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Hess (HES) Down 2.4% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Hess (HES - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hess Q2 Earnings Beat Estimates on Bakken Volumes
Hess reported adjusted second-quarter 2020 loss per share of $1.05, narrower than the Zacks Consensus Estimate of a loss of $1.18. The quarterly loss, however, was wider than the year-ago loss of 9 cents per share.
Quarterly revenues plunged to $842 million from $1,697 million in the year-ago quarter. Also, the top line missed the Zacks Consensus Estimate of $981 million.
The narrower-than-expected loss was due to higher oil equivalent production from the Bakken play and increased throughput volumes. This was partially offset by lower commodity price realizations and increased operating expenses.
Q2 Operational Update
Exploration and Production
In the quarter under review, the Exploration and Production business reported an adjusted net loss of $249 million against profit of $46 million a year ago. The business was affected by lower realized commodity prices, partially offset by higher production volumes.
Quarterly hydrocarbon production was 334 thousand barrels of oil equivalent per day (MBoe/d), up from 293 MBoe/d in the year-ago period on contributions from resources in the Bakken play and Liza Field offshore Guyana.
Crude oil production increased from 161 thousand barrels per day (MBbls/d) in second-quarter 2019 to 183 MBbls/d. Moreover, natural gas liquids production totaled 63 MBbls/d, up from 43 MBbls/d in the prior-year quarter. However, natural gas output was 528 thousand cubic feet per day (Mcf/d), down from 535 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $20.63 (excluding the impact of hedging) declined from $61.37 in the year-ago period. The average worldwide natural gas liquids selling price also fell to $7.32 per barrel from $12.18 a year ago. Moreover, worldwide natural gas prices declined to $2.41 per Mcf from the year-ago level of $3.92.
Midstream
From the midstream business, the company generated adjusted net earnings of $51 million, significantly up from $35 million a year ago. The rise can be attributed to higher throughput volumes.
Operating Expenses
Operating expenses in the second quarter totaled $294 million, up from the year-ago figure of $285 million. Exploration expenses, however, fell to $31 million from $43 million in the year-ago period.
Total costs and expenses declined to $1,114 million from $1,531 million in second-quarter 2019.
Financials
Quarterly net cash flow from operations was $266 million in the second quarter, reflecting a significant decline from the year-ago $675 million. Hess’ capital expenditures for exploration and production activities totaled $453 million, down from $664 million in the prior-year quarter.
As of Jun 30, 2020, the company had $1,646 million in cash & cash equivalents. Its long-term debt was recorded at $8,205 million at the end of the second quarter. Debt to capitalization at the end of the quarter was 55.5%.
Guidance
The company has raised its 2020 net production guidance, excluding Libya, to 330,000 BoE/d from the earlier projection of 320,000 BoE/d. From the prolific Bakken shale play, the company expects 2020 net production of 185,000 BoE/d versus the earlier projection of 175,000 BoE/d.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -22.67% due to these changes.
VGM Scores
At this time, Hess has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hess has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Hess (HES) Down 2.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Hess (HES - Free Report) . Shares have lost about 2.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hess Q2 Earnings Beat Estimates on Bakken Volumes
Hess reported adjusted second-quarter 2020 loss per share of $1.05, narrower than the Zacks Consensus Estimate of a loss of $1.18. The quarterly loss, however, was wider than the year-ago loss of 9 cents per share.
Quarterly revenues plunged to $842 million from $1,697 million in the year-ago quarter. Also, the top line missed the Zacks Consensus Estimate of $981 million.
The narrower-than-expected loss was due to higher oil equivalent production from the Bakken play and increased throughput volumes. This was partially offset by lower commodity price realizations and increased operating expenses.
Q2 Operational Update
Exploration and Production
In the quarter under review, the Exploration and Production business reported an adjusted net loss of $249 million against profit of $46 million a year ago. The business was affected by lower realized commodity prices, partially offset by higher production volumes.
Quarterly hydrocarbon production was 334 thousand barrels of oil equivalent per day (MBoe/d), up from 293 MBoe/d in the year-ago period on contributions from resources in the Bakken play and Liza Field offshore Guyana.
Crude oil production increased from 161 thousand barrels per day (MBbls/d) in second-quarter 2019 to 183 MBbls/d. Moreover, natural gas liquids production totaled 63 MBbls/d, up from 43 MBbls/d in the prior-year quarter. However, natural gas output was 528 thousand cubic feet per day (Mcf/d), down from 535 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $20.63 (excluding the impact of hedging) declined from $61.37 in the year-ago period. The average worldwide natural gas liquids selling price also fell to $7.32 per barrel from $12.18 a year ago. Moreover, worldwide natural gas prices declined to $2.41 per Mcf from the year-ago level of $3.92.
Midstream
From the midstream business, the company generated adjusted net earnings of $51 million, significantly up from $35 million a year ago. The rise can be attributed to higher throughput volumes.
Operating Expenses
Operating expenses in the second quarter totaled $294 million, up from the year-ago figure of $285 million. Exploration expenses, however, fell to $31 million from $43 million in the year-ago period.
Total costs and expenses declined to $1,114 million from $1,531 million in second-quarter 2019.
Financials
Quarterly net cash flow from operations was $266 million in the second quarter, reflecting a significant decline from the year-ago $675 million. Hess’ capital expenditures for exploration and production activities totaled $453 million, down from $664 million in the prior-year quarter.
As of Jun 30, 2020, the company had $1,646 million in cash & cash equivalents. Its long-term debt was recorded at $8,205 million at the end of the second quarter. Debt to capitalization at the end of the quarter was 55.5%.
Guidance
The company has raised its 2020 net production guidance, excluding Libya, to 330,000 BoE/d from the earlier projection of 320,000 BoE/d. From the prolific Bakken shale play, the company expects 2020 net production of 185,000 BoE/d versus the earlier projection of 175,000 BoE/d.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -22.67% due to these changes.
VGM Scores
At this time, Hess has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hess has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.