Hess (HES) Q4 Loss Wider Than Expected, Proved Reserves Grow
Zacks Investment Research | Feb 05, 2018 02:13AM ET
Hess Corporation (NYSE:HES) reported adjusted fourth-quarter 2017 loss from continuing operations of $1.01 per share, wider than the Zacks Consensus Estimate of a loss of 90 cents, thanks to lower oil equivalent production. The bottom line was flat year over year. Following the release, the stock lost almost 4% in pre-market trading hours.
Revenues declined to $1,296 million in the quarter from $1,386 million a year ago. The top line, however, surpassed the Zacks Consensus Estimate of $1,294 million on higher commodity price realizations.
Q4 Operational Update
In the quarter under review, the Exploration and Production business incurred a loss of $2,592 million, narrower than the year-earlier loss of $3,949 million.
Quarterly hydrocarbon production was 300 thousand barrels of oil equivalent per day, down 3.5% year over year owing to unscheduled downtime.
Crude oil production was 173 thousand barrels per day compared with 190 thousand barrels in the year-ago quarter. Natural gas liquids production totaled 41 thousand barrels compared with 40 thousand barrels in the prior-year quarter. Natural gas output was 556 thousand cubic feet (Mcf) compared with 512 Mcf a year ago.
Worldwide crude oil realization per barrel of $55.44 (including the impact of hedging) showed an increase of 20.6% year over year.
Worldwide natural gas prices rose 13.9% year over year to $3.69 per Mcf. The average worldwide natural gas liquids selling price also increased to $22.78 per barrel from $14.68 in the year-ago quarter.
Operating Expenses
Operating expenses in the fourth quarter totaled $359 million, down more than 36% from the year-ago $568 million.
Financials
Quarterly net cash flow from operations was $343 million at the end of the fourth quarter. Hess’ capital expenditures totaled $568 million, up 38% from $411 million in the prior-year quarter.
As of Dec 31, 2017, the company had approximately $4,847 million in cash and $6,397 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 36.1%.
Q4 Price Performance
The pricing chart reveals that the company underperformed the industry in the October-to-December 2017 quarter. During this period, the company’s shares gained 1.2% compared with the industry’s 9.4%.
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Outlook
The company expects to invest $2.1 billion in 2018 for exploration and production activities. Hess also projects 2018 production between 245,000 to 255,000 (BOE/D), higher than 242,000 BOE/D recorded in 2017.
Proved Reserves
As of Dec 31, 2017, the company reported proved reserves of crude and natural gas at 1,154 million BOE, up from 1,109 BOE as of Dec 31, 2016.
Zacks Rank & Stocks to Consider
Hess carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are Statoil (OL:STL) ASA (NYSE:STO) , Pioneer Natural Resources (NYSE:PXD) and Cabot Oil & Gas (NYSE:COG) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see .
Headquartered in Stavanger, Norway, Statoil is a major international integrated energy player. The company is expected to witness year-over-year earnings growth of 17.1% in 2018.
Headquartered at Irving, TX, Pioneer Natural Resources is an upstream energy firm. The company delivered an average positive earnings surprise of 67.6% for the preceding four quarters.
Headquartered in Houston, TX, Cabot is also an upstream energy company. The firm will likely see year-over-year earnings growth of 128.4% in 2018.
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