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Hess (HES) Surpasses Earnings & Revenue Estimates in Q1

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·4 min read
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Hess Corporation HES reported adjusted first-quarter 2021 earnings per share of 82 cents, beating the Zacks Consensus Estimate of earnings of 44 cents and improving from the year-ago quarter’s loss of 60 cents.

Notably, quarterly revenues increased to $1,919 million from $1,369 million a year ago. Moreover, the top line beat the Zacks Consensus Estimate of $1,725 million.

Higher price realizations of commodities primarily drove the company’s strong first-quarter results.

Hess Corporation Price, Consensus and EPS Surprise

Hess Corporation Price, Consensus and EPS Surprise
Hess Corporation Price, Consensus and EPS Surprise

Hess Corporation price-consensus-eps-surprise-chart | Hess Corporation Quote

Q1 Operational Update

Exploration and Production

In the quarter under review, the Exploration and Production business reported adjusted earnings of $308 million against loss of $120 million a year ago. The business was favored by higher realized oil and gas prices.

Quarterly hydrocarbon production was 333 thousand barrels of oil equivalent per day (MBoe/d), down from 349 MBoe/d in the year-ago period owing to lower contributions from Gulf of Mexico – offshore U.S. resources – and the prolific Bakken play.

Crude oil production decreased from 191 thousand barrels per day (MBbls/d) in first-quarter 2020 to 177 MBbls/d. Moreover, natural gas liquids production totaled 53 MBbls/d, down from 56 MBbls/d in the prior-year quarter. However, natural gas output was 617 thousand cubic feet per day (Mcf/d), up from 611 Mcf/d a year ago.

Worldwide crude oil realization per barrel of $52.52 (excluding the impact of hedging) improved from $42.08 in the year-ago period. Also, worldwide natural gas prices rose to $4.90 per Mcf from the year-ago $3.16. Moreover, the average worldwide natural gas liquids selling price increased to $29.49 per barrel from $9.32 a year ago.

Midstream

From the midstream business, the company generated adjusted net earnings of $75 million, significantly up from $61 million a year ago on improvement in tariff rates and minimum volume commitments.

Operating Expenses

Operating expenses in the first quarter totaled $265 million versus the year-ago $303 million. Marketing costs, however, increased to $518 million from $378 million a year ago. But, exploration expenses contracted to $33 million from $189 million in the year-ago period.

Financials

Quarterly net cash flow from operations was $591 million in the first quarter, reflecting a significant improvement from the year-ago $445 million. Hess’ capital expenditure for exploration and production activities totaled $309 million, down from $631 million in the prior-year quarter.

As of Mar 31, 2021, the company had $1,866 million in cash & cash equivalents. Its long-term debt was recorded at $8,273 million at first quarter-end. Current maturity of the long-term debt is $13 million. Debt to capitalization at quarter-end was 56.5%.

Guidance

Notably, the company expects its 2021 net production (excluding Libya) in the band of 290,000 Boe/d to 295,000 Boe/d.

Zacks Rank & Stocks to Consider

Hess currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include EOG Resources, Inc. EOG, Diamondback Energy, Inc. FANG and Matador Resources Company MTDR. While EOG Resources and Matador carry a Zacks Rank #2 (Buy), Diamondback sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources is likely to see earnings growth of 272.6% in 2021.

Diamondback is expected to witness earnings growth of 112.5% in 2021.

Matador is likely to see earnings growth of 300% in 2021.

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