Guyana Deep Dive Supports FVE Increase for Hess, but Investors Shouldn't Get Carried Away
We've been mostly bearish on Hess since the recent crude downturn. In our view, the market has overreacted to current prices, which are unsustainable in the long run. That spells trouble for oil producers at the higher end of the cost curve, where Hess perched until recently. But after a detailed review, we can see more value in the firm's much-lauded Guyana assets than we previously gave credit for. This invalidates our previous (bearish) thesis and justifies the recent runup in the shares. But...Hess is a global exploration and production company engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquid (NGL), and natural gas with production operations located primarily in the United States, Guyana, the Malaysia/Thailand Joint Development Area, Malaysia and Denmark. The company's Midstream operating segment provides fee-based services, including gathering, compressing and processing natural gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota.
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