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Hess (HES) Q3 Earnings Miss Estimates on Lower Production
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Hess Corporation (HES - Free Report) reported an adjusted third-quarter 2021 earnings per share of 28 cents, missing the Zacks Consensus Estimate of 29 cents. Nonetheless, the figure improved from the year-ago loss of 71 cents per share.
Quarterly revenues increased to $1,811 million from $1,176 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,598 million.
The weaker-than-expected earnings were caused by lower hydrocarbon production and increased operating costs. Hurricane Ida-related production decline in the Gulf of Mexico and Tioga Gas Plant maintenance in Bakken play affected overall output. The negatives were partially offset by higher commodity price realizations.
Hess Corporation Price, Consensus and EPS Surprise
For the quarter under review, the Exploration and Production business reported adjusted earnings of $149 million against a loss of $156 million a year ago. The business was favored by higher realized commodity prices, partially offset by decreased output.
Quarterly hydrocarbon production was 284 thousand barrels of oil equivalent per day (MBoe/d), down from 321 MBoe/d in the year-ago period owing to lower contributions from the Gulf of Mexico and Bakken play. This was partially offset by higher production from Guyana.
Crude oil production decreased from 168 thousand barrels per day (MBbls/d) in third-quarter 2020 to 153 MBbls/d. Natural gas liquids production totaled 47 MBbls/d, down from 63 MBbls/d in the prior-year quarter. Also, natural gas output was 503 thousand cubic feet per day (Mcf/d), down from 540 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $67.88 (excluding the impact of hedging) improved from $36.17 in the year-ago period. Also, worldwide natural gas prices rose to $4.71 per Mcf from the year-ago figure of $2.94. The average worldwide natural gas liquids selling price increased to $32.88 per barrel from $11.63 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $61 million, up from $56 million a year ago on improvement in tariff rates and minimum volume commitments.
As announced earlier, it received $375 million in net proceeds following Hess Midstream LP’s (HESM - Free Report) repurchase of a significant number of Hess Midstream Operations LP units in August.
Operating Expenses
Operating expenses for the third quarter totaled $333 million versus the year-ago level of $308 million. Marketing costs increased to $522 million from $221 million a year ago. Exploration expenses, however, decreased to $36 million from $71 million in the year-ago period.
Total costs and expenses increased to $1,483 million for the quarter from $1,354 million a year ago.
Financials
Net cash flow from operations was $615 million for the third quarter, reflecting a significant improvement from the year-ago figure of $136 million. Hess’ capital expenditure for exploration and production activities totaled $498 million, up from $331 million in the prior-year quarter.
As of Sep 30, 2021, the company had $2,419 million in cash & cash equivalents, down from $2,430 million in the previous quarter. Its long-term debt was recorded at $7,993 million at third quarter-end, up sequentially from $7,712 million. Current maturity of the long-term debt is $514 million. Debt to capitalization at quarter-end was 58.3%.
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It expects cash flow to grow further in the coming days, which will enable it to increase shareholder returns. The company’s new finds in the Stabroek Block of Guyana helped it to increase the estimate of gross recoverable resource to 10 billion Boe from 9 billion Boe. It reported 21 commercial discoveries in the block. On Oct 25, the Liza Unity floating production, storage and offloading vessel reached Guyana. The company expects production from phase 2 to commence early next year.
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Hess (HES) Q3 Earnings Miss Estimates on Lower Production
Hess Corporation (HES - Free Report) reported an adjusted third-quarter 2021 earnings per share of 28 cents, missing the Zacks Consensus Estimate of 29 cents. Nonetheless, the figure improved from the year-ago loss of 71 cents per share.
Quarterly revenues increased to $1,811 million from $1,176 million a year ago. The top line also beat the Zacks Consensus Estimate of $1,598 million.
The weaker-than-expected earnings were caused by lower hydrocarbon production and increased operating costs. Hurricane Ida-related production decline in the Gulf of Mexico and Tioga Gas Plant maintenance in Bakken play affected overall output. The negatives were partially offset by higher commodity price realizations.
Hess Corporation Price, Consensus and EPS Surprise
Hess Corporation price-consensus-eps-surprise-chart | Hess Corporation Quote
Operational Update
Exploration and Production
For the quarter under review, the Exploration and Production business reported adjusted earnings of $149 million against a loss of $156 million a year ago. The business was favored by higher realized commodity prices, partially offset by decreased output.
Quarterly hydrocarbon production was 284 thousand barrels of oil equivalent per day (MBoe/d), down from 321 MBoe/d in the year-ago period owing to lower contributions from the Gulf of Mexico and Bakken play. This was partially offset by higher production from Guyana.
Crude oil production decreased from 168 thousand barrels per day (MBbls/d) in third-quarter 2020 to 153 MBbls/d. Natural gas liquids production totaled 47 MBbls/d, down from 63 MBbls/d in the prior-year quarter. Also, natural gas output was 503 thousand cubic feet per day (Mcf/d), down from 540 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $67.88 (excluding the impact of hedging) improved from $36.17 in the year-ago period. Also, worldwide natural gas prices rose to $4.71 per Mcf from the year-ago figure of $2.94. The average worldwide natural gas liquids selling price increased to $32.88 per barrel from $11.63 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $61 million, up from $56 million a year ago on improvement in tariff rates and minimum volume commitments.
As announced earlier, it received $375 million in net proceeds following Hess Midstream LP’s (HESM - Free Report) repurchase of a significant number of Hess Midstream Operations LP units in August.
Operating Expenses
Operating expenses for the third quarter totaled $333 million versus the year-ago level of $308 million. Marketing costs increased to $522 million from $221 million a year ago. Exploration expenses, however, decreased to $36 million from $71 million in the year-ago period.
Total costs and expenses increased to $1,483 million for the quarter from $1,354 million a year ago.
Financials
Net cash flow from operations was $615 million for the third quarter, reflecting a significant improvement from the year-ago figure of $136 million. Hess’ capital expenditure for exploration and production activities totaled $498 million, up from $331 million in the prior-year quarter.
As of Sep 30, 2021, the company had $2,419 million in cash & cash equivalents, down from $2,430 million in the previous quarter. Its long-term debt was recorded at $7,993 million at third quarter-end, up sequentially from $7,712 million. Current maturity of the long-term debt is $514 million. Debt to capitalization at quarter-end was 58.3%.
View
It expects cash flow to grow further in the coming days, which will enable it to increase shareholder returns. The company’s new finds in the Stabroek Block of Guyana helped it to increase the estimate of gross recoverable resource to 10 billion Boe from 9 billion Boe. It reported 21 commercial discoveries in the block. On Oct 25, the Liza Unity floating production, storage and offloading vessel reached Guyana. The company expects production from phase 2 to commence early next year.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include HollyFrontier Corporation and PHX Minerals Inc. (PHX - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HollyFrontier’s bottom line for 2021 is expected to rise 260.9% year over year.
PHX Minerals’ bottom line for the current year is expected to rise 280% year over year.