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Hess (HES) Q4 Earnings Beat Estimates on Surging Oil Prices
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Hess Corporation (HES - Free Report) reported adjusted fourth-quarter 2021 earnings per share of 85 cents, beating the Zacks Consensus Estimate of 76 cents. Nonetheless, the figure improved from the year-ago loss of 58 cents per share.
Quarterly revenues increased to $2,255 million from $1,417 million a year ago. The top line also beat the Zacks Consensus Estimate of $2,050 million.
The strong quarterly results were due to the higher commodity price realizations and increased contributions from the midstream business.
Hess Corporation Price, Consensus and EPS Surprise
For the quarter under review, the Exploration and Production business reported adjusted earnings of $309 million against a loss of $118 million a year ago. The business was favored by higher realized commodity prices, partially offset by decreased output.
Quarterly hydrocarbon production was 316 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 Bakken Play. This was partially offset by higher production from the Gulf of Mexico.
Crude oil production decreased from 167 thousand barrels per day (MBbls/d) in fourth-quarter 2020 to 158 MBbls/d. Natural gas liquids production totaled 56 MBbls/d, down from 64 MBbls/d in the prior-year quarter. However, natural gas output was 611 thousand cubic feet per day (Mcf/d), up from 538 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $75.22 (excluding the impacts of hedging) significantly improved from $39.45 in the year-ago period. Also, worldwide natural gas prices rose to $4.77 per Mcf from the year-ago figure of $3.35. The average worldwide natural gas liquids’ selling price increased to $36.47 per barrel from $15.80 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $74 million, up from $62 million a year ago on improvement in tariff rates and minimum volume commitments.
As announced earlier, it received $108 million in net proceeds, following Hess Midstream LP’s repurchase of a significant number of Hess Midstream Operations LP units in October.
Operating Expenses
Operating expenses for the fourth quarter totaled $316 million versus the year-ago level of $313 million. Marketing costs increased to $672 million from $281 million a year ago. Exploration expenses, however, decreased to $45 million from $60 million in the year-ago period.
Total costs and expenses increased to $1,687 million for the quarter from $1,372 million a year ago.
Financials
Net cash flow from operations was $899 million for the fourth quarter, reflecting a significant improvement from the year-ago figure of $486 million. Hess’ capital expenditure for exploration and production activities totaled $593 million, up from $371 million in the prior-year quarter.
As of Dec 31, 2021, the company had $2,713 million in cash and cash equivalents, up from $2,419 million in the previous quarter. Its long-term debt was recorded at $7,941 million at the fourth-quarter end, down sequentially from $7,993 million. The current maturity of the long-term debt is $517 million. Debt to capitalization at the quarter end was 55.3%.
Guidance
For 2022, Hess projects net production (excluding Libya) of 330,000-340,000 Boe/d. The figure indicates a 12-15% increase from the 2021 reported level.
Net Bakken production is expected to be 165,000-70,000 Boe/d, suggesting a 6-9% increase from 2021. In the Bakken Play, Hess plans to operate a three-rig program, which will enable it to generate significant free cash flows, reduce unit cash costs and optimize its infrastructure.
The company expects E&P capital and exploratory expenditure to be $2.6 billion, 80% of which will be allocated to Guyana and the Bakken Shale Play.
Eni SPA (E - Free Report) is among the leading integrated energy Players in the world. Its upstream operations involve the exploitation and production of oil and natural gas resources. Through midstream activities, the company transports and stores hydrocarbons. Eni also engages in refining hydrocarbons and distributing the end products in 71 nations. Apart from providing natural gas, the company generates and sells electricity.
Eni is also projected to see a year-over-year earnings surge of 38% in 2022. The company currently has a Zacks Style Score of B for both Value, Growth and Momentum. Eni beat the Zacks Consensus Estimate three times in the last four quarters and missed once, with an earnings surprise of 0.43%, on average.
Sunoco LP (SUN - Free Report) is a master limited partnership that engages in the distribution of motor fuel to roughly 10,000 customers, including independent dealers, commercial customers, convenience stores and distributors. In the United States, Sunoco is among the largest motor fuel distributors in the wholesale market by volume. In 2020, the partnership sold 7.1 billion gallons of motor fuel.
Sunoco currently has a Zacks Style Score of A for both Value and Growth. SUN witnessed one upward revision in the past 30 days. For 2021, Sunoco expects fuel volumes of 7.25-7.75 billion gallons, indicating a rise from the 2020 level of 7.09 billion gallons.
TotalEnergies SE (TTE - Free Report) has one of the best production growth profiles among the oil super majors, characterized by an upstream portfolio, with above industry-average exposure to the faster-growing hydrocarbon-producing regions of the world. TotalEnergies is making regular investments to expand the renewable operation and strives to achieve net-zero emission by 2050.
TotalEnergies is expected to see an earnings growth of 12.3% in 2022. TTE currently has a Zacks Style Score of A for Value and B for Growth. TotalEnergies manages long-term debt efficiently and tries to maintain the same at manageable levels. TTE’s debt to capital has been declining in the past few years.
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Hess (HES) Q4 Earnings Beat Estimates on Surging Oil Prices
Hess Corporation (HES - Free Report) reported adjusted fourth-quarter 2021 earnings per share of 85 cents, beating the Zacks Consensus Estimate of 76 cents. Nonetheless, the figure improved from the year-ago loss of 58 cents per share.
Quarterly revenues increased to $2,255 million from $1,417 million a year ago. The top line also beat the Zacks Consensus Estimate of $2,050 million.
The strong quarterly results were due to the higher commodity price realizations and increased contributions from the midstream business.
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 $309 million against a loss of $118 million a year ago. The business was favored by higher realized commodity prices, partially offset by decreased output.
Quarterly hydrocarbon production was 316 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 Bakken Play. This was partially offset by higher production from the Gulf of Mexico.
Crude oil production decreased from 167 thousand barrels per day (MBbls/d) in fourth-quarter 2020 to 158 MBbls/d. Natural gas liquids production totaled 56 MBbls/d, down from 64 MBbls/d in the prior-year quarter. However, natural gas output was 611 thousand cubic feet per day (Mcf/d), up from 538 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $75.22 (excluding the impacts of hedging) significantly improved from $39.45 in the year-ago period. Also, worldwide natural gas prices rose to $4.77 per Mcf from the year-ago figure of $3.35. The average worldwide natural gas liquids’ selling price increased to $36.47 per barrel from $15.80 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $74 million, up from $62 million a year ago on improvement in tariff rates and minimum volume commitments.
As announced earlier, it received $108 million in net proceeds, following Hess Midstream LP’s repurchase of a significant number of Hess Midstream Operations LP units in October.
Operating Expenses
Operating expenses for the fourth quarter totaled $316 million versus the year-ago level of $313 million. Marketing costs increased to $672 million from $281 million a year ago. Exploration expenses, however, decreased to $45 million from $60 million in the year-ago period.
Total costs and expenses increased to $1,687 million for the quarter from $1,372 million a year ago.
Financials
Net cash flow from operations was $899 million for the fourth quarter, reflecting a significant improvement from the year-ago figure of $486 million. Hess’ capital expenditure for exploration and production activities totaled $593 million, up from $371 million in the prior-year quarter.
As of Dec 31, 2021, the company had $2,713 million in cash and cash equivalents, up from $2,419 million in the previous quarter. Its long-term debt was recorded at $7,941 million at the fourth-quarter end, down sequentially from $7,993 million. The current maturity of the long-term debt is $517 million. Debt to capitalization at the quarter end was 55.3%.
Guidance
For 2022, Hess projects net production (excluding Libya) of 330,000-340,000 Boe/d. The figure indicates a 12-15% increase from the 2021 reported level.
Net Bakken production is expected to be 165,000-70,000 Boe/d, suggesting a 6-9% increase from 2021. In the Bakken Play, Hess plans to operate a three-rig program, which will enable it to generate significant free cash flows, reduce unit cash costs and optimize its infrastructure.
The company expects E&P capital and exploratory expenditure to be $2.6 billion, 80% of which will be allocated to Guyana and the Bakken Shale Play.
Zacks Rank & Stocks to Consider
Hess currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Eni SPA (E - Free Report) is among the leading integrated energy Players in the world. Its upstream operations involve the exploitation and production of oil and natural gas resources. Through midstream activities, the company transports and stores hydrocarbons. Eni also engages in refining hydrocarbons and distributing the end products in 71 nations. Apart from providing natural gas, the company generates and sells electricity.
Eni is also projected to see a year-over-year earnings surge of 38% in 2022. The company currently has a Zacks Style Score of B for both Value, Growth and Momentum. Eni beat the Zacks Consensus Estimate three times in the last four quarters and missed once, with an earnings surprise of 0.43%, on average.
Sunoco LP (SUN - Free Report) is a master limited partnership that engages in the distribution of motor fuel to roughly 10,000 customers, including independent dealers, commercial customers, convenience stores and distributors. In the United States, Sunoco is among the largest motor fuel distributors in the wholesale market by volume. In 2020, the partnership sold 7.1 billion gallons of motor fuel.
Sunoco currently has a Zacks Style Score of A for both Value and Growth. SUN witnessed one upward revision in the past 30 days. For 2021, Sunoco expects fuel volumes of 7.25-7.75 billion gallons, indicating a rise from the 2020 level of 7.09 billion gallons.
TotalEnergies SE (TTE - Free Report) has one of the best production growth profiles among the oil super majors, characterized by an upstream portfolio, with above industry-average exposure to the faster-growing hydrocarbon-producing regions of the world. TotalEnergies is making regular investments to expand the renewable operation and strives to achieve net-zero emission by 2050.
TotalEnergies is expected to see an earnings growth of 12.3% in 2022. TTE currently has a Zacks Style Score of A for Value and B for Growth. TotalEnergies manages long-term debt efficiently and tries to maintain the same at manageable levels. TTE’s debt to capital has been declining in the past few years.