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Hess' (HES) Q1 Earnings Beat on Bakken Production Volumes

Nilanjan Banerjee
Higher hydrocarbon production supports Hess' (HES) Q1 earnings.
Higher hydrocarbon production supports Hess' (HES) Q1 earnings.

Hess Corporation HES reported adjusted first-quarter 2019 earnings per share of 9 cents against the Zacks Consensus Estimate of a loss of 26 cents and the year-ago quarter adjusted loss of 27 cents.

Revenues increased to $1,599 million from $1,390 million in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $1,475 million.

The strong first-quarter results were attributed to higher hydrocarbon production, backed by prolific plays like Bakken and Gulf of Mexico.

Q1 Operational Update

Exploration and Production

In the quarter under review, the Exploration and Production business reported a profit of $109 million, improving from a loss of $25 million a year ago.

Quarterly hydrocarbon production was 299 thousand barrels of oil equivalent per day, up 17.3% year over year on contributions from the onshore Bakken play and offshore resources in Gulf of Mexico.

Crude oil production increased from 134 thousand barrels per day in first-quarter 2018 to 164 thousand barrels per day in first-quarter 2019.

Natural gas liquids production totaled 40 thousand barrels compared, up from 37 thousand barrels in the prior-year quarter. Natural gas output was 572 thousand cubic feet (Mcf), up from 504 Mcf in the year-ago quarter.

Worldwide crude oil realization per barrel of $55.91 (including the impact of hedging) declined 6% year over year. The average worldwide natural gas liquids selling price also fell to $18.46 per barrel from $21.11 in the year-ago quarter. However, worldwide natural gas prices rose 15% to $4.43 per Mcf.


From the midstream business, the company generated earnings of $37 million, up from $28 million a year ago.

Operating Expenses

Operating expenses in the first quarter totaled $266 million, down roughly 8% from the year-ago quarter’s $288 million.


Quarterly net cash flow from operations was $238 million at the end of the first quarter. Hess’ capital expenditures for exploration and production activities totaled $542 million, up 41.1% from $384 million in the prior-year quarter.

As of Mar 31, 2019, the company had $2,300 million in cash & cash equivalents and $6,550 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 39.4%. 

Zacks Rank and Key Picks

Currently, Hess carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space are ProPetro Holding Corp. PUMP, Parsley Energy PE and TransCanada Corp. TRP, all of which have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   

The Zacks Consensus Estimate for Midland, TX-based ProPetro’s 2019 earnings is $2.42, representing 21% growth over 2018. Next year’s forecast is $2.70, pointing to 11.5% growth.

TransCanada has a 100% track record of outperforming estimates over the last four quarters, at an average rate of 19%.

The Zacks Consensus Estimate for Austin, TX-based Parsley’s 2019 earnings is $1.53, reflecting 8.5% growth over 2018 levels. Next year’s forecast is $2.47, calling for 61.8% growth.

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