Hess (HES) Up 14.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Hess (HES). Shares have added about 14.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hess due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hess Q1 Earnings Top Estimates
Hess Corporation reported first-quarter 2022 earnings per share of $1.30, beating the Zacks Consensus Estimate of $1.12. The figure also improved from the year-ago earnings of 82 cents per share.
Quarterly revenues increased to $2,371 million from $1,919 million a year ago. The top line also beat the Zacks Consensus Estimate of $2,030 million.
The higher commodity price realizations backed the strong quarterly results.
Operational Update
Exploration and Production
For the quarter under review, the Exploration and Production business reported adjusted earnings of $460 million, improving from a profit of $308 million a year ago. The business was favored by higher realized commodity prices, partially offset by decreased output.
Quarterly hydrocarbon production was 297 thousand barrels of oil equivalent per day (MBoe/d), down from 333 MBoe/d in the year-ago period, owing to unplanned downtime in the Gulf of Mexico.
Crude oil production decreased from 177 thousand barrels per day (MBbls/d) in first-quarter 2021 to 151 MBbls/d. Natural gas liquids production totaled 50 MBbls/d, down from 53 MBbls/d in the prior-year quarter. Natural gas output was 577 thousand cubic feet per day (Mcf/d), down from 617 Mcf/d a year ago.
Worldwide crude oil realization per barrel of $94.04 (excluding the impacts of hedging) significantly improved from $52.52 in the year-ago period. Also, worldwide natural gas prices rose to $5.28 per Mcf from the year-ago figure of $4.90. The average worldwide natural gas liquids’ selling price increased to $39.79 per barrel from $29.49 a year ago.
Midstream
From the midstream business, the company generated adjusted net earnings of $72 million, down from $75 million a year ago.
Operating Expenses
Operating expenses for the first quarter totaled $313 million versus the year-ago level of $265 million. Marketing costs increased to $682 million from $518 million a year ago. Exploration expenses rose to $43 million from $33 million in the year-ago period.
Total costs and expenses increased to $1,669 million for the quarter from $1,460 million a year ago.
Financials
Net cash used in operations was $156 million for the first quarter. Hess’ capital expenditure for exploration and production activities totaled $580 million.
As of Mar 31, 2022, the company had $1,370 million in cash and cash equivalents. Its long-term debt was recorded at $7,934 million at first-quarter end. The current maturity of the long-term debt is $22 million.
Other News
On Apr 26, Hess announced three discoveries in the Stabroek Block, thereby increasing the block’s gross discovered recoverable resource estimate from 10 billion barrels of oil equivalent to 11 billion barrels of oil equivalent.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -11.16% due to these changes.
VGM Scores
At this time, Hess has a nice Growth Score of B, 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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