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Hess (HES) Down 6.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Hess (HES - Free Report) . Shares have lost about 6.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hess Q4 Earnings Miss Estimates on Oil Price Slump
Hess Corporation reported adjusted fourth-quarter 2019 loss per share of 60 cents, wider than the Zacks Consensus Estimate of a loss of 56 cents. In the year-ago quarter, the company had recorded a loss of 31 cents per share.
However, quarterly revenues increased to $1,699 million from $1,682 million in the year-ago quarter. Also, the top line beat the Zacks Consensus Estimate of $1,572 million.
The weak quarterly earnings were due to lower commodity price realization and increased operating expenses. It was partially offset by higher hydrocarbon production, backed by the prolific Bakken play and improved Midstream profits due to higher throughput volumes.
Full-year 2019 revenues amounted to $6,510 million, marginally up from the 2018 figure of $6,466 million.
Q4 Operational Update
Exploration and Production
In the quarter under review, the Exploration and Production business reported an adjusted net loss of $124 million compared with a loss of $5 million a year ago. The business was affected by lower realized commodity prices.
Quarterly hydrocarbon production was 338 thousand barrels of oil equivalent per day, up 17% year over year on contributions from resources in the Bakken play.
Crude oil production increased from 161 thousand barrels per day (MBbls/d) in fourth-quarter 2018 to 183MBbls/d in fourth-quarter 2019. Moreover, natural gas liquids production totaled 52 MBbls/d, up from 37MBbls/d in the prior-year quarter. Also, natural gas output was 618 thousand cubic feet (Mcf), up from 545 Mcf a year ago.
Worldwide crude oil realization per barrel of $55.05 (excluding the impact of hedging) declined from $58.11 in the year-ago period. The average worldwide natural gas liquids selling price also fell to $13.87 per barrel from $21.19 in the year-ago quarter. Moreover, worldwide natural gas prices declined to $3.48 per Mcf from the year-ago level of $4.82.
As of year-end 2019, Hess’ proved reserves were 1.197 billion oil-equivalent barrels compared with 1.192 billion oil-equivalent barrels on Dec 31, 2018. This was supported by discoveries in Guyana and Bakken.
Midstream
From the midstream business, the company generated adjusted net earnings of $49 million, up from $32 million a year ago. The rise can be attributed to higher throughput volumes.
Operating Expenses
Operating expenses in the fourth quarter totaled $365 million, up 25% from the year-ago figure of $292 million. Total costs and expenses rose to $1,763 million from $1,621 million in fourth-quarter 2018.
Financials
Quarterly net cash flow from operations was $286 million at the end of the fourth quarter, reflecting a significant decline from the year-ago level of $881 million. Hess’ capital expenditures for exploration and production activities totaled $876 million, up from $618 million in the prior-year quarter.
As of Dec 31, 2019, the company had $1,545 million in cash & cash equivalents, and $7,142 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 43.1%.
Guidance
The company announced 2020 capital budget for exploration and production activities of $3 billion. Of the total amount, more than 80% will be allocated to Guyana and Bakken properties.
Through 2020, Hess expects net production volumes — excluding Libya — to be around 330,000-335,000 barrels of oil equivalent per day (Boe/d), indicating an increase from the 2019 level of 290,000 Boe/d. For full-year 2020, the company expects net production from Bakken to be 180,000 Boe/d, suggesting an improvement from the 2019 level of 152,000 Boe/d.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -131.25% due to these changes.
VGM Scores
Currently, Hess has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hess has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Hess (HES) Down 6.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Hess (HES - Free Report) . Shares have lost about 6.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hess due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hess Q4 Earnings Miss Estimates on Oil Price Slump
Hess Corporation reported adjusted fourth-quarter 2019 loss per share of 60 cents, wider than the Zacks Consensus Estimate of a loss of 56 cents. In the year-ago quarter, the company had recorded a loss of 31 cents per share.
However, quarterly revenues increased to $1,699 million from $1,682 million in the year-ago quarter. Also, the top line beat the Zacks Consensus Estimate of $1,572 million.
The weak quarterly earnings were due to lower commodity price realization and increased operating expenses. It was partially offset by higher hydrocarbon production, backed by the prolific Bakken play and improved Midstream profits due to higher throughput volumes.
Full-year 2019 revenues amounted to $6,510 million, marginally up from the 2018 figure of $6,466 million.
Q4 Operational Update
Exploration and Production
In the quarter under review, the Exploration and Production business reported an adjusted net loss of $124 million compared with a loss of $5 million a year ago. The business was affected by lower realized commodity prices.
Quarterly hydrocarbon production was 338 thousand barrels of oil equivalent per day, up 17% year over year on contributions from resources in the Bakken play.
Crude oil production increased from 161 thousand barrels per day (MBbls/d) in fourth-quarter 2018 to 183MBbls/d in fourth-quarter 2019. Moreover, natural gas liquids production totaled 52 MBbls/d, up from 37MBbls/d in the prior-year quarter. Also, natural gas output was 618 thousand cubic feet (Mcf), up from 545 Mcf a year ago.
Worldwide crude oil realization per barrel of $55.05 (excluding the impact of hedging) declined from $58.11 in the year-ago period. The average worldwide natural gas liquids selling price also fell to $13.87 per barrel from $21.19 in the year-ago quarter. Moreover, worldwide natural gas prices declined to $3.48 per Mcf from the year-ago level of $4.82.
As of year-end 2019, Hess’ proved reserves were 1.197 billion oil-equivalent barrels compared with 1.192 billion oil-equivalent barrels on Dec 31, 2018. This was supported by discoveries in Guyana and Bakken.
Midstream
From the midstream business, the company generated adjusted net earnings of $49 million, up from $32 million a year ago. The rise can be attributed to higher throughput volumes.
Operating Expenses
Operating expenses in the fourth quarter totaled $365 million, up 25% from the year-ago figure of $292 million. Total costs and expenses rose to $1,763 million from $1,621 million in fourth-quarter 2018.
Financials
Quarterly net cash flow from operations was $286 million at the end of the fourth quarter, reflecting a significant decline from the year-ago level of $881 million. Hess’ capital expenditures for exploration and production activities totaled $876 million, up from $618 million in the prior-year quarter.
As of Dec 31, 2019, the company had $1,545 million in cash & cash equivalents, and $7,142 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 43.1%.
Guidance
The company announced 2020 capital budget for exploration and production activities of $3 billion. Of the total amount, more than 80% will be allocated to Guyana and Bakken properties.
Through 2020, Hess expects net production volumes — excluding Libya — to be around 330,000-335,000 barrels of oil equivalent per day (Boe/d), indicating an increase from the 2019 level of 290,000 Boe/d. For full-year 2020, the company expects net production from Bakken to be 180,000 Boe/d, suggesting an improvement from the 2019 level of 152,000 Boe/d.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -131.25% due to these changes.
VGM Scores
Currently, Hess has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hess has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.