Will Hess Corporation (HES) Disappoint This Earnings Season?
Zacks Investment Research | Jul 20, 2017 10:52PM ET
Hess Corporation (NYSE:HES) , a global exploration and production (E&P) company, is expected to report second-quarter 2017 earnings on Jul 26, before the market opens.
Last quarter, the company had delivered an impressive 2.73% positive earnings surprise, courtesy of an uptick in oil prices. Also, Hess has an average positive earnings surprise of 8.23% for the last four quarters.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Since the beginning of 2014, long-term debt load has been on the rise. Our proprietary model shows that from 2014 to 2016, the company’s long-term debt increased from nearly $5,500 million to almost $6,700 million.
Also, net cash flow from operations has been declining steadily over the last three years, reflecting weak operations owing to persistently low commodity prices.
Oil and gas prices have been low for almost three years now and during second-quarter 2017, the prices of both the commodities deteriorated further. The prolonged weakness can be attributed to the supply glut in the commodity market. During the second quarter of 2017, oil and natural gas prices fell 8.4% and 5%, respectively. Hence, the OPEC’s historical production cut extension deal until Mar 2018 has failed to drive oil.
This development is not favorable for explorers like Hess as the company’s cashflow might get affected further.
Price Movement in Q2
Hess has lost 9% in the April-to-June quarter versus the 9.5% decline of the Zacks Investment Research
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