) reported adjusted third quarter 2013 earnings of $1.18 per
share, lagging the Zacks Consensus Estimate of $1.45. The
underperformance was mostly due to lower production resulting
from various asset sales.
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Total revenue in the quarter decreased 22.8% year over year to
$2,698 million from $3,494 million. Revenues, however, topped the
Zacks Consensus Estimate of $2,694.0 million.
The company is gradually transforming into a pure play
exploration and production (E&P) entity from an integrated
oil and gas company. As part of this strategy, Hess has sold
assets worth billions of dollars, as it looks to exit the
downstream business. Since the first quarter, the company has
classified its Marketing and Refining business as discontinued
In the reported quarter, the E&P business posted profits of
$455 million which declined 25.2% from the year-earlier profit of
Quarterly hydrocarbon production was 310 thousand barrels of oil
equivalent per day (MBOE/d), down 22.9% year over year. Lower
production was due to the impact of asset sales. This was
partially offset by higher Bakken and Valhall production year
Crude oil production was 207 thousand barrels per day (down from
281 thousand barrels per day in the year-ago quarter); natural
gas liquids production totaled 17 thousand barrels per day (down
from 19 thousand barrels); and daily natural gas output was 519
thousand cubic feet (Mcf) (down from 614 Mcf).
Worldwide crude oil realization per barrel of $104.95 increased
21.1% year over year. Worldwide natural gas prices increased
10.9% year over year to $6.52 per Mcf.
In the reported quarter, downstream businesses (now discontinued)
clocked earnings of $54 million versus $53 million in the
Quarterly net cash flow from operations was $1,254 million. Hess'
capital expenditures totaled $1,527 million, of which
approximately $1,491 million were expended toward E&P.
As of Sep 30, 2013, the company had approximately $321 million in
cash and $6,209 million of total debt. Hess'
debt-to-capitalization ratio at the end of the quarter was 20.7%.
The company reaffirmed its full-year production guidance at
340-355 MBOE/d. Production is expected to remain at the lower end
of the range due to civil unrest in Libya.
New York-based Hess Corporation is an integrated energy company
engaged in oil and gas exploration, production and refining as
well as marketing.
Hess, however, remains on track with its transition to a pure
play E&P company while boosting shareholder value, much like
Marathon Oil Corporation
Going forward, we believe that the company's strong exploration
upside in Ghana and continued improvement in Bakken productivity
hold a lot of promise. This would help the company to
consistently deliver 5-8% year-over-year production growth in the
Hess shares currently carry a Zacks Rank #3 (Hold). However,
there are other Zacks Ranked #1 (Strong Buy) stocks in the oil
and gas industry like
TransAtlantic Petroleum Ltd
), that appear more attractive in the short term.