Hess net profit plunges 82% on sagging oil and gas prices, but beats Wall Street estimates

Results were partially offset by higher production volumes in Guyana and the Bakken

Sharp fall: Hess chief executive John Hess
Sharp fall: Hess chief executive John HessPhoto: REUTERS/SCANPIX

US independent Hess has reported a sharp drop in quarterly profits, as results reflected lower realised selling prices, although they were partially offset by higher production volumes in Guyana and the Bakken shale formation in the US.

Hess will continue to benefit from growing production figures in Guyana over the next few years, as project partner ExxonMobil has already sanctioned five projects in the prolific Stabroek block, with more expected by the end of the decade.

Hess posted a net profit of $119 million, or $0.39 per share, in the second quarter of 2023, down 82% from $667 million, or $2.15 per share, in the same period a year ago. Revenues fell 22% to $2.3 billion over the same period.

The company reported adjusted net income of $0.65 per share, which topped analyst estimates of $0.52 per share, according to a research note from the Piper Sandler investment bank.

The company’s average realised crude oil selling price in the second quarter, including the effect of hedging, was $71.13 per barrel in the second quarter, down from $99.16 per barrel in the prior-year quarter.

Hess’ average realised natural gas liquids selling price was $17.95 per barrel, down from $40.92 a year earlier.

Its average realised natural gas selling price was $3.82 per million cubic feet, below the $6.45 per MMcf from a year earlier.

Production increased 28% to 387,000 barrels of oil equivalent per day from from 303,000 boepd, with output in the Bakken up 29% to 181,000 boepd due to increased drilling and completion activity and higher uptime after weather related shut-ins in 2022.

Hess drilled 32 wells, completed 28 and brought 30 online in the second quarter. Output in the Bakken is expected to be in the range of 175,000 to 180,000 boepd for the full year.

In Guyana, net production from the Liza field jumped 64% from 67,000 barrels per day of oil to 110,000 bpd.

The company also raised its production guidance for the year to the range of 385,000 to 390,000 boepd, up from a previous forecast of 365,000 to 375,000 boepd, primarily due to strong operational performance and the expected start-up of the Payara development offshore Guyana in the fourth quarter.

“Hess continues to demonstrate its differentiated position as the exploration and production growth company, with a strong beat on expected production volumes… but also a positive revision of 2023 production guidance,” Piper Sandler's research note stated.

In the Gulf of Mexico, Hess made the Pickerel-1 discovery in the Mississippi Canyon block and unlocked 90 feet (27 metres) of net pay in high-quality Miocene-aged reservoirs.

Planning is under way to tie-back the well to the Tubular Bells production facility with first oil expected in mid-2024.

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Published 26 July 2023, 12:45Updated 26 July 2023, 13:17
HessGuyanaUSAGulf of MexicoBakken