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Hess (HES) Beats on Q3 Earnings, Raises '23 Production Outlook
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Hess Corporation (HES - Free Report) has reported third-quarter 2023 earnings per share of $1.64, beating the Zacks Consensus Estimate of $1.24. However, the bottom line declined from the year-ago quarter’s $1.89 per share.
Total quarterly revenues dipped to $2,837 million from $3,157 million a year ago but beat the Zacks Consensus Estimate of $2,582 million.
Better-than-expected quarterly results have been driven by higher oil equivalent production volumes. The positives were partially offset by lower realizations of commodity prices.
Hess Corporation Price, Consensus and EPS Surprise
Hess is being acquired by Chevron Corporation (CVX - Free Report) for $53 billion in an all-stock transaction. This deal, projected to be finalized in early 2024, marks the second-largest acquisition in the history of the oil and gas industry.
For Chevron, this acquisition represents a significant achievement, granting the company entry to Hess' valuable assets in Guyana and the Bakken Formation in North Dakota. In addition to the Guyana and Bakken assets, Chevron will gain access to Hess’ assets in the Gulf of Mexico and Southeast Asia.
Operational Update
Exploration and Production:
For the quarter under review, the Exploration and Production business has reported adjusted earnings of $529 million, declining from $626 million a year ago. The business was negatively impacted by a dip in realized commodity prices.
Quarterly hydrocarbon production was 395 thousand barrels of oil equivalent per day (MBoe/d), up from 368 MBoe/d in the year-ago period primarily due to higher production in Guyana and the Bakken. The reported figure also beat our estimate of 385 MBoe/d.
Crude oil production increased from 217 thousand barrels per day (MBbls/d) in third-quarter 2022 to 221 MBbls/d in the quarter under review and beat our estimate of 217.9 MBbls/d.
Natural gas liquid production totaled 71 MBbls/d, up from 60 MBbls/d in the prior-year quarter. The reported figure is slightly below our estimate of 75.4 MBbls/d.
Natural gas production was 615 thousand cubic feet per day (Mcf/d), up from 547 Mcf/d a year ago. The reported figure is above our estimate of 550 Mcf/d.
Worldwide crude oil realization per barrel of $84.07 (excluding the impacts of hedging) significantly declined from $93.95 in the year-ago period. Also, worldwide natural gas prices fell to $4.57 per Mcf from the year-ago figure of $5.85. The average worldwide natural gas liquids’ selling price declined to $20.17 per barrel from $35.44 a year ago.
Midstream:
From the midstream business, the company generated adjusted net earnings of $66 million, down from $68 million a year ago.
Operating Expenses
Operating expenses for the third quarter totaled $467 million versus the year-ago level of $398 million. The reported figure is above our estimate of $373 million.
Exploration expenses increased to $65 million from $58 million in the year-ago period. However, marketing costs declined to $696 million from $982 million a year ago.
Total costs and expenses declined to $2,020 million for the quarter from $2,269 million a year ago.
Financials
Net cash provided by operating activities was $986 million for the third quarter. Hess’ capital expenditure for exploration and production activities totaled $998 million.
As of Sept 30, 2023, the company had $2,018 million in cash and cash equivalents. Its long-term debt was $8,241 million at the third-quarter end.
Guidance
For 2023, Hess expects a net production (excluding Libya) of 390,000 barrels of oil equivalent per day (Boe/d), which is at the upper end of the previously mentioned 385,000-390,000 Boe/d. The metric suggests a rise from the 344,000 Boe/d reported in 2022.
The company revised its guidance for exploration and production capital, and exploratory expenditure to $4.1 billion, an increase from the prior stated $3.7 billion. The upward adjustment is primarily attributed to the company’s decision to acquire the Liza Unity FPSO in the fourth quarter of 2023, as opposed to the originally planned timing of the first quarter of 2024.
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 on Dec 20, 2023, to stockholders of record as of Dec 6, 2023. This dividend is up 40% from the previous quarter’s level.
Matador Resources Company (MTDR - Free Report) reported third-quarter 2023 adjusted earnings of $1.86 per share, which beat the Zacks Consensus Estimate of $1.59. Matador’s milestone, with its highest-ever total production averaging more than 135,000 barrels of oil and natural gas equivalent per day, led to better-than-expected Q3 results.
For the fourth quarter of 2023, Matador expects an average daily oil equivalent production of 145,000 BOE. The recent guidance indicates a 2% upward revision from the prior mentioned 143,000 BOE/D.
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Hess (HES) Beats on Q3 Earnings, Raises '23 Production Outlook
Hess Corporation (HES - Free Report) has reported third-quarter 2023 earnings per share of $1.64, beating the Zacks Consensus Estimate of $1.24. However, the bottom line declined from the year-ago quarter’s $1.89 per share.
Total quarterly revenues dipped to $2,837 million from $3,157 million a year ago but beat the Zacks Consensus Estimate of $2,582 million.
Better-than-expected quarterly results have been driven by higher oil equivalent production volumes. The positives were partially offset by lower realizations of commodity prices.
Hess Corporation Price, Consensus and EPS Surprise
Hess Corporation price-consensus-eps-surprise-chart | Hess Corporation Quote
Key information
Hess is being acquired by Chevron Corporation (CVX - Free Report) for $53 billion in an all-stock transaction. This deal, projected to be finalized in early 2024, marks the second-largest acquisition in the history of the oil and gas industry.
For Chevron, this acquisition represents a significant achievement, granting the company entry to Hess' valuable assets in Guyana and the Bakken Formation in North Dakota. In addition to the Guyana and Bakken assets, Chevron will gain access to Hess’ assets in the Gulf of Mexico and Southeast Asia.
Operational Update
Exploration and Production:
For the quarter under review, the Exploration and Production business has reported adjusted earnings of $529 million, declining from $626 million a year ago. The business was negatively impacted by a dip in realized commodity prices.
Quarterly hydrocarbon production was 395 thousand barrels of oil equivalent per day (MBoe/d), up from 368 MBoe/d in the year-ago period primarily due to higher production in Guyana and the Bakken. The reported figure also beat our estimate of 385 MBoe/d.
Crude oil production increased from 217 thousand barrels per day (MBbls/d) in third-quarter 2022 to 221 MBbls/d in the quarter under review and beat our estimate of 217.9 MBbls/d.
Natural gas liquid production totaled 71 MBbls/d, up from 60 MBbls/d in the prior-year quarter. The reported figure is slightly below our estimate of 75.4 MBbls/d.
Natural gas production was 615 thousand cubic feet per day (Mcf/d), up from 547 Mcf/d a year ago. The reported figure is above our estimate of 550 Mcf/d.
Worldwide crude oil realization per barrel of $84.07 (excluding the impacts of hedging) significantly declined from $93.95 in the year-ago period. Also, worldwide natural gas prices fell to $4.57 per Mcf from the year-ago figure of $5.85. The average worldwide natural gas liquids’ selling price declined to $20.17 per barrel from $35.44 a year ago.
Midstream:
From the midstream business, the company generated adjusted net earnings of $66 million, down from $68 million a year ago.
Operating Expenses
Operating expenses for the third quarter totaled $467 million versus the year-ago level of $398 million. The reported figure is above our estimate of $373 million.
Exploration expenses increased to $65 million from $58 million in the year-ago period. However, marketing costs declined to $696 million from $982 million a year ago.
Total costs and expenses declined to $2,020 million for the quarter from $2,269 million a year ago.
Financials
Net cash provided by operating activities was $986 million for the third quarter. Hess’ capital expenditure for exploration and production activities totaled $998 million.
As of Sept 30, 2023, the company had $2,018 million in cash and cash equivalents. Its long-term debt was $8,241 million at the third-quarter end.
Guidance
For 2023, Hess expects a net production (excluding Libya) of 390,000 barrels of oil equivalent per day (Boe/d), which is at the upper end of the previously mentioned 385,000-390,000 Boe/d. The metric suggests a rise from the 344,000 Boe/d reported in 2022.
The company revised its guidance for exploration and production capital, and exploratory expenditure to $4.1 billion, an increase from the prior stated $3.7 billion. The upward adjustment is primarily attributed to the company’s decision to acquire the Liza Unity FPSO in the fourth quarter of 2023, as opposed to the originally planned timing of the first quarter of 2024.
Zacks Rank & Other Stocks to Consider
Hess currently carries a Zacks Rank #2 (Buy).
Investors interested in the energy sector may look at some other top-ranked companies mentioned below. The three companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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 on Dec 20, 2023, to stockholders of record as of Dec 6, 2023. This dividend is up 40% from the previous quarter’s level.
Matador Resources Company (MTDR - Free Report) reported third-quarter 2023 adjusted earnings of $1.86 per share, which beat the Zacks Consensus Estimate of $1.59. Matador’s milestone, with its highest-ever total production averaging more than 135,000 barrels of oil and natural gas equivalent per day, led to better-than-expected Q3 results.
For the fourth quarter of 2023, Matador expects an average daily oil equivalent production of 145,000 BOE. The recent guidance indicates a 2% upward revision from the prior mentioned 143,000 BOE/D.