It has been about a month since the last earnings report for Hess (HES Quick QuoteHES - Free Report) . Shares have lost about 8.7% 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 the most recent earnings report in order to get a better handle on the important drivers.

Hess Beats on Q1 Earnings Estimate, Revenues Miss

Hess has reported first-quarter 2023 earnings per share of $1.13, beating the Zacks Consensus Estimate of $1.03. However, the bottom line declined from the year-ago quarter’s $1.30 per share.

Total quarterly revenues increased to $2,453 million from $2,371 million a year ago. The top line missed the Zacks Consensus Estimate of $2,477 million.

Better-than-expected quarterly earnings have been driven by higher hydrocarbon production. The positives were partially offset by lower realizations of commodity prices.

Operational Update

Exploration and Production:

For the quarter under review, the Exploration and Production business has reported adjusted earnings of $405 million, declining from $460 million a year ago. The business was negatively impacted by a decline in realized commodity prices.

Quarterly hydrocarbon production was 374 thousand barrels of oil equivalent per day (MBoe/d), up from 297 MBoe/d in the year-ago period primarily due to higher production in Guyana and the Bakken.

Crude oil production increased from 151 thousand barrels per day (MBbls/d) in first-quarter 2022 to 216 MBbls/d in the quarter under review. Natural gas liquid production totaled 62 MBbls/d, up from 50 MBbls/d in the prior-year quarter. However, natural gas production was 574 thousand cubic feet per day (Mcf/d), down from 577 Mcf/d a year ago.

Worldwide crude oil realization per barrel of $76.02 (excluding the impacts of hedging) significantly declined from $94.04 in the year-ago period. Also, worldwide natural gas prices fell to $4.39 per Mcf from the year-ago figure of $5.28. The average worldwide natural gas liquids’ selling price declined to $24.25 per barrel from $39.79 a year ago.

Midstream:

From the midstream business, the company generated adjusted net earnings of $61 million, down from $72 million a year ago.

Operating Expenses

Operating expenses for the first quarter totaled $382 million versus the year-ago level of $313 million. Marketing costs declined to $603 million from $682 million a year ago. However, exploration expenses increased to $66 million from $43 million in the year-ago period.

Total costs and expenses increased to $1,849 million for the quarter from $1,669 million a year ago.

Financials

Net cash provided by operating activities was $638 million for the first quarter. Hess’ capital expenditure for exploration and production activities totaled $765 million.

As of Mar 31, 2023, the company had $2,100 million in cash and cash equivalents. Its long-term debt was $8,382 million at the first-quarter end.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -20.96% due to these changes.

VGM Scores

At this time, Hess has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.