) reported adjusted second-quarter 2014 earnings of $1.38 per
share, breezing past the Zacks Consensus Estimate of $1.20.
However, this came below the year-ago quarterly earnings of $1.51
Hess Corporation - Earnings Surprise |
Total revenue decreased 13.5% year over year to $3,600 million
in the quarter from $4,162 million. However, it surpassed the Zacks
Consensus Estimate of $2,750 million. The beat is mainly
attributable to better realizations.
In the reported quarter, the Exploration and Production (E&P)
business posted adjusted profits of $483 million, down 19.5% from
the year-earlier profit of $600 million.
Quarterly hydrocarbon production was 319 thousand barrels of oil
equivalent per day (MBOE/d), down 6.5% year over year. The drop in
production was primarily due to asset sales and Libyan unrest.
Crude oil production was 216 thousand barrels per day (down from
226 thousand barrels per day in the year-ago quarter), natural gas
liquids production totaled 21 thousand barrels (up from 18 thousand
barrels) while natural gas output was 491 thousand cubic feet (Mcf)
(down from 583 Mcf).
Worldwide crude oil realization per barrel of $101.70 (including
the impact of hedging) increased 3.9% year over year. Worldwide
(including the impact of hedging) fell 1.4% year over year to $6.35
In the quarter under review, downstream businesses (now
discontinued) reported loss of $35 million versus earnings of $26
million in the year-ago period.
Quarterly net cash flow from operations was $946 million. Hess
Corp.'s capital expenditures totaled $1,256 million. In the
reported quarter, the company repurchased approximately 8.3 million
shares of common stock for approximately $768 million at an average
cost per share of $91.85.
As of Jun 30, 2014, the company had approximately $2,240 million in
cash and $6.077 million in long-term debt. The
debt-to-capitalization ratio at the end of the quarter was 20%
versus 18.7% in the prior quarter.
The company expects production to average 305-315 MBOE/d for 2014.
This would be driven by continued growth in the Bakken, higher
production from the Valhall Field, and the planned start-up of the
Tubular Bells Field in the Gulf of Mexico in the third quarter of
Going forward, we believe the company's asset divestiture program
and significant progress in multi-year transformation will reduce
its financing needs. Hess remains focused on value creation and the
pursuit of its previously announced intention to monetize its
midstream assets in the Bakken oil shale play in North Dakota.
With this intention, the company announced plans to pursue the
formation and initial public offering of a master limited
partnership or MLP. Hess stated that it plans to use the MLP as the
primary midstream vehicle to support its Bakken production growth.
It expects the MLP to file a registration statement with the
Securities and Exchange Commission in the fourth quarter of 2014
and launch an initial public offering of common units representing
limited partner interests in the MLP in the first quarter of 2015.
Hess Corp. remains on track with its strategy of becoming an
E&P company entirely while boosting its shareholder value, much
like ConocoPhillips (
) and Marathon Oil Corp. (
Hess Corp. currently carries a Zacks Rank #3 (Hold). Meanwhile, one
can consider the Zacks Ranked #1 (Strong Buy) stock Weatherford
International plc (
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