Scope of Report Message From the Chairman Our Company 2006 Highlights 2006 At A Glance 2006 Performance Data How We Operate Review of Operations Safety Performance Environmental Performance Global Workforce Community & Social Performance Global Compact Index GRI & IPIECA/API Index Verification Statement

MESSAGE FROM THE CHAIRMAN

In 2006 we continued to make progress in executing our strategy to increase shareholder value on a sustainable basis. Our challenge is to help meet the increasing worldwide demand for energy while managing our operations in a responsible manner that protects the environment, the health and safety of our stakeholders and has a positive impact on the communities where we operate. We are guided by our long established values that provide a framework for responsible policies and practices.

Throughout the year we maintained our strategic focus on growing reserves and production. Our year end proved reserves grew by 14 percent and we replaced 232 percent of production. We brought four new field developments into production, including our company operated Okume Complex in Equatorial Guinea and Phu Horm Project in Thailand and made a significant discovery at our Pony prospect in the deepwater Gulf of Mexico.

In Marketing and Refining we generated solid financial results and continued the selective expansion of our Retail and Energy Marketing businesses. Our refineries continued to operate reliably and we successfully completed low sulfur fuel projects at both Port Reading and our HOVENSA joint venture refinery.

As we continue to make major investments to grow our hydrocarbon reserves, we are also implementing standards and systems that support our goals of improving our environment, health, safety and social responsibility performance. We have put in place a new process to address and mitigate our greenhouse gas emissions and have developed appropriate reporting tools to measure our performance.

In 2006 we continued to improve our safety performance and achieved a 13 percent reduction in recordable injuries from the previous year. We are especially pleased that 2006 represented the second consecutive year with no work related fatalities. We are committed to further improving our safety performance and are developing new safety initiatives and programs.

We remain committed to having a positive impact on the communities where we operate. In Equatorial Guinea, we joined with the government in a $40 million program to support education in the country. As part of this program, Hess will contribute $20 million over the next five years to help strengthen the education system for children from ages 6 to 18.

We have significantly revised this annual report to align with the latest global reporting guidelines and provide a comprehensive overview of our performance and commitment to our stakeholders. We are proud of the progress we have made and remain confident that we are building a sustainable enterprise for future growth.