Hess Posts Narrower-than-Expected Q2 Loss, Revenues Beat

Hess Corporation HES reported adjusted second-quarter 2015 loss – from continuing operation − of 52 cents per share, narrower than the Zacks Consensus Estimate of 70 cents loss. However, the bottom line deteriorated from the year-ago quarter earnings of $1.38 mainly due to a drop in oil and gas prices.

Revenues decreased year over year to $1,935 million in the quarter from $3,583 million a year ago. However, revenues surpassed the Zacks Consensus Estimate of $1,637 million.

Second-Quarter Operational Performance

In the reported quarter, the Exploration and Production business digested a loss of $502 million versus the year-earlier profit of $1,049 million.

Quarterly hydrocarbon production was 391 thousand barrels of oil equivalent per day, up 23% year over year. The increase in production came primarily on the back of higher output from the Bakken shale play, Utica shale play, the Joint Development Area of Malaysia/Thailand and the Gulf of Mexico.

Crude oil production was 246 thousand barrels per day (up from 216 thousand barrels per day in the year-ago quarter), natural gas liquids production totaled 42 thousand barrels (up from 21 thousand barrels). Natural gas output was 617 thousand cubic feet (Mcf) (up from 491 Mcf).

Worldwide crude oil realization per barrel of $55.83 (including the impact of hedging) decreased 45% year over year. Worldwide natural gas prices fell 30% year over year to $4.49 per Mcf. The average worldwide natural gas liquids selling price was $11.06 per barrel, down from $36.59 per barrel in the year-ago quarter.

Financials

Quarterly net cash flow from operations was $541 million at quarter end. Hess' capital expenditures totaled $1,071 million.

As of Jun 30, 2015, the company had approximately $931 million in cash and $5,888 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 22.0%.

Zacks Rank

Hess currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are Linn Energy LLC LINE, Western Gas Equity Partners LP WGP and Cheniere Energy Inc. LNG. All of these stocks sport a Zacks Rank #1 (Strong Buy) and appear more rewarding for the short term.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>