Hess Corporation HES is a leading oil and gas explorer, with presence in both onshore and offshore resources. The stock has gained 2.1% in the past year, significantly outperforming the 38.7% decline of the composite stocks belonging to the industry.
The upstream energy player has also witnessed positive estimate revisions of its 2020 bottom line over the past 60 days by most analysts. Let’s discuss the reasons for which investors should be bullish about the Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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In the Stabroek Block, located off the coast of Guyana, the company has witnessed an expanding inventory of newly-discovered oil resources. Notably, Hess recently announced its 16th discovery on the Stabroek Block, owing to which the upstream energy player has revised upward its estimate for the region’s gross discovered recoverable resources to more than 8 billion barrels of oil equivalent.
Hess also has a strong presence in the North Dakota Bakken shale play, which is among the prolific resources in the United States. In Bakken’s core areas, the company discovered a huge inventory of premium drilling locations. While employing advanced drilling techniques, the company has been successful in bringing down operating costs and scaling up well productivity.
The company is also a leading producer in the deepwater Gulf of Mexico. Other offshore resources where the company has a presence are locations in Europe, Asia Pacific and South America.
Declining Costs & Strong Balance Sheet
Through 2021 from 2017, the company estimates a 30% reduction in cash costs. Moreover, the upstream firm expects depreciation, depletion and amortization expenses to decline 35% from 2017 to 2021. Thus, the considerable decline in unit costs will drive the company’s bottom line. Hess also maintains investment grade credit ratings, reflecting a strong balance sheet.
Other Key Picks
Other prospective players in the energy sector are Precision Drilling Corporation PDS, Antero Resources Corporation AR and Sunoco LP SUN. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Precision Drilling beat the Zacks Consensus Estimate for earnings in the prior four reported quarters.
Antero is likely to see earnings growth of more than 270% in 2020.
Sunoco is likely to see earnings growth of 11.7% in 2020.
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Hess Corporation (HES) : Free Stock Analysis Report
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