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Hess (HES) Beats on Q2 Earnings, Discovers New Oil in Guyana
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Hess Corporation (HES - Free Report) reported adjusted second-quarter 2021 earnings per share of 24 cents, beating the Zacks Consensus Estimate of 19 cents and improving from the year-ago loss of $1.05.
Quarterly revenues increased to $1,598 million from $842 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,508 million.
Its strong second-quarter results were supported by higher commodity price realizations despite encountering lower crude oil and natural gas liquids production.
Hess Corporation Price, Consensus and EPS Surprise
Hess made a significant hydrocarbon discovery at Whiptail-1, located in the famous Stabroek Block offshore Guyana, wherein it has made numerous world-class oil discoveries so far. The new find adds to the previous estimate of gross recoverable resource of 9 billion barrels of oil equivalent. The location of the new find is around 4 miles southeast of Uaru-1 discovery.
Operational Update
Exploration and Production
For the quarter under review, the Exploration and Production business reported adjusted earnings of $122 million against a loss of $249 million a year ago. The business was favored by higher realized commodity prices.
Quarterly hydrocarbon production was 328 thousand barrels of oil equivalent per day (MBoe/d), down from 334 MBoe/d in the year-ago period owing to lower contributions from Gulf of Mexico and the Bakken play.
Crude oil production decreased from 183 thousand barrels per day (MBbls/d) in second-quarter 2020 to 166MBbls/d. Also, natural gas liquids production totaled 57 MBbls/d, down from 63 MBbls/d in the prior-year quarter. Nonetheless, natural gas output was 632 thousand cubic feet per day (Mcf/d), up from 528 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $64.27 (excluding the impact of hedging) improved from $20.63 in the year-ago period. Also, worldwide natural gas prices rose to $4.05 per Mcf from the year-ago figure of $2.41. The average worldwide natural gas liquids selling price increased to $23.12 per barrel from $7.32 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $76 million, significantly up from $51 million a year ago on improvement in tariff rates and minimum volume commitments.
Operating Expenses
Operating expenses for the second quarter totaled $315 million versus the year-ago level of $294 million. Marketing costs increased to $322 million from $56 million a year ago. Exploration expenses also increased to $48 million from $31 million in the year-ago period.
Total costs and expenses increased to $1,463 million for the quarter from $1,114 million a year ago.
Financials
Net cash flow from operations was $785 million for the second quarter, reflecting a significant improvement from the year-ago figure of $266 million. Hess’ capital expenditure for exploration and production activities totaled $429 million, down from $453 million in the prior-year quarter.
As of Jun 30, 2021, the company had $2,430 million in cash & cash equivalents, up from $1,866 million in the previous quarter. Its long-term debt was recorded at $7,712 million at first quarter-end, down sequentially from $8,273 million. Current maturity of the long-term debt is $511 million. Debt to capitalization at quarter-end was 56.4%.
Guidance
The company expects 2021 net production (excluding Libya) to be 295,000 Boe/d. It intends to increase rig count in the Bakken Shale Play to three in September. Total upstream expenditure is estimated at $1.9 billion.
In the September quarter, the company expects to receive $375 million in net proceeds following Hess Midstream LP’s (HESM - Free Report) decision to repurchase a significant number of Hess Midstream Operations LP units.
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Hess (HES) Beats on Q2 Earnings, Discovers New Oil in Guyana
Hess Corporation (HES - Free Report) reported adjusted second-quarter 2021 earnings per share of 24 cents, beating the Zacks Consensus Estimate of 19 cents and improving from the year-ago loss of $1.05.
Quarterly revenues increased to $1,598 million from $842 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,508 million.
Its strong second-quarter results were supported by higher commodity price realizations despite encountering lower crude oil and natural gas liquids production.
Hess Corporation Price, Consensus and EPS Surprise
Hess Corporation price-consensus-eps-surprise-chart | Hess Corporation Quote
New Discovery in Stabroek
Hess made a significant hydrocarbon discovery at Whiptail-1, located in the famous Stabroek Block offshore Guyana, wherein it has made numerous world-class oil discoveries so far. The new find adds to the previous estimate of gross recoverable resource of 9 billion barrels of oil equivalent. The location of the new find is around 4 miles southeast of Uaru-1 discovery.
Operational Update
Exploration and Production
For the quarter under review, the Exploration and Production business reported adjusted earnings of $122 million against a loss of $249 million a year ago. The business was favored by higher realized commodity prices.
Quarterly hydrocarbon production was 328 thousand barrels of oil equivalent per day (MBoe/d), down from 334 MBoe/d in the year-ago period owing to lower contributions from Gulf of Mexico and the Bakken play.
Crude oil production decreased from 183 thousand barrels per day (MBbls/d) in second-quarter 2020 to 166MBbls/d. Also, natural gas liquids production totaled 57 MBbls/d, down from 63 MBbls/d in the prior-year quarter. Nonetheless, natural gas output was 632 thousand cubic feet per day (Mcf/d), up from 528 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $64.27 (excluding the impact of hedging) improved from $20.63 in the year-ago period. Also, worldwide natural gas prices rose to $4.05 per Mcf from the year-ago figure of $2.41. The average worldwide natural gas liquids selling price increased to $23.12 per barrel from $7.32 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $76 million, significantly up from $51 million a year ago on improvement in tariff rates and minimum volume commitments.
Operating Expenses
Operating expenses for the second quarter totaled $315 million versus the year-ago level of $294 million. Marketing costs increased to $322 million from $56 million a year ago. Exploration expenses also increased to $48 million from $31 million in the year-ago period.
Total costs and expenses increased to $1,463 million for the quarter from $1,114 million a year ago.
Financials
Net cash flow from operations was $785 million for the second quarter, reflecting a significant improvement from the year-ago figure of $266 million. Hess’ capital expenditure for exploration and production activities totaled $429 million, down from $453 million in the prior-year quarter.
As of Jun 30, 2021, the company had $2,430 million in cash & cash equivalents, up from $1,866 million in the previous quarter. Its long-term debt was recorded at $7,712 million at first quarter-end, down sequentially from $8,273 million. Current maturity of the long-term debt is $511 million. Debt to capitalization at quarter-end was 56.4%.
Guidance
The company expects 2021 net production (excluding Libya) to be 295,000 Boe/d. It intends to increase rig count in the Bakken Shale Play to three in September. Total upstream expenditure is estimated at $1.9 billion.
In the September quarter, the company expects to receive $375 million in net proceeds following Hess Midstream LP’s (HESM - Free Report) decision to repurchase a significant number of Hess Midstream Operations LP units.
Zacks Rank & Other Stocks to Consider
The company currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks from the energy space include Southwestern Energy Company (SWN - Free Report) and W&T Offshore, Inc. (WTI - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwestern’s profits for 2021 are expected to jump 197.4% year over year.
W&T Offshore’s bottom line for 2021 is expected to surge 387.5% year over year.