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Why Is Hess (HES) Down 6.5% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Hess Corporation (HES - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hess Q4 Loss Narrower than Expected; View Raised
Hess Corporation reported adjusted fourth-quarter 2016 loss from continuing operations of $1.01 per share, narrower than the Zacks Consensus Estimate of loss of $1.08. The company had incurred a loss of $1.40 per share in the year-ago quarter. Higher oil price realizations as well as improved total production unit costs resulted in the narrower loss.
Revenues decreased marginally year over year to $1,386 million in the quarter from $1,387 million. The top line, however, beat the Zacks Consensus Estimate of $1,281 million.
Full-year 2016 loss from continuing operation – excluding one-time items − was at $4.94 per share. The company had posted loss of $3.93 per share a year ago. The loss was, however, narrower than the Zacks Consensus Estimate of a loss of $5.02 per share.
Total revenue decreased 26.2% to $4,844 million from $6,561 million in 2015. Revenues for 2016 were above the Zacks Consensus Estimate of $4,684 million.
Fourth-Quarter Operational Performance
In the reported quarter, the Exploration and Production (E&P) business posted adjusted loss of $257 million, narrower the year-earlier loss of $328 million.
Quarterly hydrocarbon production was 311 thousand barrels of oil equivalent per day (MBOE/d), down 15.5% year over year.
Crude oil production was 186 thousand barrels per day as against 233 thousand barrels per day in the year-ago quarter. Natural gas liquids production remained flat year over year at 40 thousand barrels. However, natural gas output was 512 thousand cubic feet (Mcf) (up from 571 Mcf).
Worldwide crude oil realization per barrel of $45.97 (including the impact of hedging) increased over 5% year over year. Worldwide natural gas prices fell 5.8% year over year to $3.24 per Mcf.
Financials
Quarterly net cash flow from operations was $326 million at the end of the quarter. Hess’ capital expenditures totaled $414 million.
As of Dec 31, 2016, the company had approximately $2,732 million in cash and $6,694 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 30.4%.
Reserves Replacement
At the end of 2016, oil and gas proved reserves were 1,109 million barrels of oil equivalent compared with 1,086 million barrels of oil equivalent (mmboe) at the end of 2015. In 2016, the company added 172 mmboe to proved reserves. Lower crude oil prices led to negative revisions to proved reserves of 29 million barrels of oil equivalent.
2017 Capital Budget
Hess has increased its 2017 capital expenditure to $2.25 billion from $1.9 billion in 2016. Oil and gas production, excluding Libya, is estimated in the range of 300,000–310,000 boe/d compared with full-year 2016 net production of 321,000 boe/d.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
At this time, Hess' stock has a nice score of 'B' on both growth and momentum front. However, the stock was allocated also a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable for growth and momentum based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Hess (HES) Down 6.5% Since the Last Earnings Report?
It has been about a month since the last earnings report for Hess Corporation (HES - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hess Q4 Loss Narrower than Expected; View Raised
Hess Corporation reported adjusted fourth-quarter 2016 loss from continuing operations of $1.01 per share, narrower than the Zacks Consensus Estimate of loss of $1.08. The company had incurred a loss of $1.40 per share in the year-ago quarter. Higher oil price realizations as well as improved total production unit costs resulted in the narrower loss.
Revenues decreased marginally year over year to $1,386 million in the quarter from $1,387 million. The top line, however, beat the Zacks Consensus Estimate of $1,281 million.
Full-year 2016 loss from continuing operation – excluding one-time items − was at $4.94 per share. The company had posted loss of $3.93 per share a year ago. The loss was, however, narrower than the Zacks Consensus Estimate of a loss of $5.02 per share.
Total revenue decreased 26.2% to $4,844 million from $6,561 million in 2015. Revenues for 2016 were above the Zacks Consensus Estimate of $4,684 million.
Fourth-Quarter Operational Performance
In the reported quarter, the Exploration and Production (E&P) business posted adjusted loss of $257 million, narrower the year-earlier loss of $328 million.
Quarterly hydrocarbon production was 311 thousand barrels of oil equivalent per day (MBOE/d), down 15.5% year over year.
Crude oil production was 186 thousand barrels per day as against 233 thousand barrels per day in the year-ago quarter. Natural gas liquids production remained flat year over year at 40 thousand barrels. However, natural gas output was 512 thousand cubic feet (Mcf) (up from 571 Mcf).
Worldwide crude oil realization per barrel of $45.97 (including the impact of hedging) increased over 5% year over year. Worldwide natural gas prices fell 5.8% year over year to $3.24 per Mcf.
Financials
Quarterly net cash flow from operations was $326 million at the end of the quarter. Hess’ capital expenditures totaled $414 million.
As of Dec 31, 2016, the company had approximately $2,732 million in cash and $6,694 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 30.4%.
Reserves Replacement
At the end of 2016, oil and gas proved reserves were 1,109 million barrels of oil equivalent compared with 1,086 million barrels of oil equivalent (mmboe) at the end of 2015. In 2016, the company added 172 mmboe to proved reserves. Lower crude oil prices led to negative revisions to proved reserves of 29 million barrels of oil equivalent.
2017 Capital Budget
Hess has increased its 2017 capital expenditure to $2.25 billion from $1.9 billion in 2016. Oil and gas production, excluding Libya, is estimated in the range of 300,000–310,000 boe/d compared with full-year 2016 net production of 321,000 boe/d.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
Hess Corporation Price and Consensus
Hess Corporation Price and Consensus | Hess Corporation Quote
VGM Scores
At this time, Hess' stock has a nice score of 'B' on both growth and momentum front. However, the stock was allocated also a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable for growth and momentum based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.