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Here's Why You Should Consider Buying Hess (HES) Stock Now
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Hess Corporation (HES - Free Report) has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days.
The company, currently carrying a Zacks Rank #2 (Buy), beat the Zacks Consensus Estimate in the prior four quarters, the average surprise being 15.3%.
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
The West Texas Intermediate crude oil price is hovering around $76 per barrel, underscoring a robust commodity pricing environment. The current oil pricing landscape is highly favorable and is expected to continue, indicating a favorable business environment for Hess’ exploration and production operations.
The company has made several remarkable oil discoveries in the Stabroek Block, situated offshore Guyana. These findings contribute to more than 11 billion barrels of oil equivalent (Boe) in gross recoverable resources within the block. This is bolstering the company’s production outlook, consequently resulting in enhanced profitability.
In the prolific Bakken shale play, the leading upstream energy firm holds a significant reserve of top-tier drilling locations. With a scheduled four-rig drilling initiative in this region, Hess expects to bring around 110 new wells online in 2023, bolstering its production outlook.
Hess recently announced its acquisition by Chevron Corporation (CVX - Free Report) for $53 billion. While Hess is not a major player in the Permian basin, it has established prominence in the Bakken basin in North Dakota. This acquisition provides Chevron with an opportunity to extend its reach, notably in the Bakken basin and in Guyana, where it will collaborate with Exxon Mobil on the same project. This strategic expansion is poised to reshape the competitive landscape.
Chevron, as a significant player in the energy sector, has the potential to offer Hess increased access to financial resources, technological capabilities, and expertise. Such benefits can prove highly valuable for enhancing exploration, development and production activities.
Hess expects substantial growth in the free cash flow in the coming years, and intends to allocate it toward reducing debt burden and returning capital to its shareholders. The company projects a 25% annual increase in cash flow over the next five years, assuming a crude oil price of $75 per barrel.
Additionally, HES plans to allocate 75% of its annual free cash flow to shareholders through a combination of dividend increases and share buybacks. This underscores its firm dedication to delivering value and returning capital to its shareholders.
Numerous factors are aiding the stock price increase for HES and are creating more room for upside.
Oceaneering International, Inc. (OII - Free Report) reported third-quarter 2023 adjusted earnings of 38 cents per share, which beat the Zacks Consensus Estimate of 27 cents. OII’s outperformance was largely due to the robust results in certain segments.
For the fourth quarter of 2023, OII anticipates a decline in EBITDA on relatively flat revenues from that reported in the third quarter.
Liberty Energy Inc. (LBRT - Free Report) reported third-quarter 2023 earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 74 cents. The Denver, CO-based oil and gas equipment company’s outperformance reflects the impacts of strong execution and increased service pricing.
Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable Dec 20, 2023, to stockholders of record as of Dec 6, 2023. The dividend increased 40% from the previous quarter’s level.
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Here's Why You Should Consider Buying Hess (HES) Stock Now
Hess Corporation (HES - Free Report) has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days.
The company, currently carrying a Zacks Rank #2 (Buy), beat the Zacks Consensus Estimate in the prior four quarters, the average surprise being 15.3%.
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
The West Texas Intermediate crude oil price is hovering around $76 per barrel, underscoring a robust commodity pricing environment. The current oil pricing landscape is highly favorable and is expected to continue, indicating a favorable business environment for Hess’ exploration and production operations.
The company has made several remarkable oil discoveries in the Stabroek Block, situated offshore Guyana. These findings contribute to more than 11 billion barrels of oil equivalent (Boe) in gross recoverable resources within the block. This is bolstering the company’s production outlook, consequently resulting in enhanced profitability.
In the prolific Bakken shale play, the leading upstream energy firm holds a significant reserve of top-tier drilling locations. With a scheduled four-rig drilling initiative in this region, Hess expects to bring around 110 new wells online in 2023, bolstering its production outlook.
Hess recently announced its acquisition by Chevron Corporation (CVX - Free Report) for $53 billion. While Hess is not a major player in the Permian basin, it has established prominence in the Bakken basin in North Dakota. This acquisition provides Chevron with an opportunity to extend its reach, notably in the Bakken basin and in Guyana, where it will collaborate with Exxon Mobil on the same project. This strategic expansion is poised to reshape the competitive landscape.
Chevron, as a significant player in the energy sector, has the potential to offer Hess increased access to financial resources, technological capabilities, and expertise. Such benefits can prove highly valuable for enhancing exploration, development and production activities.
Hess expects substantial growth in the free cash flow in the coming years, and intends to allocate it toward reducing debt burden and returning capital to its shareholders. The company projects a 25% annual increase in cash flow over the next five years, assuming a crude oil price of $75 per barrel.
Additionally, HES plans to allocate 75% of its annual free cash flow to shareholders through a combination of dividend increases and share buybacks. This underscores its firm dedication to delivering value and returning capital to its shareholders.
Numerous factors are aiding the stock price increase for HES and are creating more room for upside.
Other Stocks to Consider
Investors interested in the energy sector may look at some other top-ranked companies mentioned below. All three companies presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Oceaneering International, Inc. (OII - Free Report) reported third-quarter 2023 adjusted earnings of 38 cents per share, which beat the Zacks Consensus Estimate of 27 cents. OII’s outperformance was largely due to the robust results in certain segments.
For the fourth quarter of 2023, OII anticipates a decline in EBITDA on relatively flat revenues from that reported in the third quarter.
Liberty Energy Inc. (LBRT - Free Report) reported third-quarter 2023 earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 74 cents. The Denver, CO-based oil and gas equipment company’s outperformance reflects the impacts of strong execution and increased service pricing.
Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable Dec 20, 2023, to stockholders of record as of Dec 6, 2023. The dividend increased 40% from the previous quarter’s level.