Did Hess Beat Earnings and Revenue Estimates in 1Q16?
Hess’s 1Q16 production
Hess’s (HES) 1Q16 production averaged 350 Mboepd (thousands of barrels of oil equivalent per day), compared to a pro forma production (which excludes assets sold) of 355 Mboepd in 1Q15. The 1Q16 earnings release noted that lower gas nominations and lower volumes from Equatorial Guinea were partially offset by production growth from the Gulf of Mexico, the Utica Shale play, and the Bakken Shale play.
1Q16 realized prices
Hess’s realized crude oil price, including the effect of hedges in 1Q16, was $28.50 per barrel, which was ~37% lower than its realized crude oil price in 1Q15. Its realized natural gas price was $3.42 per thousand cubic feet, which was 28% lower than its realized natural gas price in 1Q15. Hess’s realized natural gas liquids price in 1Q16 was $7.44 per barrel—down ~50% compared to 1Q15.
1Q16 capex and guidance
Hess’s exploration and production capital and exploratory expenditures amounted to $544 million in 1Q16, down 56% compared to $1.2 billion in 1Q15. Hess’s capex (capital expenditure) budget for 2016 is $2.4 billion. This is 40% lower than its 2015 capex of $4 billion. Of the $2.4 billion, $470 million will be allocated to unconventional shale resources, $610 million will be allocated to production, $820 million will be allocated to development, and $500 million will be allocated to exploration and appraisal activities.
Many upstream companies have reduced their 2016 capex in response to lower energy prices. Newfield Exploration (NFX) and Concho Resources (CXO) lowered their 2016 capex by ~50% and 35%, respectively, from 2015. Anadarko Petroleum’s (APC) 2016 capex is also ~50% less than its 2015 capex. These companies make up ~12.8% of the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).
In the next article in this series, we’ll see how Hess’s stock reacted to 1Q16 earnings.
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