Hess Corp. Misses on Earnings, Beats Revs - Analyst Blog
Integrated oil company,
) reported adjusted fourth-quarter 2013 earnings of 96 cents per
share, lagging the Zacks Consensus Estimate of $1.09 per share as
well as the year-ago quarter earnings of $1.20 per share. The
underperformance was mainly due to a drop in production volumes.
Full-year 2013 earnings came in at $5.55 per share, down about 5.5% from year-earlier earnings of $5.87 per share. The earnings missed the Zacks Consensus Estimate of $5.79.
Total revenue decreased 6.1% year over year to $5,568 million in the quarter from $5,929 million. However, it surpassed the Zacks Consensus Estimate of $2,636 million. The beat can be mainly attributable to better realizations.
For full-year 2013, total revenue increased 1.4% reaching $24,421 million from $24,086 million in 2012. The figure also surpassed the Zacks Consensus Estimate of $12,518 million.
In the reported quarter, the Exploration and Production business posted adjusted profits of $436 million, up 1.2% from the year-earlier profit of $431 million.
Quarterly hydrocarbon production was 336 thousand barrels of oil equivalent per day (MBOE/d), down 17.2% year over year. The drop in production was primarily due to unplanned downtime, natural field declines and reduced entitlement in Algeria. However, the negatives were partly offset by new additions from the North Malay Basin and higher Valhall production.
Crude oil production was 225 thousand barrels per day (down from 284 thousand barrels per day in the year-ago quarter), natural gas liquids production totaled 17 thousand barrels (down from 19 thousand barrels) while natural gas output was 565 thousand cubic feet (Mcf) (down from 616 Mcf).
Worldwide crude oil realization per barrel of $98.27 (including the impact of hedging) increased 16.4% year over year. Worldwide natural gas prices (including the impact of hedging) upped 5.6% year over year to $6.97 per Mcf.
At the end of fiscal 2013, oil and gas proved reserves were 1,437 million barrels of oil equivalent compared with 1,533 million barrels at the end of 2012. During 2013, the Corporation added 148 million barrels of oil equivalent to proved reserves. Subject to final review, these additions replaced approximately 118% of the Corporation's 2013 production, resulting in a reserve life of 11.5 years.
In the quarter under review, downstream businesses (now discontinued) reported a loss of $9 million versus a profit of $88 million in the year-ago period.
Quarterly net cash flow from operations was $1,550 million. Hess Corp.'s capital expenditures totaled $1,544 million, of which approximately $1,476 million were expended toward E&P.
As of Dec 31, 2013, the company had approximately $1,184 million in cash and $5,798 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 19.0% versus 27.7% in the year ago quarter.
New York-based Hess Corp. is an integrated energy company engaged in oil and gas exploration, production and refining as well as marketing.
Going forward, we believe that the company's strong exploration upside in Ghana and continued improvement in Bakken productivity hold a lot of promise. The company's asset divestiture program along with significant progress in multi-year transformation is also likely to reduce its financing needs.
Hess Corp. remains on track with its strategy of becoming an E&P company entirely while boosting its shareholders value, much like ConocoPhillips ( COP ) and Marathon Oil Corp. ( MRO ).
Hess Corp. currently carries a Zacks Rank #3 (Hold). Meanwhile, one can consider the Zacks Ranked #2 (Buy) stock TransAtlantic Petroleum Ltd ( TAT ).
CONOCOPHILLIPS (COP): Free Stock Analysis Report
HESS CORP (HES): Free Stock Analysis Report
MARATHON OIL CP (MRO): Free Stock Analysis Report
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