Hess Appoints New Board Member - Analyst Blog

Hess Corporation HES announced that Terrence J. Checki, a Management Committee member at the Federal Reserve Bank of New York, will be appointed to the company's board of directors, effective May 1, 2014.

Checki, aged 68, will replace Hess' current director John Krenicki Jr., who intends to resign from the board on the same day. Checki began his career at the New York Fed in late 1967 and was first named an executive vice president in 1995. During his tenure, he held positions in corporate, financial supervision and international affairs areas as well as in the Office of the President. However, owing to his appointment in Hess, he would step down from his post at the New York Fed.

Hess is undergoing a transition from an integrated oil and gas company to a predominantly E&P entity, thereby shifting its growth approach from the high-impact exploration to lower-risk unconventionals and a smaller, more focused exploration portfolio. It announced the closure of Port Reading, its New Jersey refinery, which marked the company's complete exit from the refining business.
 
Hess also aims to shed assets in Indonesia and Thailand as well as its terminals, retail, energy marketing and trading businesses in the downstream. The company also announced a share repurchase plan of up to $4 billion, and a twofold increase in its annual dividend – incepted in third quarter 2013 – to $1 a share. In view of the global economic slowdown and new refining capacity entering the world market, these aforesaid decisions will help raise Hess' shareholder value.

In January, Hess reported adjusted fourth-quarter 2013 earnings of 96 cents per share, lagging the Zacks Consensus Estimate of $1.09 per share as well as the year-ago quarter earnings of $1.20 per share. The underperformance was mainly due to a drop in production volumes.

Going forward, we believe that the company's strong exploration upside in Ghana and continued improvement in Bakken productivity hold a lot of promise. The company's asset divestiture program along with significant progress in multi-year transformation is also likely to reduce its financing needs.
 
Hess currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the energy sector like Patterson-UTI Energy Inc. PTEN, Helmerich & Payne Inc. HP and Warren Resources Inc. WRES. All the stocks sport a Zacks Rank #1 (Strong Buy).