

rpris

es w

ill al

low

him

to p

rovi

de u

npre

cede

nted

per

spec

tive

to th

e H

ess

Boa

rd

S

elec

ted

care

er a

ccom

plis

hmen

ts a

t Am

eric

an E

xpre

ss

Le

d a

dram

atic

turn

arou

nd o

f Am

eric

an E

xpre

ss –

with

sha

res

appr

ecia

ting

by o

ver 7

50%

dur

ing

his

tenu

re –

by s

ettin

g a

lt

ti

diti

hdd

ib

it

lii

tti

tt

lii

tid

di

clea

r stra

tegi

c di

rect

ion,

she

ddin

g no

n-co

re b

usin

esse

s, s

tream

linin

g m

anag

emen

t rep

ortin

g st

ruct

ures

, elim

inat

ing

redu

ndan

cies

an

d cr

eatin

g a

cultu

re o

f per

form

ance

and

acc

ount

abilit

y

Fu

lfille

d ev

ery

prom

ise

and

com

mitm

ent m

ade

as C

EO b

y fo

ster

ing

a cu

lture

that

priz

ed in

telle

ctua

l hon

esty

, a w

illing

ness

to

chal

leng

e th

e co

nven

tiona

l wis

dom

, and

a fo

cus

on “g

ettin

g th

ings

don

e”

Pre

pare

dex

trem

ely

succ

essf

ulco

llabo

rativ

ele

ader

ship

trans

ition

that

has

beco

me

am

odel

fore

ffect

ive

succ

essi

onpl

anni

ng

Pre

pare

d ex

trem

ely

succ

essf

ul, c

olla

bora

tive

lead

ersh

ip tr

ansi

tion

that

has

bec

ome

a m

odel

for e

ffect

ive

succ

essi

on p

lann

ing

S

elec

ted

high

light

s fro

m p

ublic

boa

rd e

xper

ienc

e

A

s N

on-E

xecu

tive

Cha

irman

at A

IG, h

elpe

d co

nstru

ct th

e st

rate

gic

plan

to e

stab

lish

corp

orat

e fo

cus,

to d

ives

t non

-cor

e as

sets

, and

to

retu

rn th

e co

mpa

ny to

priv

ate-

sect

or o

wne

rshi

p

AsN

onE

xecu

tive

Cha

irman

atC

ampb

ellS

oup

supe

rvis

edst

rate

gic

asse

ssm

ento

fthe

ente

rpris

eth

atle

dto

the

dive

stm

ento

f [ 115

]

As

Non

-Exe

cutiv

e C

hairm

an a

t Cam

pbel

l Sou

p, s

uper

vise

d st

rate

gic

asse

ssm

ent o

f the

ent

erpr

ise

that

led

to th

e di

vest

men

t of

God

iva

Cho

cola

tier–

a su

cces

sful

, pro

fitab

le b

usin

ess

but o

ne th

at re

quire

d a

skill-

set t

hat w

as n

ot a

cor

e st

reng

th a

t Cam

pbel

l

Wha

tSha

reho

lder

san

dC

EOs

Say

Abo

utH

arve

yG

olub

asa

Lead

erW

hat S

hare

hold

ers

and

CEO

s Sa

y A

bout

Har

vey

Gol

ub a

s a

Lead

er

“Har

vey

Gol

ub is

eve

ryth

ing

that

you

wou

ld w

ant i

n a

dire

ctor

. A

nd o

ne o

f th

e th

ings

that

I ap

prec

iate

mos

t abo

ut h

im is

that

he

has

alw

ays

resp

ecte

d th

e sp

ace

betw

een

the

Non

-Exe

cutiv

e C

hairm

an a

nd th

e C

EO

role

s. H

e ch

alle

nged

me

He

held

me

acco

unta

ble

But

hedi

dno

ttry

todo

my

job

for

chal

leng

ed m

e. H

e he

ld m

e ac

coun

tabl

e. B

ut h

e di

d no

t try

to d

o m

y jo

b fo

r m

e… A

nd h

e ha

s ch

alle

nged

us

to s

harp

en o

ur s

trate

gy, a

nd b

ette

r exe

cute

th

at s

trate

gy b

y ho

ldin

g us

to h

igh

perfo

rman

ce s

tand

ards

. He

ofte

n te

lls u

s,

‘Thi

s is

wha

t you

sai

d yo

u w

ould

do.

Are

you

del

iver

ing

and,

if n

ot, w

hy n

ot?”

yy

yg

y

Dou

glas

Con

ant,

form

er C

EO

of C

ampb

ell S

oup

Co,

Sep

tem

ber 2

009

“Har

vey

Gol

ub h

as d

one

an a

bsol

utel

y se

nsat

iona

l job

, and

we'

re p

roba

bly

$4

billi

on b

ette

r bec

ause

of i

t.”

War

ren

Buf

fet,

1999

Ber

kshi

re H

atha

way

Ann

ual M

eetin

g

[ 116

]

Setti

nga

Focu

sed

Stra

tegy

:Har

vey

Gol

ubSe

tting

a F

ocus

ed S

trat

egy:

Har

vey

Gol

ub

“Suc

cess

ful c

ompa

nies

gen

eral

ly h

ave

two

thin

gs -

a go

od s

trate

gy

and

solid

exe

cutio

n. A

goo

d st

rate

gy e

stab

lishe

s co

rpor

ate

focu

s an

d de

term

ines

whi

ch b

usin

esse

s a

com

pany

sho

uld

stay

in a

nd e

xit o

ver

time.

And

sol

id e

xecu

tion

gets

the

job

done

.”

[ 117

]

Har

vey

Gol

ub:W

hyIa

mEx

cite

dto

Join

the

Boa

rdof

Hes

sH

arve

y G

olub

: Why

I am

Exc

ited

to J

oin

the

Boa

rd o

f Hes

s

“Hes

s ha

s an

inte

rest

ing

set o

f ass

ets

that

hav

e no

t yie

lded

co

mpe

titiv

e sh

areh

olde

r ret

urns

ove

r tim

e. A

nd th

ey o

ught

to.

Wor

king

with

the

Boa

rd to

refo

cus

Hes

s in

ord

er to

del

iver

retu

rns

to

shar

ehol

ders

repr

esen

ts a

n ex

citin

g op

portu

nity

.”

[ 118

]

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e

Har

vey

Gol

ub: S

ettin

g a

Focu

sed

Stra

tegy

gp

p

Mar

k Sm

ith: O

vers

eein

g O

pera

tiona

l Exc

elle

nce

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estr

uctu

ring

Supe

rior N

omin

ees

With

Unp

aral

lele

d Ex

perie

nce

Rod

ney

Cha

se: I

nstil

ling

Ove

rsig

ht &

Acc

ount

abili

ty

Supe

oo

ees

tU

paa

eed

pee

ce

We

wan

t to

be c

lear

that

we

inte

nd to

sup

port

all o

f the

Ellio

tt no

min

ees

at th

e up

com

ing

annu

al m

eetin

g of

sha

reho

lder

s. O

urre

ason

ing

is th

at w

hile

the

com

pany

’s n

ew n

omin

ees

are

an im

prov

emen

t ove

r the

incu

mbe

nt d

irect

ors,

Ellio

tt’s

nom

inee

s as

sure

grea

ter a

ccou

ntab

ility

and

are

mor

e lik

ely

to c

ontin

ue to

exp

lore

all

aven

ues

to e

nhan

ce s

hare

hold

er v

alue

whi

le p

rovi

ding

mor

e

[ 119

]

gy

yp

pg

perti

nent

E&

P ex

perie

nce.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

Kar

lKur

zK

arl K

urz

For

mer

CO

O, A

nada

rko

Pet

role

um C

orpo

ratio

nF

orm

er S

VP

Nor

th A

mer

ica

Ope

ratio

ns M

idst

ream

and

Mar

ketin

g, S

VP

Uni

ted

Sta

tes

Oh

dM

kti

VPM

idt

dM

kti

Ons

hore

and

Mar

ketin

g, V

P M

idst

ream

and

Mar

ketin

gM

anag

ing

Dire

ctor

and

Co-

Hea

d of

Ene

rgy

Gro

up a

t CC

MP

Cap

ital f

rom

200

9 to

201

2C

urre

nt D

irect

or o

f Sem

grou

pan

d G

loba

l Geo

phys

ical

Tra

ck R

ecor

d of

Effe

ctiv

e R

estru

ctur

ings

Sen

ior M

gmt U

ncon

vent

iona

l Exp

erie

nce

Stro

ng C

apita

l Allo

catio

n C

apab

ilitie

s

His

tory

of V

alue

Cre

atio

n in

Mid

stre

amS

enio

r Mgm

t Con

vent

iona

l Exp

erie

nce

Stro

ng S

hare

hold

er V

alue

Orie

ntat

ion

Rel

evan

cyto

H

ess

Kar

l’s s

igni

fican

t exp

erie

nce

tran

sfor

min

g in

depe

nden

t E&

P co

mpa

nies

and

ope

ratin

g a

glob

al p

ortfo

lio o

f con

vent

iona

l and

un

conv

entio

nal a

sset

s, a

s w

ell a

s hi

s tr

ack

reco

rd o

f val

ue c

reat

ion

acro

ss e

xplo

ratio

n, p

rodu

ctio

n, m

idst

ream

, mar

ketin

g an

d pr

ivat

e eq

uity

will

add

sign

ifica

nt v

alue

to th

e H

ess

Boa

rd

S

elec

ted

care

er a

ccom

plis

hmen

ts d

urin

g te

nure

at A

nada

rko

AC

OO

fAd

kh

ld

ld

flt

fti

il

dib

ildt

fAd

k’

tti

lti

bilit

As

CO

O o

f Ana

dark

o, h

elpe

d le

ad a

suc

cess

ful t

rans

form

atio

n in

clud

ing:

bui

ld-o

ut o

f Ana

dark

o’s

top-

tier e

xplo

ratio

n ca

pabi

lity,

M

LP s

pin-

off o

f Ana

dark

o’s

pipe

line

asse

ts, a

nd s

hift

tow

ard

incr

ease

d ca

pita

l dis

cipl

ine

and

impr

oved

ope

ratio

nal e

xecu

tion

H

elpe

d le

ad p

ortfo

lio re

posi

tioni

ng th

roug

h ac

quiri

ngK

err-

McG

ee a

nd W

este

rn G

as R

esou

rces

(tot

al $

23bn

) as

wel

l as

the

subs

tant

ial d

ives

titur

e an

d po

rtfo

lio h

igh-

grad

ing

prog

ram

that

follo

wed

, res

ultin

g in

$16

bn o

f pro

ceed

s an

d ov

er 5

.3 B

Boe

of

net r

esou

rces

add

ed a

t $1.

80/b

oe

S

pear

head

ed c

once

ptua

lizat

ion

and

exec

utio

n of

MLP

spi

n-of

f of W

este

rn G

as P

artn

ers,

cre

atin

g ov

er $

6.7b

n of

sha

reho

lder

va

lue

thro

ugh

mid

stre

am m

onet

izat

ion

whi

le m

aint

aini

ng c

ontro

l of t

he M

LP a

nd it

s as

sets

thro

ugh

its G

P ow

ners

hip

A

s V

P of

Mid

stre

am &

Mar

ketin

g, re

turn

ed b

usin

ess

from

per

sist

ent l

osse

s to

con

sist

ent p

rofit

abili

ty; i

mpr

oved

mor

ale

thro

ugh

com

mon

vis

ion,

re-e

ngin

eerin

g co

st s

truct

ure;

cre

ated

cul

ture

of a

ccou

ntab

ility

, int

elle

ctua

l hon

esty

and

per

form

ance

[ 120

]

S

elec

ted

high

light

s fro

m p

ublic

boa

rd e

xper

ienc

e

A

s in

depe

nden

t dire

ctor

of S

emgr

oup,

pla

yed

inte

gral

role

in re

stru

ctur

ing

the

com

pany

afte

r its

ban

krup

tcy

and

grow

ing

it to

a

mar

ket c

apita

lizat

ion

of o

ver $

2.2b

n

Cap

italA

lloca

tion:

Kar

lKur

zC

apita

l Allo

catio

n: K

arl K

urz

“Cit

ldi

ili

ith

itil

fll

ti’

“Cap

ital d

isci

plin

e is

the

criti

cal p

roce

ss o

f allo

catin

g a

com

pany

’s

mos

t pre

ciou

s re

sour

ce a

fter i

ts p

eopl

e, c

ash

flow

, to

ensu

re

desi

red

inve

stm

ent r

etur

ns fo

r the

ben

efit

of a

ll st

akeh

olde

rs.

At

Ana

dark

ow

ecr

eate

da

cultu

reof

capi

tald

isci

plin

eth

roug

hA

nada

rko,

we

crea

ted

a cu

lture

of c

apita

l dis

cipl

ine

thro

ugh

deve

lopm

ent o

f a fo

cuse

d al

loca

tion

fram

ewor

k:

C

onst

rain

ing

capi

tali

nor

dert

odr

ive

portf

olio

dept

han

d

Con

stra

inin

g ca

pita

l in

orde

r to

driv

e po

rtfol

io d

epth

and

co

nsta

ntly

hig

h-gr

ade

the

portf

olio

,

In

still

ing

inte

llect

ual i

nteg

rity

via

an h

ones

t but

pro

bing

pos

t-st

gte

ectu

ate

gty

aa

oes

tbut

pob

gpo

stm

orte

m p

roce

sses

, and

C

reat

ing

a le

arni

ng c

ultu

re th

at e

mph

asiz

ed c

ontin

uous

im

prov

emen

t.”

[ 121

]

Kar

lKur

z:W

hyIa

mEx

cite

dto

Join

the

Boa

rdof

Hes

sK

arl K

urz:

Why

I am

Exc

ited

to J

oin

the

Boa

rd o

f Hes

s

“I am

exc

ited

to a

pply

my

prev

ious

exp

erie

nces

turn

ing

arou

nd

unde

rper

form

ing

com

pani

es to

Hes

s. T

he p

rosp

ect o

f wor

king

with

m

anag

emen

tto

trans

form

Hes

sin

toa

high

lym

otiv

ated

orga

niza

tion

man

agem

ent t

o tra

nsfo

rm H

ess

into

a h

ighl

y m

otiv

ated

org

aniz

atio

n th

at c

onsi

sten

tly d

eliv

ers

top

quar

tile

resu

lts is

an

oppo

rtuni

ty I

coul

d ne

ver p

ass

up.”

[ 122

]

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e

Har

vey

Gol

ub: S

ettin

g a

Focu

sed

Stra

tegy

gp

p

Mar

k Sm

ith: O

vers

eein

g O

pera

tiona

l Exc

elle

nce

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estr

uctu

ring

Supe

rior N

omin

ees

With

Unp

aral

lele

d Ex

perie

nce

Rod

ney

Cha

se: I

nstil

ling

Ove

rsig

ht &

Acc

ount

abili

ty

Supe

oo

ees

tU

paa

eed

pee

ce

We

wan

t to

be c

lear

that

we

inte

nd to

sup

port

all o

f the

Ellio

tt no

min

ees

at th

e up

com

ing

annu

al m

eetin

g of

sha

reho

lder

s. O

urre

ason

ing

is th

at w

hile

the

com

pany

’s n

ew n

omin

ees

are

an im

prov

emen

t ove

r the

incu

mbe

nt d

irect

ors,

Ellio

tt’s

nom

inee

s as

sure

grea

ter a

ccou

ntab

ility

and

are

mor

e lik

ely

to c

ontin

ue to

exp

lore

all

aven

ues

to e

nhan

ce s

hare

hold

er v

alue

whi

le p

rovi

ding

mor

e

[ 123

]

gy

yp

pg

perti

nent

E&

P ex

perie

nce.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

Mar

kSm

ithM

ark

Smith

SV

P an

d C

FO, U

ltra

Pet

role

um C

orpo

ratio

nC

FO o

f Gul

f Liq

uids

, Inc

(Mid

stre

am)

VP

of B

usin

ess

Dev

elop

men

t at J

. M. H

uber

Ene

rgy

VP

of U

pstre

am B

usin

ess

Dev

elop

men

t at C

onst

ella

tion

Ene

rgy

Tec

hnic

al b

ackg

roun

d in

Pet

role

um E

ngin

eerin

g

Sen

ior M

gmt U

ncon

vent

iona

l Exp

erie

nce

Las

er F

ocus

on

Ope

ratin

g E

ffici

enci

esE

xper

ienc

e M

onet

izin

g M

idst

ream

Fin

anci

al E

xper

tise

& H

isto

ry o

f Dra

win

g O

n C

reat

ive

Sol

utio

ns to

Unl

ock

Valu

eS

trong

Sha

reho

lder

Val

ue O

rient

atio

nR

elev

ancy

to

Hes

s

Mar

k’s

expe

rienc

e on

an

exec

utiv

e te

am th

at m

anag

es th

e lo

wes

t-cos

t ope

rato

r in

an u

ncon

vent

iona

l res

ourc

e pl

ay a

nd

oper

ates

with

a s

harp

focu

s on

RO

CE

will

be a

gre

at re

sour

ce fo

r the

Hes

s B

oard

S

elec

ted

care

er a

ccom

plis

hmen

ts d

urin

g te

nure

at U

ltra

Pet

role

um

O

vers

aw m

easu

rem

ent a

nd b

ench

mar

king

sys

tem

that

has

allo

wed

Ultr

a to

dec

reas

e av

erag

e dr

illing

day

s in

the

Pin

edal

e by

81

%i

2006

dl

dt

thl

tll

it

bi

thi

dt

81%

sin

ce 2

006

and

led

to th

e lo

wes

t all-

in c

osts

per

boe

in th

e in

dust

ry

S

pear

head

ed 2

012

trans

actio

n of

UP

L m

idst

ream

thro

ugh

crea

tive

RE

IT s

truct

ure

that

mon

etiz

ed a

sset

s at

11.

5x c

ash

flow

w

hile

reta

inin

g op

erat

ing

cont

rol

S

truct

ured

tax

effic

ient

, hig

hly

com

plex

tran

sact

ions

incl

udin

g m

onet

izat

ions

of U

PL’

s C

hine

se a

sset

s an

d P

ined

ale

liqui

ds

gath

erin

gsy

stem

asw

ella

sre

stru

ctur

ings

ofU

PL’

sin

tern

atio

nalt

axfra

mew

ork

gath

erin

g sy

stem

as

wel

l as

rest

ruct

urin

gs o

f UPL

s in

tern

atio

nal t

ax fr

amew

ork

M

anag

es d

isci

plin

ed c

apita

l allo

catio

n pr

oces

s w

hich

has

incl

uded

taki

ng to

ugh

non-

cons

ent a

ctio

ns o

n hi

gh c

ost w

ells

H

elpe

d bu

ild c

ultu

re w

hich

str

esse

s op

erat

ing

effic

ienc

y, in

tens

ive

data

ana

lytic

s to

driv

e de

cisi

on-m

akin

g, c

ontin

ual

impr

ovem

ent a

nd a

dopt

ion

of b

est p

ract

ices

[ 124

]

Ope

ratio

nalE

xcel

lenc

e:M

ark

Smith

Ope

ratio

nal E

xcel

lenc

e: M

ark

Smith

“At U

ltra

Pet

role

um, w

e ha

ve c

once

ntra

ted

on c

reat

ing

a cu

lture

of

oper

atio

nal d

isci

plin

e an

d ef

ficie

ncy.

We

focu

s re

lent

less

ly o

n co

sts,

be

stpr

actic

esan

dco

nsta

ntbe

nchm

arki

ngto

cont

inuo

usly

impr

ove

best

pra

ctic

es, a

nd c

onst

ant b

ench

mar

king

to c

ontin

uous

ly im

prov

e th

e ef

ficie

ncy

and

effe

ctiv

enes

s of

our

ope

ratio

ns. T

his

proc

ess

is

neve

r don

e an

d re

quire

s co

nsta

nt v

igila

nce.

”

[ 125

]

Mar

kSm

ith:W

hyIa

mEx

cite

dto

Join

the

Boa

rdof

Hes

sM

ark

Smith

: Why

I am

Exc

ited

to J

oin

the

Boa

rd o

f Hes

s

“Hes

s is

a c

ompa

ny w

ith g

reat

ass

ets

that

I be

lieve

are

not

bei

ng

valu

ed a

ppro

pria

tely

in th

e m

arke

t. I a

m e

xcite

d no

t onl

y to

app

ly th

e le

sson

sIh

ave

lear

ned

atU

ltra

toH

ess’

sop

erat

ions

inth

eB

akke

nle

sson

s I h

ave

lear

ned

at U

ltra

to H

ess

s op

erat

ions

in th

e B

akke

n,

but a

lso

to h

elp

Hes

s ac

hiev

e its

pot

entia

l and

real

ize

valu

e fo

r all

stak

ehol

ders

: sha

reho

lder

s an

d em

ploy

ees.

”

[ 126

]

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e

Har

vey

Gol

ub: S

ettin

g a

Focu

sed

Stra

tegy

gp

p

Mar

k Sm

ith: O

vers

eein

g O

pera

tiona

l Exc

elle

nce

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estr

uctu

ring

Supe

rior N

omin

ees

With

Unp

aral

lele

d Ex

perie

nce

Rod

ney

Cha

se: I

nstil

ling

Ove

rsig

ht &

Acc

ount

abili

ty

Supe

oo

ees

tU

paa

eed

pee

ce

We

wan

t to

be c

lear

that

we

inte

nd to

sup

port

all o

f the

Ellio

tt no

min

ees

at th

e up

com

ing

annu

al m

eetin

g of

sha

reho

lder

s. O

urre

ason

ing

is th

at w

hile

the

com

pany

’s n

ew n

omin

ees

are

an im

prov

emen

t ove

r the

incu

mbe

nt d

irect

ors,

Ellio

tt’s

nom

inee

s as

sure

grea

ter a

ccou

ntab

ility

and

are

mor

e lik

ely

to c

ontin

ue to

exp

lore

all

aven

ues

to e

nhan

ce s

hare

hold

er v

alue

whi

le p

rovi

ding

mor

e

[ 127

]

gy

yp

pg

perti

nent

E&

P ex

perie

nce.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

Dav

idM

cMan

usD

avid

McM

anus

For

mer

EV

P an

d H

ead

of In

tern

atio

nal O

pera

tions

, Pio

neer

Nat

ural

Res

ourc

es C

oF

orm

er E

VP

at B

G

Pre

side

nt o

f AR

CO

Eur

ope

Cur

rent

Dire

ctor

at R

ockh

oppe

rExp

lora

tion,

Fle

x LN

G a

nd C

aza

Oil

& G

as

Rel

evan

cyto

H

ess

Ext

ensi

ve E

xper

ienc

e E

valu

atin

g &

E

xecu

ting

Effe

ctiv

e R

estru

ctur

ing

Tra

ck R

ecor

d of

Val

ue C

reat

ion

Im

men

se In

tern

atio

nal E

nerg

y E

xper

ienc

eS

olid

Cor

pora

te G

over

nanc

e R

ecor

dS

trong

Sha

reho

lder

Val

ue O

rient

atio

n

Dav

id’s

dee

p ex

perie

nce

exec

utin

g a

port

folio

repo

sitio

ning

and

trem

endo

us in

tern

atio

nal o

il &

gas

exp

erie

nce

will

allo

w h

im to

co

ntrib

ute

uniq

ue in

sigh

t to

the

curr

ent s

trat

egic

dec

isio

n-m

akin

g pr

oces

s on

the

Hes

s B

oard

S

elec

ted

care

er a

ccom

plis

hmen

ts d

urin

g te

nure

at P

ione

er

Le

d va

lue

accr

etiv

e, s

trate

gic

dive

stitu

re o

f Pio

neer

’s in

tern

atio

nal p

ortfo

lio in

clud

ing

obje

ctiv

e as

sess

men

t of a

ll op

port

uniti

es

ilbl

tti

it

til

tbd

ihi

tPi

’t

d20

0%av

aila

ble

to m

onet

ize

inte

rnat

iona

l ass

et b

ase

–du

ring

his

tenu

re P

ione

er’s

retu

rned

ove

r 200

%

M

anag

ed in

tern

atio

nal p

ortfo

lio, s

ettin

g an

d ex

ecut

ing

cons

olid

atio

n st

rate

gy in

Nor

th A

frica

whi

ch in

crea

sed

net a

sset

val

ue b

y 10

tim

es o

ver 6

yea

rs th

roug

h su

cces

sful

exp

lora

tion

and

appr

aisa

l pro

gram

H

eavi

ly in

volv

ed in

exe

cutiv

e co

mm

ittee

dec

isio

n-m

akin

g on

Pio

neer

’s U

.S. o

nsho

re re

sour

ce p

lay

deve

lopm

ent –

onsh

ore

prod

uctio

ngr

ewfro

m27

mbo

e/d

to95

mbo

e/d

ane

arly

30%

CA

GR

durin

ghi

ste

nure

prod

uctio

n gr

ew fr

om 2

7mbo

e/d

to 9

5mbo

e/d

a ne

arly

30%

CA

GR

dur

ing

his

tenu

re

W

orke

d co

nstru

ctiv

ely

with

boa

rd, i

nclu

ding

dis

side

nt n

omin

ees

from

act

ivis

t inv

esto

r Sou

thea

ster

n A

sset

Man

agem

ent

S

elec

ted

high

light

s fro

m p

ublic

boa

rds

and

prev

ious

pos

ition

s

A

s E

VP

at B

G, o

vers

aw e

xecu

tion

of B

G’s

larg

est p

roje

ct –

deve

lopm

ent o

f 200

,000

bbl

/d fi

eld

and

rela

ted

faci

litie

s in

Kaz

akhs

tan

[ 128

]

A

s in

depe

nden

t Non

-Exe

cutiv

e C

hairm

an a

t Cap

e ov

ersa

w e

xten

sive

acq

uisi

tion

prog

ram

as

Cap

e ex

ecut

ed o

n its

stra

tegy

to

build

a c

ore

posi

tion

in A

ustra

lia

A

s in

depe

nden

t dire

ctor

at R

ockh

oppe

rExp

lora

tion,

ove

rsaw

hig

h pe

rfor

min

g ex

plor

atio

n-fo

cuse

d E

&P

com

pany

and

su

perv

ised

the

farm

-dow

n of

a la

rge

wor

king

inte

rest

in th

e Fa

lkla

nd Is

land

s

Port

folio

Rep

ositi

onin

g:D

avid

McM

anus

Port

folio

Rep

ositi

onin

g: D

avid

McM

anus

“Por

tfolio

con

stru

ctio

n sh

ould

alw

ays

begi

n w

ith a

n ev

alua

tion

of th

e co

mpa

ny’s

cor

e st

reng

ths.

If a

n as

set d

oesn

’t pl

ay to

a s

treng

th, i

t sh

ould

n’tb

eth

ere.

Ifan

asse

tis

notm

ater

ialw

ithre

spec

tto

NAV

orsh

ould

nt b

e th

ere.

If a

n as

set i

s no

t mat

eria

l with

resp

ect t

o N

AV o

r do

esn’

t hav

e th

e po

tent

ial t

o be

, it s

houl

dn’t

be th

ere.

Pro

per p

ortfo

lio

man

agem

ent r

equi

res

a co

nsta

nt s

harp

eva

luat

ion

of th

e po

rtfol

io to

de

term

ine

valu

e an

d to

que

stio

n is

it w

orth

som

ethi

ng m

ore

to

qg

som

eone

els

e?”

[ 129

]

Dav

idM

cMan

us:W

hyIa

mEx

cite

dto

Join

the

Boa

rdof

Hes

sD

avid

McM

anus

: Why

I am

Exc

ited

to J

oin

the

Boa

rd o

f Hes

s

“Hes

s is

unm

ista

kabl

y m

ater

ially

und

erva

lued

, with

ove

rsig

ht a

nd

disc

iplin

e la

ckin

g. B

ut a

t the

end

of t

he d

ay, e

very

one

wan

ts to

see

Hes

s su

ccee

dIb

elie

vem

yba

ckgr

ound

and

expe

rienc

esha

vepa

rticu

lar

succ

eed.

I be

lieve

my

back

grou

nd a

nd e

xper

ienc

es h

ave

parti

cula

r re

leva

nce

to th

e di

fficu

lties

at H

ess

and

belie

ve I

can

mak

e a

subs

tant

ial

cont

ribut

ion

to u

nloc

king

the

upsi

de p

oten

tial a

t Hes

s.”

[ 130

]

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e

Har

vey

Gol

ub: S

ettin

g a

Focu

sed

Stra

tegy

gp

p

Mar

k Sm

ith: O

vers

eein

g O

pera

tiona

l Exc

elle

nce

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estr

uctu

ring

Supe

rior N

omin

ees

With

Unp

aral

lele

d Ex

perie

nce

Rod

ney

Cha

se: I

nstil

ling

Ove

rsig

ht &

Acc

ount

abili

ty

Supe

oo

ees

tU

paa

eed

pee

ce

We

wan

t to

be c

lear

that

we

inte

nd to

sup

port

all o

f the

Ellio

tt no

min

ees

at th

e up

com

ing

annu

al m

eetin

g of

sha

reho

lder

s. O

urre

ason

ing

is th

at w

hile

the

com

pany

’s n

ew n

omin

ees

are

an im

prov

emen

t ove

r the

incu

mbe

nt d

irect

ors,

Ellio

tt’s

nom

inee

s as

sure

grea

ter a

ccou

ntab

ility

and

are

mor

e lik

ely

to c

ontin

ue to

exp

lore

all

aven

ues

to e

nhan

ce s

hare

hold

er v

alue

whi

le p

rovi

ding

mor

e

[ 131

]

gy

yp

pg

perti

nent

E&

P ex

perie

nce.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

Rod

ney

Cha

seR

odne

y C

hase

For

mer

Dep

uty

Chi

ef E

xecu

tive,

BP

plc

For

mer

CE

O o

f Exp

lora

tion

& P

rodu

ctio

n, C

EO

of M

arke

ting

& R

efin

ing,

Cha

irman

/CE

O B

P fB

PA

iof

BP

Amer

ica

Cur

rent

or F

orm

er In

depe

nden

t Cha

irman

at G

enel

, Nal

co, P

etro

frac

Rel

evan

cyto

H

ess

Led

Suc

cess

ful R

estru

ctur

ings

At B

oth

Exe

cutiv

e an

d B

oard

Lev

els

Sen

ior O

il &

Gas

Ups

tream

Exp

erie

nce

Suc

cess

ion

Pla

nnin

g E

xper

ienc

eC

orpo

rate

Gov

erna

nce

Exp

ertis

eS

trong

Sha

reho

lder

Val

ue O

rient

atio

n

Rod

ney’

s de

ep e

xper

ienc

e in

eve

ry fa

cet o

f oil

& g

as a

nd s

igni

fican

t ind

ustr

y pu

blic

boa

rd e

xper

ienc

e w

ill be

a m

eani

ngfu

l ad

ditio

n to

the

Hes

s B

oard

S

elec

ted

care

er a

ccom

plis

hmen

ts d

urin

g 38

yea

rs a

t BP

Le

d up

stre

am a

nddo

wns

trea

m b

usin

esse

s of

BP,

ove

rsee

ing

mat

eria

l res

truct

urin

g, in

tegr

atin

g su

bsta

ntia

l ass

ets,

and

i

titti

fb

dlt

Stk

tf

dit

b16

0%d

ihi

tdi

td

il

din

stitu

ting

a pe

rfor

man

ce-b

ased

cul

ture

. Sto

ck o

utpe

rform

ed it

s pe

ers

by 1

60%

dur

ing

his

tenu

re a

s di

rect

or a

nd s

enio

r lea

der

Sp

earh

eade

d po

rtfo

lio ra

tiona

lizat

ion

effo

rt at

BP

to s

treng

then

bus

ines

s fo

cus

and

driv

e pe

rform

ance

gro

wth

incl

udin

g th

e sa

le o

f BP

Min

eral

s ($

4bn)

and

BP

’s s

take

in R

uhrg

as($

2bn)

and

the

acqu

isiti

ons

of A

moc

o ($

57bn

), A

RC

O ($

27bn

), M

obil

Eur

ope,

Cas

trol (

$6bn

) and

Veb

aO

il ($

5bn)

Dire

cted

crea

tion

of$2

0bn

Rus

sian

JVw

ithTN

KBP

’sla

rges

tsin

gle

asse

tove

rthe

last

deca

de~3

0%IR

Rov

er9-

year

D

irect

ed c

reat

ion

of $

20bn

Rus

sian

JV

with

TN

K, B

Ps

larg

est s

ingl

e as

set o

ver t

he la

st d

ecad

e.

30%

IRR

ove

r 9-y

ear

perio

d on

BP

’s $

6.9b

n in

vest

men

t

S

elec

ted

high

light

s fro

m 1

0 ye

ars

as a

n in

depe

nden

t dire

ctor

A

s C

hairm

an o

f Nal

co, l

ed N

alco

bac

k to

pub

lic o

wne

rshi

p af

ter p

rivat

e eq

uity

, rec

ruiti

ng a

new

CEO

and

man

agem

ent

team

to d

rive

a st

ron g

per

form

ance

turn

arou

nd a

nd e

vent

ually

to o

vers

ee th

e sa

le o

f the

com

pany

to E

cola

b

[ 132

]

gp

yp

y

A

s th

e in

itial

Inde

pend

ent C

hairm

an o

f Pet

rofa

can

d G

enel

Ene

rgy,

was

inte

gral

to th

e se

tting

of s

trate

gies

, ove

rsee

ing

the

exec

utio

n of

per

form

ance

pla

ns a

nd th

e cr

eatio

n of

per

form

ance

cul

ture

s an

d ef

fect

ive

gove

rnan

ce b

ased

on

inde

pend

ent

boar

d ov

ersi

ght

Wha

tCol

leag

ues

Say

Abo

utR

odne

yC

hase

asa

Lead

erW

hat C

olle

ague

s Sa

y A

bout

Rod

ney

Cha

se a

s a

Lead

er

“Ove

r the

cou

rse

of h

is 3

8-ye

ar c

aree

r, R

odne

y ha

s m

ade

an

outs

tand

ing

cont

ribut

ion

to B

P. H

e ha

s pl

ayed

a c

ritic

al p

art i

n al

l the

m

ajor

dev

elop

men

ts o

f rec

ent y

ears

that

hav

e tra

nsfo

rmed

the

com

pany

into

one

of t

he w

orld

's le

adin

g en

ergy

bus

ines

ses.

”

Lord

Bro

wne

, CE

O o

f BP

Plc

, Jan

uary

200

3

[ 133

]

Ove

rsig

ht&

Acc

ount

abili

ty:R

odne

yC

hase

Ove

rsig

ht &

Acc

ount

abili

ty: R

odne

y C

hase

“The

key

role

of a

boa

rd m

embe

r is

to a

ppoi

nt m

anag

emen

t, to

set

, to

geth

er w

ith m

anag

emen

t, a

clea

r stra

tegy

with

def

ined

goa

ls a

nd

met

rics,

and

to h

old

man

agem

ent a

ccou

ntab

le fo

r effe

ctin

g th

at

stra

tegy

. The

ove

rsig

ht ro

le o

f the

boa

rd is

crit

ical

.”

[ 134

]

Rod

ney

Cha

se:W

hyIa

mEx

cite

dto

Join

the

Boa

rdof

Hes

sR

odne

y C

hase

: Why

I am

Exc

ited

to J

oin

the

Boa

rd o

f Hes

s

“I be

lieve

a s

usta

ined

and

rigo

rous

focu

s on

stra

tegy

and

its

exec

utio

n, c

ombi

ned

with

a ro

bust

cor

pora

te g

over

nanc

e st

ruct

ure,

ca

n he

lp H

ess

max

imiz

e lo

ng te

rm v

alue

for s

hare

hold

ers.

I am

ex

cite

d to

hel

p H

ess

acco

mpl

ish

thes

e go

als.

”

[ 135

]

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Kar

l Kur

z: In

still

ing

Cap

ital D

isci

plin

e

Har

vey

Gol

ub: S

ettin

g a

Focu

sed

Stra

tegy

gp

p

Mar

k Sm

ith: O

vers

eein

g O

pera

tiona

l Exc

elle

nce

Dav

id M

cMan

us: E

xecu

ting

Effe

ctiv

e R

estr

uctu

ring

Supe

rior N

omin

ees

With

Unp

aral

lele

d Ex

perie

nce

Rod

ney

Cha

se: I

nstil

ling

Ove

rsig

ht &

Acc

ount

abili

ty

Supe

oo

ees

tU

paa

eed

pee

ce

We

wan

t to

be c

lear

that

we

inte

nd to

sup

port

all o

f the

Ellio

tt no

min

ees

at th

e up

com

ing

annu

al m

eetin

g of

sha

reho

lder

s. O

urre

ason

ing

is th

at w

hile

the

com

pany

’s n

ew n

omin

ees

are

an im

prov

emen

t ove

r the

incu

mbe

nt d

irect

ors,

Ellio

tt’s

nom

inee

s as

sure

grea

ter a

ccou

ntab

ility

and

are

mor

e lik

ely

to c

ontin

ue to

exp

lore

all

aven

ues

to e

nhan

ce s

hare

hold

er v

alue

whi

le p

rovi

ding

mor

e

[ 136

]

gy

yp

pg

perti

nent

E&

P ex

perie

nce.

Dav

id H

. Bat

chel

der,

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC (M

arch

27,

201

3)

Shar

ehol

derN

omin

ees

Hav

eU

npar

alle

led

Ope

ratin

gEx

perie

nce

Shar

ehol

der N

omin

ees

Hav

e U

npar

alle

led

Ope

ratin

g Ex

perie

nce

Shar

ehol

der N

omin

ees

John

Hes

s’s

Nom

inee

s

Rod

ney

Cha

se

Fo

rmer

Dep

uty

Gro

up C

hief

Exe

cutiv

e,

BP

Fo

rmer

Cha

irman

/CE

Oof

BP

Am

eric

a,

CE

Oof

Mar

ketin

g&

Ref

inin

gC

EO

of

Form

er C

OO

, TN

K-B

P jo

int v

entu

reW

illia

m S

chra

der

CEO

of M

arke

ting

& R

efin

ing,

CEO

of

E&P

Har

vey

Gol

ub

Form

er C

hairm

an &

CE

O, A

mer

ican

E

xpre

ss

Fo

rmer

Non

Exe

cutiv

eC

hairm

anAI

G

Fo

rmer

Vic

e C

hairm

an,G

E

P

res.

&C

EO

, GE

Ene

r gy

Infra

stru

ctur

e Jo

hn K

reni

ckiJ

r.

Form

er N

on-E

xecu

tive

Cha

irman

, AIG

gy

Kar

lKur

z

Form

er C

OO

, Ana

dark

o P

etro

leum

Fo

rmer

SV

Pof

E&

P fo

r the

Am

eric

as,

Con

ocoP

hillip

sD

r. K

evin

Mey

ers

Dav

id M

cMan

us

Form

er E

VP,

Pio

neer

Nat

ural

Res

ourc

es

Fo

rmer

EV

P at

BG

, For

mer

Pre

side

nt o

f A

RC

O E

urop

e

Dow

nstre

amD

irect

or, R

oyal

Dut

ch S

hell

Dr.

Mar

k W

illia

ms

Mar

kSm

ith

Cur

rent

SV

P &

CFO

, Ultr

a P

etro

leum

Fo

rmer

EV

P an

d C

FO, C

BS

Cor

pora

tion

Fred

ricR

eyno

lds [ 137

]

Shar

ehol

der N

omin

ees

Hav

e Th

e R

elev

ant O

il &

Gas

Ope

ratin

g an

d R

estr

uctu

ring

Expe

rienc

eN

eede

dat

Hes

sR

estr

uctu

ring

Expe

rienc

e N

eede

d at

Hes

s

Seni

orM

anag

emen

tW

hich

nom

inee

s ar

e N

o20

%Y

Shar

ehol

der N

omin

ees

John

Hes

s’s

Nom

inee

s

Seni

or M

anag

emen

t U

pstr

eam

Oil

& G

as

Ope

ratin

g Ex

perie

nce

bette

r sui

ted

for a

pu

re-p

lay

E&P

com

pany

?Ye

s80

%

20%

Yes

40%

No

60%

Res

truc

turin

g Ex

perie

nce

Whi

ch n

omin

ees

are

bette

r sui

ted

for a

co

rpor

ate

tran

sfor

mat

ion?

Yes

80%

No

20%

Yes

40%

No

60%

Publ

icB

oard

Expe

rienc

e

No

20%

Yes

40%

N

Whi

ch n

omin

ees

are

mor

e lik

ely

to

Seni

or M

gmt C

onve

ntio

nal

4D

irect

ors

2D

irect

ors

Publ

ic B

oard

Exp

erie

nce

Yes

80%

40%

No

60%

posi

tivel

y im

pact

go

vern

ance

?

Seni

or M

gmt U

ncon

vent

iona

l E&

P Ex

perie

nce

E&P

Expe

rienc

e4

Dire

ctor

s

2 D

irect

ors

2 D

irect

ors

1* D

irect

orW

hich

nom

inee

s w

ill

have

the

abili

ty to

as

k th

e rig

ht

ques

tions

?

[ 138

]

Mid

stre

am E

xper

ienc

e3

Dire

ctor

s0

Dire

ctor

s

* U

ncon

vent

iona

l exp

erie

nce

incl

udes

Kev

in M

eyer

s fo

r 1½

yea

rs in

his

role

as

SV

P C

onoc

oPhi

llips

Am

eric

asS

enio

r Man

agem

ent O

il &

Gas

Ups

tream

Ope

ratin

g E

xper

ienc

e do

es n

ot in

clud

e M

ark

Will

iam

s as

his

prim

ary

exec

utiv

e ex

perie

nce

was

ove

rsee

ing

She

ll do

wns

tream

div

isio

n

John

Hes

s’s

Nom

inee

sLa

ckU

ncon

vent

iona

lExp

erie

nce

John

Hes

ss

Nom

inee

s La

ck U

ncon

vent

iona

l Exp

erie

nce

Am

idst

a fl

urry

of d

efen

sive

hyp

erbo

le a

nd in

sults

, H

ess

clai

ms

itsN

omin

ees

have

“dee

pan

ddi

rect

lyre

leva

ntsh

ale

expe

rienc

e”

“Eve

n th

e m

ost c

asua

l obs

erve

r wou

ld re

cogn

ize

that

Hes

s no

min

ees

have

dee

p an

d di

rect

ly re

leva

nt s

hale

exp

erie

nce.

In

his

time

at C

onoc

oPhi

llips

, for

exa

mpl

e,

Hes

sno

min

eeD

rK

ein

Me

ers

”

Hes

s cl

aim

s its

Nom

inee

s ha

ve

deep

and

dire

ctly

rele

vant

sha

le e

xper

ienc

e.

Hes

s no

min

ee D

r. Ke

vin

Mey

ers…

”H

ess

Lette

r to

Sha

reho

lder

sM

arch

201

3(1)

The

real

ity is

that

Joh

n H

ess’

s N

omin

ees

have

nea

rly

no u

ncon

vent

iona

l sha

le e

xper

ienc

e ot

her t

han

18

mon

ths

that

one

nom

inee

spe

nt a

s SV

P of

the

Am

eric

as a

t Con

ocoP

hilli

ps (p

rior t

o th

at ro

le, t

he

bulk

of h

is s

enio

r man

agem

ent c

aree

r was

spe

nt

over

seei

ng c

onve

ntio

nal a

sset

s in

Ala

ska)

.

[ 139

]

1.H

ess

Lette

r to

Sha

reho

lder

s, M

arch

26,

201

3

John

Hes

s’s

Nom

inee

sLa

ckU

ncon

vent

iona

lExp

erie

nce

John

Hes

ss

Nom

inee

s La

ck U

ncon

vent

iona

l Exp

erie

nce

Am

idst

ano

ther

def

ensi

ve b

out o

f ass

ertio

ns,

Hes

scl

aim

sal

lofi

tsN

omin

ees

have

rest

ruct

urin

gex

perie

nce

Hes

s cl

aim

s al

l of i

ts N

omin

ees

have

rest

ruct

urin

g ex

perie

nce.

“All

of H

ess’

six

new

dire

ctor

s ha

ve e

xper

ienc

e ex

ecut

ing

or a

dvis

ing

on m

ajor

co

r por

ate

rest

ruct

urin

gs.”

pg

Hes

s Le

tter t

o S

hare

hold

ers

Mar

ch 2

013(

1)

In it

s m

ost w

ater

ed d

own

sens

e pe

rhap

s ev

eryo

ne

has

rest

ruct

urin

g ex

perie

nce

(and

Joh

n H

ess

mor

e g

p(

than

mos

t), b

ut w

hen

take

n as

a m

eani

ngfu

l mar

k of

ha

ving

effe

ctiv

ely

turn

ed a

roun

d an

org

aniz

atio

n, n

ot

one

of J

ohn

Hes

s’s

Nom

inee

s ha

ve e

xper

ienc

e on

par

w

ith w

hat K

arl K

urz

help

ed a

ccom

plis

h at

Ana

dark

o,

Dav

id M

cMan

us h

elpe

d ex

ecut

e at

Pio

neer

, or w

hat

Har

vey

Gol

ubac

hiev

ed a

t Am

eric

an E

xpre

ss.

[ 140

]

1.H

ess

Lette

r to

Sha

reho

lder

s, M

arch

26,

201

3

Mos

t Crit

ical

ly, J

ohn

Hes

s’s

Nom

inee

s Fa

il to

Rec

ogni

ze T

hat R

eal C

hang

e Is

Nee

ded

AtH

ess

Is N

eede

d A

t Hes

s

Sha

reho

lder

Nom

inee

s br

ing

reco

gniti

on th

at re

al c

hang

e is

nee

ded

and

an a

bilit

y to

effe

ct c

hang

e th

rou g

h th

e B

oard

room

. Sha

reho

lder

Nom

inee

s ha

ve le

d su

bsta

ntia

l tur

naro

unds

and

driv

en

gop

erat

iona

l ach

ieve

men

ts, n

ot th

roug

h “li

quid

atio

ns,”

but r

athe

r thr

ough

impa

ctfu

l cha

nge

that

re

orie

nted

thei

r cor

pora

tions

in a

man

ner t

hat b

enef

ited

all S

hare

hold

ers.

John

Hes

s’s

Nom

inee

s

“ The

sein

depe

nden

tdire

ctor

sag

reed

tojo

in

Shar

ehol

der N

omin

ees

“ Sha

reho

lder

Nom

inee

sw

illfo

rmth

eiro

wn

Thes

e in

depe

nden

t dire

ctor

s ag

reed

to jo

in

our b

oard

, bec

ause

they

bel

ieve

in o

ur

outs

tand

ing

plan

and

they

reco

gniz

e th

at

our p

lan

is th

e rig

ht p

lan…

”

Sha

reho

lder

Nom

inee

s w

ill fo

rm th

eir o

wn,

in

depe

nden

t vie

ws

on th

e C

ompa

ny, i

ts

asse

ts, a

nd it

s st

rate

gy.”

John

Hes

s’s

Plan

A

ll Sh

areh

olde

rs C

an H

ope

to G

et A

nd

No

Con

fiden

ce in

Tim

ing

or E

xecu

tion

Obj

ectiv

e, C

lear

-Eye

d A

naly

sis

Eval

uatin

g A

ll O

ptio

ns

to M

axim

ize

Shar

ehol

der V

alue

[ 141

]

Giv

en T

he P

erva

sive

, Dee

p-ro

oted

, Per

sist

ent P

robl

ems

at H

ess

Exte

rnal

lyIm

pose

dB

oard

Res

truc

turin

gIs

Nee

ded

Exte

rnal

ly Im

pose

d B

oard

Res

truc

turin

g Is

Nee

ded

La

rge

turn

over

nee

ded

to c

hang

e B

oard

dyn

amic

and

cul

ture

P

rovi

des

oppo

rtuni

ty to

rese

t cul

ture

and

intro

duce

acc

ount

abili

ty

N

eed

dire

ctor

s w

ith n

o lin

ks to

cur

rent

Boa

rd a

nd m

anag

emen

t

N

eed

dire

ctor

s th

at h

ave

not a

gree

d to

any

pla

n

S

elf-r

estru

ctur

ing

of B

oard

is n

ot s

uffic

ient

N

o ac

know

ledg

emen

t of t

he fu

ndam

enta

l pro

blem

s

C

hang

es to

dat

e ha

ve b

een

reac

tion

to S

hare

hold

er N

omin

ees

Sh

hld

dB

dth

tdt

tti

ld

hi

“Ele

ctin

g ne

w m

anag

emen

t nom

inee

s is

itse

lf lik

ely

to b

e se

en a

s a

vote

for t

he o

ld o

rder

;

S

hare

hold

ers

dese

rve

a B

oard

that

dem

onst

rate

s pr

oact

ive

lead

ersh

ip

gg

y;

elec

ting

diss

iden

t nom

inee

s, if

they

car

ry m

eani

ngfu

l cre

dent

ials

and

exp

erie

nce,

sen

ds a

fa

r stro

nger

sig

nal t

o th

e in

cum

bent

boa

rd, a

nd is

thus

mor

e lik

ely

to e

ffect

cha

nge.

”

-IS

S P

roxy

Adv

isor

y S

ervi

ces,

R

ecom

men

datio

n: B

arne

s &

Nob

le P

rox y

Con

test

, Sep

tem

ber 2

010

[142

]

y,

p

Shar

ehol

derN

omin

ees

Ack

now

ledg

eTh

ePr

oble

ms

and

Can

Fix

Them

Shar

ehol

der N

omin

ees

Ack

now

ledg

e Th

e Pr

oble

ms

and

Can

Fix

The

m

Ther

e ar

e fu

ndam

enta

l pro

blem

s at

Hes

s th

at h

ave

pers

iste

d fo

r nea

rly tw

o

Hes

s’s

attit

ude

that

not

hing

fund

amen

tal i

s w

rong

, tha

t no

subs

tant

ive

prob

lem

s d

tb

ddd

dth

tHi

“dli

iS

hh

ldl

”ii

l

deca

des

and

have

resu

lted

in u

nrel

entin

g un

derp

erfo

rman

ce.

need

to b

e ad

dres

sed,

and

that

Hes

s is

“del

iver

ing

Sha

reho

lder

val

ue” i

s pr

ecis

ely

the

min

dset

that

ens

ures

con

tinue

d un

derp

erfo

rman

ce.

Wb

liH

hb

ii

dI

ibl

ih

We

belie

ve H

ess

has

grea

t ass

ets

but i

s m

ism

anag

ed. I

t is

a pu

blic

com

pany

that

sh

ould

be

run

for a

ll S

hare

hold

ers

but h

as b

een

held

cap

tive

by a

CE

O a

nd B

oard

that

ar

e ap

pare

ntly

unw

illing

to ta

ke a

n ob

ject

ive,

cle

ar-e

yed

look

at t

heir

own

reco

rd. T

he

first

ste

p in

cor

rect

ing

a pr

oble

m is

reco

gniz

ing

it ex

ists

.

Shar

ehol

der N

omin

ees

will

del

iver

the

tran

sfor

mat

ive

chan

ge th

ey d

eliv

ered

at

thei

r prio

r org

aniz

atio

ns, b

ecau

se th

ey p

osse

ss n

ot o

nly

the

capa

bilit

y to

do

so,

bt

lth

hili

td

illi

tk

ld

bld

fith

but a

lso

the

hum

ility

and

will

ingn

ess

to a

ckno

wle

dge

prob

lem

s an

d fix

them

.

[ 143

]

Con

tact

s&

Add

ition

alIn

form

atio

nC

onta

cts

& A

dditi

onal

Info

rmat

ion

Inve

stor

s

Bru

ce H

. Gol

dfar

b / P

at M

cHug

h / G

eoff

Sor

bello

Oka

pi P

artn

ers

LLC

Tel:

+1-2

12-2

97-0

720

f@

info

@ok

apip

artn

ers.

com

Pres

sPr

ess

John

Har

tzTe

l: +1

-212

-446

-187

2Te

l 2: +

1-71

8-92

6-35

03

ForA

dditi

onal

Info

rmat

ion

jhar

tz@

sloa

nepr

.com

ww

w.R

eass

essH

ess.

com

For A

dditi

onal

Info

rmat

ion

[144

]

I. A

dditi

onal

Info

rmat

ion

on C

ompe

nsat

ion

Shar

ehol

derN

omin

eeC

ompe

nsat

ion

isPa

yfo

rPer

form

ance

Shar

ehol

der N

omin

ee C

ompe

nsat

ion

is P

ay fo

r Per

form

ance

Wha

t it i

s: $

30,0

00 fo

r eac

h 1%

that

Hes

s’s

stoc

k ou

tper

form

s H

ess’

s ow

n pr

oxy

peer

s as

mea

sure

d at

the

end

ofth

eSh

areh

olde

rNom

inee

’sth

ree

eart

erm

asa

dire

ctor

(201

6)en

d of

the

Sha

reho

lder

Nom

inee

’s th

ree-

year

term

as

a di

rect

or (2

016)

S

imila

r to

Hes

s’s

Per

form

ance

Sha

re U

nit (

PS

U) p

rogr

am b

ut w

ith m

ore

rigor

ous

goal

s

Th

epe

ergr

oup

isth

eex

acts

ame

asth

egr

oup

used

fort

heP

SU

prog

ram

Th

e pe

er g

roup

is th

e ex

act s

ame

as th

e gr

oup

used

for t

he P

SU p

rogr

am

Th

e m

easu

rem

ent o

f tot

al re

turn

is th

e sa

me

as th

e P

SU

pro

gram

Th

ego

als

are

mor

erig

orou

sth

anP

SU

prog

ram

beca

use

Shar

ehol

derN

omin

eeis

only

paid

ifTh

e go

als

are

mor

e rig

orou

sth

an P

SU p

rogr

am b

ecau

se S

hare

hold

er N

omin

ee is

onl

y pa

id if

ou

tper

form

pee

r gro

up a

nd p

aym

ent c

omm

ensu

rate

with

am

ount

of o

utpe

rform

ance

. Hes

s pa

ys

man

agem

ent 5

0% to

100

% o

f tar

get b

onus

eve

n if

Hes

s in

3rd

quar

tile

Th

eob

ligat

ion

topa

yis

cont

ract

ually

fixed

and

nots

ubje

ctto

Ellio

tt’s

disc

retio

n

The

oblig

atio

n to

pay

is c

ontra

ctua

lly fi

xed

and

not s

ubje

ct to

Elli

ott’s

dis

cret

ion

Th

e pa

ymen

t has

no

tie w

hats

oeve

r to

Ellio

tt’s

P&L

or in

vest

men

t

Th

edu

ratio

nis

mor

elo

ngte

rmor

ient

edth

anan

ypl

ancu

rren

tlyat

Hes

s

The

dura

tion

is m

ore

long

term

orie

nted

than

any

pla

n cu

rren

tly a

t Hes

s

Th

e pa

ymen

t is

capp

ed a

t 300

% o

utpe

rform

ance

(300

% o

utpe

rform

ance

wou

ld im

ply

Hes

s sh

are

pric

e at

~$

250

per s

hare

whi

le p

eers

are

flat

)

[ 146

]

An

Exam

ple

An

Exam

ple

If:

S

hare

hold

er N

omin

ee is

ele

cted

to th

e B

oard

, and

D

urin

g th

e th

ree

year

s fo

llow

ing

the

2013

Ann

ual M

eetin

g

H

ess

Com

mon

Sto

ck h

ad a

tota

l ret

urn

of 3

0%

P

eer g

roup

has

a to

tal r

etur

n of

20%

Th

eref

ore,

out

perfo

rman

ce o

f 10%

Then

: N

omin

ee w

ould

rece

ive

com

pens

atio

n of

$30

0,00

0 ($

30,0

00 ×

10)

[ 147

]

Nom

inee

Com

pens

atio

nEn

dors

edB

ySh

areh

olde

rsan

dG

over

nanc

eEx

pert

sN

omin

ee C

ompe

nsat

ion

Endo

rsed

By

Shar

ehol

ders

and

Gov

erna

nce

Expe

rts

“We

unde

rsta

nd fr

om re

adin

g th

eir p

roxy

sta

tem

ent t

hat a

ny c

ontin

uing

agr

eem

ent b

etw

een

Elli

ott a

nd th

eir n

omin

ees

will

be

pure

ly e

xecu

tory

and

such

nom

inee

s w

ill n

ot o

we

any

duty

or a

llegi

ance

to E

lliot

t. M

oreo

ver,

we

find

that

the

tiid

db

Elli

ttt

thi

ii

it

td

blt

tht

fth

’ti

ico

mpe

nsat

ion

prov

ided

by

Ellio

tt to

thei

r nom

inee

s is

con

sist

ent a

nd c

ompa

rabl

e to

that

of t

he c

ompa

ny’s

con

tinui

ng

dire

ctor

s; s

peci

fical

ly, c

ontin

uing

dire

ctor

s ha

ve s

imila

r ups

ide

pote

ntia

l on

hist

oric

al s

hare

gra

nts

rece

ived

dur

ing

thei

r te

nure

as

dire

ctor

s. W

e be

lieve

Elli

ott’s

nom

inee

s an

d yo

ur c

ontin

uing

dire

ctor

s ar

e al

l com

pens

ated

in a

man

ner

cons

iste

nt w

ith th

eir f

iduc

iary

dut

ies

to a

ll th

e sh

areh

olde

rs.”

Dav

id H

. Bat

chel

der

“Hes

s ha

s po

rtray

ed th

ese

bonu

ses

as s

omeh

ow o

bjec

tiona

ble…

it is

diff

icul

t to

see

the

mer

it in

man

agem

ent’s

ar

gum

ents

. The

bon

uses

see

m s

urgi

cally

tailo

red

to ti

e th

e pa

yoff

to H

ess’

s st

ock

pric

e pe

rform

ance

com

pare

d to

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC

com

petit

ors.

Tha

t is

inte

nded

to a

lign

the

inte

rest

s of

thos

e di

rect

ors

with

thos

e of

the

com

pany

’s s

hare

hold

ers.

Elli

ott

mak

es th

e pr

omis

e at

the

outs

et a

nd th

en h

as n

o ro

le to

pla

y af

terw

ards

, oth

er th

an to

pay

up

if m

ilest

ones

are

met

. No

one

is b

ehol

den

to E

lliot

t and

the

inde

pend

ence

of t

hose

dire

ctor

s is

not

com

prom

ised

.”La

wre

nce

A. C

unni

ngha

m,

Pro

fess

or, G

eorg

e W

ashi

ngto

n U

nive

rsity

Law

Sch

ool

“The

Elli

ott a

ppro

ach

mak

es s

ense

for H

ess

shar

ehol

ders

. It’s

a s

traig

htfo

rwar

d an

d ob

ject

ive

ince

ntiv

e pl

an th

at c

lear

ly

conn

ects

the

inte

rest

s of

inde

pend

ent n

omin

ees

with

the

inte

rest

s of

sha

reho

lder

s ov

er th

e m

ediu

m a

nd lo

ng te

rm. T

his

kind

ofap

proa

chle

nds

itsel

fto

allo

win

gth

ese

nom

inee

sif

elec

ted

tofo

cus

onin

depe

nden

tdec

isio

n-m

akin

gan

dki

nd o

f app

roac

h le

nds

itsel

f to

allo

win

g th

ese

nom

inee

s, if

ele

cted

, to

focu

s on

inde

pend

ent d

ecis

ion

mak

ing

and

fulfi

lling

thei

r fid

ucia

ry o

blig

atio

ns o

n be

half

of s

hare

hold

ers.

”R

anda

ll Th

omas

, P

rofe

ssor

, Van

derb

ilt L

aw S

choo

l

[ 148

]

And

Mor

eG

over

nanc

eEx

pert

s

“The

Elli

ott p

lan

mak

es p

erfe

ct s

ense

for H

ess

shar

ehol

ders

. In

fact

, it i

s st

ate-

of-th

e-ar

t and

oug

ht to

be

mor

e br

oadl

y ad

opte

d. T

ying

dire

ctor

com

pens

atio

n di

rect

ly to

out

perfo

rman

ce a

gain

st p

eers

per

fect

ly a

ligns

the

dire

ctor

s w

ith th

e

And

Mor

e G

over

nanc

e Ex

pert

s

inte

rest

s of

sha

reho

lder

s. T

he p

aym

ents

are

lega

l obl

igat

ions

, not

dis

cret

iona

ry, a

nd th

ey b

ear n

o re

latio

nshi

p w

hats

oeve

r with

any

reco

mm

enda

tions

put

forw

ard

by E

lliot

t. I t

hink

it is

a g

reat

pla

n th

at s

erve

s H

ess

shar

ehol

ders

w

ell.”

Yair

List

oken

, P

rofe

ssor

, Yal

e La

w S

choo

l

“Hes

s sh

areh

olde

rs s

houl

d no

t fin

d th

is a

ppro

ach

obje

ctio

nabl

e, b

ut s

houl

d in

fact

be

happ

y th

at E

lliot

t is

will

ing

to p

ay it

s ow

n m

oney

to c

ompe

nsat

e di

rect

or n

omin

ees

base

d di

rect

ly o

n H

ess’

s st

ock

pric

e pe

rform

ance

rela

tive

to it

s pe

er

grou

p.Th

isap

proa

chis

trans

pare

ntan

dcl

ear,

and

ital

igns

the

inte

rest

sof

inde

pend

entn

omin

ees

with

thos

eof

Hes

sgr

oup.

Thi

s ap

proa

ch is

tran

spar

ent a

nd c

lear

, and

it a

ligns

the

inte

rest

s of

inde

pend

ent n

omin

ees

with

thos

e of

Hes

s sh

areh

olde

rs.”

M. T

odd

Hen

ders

on

Pro

fess

or, U

nive

rsity

of C

hica

go L

aw S

choo

l

“The

Elli

ott n

omin

ee c

ompe

nsat

ion

plan

clo

sely

alig

ns th

e in

tere

sts

of th

ose

nom

inee

s w

ith th

e m

ediu

m a

nd lo

ng te

rm

inte

rest

s of

Hes

s sh

areh

olde

rs a

nd h

as n

o im

pact

on

a di

rect

or's

inde

pend

ence

or a

bilit

y to

fulfi

ll hi

s du

ties

to

stoc

khol

ders

. The

pay

out c

riter

ia a

re o

bjec

tive,

not

dis

cret

iona

ry, a

nd th

ey ti

e on

ly to

mar

ket p

rice

perfo

rman

ce o

ver a

fa

irly

long

per

iod,

rega

rdle

ss o

f whe

ther

the

Boa

rd a

dopt

s E

lliot

t's p

ropo

sals

.”La

wre

nce

AH

amer

mes

hLa

wre

nce

A. H

amer

mes

h,

Pro

fess

or, W

iden

er In

stitu

te o

f Del

awar

e C

orpo

rate

Law [ 1

49]

Shar

ehol

derN

omin

eeC

ompe

nsat

ion

Serv

esas

Cat

chup

toC

urre

ntD

irect

ors

Shar

ehol

der N

omin

ee C

ompe

nsat

ion

Serv

es a

s C

atch

-up

to C

urre

nt D

irect

ors

Afte

r yea

rs o

f rec

eivi

ng u

nres

tric

ted

stoc

k, H

ess’

s cu

rren

t Boa

rd m

embe

rs h

ave

sim

ilar

upsi

de to

Sha

reho

lder

Nom

inee

com

pens

atio

n

Cur

rent

Non

-M

anag

emen

t Boa

rd

Mem

bers

Com

pens

atio

n Pe

r 1%

Incr

ease

Hes

s St

ock(

1)

Nic

hola

s F.

Bra

dy$9

1,91

7

Sam

uelB

odm

an$2

5,10

4

Edi

th H

olid

ay$2

0,58

0

Thom

asH

Kea

n$2

4,08

9“M

oreo

ver,

we

find

that

the

com

pens

atio

nTh

omas

H. K

ean

$24,

089

Cra

ig M

atth

ews

$17,

422

Ris

aLa

vizz

o-M

oure

y$2

2,93

9

Mor

eove

r, w

e fin

d th

at th

e co

mpe

nsat

ion

prov

ided

by

Elli

ott t

o th

eir n

omin

ees

is

cons

iste

nt a

nd c

ompa

rabl

e to

that

of t

he

com

pany

’s c

ontin

uing

dire

ctor

s; s

peci

fical

ly,

cont

inui

ng d

irect

ors

have

sim

ilar u

psid

e po

tent

ialo

nhi

stor

ical

shar

egr

ants

rece

ived

John

Mul

lin II

I$2

8,17

6

Sam

uel A

. Nun

nJr

.$2

,349

Fran

k A

.Ols

on$2

7,90

0

pote

ntia

l on

hist

oric

al s

hare

gra

nts

rece

ived

du

ring

thei

r ten

ure

as d

irect

ors.

”

Dav

id H

. Bat

chel

der

Hes

s sh

areh

olde

r, R

elat

iona

l Inv

esto

rs L

LC(2

)

Ern

st v

on M

etzs

ch$5

4,34

2

Rob

ert

Wils

on$5

0,68

6

Ave

rage

Cur

rent

Boa

rd$3

322

8

[ 150

]

Ave

rage

Cur

rent

Boa

rd$3

3,22

8

Ave

rage

Rem

aini

ng B

oard

$31,

176

Sou

rce:

Blo

ombe

rg, C

ompa

ny fi

lings

1.C

alcu

late

d us

ing

shar

e ho

ldin

gs a

s of

3/1

5/12

pro

xy fi

ling

and

valu

atio

n as

of 4

/5/1

32.

Rel

atio

nal I

nves

tors

lette

r to

John

Hes

s on

Mar

ch 2

7, 2

013

II. A

dditi

onal

Info

rmat

ion

on P

eers

Who

Are

Hes

s’s

Peer

s?W

ho A

re H

ess

s Pe

ers?

Com

pany

Des

crip

tion

Che

vron

(CV

X)

U.S

. Sup

erM

ajor

; Poo

r com

para

ble

due

to s

ize

and

busi

ness

mix

E(X

OM

)U

SS

Mj

Pbl

dt

id

bi

iEx

xon

(XO

M)

U.S

. Sup

erM

ajor

; Poo

r com

para

ble

due

to s

ize

and

busi

ness

mix

BP

(BP

)E

urop

ean

Sup

erM

ajor

; Poo

r com

para

ble

due

to s

ize,

bus

ines

s m

ix a

nd d

iffer

ence

s in

Eur

opea

n eq

uity

mar

kets

She

ll (R

DS

A)

Eur

opea

n S

uper

Maj

or; P

oor c

ompa

rabl

e du

eto

siz

e, b

usin

ess

mix

and

diff

eren

ces

in E

urop

ean

equi

ty m

arke

ts

Sta

toil

(STO

)Eu

rope

an S

uper

Maj

or; P

oor c

ompa

rabl

e du

eto

siz

e, b

usin

ess

mix

and

diff

eren

ces

in E

urop

ean

equi

ty m

arke

ts

Tota

l (TO

T)Eu

rope

an S

uper

Maj

or; P

oor c

ompa

rabl

e du

eto

siz

e, b

usin

ess

mix

and

diff

eren

ces

in E

urop

ean

equi

ty m

arke

ts

Apa

che

(APA

)C

once

ntra

ted

expo

sure

to E

gypt

(58%

of I

ncom

e), w

hich

has

suf

fere

d du

e to

Ara

b S

prin

g

Ana

dark

o (A

PC

)M

ost c

ompa

rabl

e pe

er a

ccor

ding

to W

ood

Mac

kenz

ie;

Gas

ex p

osur

e ov

erst

ated

due

to c

onsi

sten

t mon

etiz

atio

n of

exp

lora

tion

asse

ts p

rior t

o pr

oduc

tion

pp

pp

Con

ocoP

hillip

s (C

OP

)R

easo

nabl

e co

mpa

rabl

e gi

ven

trans

ition

from

inte

grat

ed to

E&

P

Dev

on (D

VN

)N

orth

Am

eric

a on

ly;s

igni

fican

t exp

osur

e to

Nor

th A

mer

ican

nat

ural

gas

and

NG

Ls

EO

G (E

OG

)R

easo

nabl

e co

mpa

rabl

e to

Hes

s re

sour

ce p

lay

busi

ness

; nat

ural

gas

wei

ghtin

g is

a he

adw

ind

for E

OG

Mth

(MR

O)

Rbl

bli

titi

fi

tt

dt

E&

Pi

dil

Mar

atho

n (M

RO

)R

easo

nabl

e co

mpa

rabl

e gi

ven

trans

ition

from

inte

grat

ed to

E&P

, siz

ean

d oi

l exp

osur

e

Mur

phy

(MU

R)

Rea

sona

ble

com

para

ble

but h

ighe

r exp

osur

e to

Nor

th A

mer

ican

nat

ural

gas

and

NG

Ls, s

ubst

antia

lly lo

wer

pe

rcen

tage

of v

alue

from

unc

onve

ntio

nal o

il a

s pe

rcen

tage

of n

et a

sset

val

ue

Nob

le (N

BL)

Mos

t com

para

ble

peer

acc

ordi

ng to

Ban

k of

Am

eric

a M

erril

l Lyn

ch;

Com

para

ble

mix

ofEx

plor

atio

n/R

esou

rce

Exp

osur

eC

ompa

rabl

e m

ix o

f Exp

lora

tion/

Res

ourc

e E

xpos

ure

Occ

iden

tal (

OX

Y)

Sub

stan

tially

larg

er th

an H

ess;

Lar

ge c

hem

ical

ope

ratio

ns

Talis

man

(TLM

)S

igni

fican

tly h

ighe

r exp

osur

e to

Nor

th A

mer

ican

nat

ural

gas

and

NG

Ls

Con

tinen

tal(

CLR

)M

ost c

ompa

rabl

epe

er fo

r Hes

s’s

Bak

ken

posi

tion

[ 152

]

Kod

iak

(KO

G)

Bak

ken

pure

-pla

y o

pera

tor

Oas

is (O

AS

)B

akke

npu

re-p

lay

ope

rato

r

Hes

sR

elat

ive

Perf

orm

ance

Hes

s R

elat

ive

Perf

orm

ance

As

of 1

1/28

/12

End

Dat

e(1)

As o

f 1/2

5/13

End

Dat

e(2)

17-Y

ear

5-Ye

ar4-

Year

3-Ye

ar2-

Year

1-Ye

ar17

-Yea

r5-

Year

4-Ye

ar3-

Year

2-Ye

ar1-

Year

U.S

. Sup

erM

ajor

U.S

. Sup

erM

ajor

CV

X(3

59)%

(71)

%(5

9)%

(61)

%(6

6)%

(25)

%C

VX

(368

)%(1

00)%

(83)

%(7

2)%

(54)

%(8

)%O

OXO

M(3

20) %

(38)

%(2

7)%

(39)

%(6

1)%

(30)

%XO

M(2

85) %

(55)

%(2

5)%

(50)

%(4

5)%

(4)%

Eur

opea

n S

uper

Maj

orE

urop

ean

Sup

erM

ajor

BP

33%

2%(6

)%9%

(39)

%(1

8)%

BP

77%

(19)

%(2

2)%

17%

(24)

%1%

RD

SA

(61)

%(4

8)%

(58)

%(6

0)%

(50)

%(2

0)%

RD

SA

(11)

%(7

1)%

(76)

%(5

0)%

(39)

%2%

STO

N/A

(22)

%(4

5)%

(22)

%(4

9)%

(13)

%S

TON/

A(5

9)%

(41)

%(2

4)%

(38)

%0%

TOT

(222

)%(1

7)%

(21)

%(2

0)%

(42)

%(2

1)%

TOT

(192

)%(3

7)%

(34)

%(1

1)%

(28)

%(1

)%

Larg

e C

ap In

depe

nden

tLa

rge

Cap

Inde

pend

ent

AP

A(3

60)%

(8)%

(8)%

5%(0

)%3%

AP

A(3

59)%

(26)

%(9

)%18

%8%

19%

AP

C(2

77)%

(60)

%(8

9)%

(35)

%(4

4)%

(9)%

AP

C(2

76)%

(83)

%(1

14)%

(27)

%(3

1)%

3%C

OP

(271

)%(4

1)%

(73)

%(7

5)%

(62)

%(2

7)%

CO

P(2

52)%

(63)

%(9

1)%

(78)

%(5

1)%

(16)

%C

OP

/PS

X(3)

(328

)%(5

2)%

(89)

%(9

0)%

(74)

%(3

8)%

CO

P/P

SX(3

)(3

22)%

(77)

%(1

12)%

(97)

%(6

5)%

(29)

%D

VN

(124

)%6%

18%

7%(5

)%1%

DV

N(8

0)%

(3)%

12%

20%

11%

19%

DV

N(1

24)%

6%18

%7%

(5)%

1%D

VN

(80)

%(3

)%12

%20

%11

%19

%E

OG

(708

)%(7

1)%

(46)

%(4

8)%

(60)

%(3

2)%

EO

G(7

28)%

(86)

%(8

8)%

(34)

%(5

0)%

(14)

%M

RO

(522

)%(3

2)%

(123

)%(8

1)%

(87)

%(3

2)%

MR

O(5

35)%

(61)

%(1

08)%

(95)

%(5

6)%

(3)%

MR

O/M

PC

(4)

(683

)%(5

1)%

(164

)%(1

13)%

(117

)%(3

2)%

MR

O/M

PC

(4)

(746

)%(9

1)%

(156

)%(1

39)%

(86)

%(3

)%M

UR

(566

)%(1

8)%

(53)

%(2

5)%

(21)

%(2

9)%

MU

R(5

70)%

(32)

%(4

7)%

(29)

%(1

7)%

(5)%

NB

L(3

98)%

(68)

%(9

8)%

(66)

%(4

8)%

(19)

%N

BL

(422

)%(9

6)%

(123

)%(4

2)%

(52)

%(4

)%O

XY(8

15)%

(46)

%(5

8)%

(12)

%(1

7)%

3%O

XY(8

81)%

(75)

%(5

9)%

(15)

%(1

3)%

20%

()

()

()

()

()

()

()

()

()

()

TLM

(89)

%4%

(5)%

22%

11%

(3)%

TLM

(51)

%(1

1)%

(4)%

30%

20%

3%

Bak

ken

Ope

rato

rsB

akke

n O

pera

tors

CLR

N/A

(222

)%(2

53)%

(92)

%(5

5)%

(15)

%C

LRN/

A(2

80)%

(282

)%(1

10)%

(65)

%3%

KO

GN/

A(3

04)%

(1,7

16)%

(276

)%(1

06)%

(14)

%K

OG

N/A

(378

)%(2

,354

)%(2

76)%

(87)

%8%

OA

SN/

AN

/AN/

AN

/A(4

9)%

(17)

%O

AS

N/A

N/A

N/A

N/A

(56)

%0%

Pro

xy P

eers

(5)

(333

)%(3

1)%

(43)

%(2

9)%

(40)

%(1

7)%

Pro

xy P

eers

(5)

(322

)%(5

2)%

(53)

%(2

7)%

(27)

%1%

Rev

ised

Pee

rs(6

)(4

60)%

(45)

%(6

3)%

(44)

%(4

7)%

(20)

%R

evis

ed P

eers

(6)

(468

)%(6

8)%

(75)

%(4

3)%

(36)

%(1

)%In

tegr

ated

Pee

rs(7

)(3

17)%

(35)

%(5

2)%

(40)

%(5

3)%

(20)

%In

tegr

ated

Pee

rs(7

)(3

06)%

(60)

%(6

0)%

(42)

%(3

9)%

(1)%

Bak

ken

Ope

rato

rs (8

)N/

A(2

63)%

(984

)%(1

84)%

(70)

%(1

6)%

Bak

ken

Ope

rato

rs (8

)N/

A(3

29)%

(1,3

18)%

(193

)%(6

9)%

4%XO

PN/

A(3

1)%

(57)

%(4

3)%

(44)

%(2

0)%

XOP

N/A

(54)

%(7

0)%

(42)

%(3

6)%

(4)%

XLE

N/A

(39)

%(8

1)%

(52)

%(3

9)%

(15)

%XL

EN/

A(6

3)%

(96)

%(4

2)%

(34)

%0%

[ 153

]

Sou

rce:

Blo

ombe

rg, C

ompa

ny fi

lings

1.A

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of H

ess

stoc

k2.

As

of 1

/25/

13, d

ate

befo

re w

hich

Elli

ott i

nten

tion

to n

omin

ate

dire

ctor

s be

cam

e pu

blic

3.In

corp

orat

ing

spin

off o

f PS

X w

hich

took

pla

ce in

May

201

24.

Inco

rpor

atin

g sp

inof

f of M

PC

whi

ch to

ok p

lace

in J

uly

2011

5.P

roxy

pee

rs: U

sed

by H

ess

for m

gmt c

ompe

nsat

ion:

Ana

dark

o, A

pach

e, B

P, C

hevr

on, C

onoc

oPhi

llips,

Dev

on, E

OG

, Exx

on, M

arat

hon,

Mur

phy,

Occ

iden

tal,

She

ll, S

tato

il, T

alis

man

and

Tot

al

6.R

evis

ed p

roxy

pee

rs: e

xclu

des

Dev

on &

Tal

ism

an d

ue to

hig

h N

orth

Am

eric

a ga

s w

eigh

ting;

exc

lude

s B

P,

She

ll, S

tato

il, T

otal

due

to E

urop

ean

supe

r maj

or s

tatu

s; in

clud

es N

oble

as

addi

tiona

l rel

evan

t com

petit

or7.

Inte

grat

ed P

eers

incl

udes

BP

, CV

X, C

OP

, XO

M, M

RO

, OX

Y, R

DS

, STL

and

TO

T. C

OP

and

MR

O w

ere

inte

grat

ed u

ntil

May

201

2 &

Jul

y 20

11 re

spec

tivel

y8.

Bak

ken

Ope

rato

rs: I

nclu

des

Con

tinen

tal,

Oas

is a

nd K

odia

k

()

()

()

()

()

()

()

()

()

Hes

s C

herr

y-Pi

cks

Prox

y Pe

ers

Year

by

Year

St

illM

anag

esto

Und

erpe

rfor

mTh

emA

llSt

ill M

anag

es to

Und

erpe

rfor

m T

hem

All

10 –

Yea

r7-

Year

5-Ye

ar3-

Year

1-Ye

ar

2003

Pro

xyP

eers

2006

Pro

xy P

eers

2008

Pro

xy P

eers

2010

Pro

xyP

eers

2012

Pro

xy P

eers

Ana

dark

oA

nada

rko

Ana

dark

oA

nada

rko

Ana

dark

oIn

dica

tes

chan

ge in

Hes

s pr

oxy

peer

sAp

ache

Apac

heAp

ache

Apac

he

Ashl

and

BG

BP

BP

BP

BP

Burli

ngto

nBu

rling

ton

Che

vron

Che

vron

Che

vron

Che

vron

Con

oco

Con

oco

Con

oco

Con

oco

Dev

onD

evon

Dev

onD

evon

Dev

on

EO

GE

OG

Exx

onE

xxon

Exx

onE

xxon

Ker

r-McG

ee

Mar

atho

nM

arat

hon

Mar

atho

nM

arat

hon

Mar

atho

n

Mur

phy

Mur

phy

Mur

phy

Oxy

Oxy

Oxy

Oxy

Oxy

Shel

lSh

ell

She

llS

hell

Sta

toil

Suno

coSu

noco

Suno

co

Talis

man

Teso

roTe

soro

Teso

ro

Tota

l

Uno

cal

Val

ero

Val

ero

Val

ero

[ 154

]

Val

ero

Val

ero

Val

ero

Willi

ams

Sou

rce:

Com

pany

filin

gs1.

Per

form

ance

cal

cula

ted

from

firs

t day

of t

he y

ear t

o 11

/28/

12, d

ate

befo

re w

hich

Elli

ott b

egan

to

purc

hase

a s

ubst

antia

l am

ount

of H

ess

stoc

k; fo

r exa

mpl

e, p

erfo

rman

ce fo

r 200

3 pr

oxy

peer

s ca

lcul

ated

from

1/1

/200

3 to

11/

28/1

2

(99)

%(3

1)%

(48)

%(6

0)%

(11)

%

Bas

ed o

n M

arke

t Cap

italiz

atio

n an

d E&

P R

even

ueM

ostC

ompa

rabl

ePe

ers

Are

Larg

eC

apIn

depe

nden

tsan

dC

ontin

enta

l

M

arke

t cap

italiz

atio

n:

Mos

t Com

para

ble

Peer

s A

re L

arge

Cap

Inde

pend

ents

and

Con

tinen

tal

Mar

ket C

ap

as M

ultip

leof

Hes

s(1)

Rev

enue

as

Mul

tiple

of H

ess

E&

P R

even

ueas

Mul

tiple

of

Hes

s

Pro

duct

ion

as M

ultip

le

of H

ess

U.S

. Sup

erM

ajor

S

uper

Maj

ors

are

~5 to

24x

Hes

s

La

rge

Cap

Inde

pend

ents

are

0.7

x to

4.1

x H

ess

R

even

ue:

CV

X12

.3x

6.1x

5.8x

6.4x

XO

M23

.9x

12.0

x6.

6x10

.4x

Euro

pean

Sup

erM

ajor

BP7.

8x10

.0x

4.5x

8.1x

E

&P

Rev

enue

is m

ore

rele

vant

than

Tot

al R

even

ue

whe

n ev

alua

ting

rela

tive

size

bec

ause

dow

nstre

am

oper

atio

ns g

ener

ate

high

reve

nues

but

hav

e lim

ited

econ

omic

s. F

or e

xam

ple,

Hes

s do

wns

tream

gen

erat

es

68%

ofits

reve

nue

butr

epre

sent

sle

ssth

an9%

ofH

ess

RD

SA

12.8

x12

.4x

6.2x

7.9x

STO

4.6x

3.4x

5.0x

4.3x

TOT

6.6x

6.4x

4.2x

5.4x

Larg

eC

apIn

depe

nden

t68

% o

f its

reve

nue

but r

epre

sent

s le

ss th

an 9

% o

f Hes

s ne

t inc

ome

Larg

e C

ap In

depe

nden

t

APA

1.8x

0.5x

1.6x

1.9x

APC

2.2x

0.4x

1.1x

1.8x

CO

P4.

1x1.

5x3.

2x3.

8x

DV

N1

3x0

3x0

7x1

7xB

ased

on

mar

ket c

apita

lizat

ion

and

reve

nue,

H

ess’

sm

ostc

ompa

rabl

epe

ers

are

Larg

eC

apD

VN

1.3x

0.3x

0.7x

1.7x

EO

G1.

9x0.

3x0.

7x1.

1x

MR

O1.

3x0.

4x1.

1x1.

1x

MU

R0.

7x0.

8x0.

4x0.

5x

NB

L1

0x0

1x0

4x0

6x

Hes

s’s

mos

t com

para

ble

peer

s ar

e La

rge

Cap

In

depe

nden

ts a

nd C

ontin

enta

l

“Sha

reho

lder

s ne

ed to

be

satis

fied

that

the

peer

gro

up is

i

td

th

ik

df

thf

NB

L1.

0x0.

1x0.

4x0.

6x

OX

Y3.

7x0.

6x1.

7x1.

9x

TLM

0.7x

0.2x

0.7x

1.0x

Bak

ken

Ope

rato

rs

CLR

07

01

02

02

appr

opria

te a

nd n

ot c

herr

y-pi

cked

for t

he p

urpo

se o

f ju

stify

ing

or in

flatin

g pa

y. In

gen

eral

, we

belie

ve a

pee

r gro

up

shou

ld ra

nge

from

0.5

to 2

tim

es th

e m

arke

t cap

italiz

atio

n of

the

Com

pany

. In

this

cas

e, G

lass

Lew

is h

as id

entif

ied

10

peer

s ou

tsid

e of

this

rang

e, w

hich

repr

esen

ts a

ppro

xim

atel

y 62

.5%

of t

he p

eer g

roup

.”

[ 155

]

CLR

0.7x

0.1x

0.2x

0.2x

KO

G0.

1x0.

0x0.

0x0.

0x

OA

S0.

2x0.

0x0.

1x0.

1xS

ourc

e: C

ompa

ny fi

lings

1.M

arke

t cap

italiz

atio

n as

of 1

1/28

/12,

dat

e be

fore

whi

ch E

lliot

t beg

an to

pur

chas

e a

subs

tant

ial a

mou

nt o

f Hes

s st

ock

Gla

ss L

ewis

, Hes

s P

roxy

Pap

er 2

011

With

Low

Exp

osur

e to

Col

laps

ing

N.A

. Nat

ural

Gas

Pric

es, H

ess

Shou

ld

Hav

eO

utpe

rfor

med

All

ofth

eIn

depe

nden

tsEs

peci

ally

DVN

EOG

and

TLM

Hav

e O

utpe

rfor

med

All

of th

e In

depe

nden

ts, E

spec

ially

DVN

, EO

G, a

nd T

LM%

of P

rodu

ctio

nN

orth

Amer

ican

Gas

or N

GLs

% o

f Pro

duct

ion

Oil

Hes

s9%

70%

N.A

. Nat

ural

Gas

Pric

es S

ince

200

8(1)

U.S

. nat

ural

gas

pric

es h

ave

colla

psed

ove

r the

pas

t 5 y

ears

Euro

pean

Supe

rMaj

or

U.S

. Sup

erM

ajor

CV

X8%

68%

XO

M16

%52

%

$6.0

0

$7.0

0

$8.0

0

$9.0

0

Euro

pean

Sup

erM

ajor

BP8%

63%

RD

SA

9%51

%

STO

4%55

%

TOT

2%55

%$3

.00

$4.0

0

$5.0

0

TOT

2%55

%

Larg

e C

ap In

depe

nden

t

APA

36%

45%

APC

68%

32%

CO

P34

%45

%

$2.0

0

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Nov-12

US

Nat

ural

Gas

H

ess

has

only

9%

of p

rodu

ctio

n ex

pose

d to

low

U.S

. nat

ural

gas

and

NG

L pr

icin

g

CO

P34

%45

%

DV

N79

%21

%

EO

G52

%34

%

MR

O15

%64

%

MU

R23

%58

%

Hes

s ha

s lo

wes

t exp

osur

e to

N.A

. gas

of a

ny In

depe

nden

t pee

r

MU

R23

%58

%

NB

L37

%37

%

OX

Y27

%61

%

TLM

41%

35%

*Not

e: A

PC

’s N

orth

Am

eric

an g

as e

xpos

ure

over

stat

ed d

ue to

co

nsis

tent

mon

etiz

atio

n of

exp

lora

tion

asse

ts p

rior t

o pr

oduc

tion

[ 156

]

Bak

ken

Ope

rato

rs

CLR

30%

70%

KO

G10

%90

%

OA

S8%

92%

Sou

rce:

Com

pany

filin

gs1.

Janu

ary

2013

Nat

ural

Gas

Hes

s Is

No

Mor

e In

tegr

ated

Tha

n A

ny o

f The

Lar

ge C

ap In

depe

nden

tsB

utIs

Subs

tant

ially

Less

Inte

grat

edTh

anTh

eSu

perM

ajor

sB

ut Is

Sub

stan

tially

Les

s In

tegr

ated

Tha

n Th

e Su

perM

ajor

s

W

hen

eal

atin

g%

ofG

ross

PP

&E

or%

ofN

etIn

com

e

Ave

rage

% o

f Gro

ss

PP&E

Out

side

of E

&P(1

)

5-Y

r

3-

Yr

1-Y

r

Hes

s7%

6%6%

Ave

rage

% o

f Net

Inco

me

Out

side

of E

&P5-

Yr

3-Y

r

1

-Yr

6%3%

9%

Whe

n ev

alua

ting

% o

f Gro

ss P

P&E

or %

of N

et In

com

e ou

tsid

e of

E&

P op

erat

ions

, Hes

s is

sim

ilar t

o La

rge

Cap

In

depe

nden

ts

C

OP

and

MR

Oha

vetra

nsiti

oned

from

Inte

grat

eds

toE

&P

Euro

pean

Supe

rMaj

or

U.S

. Sup

erM

ajor

CV

X15

%13

%12

%

XO

M28

%25

%21

%

6%8%

9%

25%

28%

36%

CO

P an

d M

RO

hav

e tra

nsiti

oned

from

Inte

grat

eds

to E

&P

pure

-pla

ys b

y sp

inni

ng o

ff th

eir d

owns

tream

ope

ratio

ns, P

SX

an

d M

PC

resp

ectiv

ely

H

ess

was

pos

ition

ed to

und

ergo

a s

imila

r tra

nsiti

on

Euro

pean

Sup

erM

ajor

BP10

%10

%10

%

RD

SA

24%

24%

23%

STO

10%

9%8%

TOT

10%

8%8%

13%

16%

8%

14%

17%

19%

11%

10%

12%

16%

16%

17%

If H

ess

wan

ts to

be

com

pare

d to

Inte

grat

eds,

then

C

OP

and

MR

O a

re th

e m

ost r

elev

ant p

eers

TOT

10%

8%8%

Larg

e C

ap In

depe

nden

t

APA2

6%6%

6%

APC

9%9%

10%

CO

P13

%11

%0%

16%

16%

17%

0%0%

0%

4%4%

5%

11%

15%

0%C

OP

13%

11%

0%

DV

N2

0%0%

0%

EO

G0%

0%0%

MR

O19

%11

%0%

MU

R20

%17

%12

%

11%

15%

0%

17%

17%

22%

0%0%

0%

17%

6%4%

16%

18%

15%

MU

R20

%17

%12

%

NB

L0%

0%0%

OX

Y17

%17

%17

%

TLM

0%0%

0%

16%

18%

15%

0%0%

0%

11%

12%

14%

0%0%

0%

[ 157

]

Bak

ken

Ope

rato

rs

CLR

0%0%

0%

KO

G0%

0%0%

OA

S0%

0%0%

Sou

rce:

Com

pany

filin

gs1.

Gro

ss P

P&

E u

sed

as a

pro

xy fo

r cap

ital e

mpl

oyed

whi

ch m

any

of th

e pe

ers

fail

to d

iscl

ose

2.A

PA

bre

aks

out m

idst

ream

for P

P&

E b

ut n

ot fo

r inc

ome;

DV

N b

reak

s ou

t mid

stre

am

oper

atio

ns fo

r inc

ome

but n

ot fo

r gro

ss P

P&

E

0%0%

0%

0%0%

0%

0%0%

0%

Idio

sync

ratic

Eve

nts

Mak

e A

pach

e (A

PA) a

nd B

P N

ot C

ompa

rabl

e to

Hes

s O

verT

heLa

st5

Year

sO

ver T

he L

ast 5

Yea

rs

Apa

che

suffe

red

from

the

Ara

b S

prin

g

Fo

r Apa

che:

20%

of p

rodu

ctio

n, 3

0% o

f cas

h flo

w, a

nd 5

8% o

f ope

ratin

g in

com

e co

me

from

Egy

pt

“AP

A's

sto

ck p

erfo

rman

ce h

as s

igni

fican

tly la

gged

its

peer

ave

rage

and

the

S&

P 5

00 s

ince

the

Egy

ptia

n re

volu

tion.

We

are

mor

e pe

ssim

istic

abo

ut E

gypt

's

futu

re th

an in

any

tim

e in

the

last

two

year

s an

d ar

e re

duci

ngou

rPT

to$9

5fro

m$1

05W

eth

ink

AP

A

“Sin

ce e

arly

-201

1, E

gypt

has

bee

n a

pers

iste

nt

over

hang

for A

PA

. Whi

le in

sim

ple

term

s th

e re

gion

ac

coun

ts fo

r …23

% o

f our

NA

V, t

his

unde

rsta

tes

the

impo

rtanc

e of

the

asse

t for

the

portf

olio

.… W

hile

a

com

plet

elif

ting

ofth

eE

gypt

over

hang

isun

likel

yth

ere

duci

ng o

ur P

T to

$95

from

$10

5. W

e th

ink

AP

A

wou

ld b

e be

tter o

ff ex

iting

Egy

pt b

y se

lling

its

oper

atio

ns a

nd u

sing

the

proc

eeds

to b

uy b

ack

shar

es, r

educ

e de

bt a

nd b

oost

inve

stm

ents

el

sew

here

.”

Oh

i(F

b28

2013

)

com

plet

e lif

ting

of th

e E

gypt

ove

rhan

g is

unl

ikel

y, th

e m

arke

t is

disc

ount

ing

a ve

ry b

earis

h ou

tcom

e fo

r an

asse

t tha

t has

suf

fere

d no

vis

ible

eco

nom

ic im

pact

fro

m th

e de

terio

ratin

g po

litic

al &

fisc

al s

ituat

ion

over

th

e pa

st 2

yea

rs.”

Dt

hB

k(M

h7

2013

)

BP

sto

ck p

rice

decl

ined

sub

stan

tially

due

to M

acon

do-Opp

enhe

imer

(Feb

ruar

y 28

, 201

3)-D

euts

che

Ban

k (M

arch

7, 2

013)

BP

’sst

ock

colla

psed

bym

ore

than

50%

inth

ew

ake

ofM

acon

do

BPs

stoc

k co

llaps

ed b

y m

ore

than

50%

in th

e w

ake

of M

acon

do

90100

110

BP

Rel

ativ

e Pe

rfor

man

ce S

ince

Jan

uary

1, 2

008(

1)

Apr

il 20

th20

10 –

Oil

spill

at

BP’s

Mac

ondo

pros

pect

5060

70

80

90

[ 158

]S

ourc

e: C

ompa

ny fi

lings

1.B

P p

erfo

rman

ce v

ersu

s re

mai

nder

of H

ess

prox

y pe

ers

50

01-Jan-0801-Mar-0801-May-08

01-Jul-0801-Sep-0801-Nov-0801-Jan-0901-Mar-0901-May-09

01-Jul-0901-Sep-0901-Nov-0901-Jan-1001-Mar-1001-May-10

01-Jul-1001-Sep-1001-Nov-1001-Jan-1101-Mar-1101-May-11

01-Jul-1101-Sep-1101-Nov-1101-Jan-1201-Mar-1201-May-12

01-Jul-1201-Sep-1201-Nov-1201-Jan-13

On

The

Bas

is o

f Siz

e, N

.A. G

as E

xpos

ure,

and

% o

f PP&

E O

utsi

de o

f U

pstr

eam

, Ana

dark

o A

nd N

oble

Are

The

Mos

t Com

para

ble

Peer

s; C

onoc

o A

nd M

arat

hon

Are

Inst

ruct

ive

Giv

en S

imila

r Tra

nsiti

ons

to P

ure-

play

E&

P;

Con

tinen

talI

sC

lose

stC

ompa

rabl

eFo

rBak

ken

Posi

tion

Con

tinen

tal I

s C

lose

st C

ompa

rabl

e Fo

r Bak

ken

Posi

tion

Inde

pend

ent

vs.

Supe

rMaj

or

Mkt

Cap

as

M

ultip

leof

Hes

s(1)

E&P

Rev

enue

as M

ultip

le

of H

ess

% o

f Pro

duct

ion

Nor

thAm

eric

anG

as o

r NG

Ls

Ave

rage

% o

f Gro

ss

PP&E

Out

side

of

E&P(

1)

5-Y

r

3-Y

r

1-Y

r

Mos

t Com

para

ble

Peer

s

Anad

arko

Inde

pend

ent

22x

11x

68%

(4)

9%9%

10%

In

depe

nden

tE&P

with

inte

rnat

iona

l sca

le c

ompa

rabl

e to

Hes

s

Sig

nific

ant U

.S. o

nsho

re re

sour

ce p

lay

expo

sure

In

tern

atio

nal e

xplo

ratio

n is

key

corp

orat

e fo

cus

Hes

sIn

depe

nden

t9%

7%6%

6%

(AP

C)

Inde

pend

ent

2.2x

1.1x

68%

(4)

9%9%

10%

S

igni

fican

t ope

ratio

ns in

Gul

f of M

exic

o

Con

side

rabl

e ca

pita

l dep

loye

d in

mid

stre

am o

pera

tions

M

ost c

ompa

rabl

e pe

er a

ccor

ding

to W

ood

Mac

kenz

ie(2

)

Nob

le(N

BL)

Inde

pend

ent

1.0x

0.4x

37%

0%0%

0%

In

depe

nden

tE&P

with

inte

rnat

iona

l sca

le c

ompa

rabl

e to

Hes

s

Sig

nific

ant U

.S. o

nsho

re re

sour

ce p

lay

expo

sure

In

tern

atio

nal e

xplo

ratio

n is

key

corp

orat

e fo

cus

P

ortfo

lioin

clud

essu

iteof

core

inte

rnat

iona

lass

ets

inW

estA

frica

and

(NB

L)p

P

ortfo

lio in

clud

es s

uite

of c

ore

inte

rnat

iona

l ass

ets

in W

est A

frica

and

lo

ng-li

fe g

as a

sset

s

Mos

t com

para

ble

peer

acc

ordi

ng to

Ban

k of

Am

eric

a M

erril

l Lyn

ch(3

)

Inst

ruct

ive

Giv

en S

imila

r Tra

nsiti

ons

to P

ure-

play

E&

P

In

depe

nden

t E&

Pw

ith d

iver

sifie

d po

rtfol

io o

f int

erna

tiona

l ass

ets

Tr

ansi

tione

dfro

min

tegr

ated

E&

Pto

pure

-pla

yE&

P(c

ompl

eted

2012

)C

onoc

o(C

OP

/PS

X)

Inde

pend

ent

4.1x

3.2x

34%

13%

11%

0%Tr

ansi

tione

d fro

m in

tegr

ated

E&

P to

pur

epl

ay E

&P

(com

plet

ed 2

012)

S

igni

fican

t U.S

. ons

hore

reso

urce

pla

y ex

posu

re

Und

ergo

ing

sign

ifica

nt d

ives

titur

e pr

ogra

m

Mat

eria

l ove

rlap

with

Hes

s as

set b

ase:

Gul

f of M

exic

o, N

orw

ay, W

est

Afri

ca, a

nd M

alay

sia

Mar

atho

nIn

depe

nden

t1

3x1

1x15

%19

%11

%0%

In

depe

nden

tE&P

with

inte

rnat

iona

l sca

le c

ompa

rabl

e to

Hes

s

Tran

sitio

ned

from

inte

grat

ed E

&P

to p

ure-

play

E&P

(com

plet

ed 2

011)

(MR

O/M

PC

)In

depe

nden

t1.

3x1.

1x15

%19

%11

%0%

S

igni

fican

t U.S

. ons

hore

reso

urce

pla

y ex

posu

re

Low

exp

osur

e to

Nor

th A

mer

ican

nat

ural

gas

and

NG

Ls

Mos

tCom

para

ble

Bak

ken

Ope

rato

r

Con

tinen

tal

(CLR

)In

depe

nden

t0.

7x0.

2x30

%0%

0%0%

Si

gnifi

cant

acre

age

posi

tion

in th

e Ba

kken

[ 159

]S

ourc

e: C

ompa

ny fi

lings

1.A

s of

11/

28/1

2, d

ate

befo

re w

hich

Elli

ott b

egan

to p

urch

ase

a su

bsta

ntia

l am

ount

of

Hes

s st

ock

2.S

ourc

e: W

ood

Mac

kenz

ie -

Sep

tem

ber 2

012

Hes

s C

orpo

rate

Rep

ort

3.B

ank

of A

mer

ica

Mer

rill L

ynch

, Apr

il 1

2013

4.A

PC

’s N

orth

Am

eric

an g

as e

xpos

ure

over

stat

ed d

ue to

con

sist

ent m

onet

izat

ion

of o

il-fo

cuse

d ex

plor

atio

n as

sets

prio

r to

prod

uctio

n

(CLR

)

Con

tact

s&

Add

ition

alIn

form

atio

nC

onta

cts

& A

dditi

onal

Info

rmat

ion

Inve

stor

s

Bru

ce H

. Gol

dfar

b / P

at M

cHug

h / G

eoff

Sor

bello

Oka

pi P

artn

ers

LLC

Tel:

+1-2

12-2

97-0

720

f@

info

@ok

apip

artn

ers.

com

Pres

sPr

ess

John

Har

tzTe

l: +1

-212

-446

-187

2Te

l 2: +

1-71

8-92

6-35

03

ForA

dditi

onal

Info

rmat

ion

jhar

tz@

sloa

nepr

.com

ww

w.R

eass

essH

ess.

com

For A

dditi

onal

Info

rmat

ion

[160

]