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Hess (HES) Q4 Earnings Surpass Estimates, Revenues Fall Y/Y
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Hess Corporation (HES - Free Report) reported fourth-quarter 2023 earnings per share of $1.63, which beat the Zacks Consensus Estimate of $1.43. However, the bottom line declined from the year-ago quarter’s level of $1.78.
Total quarterly revenues decreased to $3,035 million from $3,054 million in the year-ago period. The figure, however, beat the Zacks Consensus Estimate of $2,775 million.
Better-than-expected quarterly results have been driven by higher oil equivalent production volumes. The positives were partially offset by higher total costs and expenses.
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 reported adjusted earnings of $512 million, down from $641 million reported a year ago. The business was negatively impacted by a dip in realized natural gas and natural gas liquids (NGL) prices.
Quarterly hydrocarbon production totaled 418 thousand barrels of oil equivalent per day (MBoe/d), up from 386 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 405.7 MBoe/d.
Crude oil production increased from 228 thousand barrels per day (MBbls/d) in fourth-quarter 2022 to 244 MBbls/d in the quarter under review. The reported figure also beat our estimate of 229.6 MBbls/d.
NGL production totaled 73 MBbls/d, up from 62 MBbls/d in the prior-year quarter. The reported figure beat our estimate of 70.8 MBbls/d.
Natural gas production totaled 608 thousand cubic feet per day (Mcf/d), up from 576 Mcf/d recorded a year ago. The reported figure missed our estimate of 632 Mcf/d.
Worldwide crude oil realization per barrel of $78.95 (excluding the impacts of hedging) significantly declined from $83.50 in the year-ago period. Also, global natural gas price fell to $4.51 per Mcf from the year-ago figure of $5.17. The average global NGL selling price declined to $20.92 per barrel from $26.93 reported a year ago.
Midstream
The company generated adjusted net earnings of $63 million, down from $64 million registered a year ago.
Operating Expenses
Operating expenses for the fourth quarter totaled $473 million compared with the year-ago level of $385 million. The reported figure outpaced our estimate of $423.2 million.
Exploration expenses increased to $87 million from $74 million recorded in the year-ago period. Marketing costs increased to $886 million from $821 million a year ago.
Total costs and expenses increased to $2,350 million from $2,180 million in the prior-year period.
Financials
Net cash provided by operating activities amounted to $1,344 million. Hess’ capital expenditure for exploration and production activities totaled $1,480 million.
As of Dec 31, 2023, the company had $1,688 million in cash and cash equivalents. Its long-term debt was $8,302 million at the end of the fourth quarter.
Outlook
Hess expects to continue operating four drilling rigs in 2024. It expects to receive leases for these rigs in the first quarter of 2024. Hess forecasts a total capital and exploratory expenditure of $4.2 billion for full-year 2024. This includes the recent acquisition of leases from the Gulf of Mexico Lease Sale 261.
Zacks Rank & Stocks to Consider
Hess currently carries a Zacks Rank #5 (Strong Sell).
Vaalco Energy is an independent energy company principally engaged in the acquisition, exploration, development, and production of crude oil and natural gas.
The Zacks Consensus Estimate for EGY’s 2024 EPS is pegged at $1.49. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days. EGY’s earnings for 2024 are expected to surge 325.7% year over year.
Oceaneering International is one of the leading suppliers of offshore equipment and technology solutions to the energy industry.
The Zacks Consensus Estimate for OII’s 2024 EPS is pegged at $1.52. It has a Zacks Style Score of A for Growth and B for Value. OII’s earnings for 2024 are expected to surge 76.4% year over year.
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Hess (HES) Q4 Earnings Surpass Estimates, Revenues Fall Y/Y
Hess Corporation (HES - Free Report) reported fourth-quarter 2023 earnings per share of $1.63, which beat the Zacks Consensus Estimate of $1.43. However, the bottom line declined from the year-ago quarter’s level of $1.78.
Total quarterly revenues decreased to $3,035 million from $3,054 million in the year-ago period. The figure, however, beat the Zacks Consensus Estimate of $2,775 million.
Better-than-expected quarterly results have been driven by higher oil equivalent production volumes. The positives were partially offset by higher total costs and expenses.
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 reported adjusted earnings of $512 million, down from $641 million reported a year ago. The business was negatively impacted by a dip in realized natural gas and natural gas liquids (NGL) prices.
Quarterly hydrocarbon production totaled 418 thousand barrels of oil equivalent per day (MBoe/d), up from 386 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 405.7 MBoe/d.
Crude oil production increased from 228 thousand barrels per day (MBbls/d) in fourth-quarter 2022 to 244 MBbls/d in the quarter under review. The reported figure also beat our estimate of 229.6 MBbls/d.
NGL production totaled 73 MBbls/d, up from 62 MBbls/d in the prior-year quarter. The reported figure beat our estimate of 70.8 MBbls/d.
Natural gas production totaled 608 thousand cubic feet per day (Mcf/d), up from 576 Mcf/d recorded a year ago. The reported figure missed our estimate of 632 Mcf/d.
Worldwide crude oil realization per barrel of $78.95 (excluding the impacts of hedging) significantly declined from $83.50 in the year-ago period. Also, global natural gas price fell to $4.51 per Mcf from the year-ago figure of $5.17. The average global NGL selling price declined to $20.92 per barrel from $26.93 reported a year ago.
Midstream
The company generated adjusted net earnings of $63 million, down from $64 million registered a year ago.
Operating Expenses
Operating expenses for the fourth quarter totaled $473 million compared with the year-ago level of $385 million. The reported figure outpaced our estimate of $423.2 million.
Exploration expenses increased to $87 million from $74 million recorded in the year-ago period. Marketing costs increased to $886 million from $821 million a year ago.
Total costs and expenses increased to $2,350 million from $2,180 million in the prior-year period.
Financials
Net cash provided by operating activities amounted to $1,344 million. Hess’ capital expenditure for exploration and production activities totaled $1,480 million.
As of Dec 31, 2023, the company had $1,688 million in cash and cash equivalents. Its long-term debt was $8,302 million at the end of the fourth quarter.
Outlook
Hess expects to continue operating four drilling rigs in 2024. It expects to receive leases for these rigs in the first quarter of 2024. Hess forecasts a total capital and exploratory expenditure of $4.2 billion for full-year 2024. This includes the recent acquisition of leases from the Gulf of Mexico Lease Sale 261.
Zacks Rank & Stocks to Consider
Hess currently carries a Zacks Rank #5 (Strong Sell).
Investors interested in the energy sector may look at some better-ranked companies like Vaalco Energy (EGY - Free Report) and Oceaneering International, Inc. (OII - Free Report) , which presently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vaalco Energy is an independent energy company principally engaged in the acquisition, exploration, development, and production of crude oil and natural gas.
The Zacks Consensus Estimate for EGY’s 2024 EPS is pegged at $1.49. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days. EGY’s earnings for 2024 are expected to surge 325.7% year over year.
Oceaneering International is one of the leading suppliers of offshore equipment and technology solutions to the energy industry.
The Zacks Consensus Estimate for OII’s 2024 EPS is pegged at $1.52. It has a Zacks Style Score of A for Growth and B for Value. OII’s earnings for 2024 are expected to surge 76.4% year over year.