Hess Corporation HES reported adjusted first-quarter 2018 loss from continuing operations of 27 cents per share, narrower than the Zacks Consensus Estimate of a loss of 54 cents and the year-ago quarter loss of $1.07.

Revenues increased to $1,390 million in the quarter from $1,254 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $1,150 million.

Higher realized oil and natural gas prices, rise in throughput volumes and the plunge in operating expenses supported the first-quarter numbers. The results were however partially offset by lower oil equivalent production.

Through first-quarter 2018, Hess spent roughly $380 million for buying back 8 million shares. The energy player also announced that it has boosted the buyback program to $1.5 billion, reflecting an increase of $1 billion.

Q1 Operational Update

Exploration and Production:In the quarter under review, the Exploration and Production business incurred a loss of $25 million, way narrower than the year-earlier loss of $233 million.

Quarterly hydrocarbon production was 255 thousand barrels of oil equivalent per day, down 18% year over year owing to unscheduled downtime at Gulf of Mexico’s Enchilada platform.

Crude oil production was 131 thousand barrels per day compared with 175 thousand barrels in the year-ago quarter. Natural gas liquids production totaled 37 thousand barrels per day compared with 40 thousand barrels in the prior-year quarter. Natural gas output was 504 thousand cubic feet (Mcf) per day versus 484 Mcf a year ago.    

Worldwide crude oil realization per barrel of $59.32 (including the impact of hedging) showed an increase of 22% year over year.

Worldwide natural gas prices rose 20.6% year over year to $3.86 per Mcf. The average worldwide natural gas liquids selling price also increased to $21.11 per barrel from $18.71 in the year-ago quarter.

Midstream: From this business, the company generated profits of $28 million, significantly higher than $18 million in the January-to-March quarter of 2017. Rise in throughput volumes primarily contributed to the segment’s profits.

Operating Expenses

Operating expenses in the first quarter totaled $288 million, down more than 19% from the year-ago $358 million.


Quarterly net cash flow from operations was $210 million at the end of the first quarter. Hess’ capital and exploratory expenditures totaled $384 million, down 2.3% from $393 million in the prior-year quarter.

As of Mar 31, 2018, the company had approximately $3,726 million in cash and $6,397 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 35.5%.    

Q1 Price Performance

The pricing chart reveals that the company outperformed the industry in the January-to-March 2018 quarter. During this period, the company’s shares gained 6.6% against the industry’s 1.4% decline.


Zacks Rank & Stocks to Consider

Hess carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space are Mammoth Energy Services, Inc. TUSK, Baytex Energy Corp. BTE and Flotek Industries, Inc. FTK. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mammoth Energy is expected to witness a year-over-year rise of 246.5% in 2018 earnings.

Baytex managed to beat the Zacks Consensus Estimate in each of the last three quarters.

Flotek Industries is expected to see year-over-year earnings growth of 557.1% in 2018.

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