Did Hess Beat Earnings and Revenue Estimates in 1Q16?
Hess’s 1Q16 earnings
Hess (HES) reported its 1Q16 earnings on April 27, 2016. The company announced adjusted EPS (earnings per share) of -$1.72. Wall Street analysts’ consensus EPS estimate was -$1.83.
Hess’s earnings and revenue analysis
Hess reported an adjusted net loss of $509 million in 1Q16. Its adjusted net loss in the corresponding period in 2015 was $279 million. In 4Q15, Hess reported an adjusted net loss of $396 million.
Hess’s 1Q16 revenue was $993 million compared to an estimate of ~$1.1 billion. The company reported revenue of $1.5 billion in 1Q15 and ~$1.4 billion in 4Q15.
As we can see in the above graphs, Hess’s earnings came in better than expected and were in line with the trend it showed in 2015. Its revenue, however, missed estimates and was significantly lower than in the previous four quarters.
Peer comparison
Hess’s peers include Apache (APA), Concho Resources (CXO), and Cimarex Energy (XEC). They haven’t announced their 1Q16 earnings yet. Analysts expect the EPS of these companies to come in at -$0.87, $0.001, and -$0.40, respectively. All the above companies make up ~5.2% of the Energy Select Sector SPDR Fund (XLE).
What drove Hess’s earnings lower?
According to Hess’s 1Q16 earnings release, lower realized energy prices (USO) (UNG) reduced its adjusted net income by ~$230 million compared to last year. However, Hess noted that its 1Q16 results “reflected lower operating costs, general and administrative expenses, and depreciation, depletion and amortization expense versus the prior-year quarter.”
In the next article in this series, we’ll look at Hess’s production, realized prices, and capital expenditure plans.
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