Hess Reports Smaller Quarterly Loss on Higher Crude Prices
Energy producer Hess Corp. (NYSE: HES – $49.68) reported a smaller-than-expected quarterly loss as rising crude prices and cost cuts helped the company offset a drop in production. The results reflect an increasing optimism within the U.S. shale oil industry that crude prices are on the rise and technology improvements, among other factors, should help companies pump more for less. Hess said total revenue rose 28.4% to $1.28 billion in the first quarter, up from $933 million last year at this time, while total costs and expenses fell 13.3% to $1.58 billion. The Street was looking for revenue of $1.32 billion. Net loss attributable to Hess narrowed to $324 million, or $1.07 per share, in the quarter, from $509 million, or $1.72 per share, a year earlier and $0.29 better than Street estimates. Lower oilfield costs have helped U.S. oil producers keep a lid on spending and enabled them to keep drilling during the downturn.
Oil and gas production exceeded guidance. Total production was 307,000 barrels of oil equivalent per day (boepd), excluding Libya and Bakken shale production was 99,000 boepd. Hess Midstream Partners LP launched its $350 million initial public offering in the first quarter, with net proceeds of $175 million retained by Hess. Long-term capital appreciation potential for HES looks worthwhile once crude prices return to more normal levels. And the $1.00 annual dividend, which seems maintainable at the moment (thanks to the company’s adequate balance sheet), sweetens the pot. The shares can be retained for eventual recover.