Saturday, February 17, 2018

Hess Posts 13th Straight Quarterly Loss; Shares Dive

Posted by February 5, 2018

U.S. oil and gas producer Hess Corp posted its 13th straight quarterly loss on Monday as ballooning expenses offset rising crude prices, sending shares down nearly 5 percent.

The results, which widely missed Wall Street's estimates, were likely to embolden activist hedge fund investor Elliott Management Corp, the fourth-largest Hess shareholder, which has blasted Chief Executive John Hess and other managers for what it considers the company's "continuing underperformance."

Hess last month began cutting roughly 13 percent of its workforce and streamlining operations, steps it said should help it start to save $150 million annually.

For the fourth quarter, Hess posted a loss of $2.68 billion, or $8.57 per share, compared with a loss of $4.89 billion, or $15.65 per share, in the year-ago period. The year-earlier quarter included a $3.75 billion charge on deferred tax assets.

Excluding one-time items, Hess lost $1.01 per share in the fourth quarter. By that measure, analysts expected a loss of 91 cents per share, according to Thomson Reuters I/B/E/S.

"We enter 2018 well positioned to deliver a decade plus of capital efficient growth with increasing cash generation and returns to shareholders," CEO Hess said in a statement.

The company, the third-largest oil producer in North Dakota's Bakken shale formation, said total costs and expenses surged 22 percent to $3.78 billion in the reported quarter. Much of that jump was due to a $1.7 billion impairment charge to write down the value of two U.S. Gulf of Mexico oil projects that the company operates.

Production fell about 4 percent to 300,000 barrels of oil equivalent per day (boe/d) even as the average selling price of crude oil jumped nearly $10 per barrel.

For 2018, Hess expects to pump 245,000 boe/d to 255,000 boe/d, below what some analysts on Wall Street have forecast.

The company plans to spend $2.1 billion this year, mostly in North Dakota and Guyana, keeping its budget unchanged from the year prior.

Shares of Hess fell 4.8 percent to $45.51 in premarket trading.
 
Reporting by Ernest Scheyder in Houston and Yashaswini Swamynathan in Bengalur

Related News