reports
- GlobalData Department
Hess Corp (HES) - Power - Deals and Alliances Profile
Summary Hess Corp (Hess) is a global independent energy company which carries out the exploration and production of crude oil and natural gas. It primarily operates in US, Denmark, the Joint Development Area of Malaysia/Thailand (JDA), and Malaysia. It offers fee-based services including gathering, processing of natural gas and the fractionation of natural gas liquids, transportation of crude oil by rail car, terminaling and loading crude oil and natural gas liquids. It also carries out the sto...
- Dave Meats
Restoration of Sanctions Could Dent Iran Oil Production and Exacerbate...
President Trump’s decision to abandon the Iran nuclear accord is likely to widen this year’s crude oil supply-demand imbalance, accelerating the decline of global inventories and potentially leaving the market with fewer days of supply on hand by year-end than it has had at any point in the past eight years. The possibility of withdrawal was well telegraphed by the administration, supporting a strong rally in crude prices in the past few months. This implies that a portion of the risk was al...
- Dave Meats
Hess has key assets in the Bakken Shale, Guyana, the Gulf of Mexico, a...
After incorporating Hess' stronger-than-expected first-quarter production data, we've nudged our fair value estimate to $37 per share (up from $34). However, we continue to believe that the stock is materially overvalued. While oil fundamentals look strong in 2018, the current oil price is more than 20% above our midcycle forecast, and the U.S. shale industry is running at least 100 more light tight oil rigs currently than it needs to to keep the market balanced in the long run. That means explo...
- Dave Meats
Hess has key assets in the Bakken Shale, Guyana, the Gulf of Mexico, a...
Hess delivered production of 233 thousand barrels of oil equivalent per day, or mboe/d, in the first quarter, beating the top end of guidance, which was 220-225 mboe/d. This excludes 22 mboe/d from Libya and is about 3% lower on a divestiture-adjusted basis, year over year. The decline was primarily attributed to previously announced downtime at the third-party-operated Enchilada platform in the Gulf of Mexico (Gulf of Mexico volumes were 41 mboe/d, 38% lower year over year). Management notes th...
- Dave Meats
Hess Shares Still Overvalued After Mild Earnings Beat
After incorporating Hess' stronger-than-expected first-quarter production data, we've nudged our fair value estimate to $37 per share (up from $34). However, we continue to believe that the stock is materially overvalued. While oil fundamentals look strong in 2018, the current oil price is more than 20% above our midcycle forecast, and the U.S. shale industry is running at least 100 more light tight oil rigs currently than it needs to to keep the market balanced in the long run. That means explo...
- Dave Meats
Hess' 1Q Production and Earnings Trump Estimates
Hess delivered production of 233 thousand barrels of oil equivalent per day, or mboe/d, in the first quarter, beating the top end of guidance, which was 220-225 mboe/d. This excludes 22 mboe/d from Libya and is about 3% lower on a divestiture-adjusted basis, year over year. The decline was primarily attributed to previously announced downtime at the third-party-operated Enchilada platform in the Gulf of Mexico (Gulf of Mexico volumes were 41 mboe/d, 38% lower year over year). Management notes th...
- Dave Meats
Hess' High Uncertainty Rating Factors in Substantial Oil Market Volati...
U.S. production reached a new high-water mark in November 2017 and is widely expected to keep growing through 2018. But this growth hasn’t prevented fundamentals from improving, leading many to believe that the market can soak up U.S. growth indefinitely. This assumption is false, but the reckoning may not happen as quickly as we previously thought. Economic malaise in Venezuela has triggered precipitous output declines, and the likelihood of further sanctions, and thus hefty outages, has soar...
- Dave Meats
Geopolitical Wild Cards Could Delay (but Not Cancel) Reckoning for Sha...
The market continues to underestimate the capacity of the shale industry to throw throw oil markets back into oversupply. U.S. output reached a high-water mark in November 2017 and is widely expected to keep growing. But this hasn’t prevented oil fundamentals from improving in the past 12 months, leading many to believe that the market can soak up U.S. growth indefinitely. This assumption is false, but the reckoning may not happen as quickly as we previously thought. The probability of major s...
- Dave Meats
OPEC Extends Output Cuts by Nine Months, but Market Reckoning Still Co...
As widely telegraphed before the May 25 meeting, OPEC and certain other countries have agreed to extend their production cuts, originally set to expire at the end of June, by nine months. There is no change to the magnitude of the cuts (1.8 million barrels per day, including 0.6 mmb/d from non-OPEC nations, such as Russia, Mexico, and Kazakhstan). The new agreement makes sense, given that the main objective of the cuts, bringing global inventories within the five-year average, remains incomplet...
- Dave Meats
Hess Outperforms in 1Q but Vulnerable If Crude Prices Slip in 2018
Hess reported production of 311 thousand barrels of oil equivalent per day in the first quarter, above the top end of guidance. The main driver was better-than-expected well performance in the Bakken Shale, despite severe winter weather. This led to better-than-expected financial results as well, with EBITDA and earnings per share at $512 million and negative $1.03, respectively (consensus estimates were $439 million and negative $1.07). Management confirmed in the release that it has added two ...
- Stephen Simko
Nothing Novel About It: OPEC Adds a Twist to the Plot, but the Ending ...
OPEC's announced production cuts this week represent a positive near-term development for world oil markets, removing more than 1 million barrels per day from an oversupplied system. Even after factoring in the inevitable U.S. shale response to higher crude prices, OPEC's cuts point to a meaningful supply deficit next year. Consequently, we are raising our 2017 WTI price to $60 per barrel, up from $50 previously. Improved near-term fundamentals come at a cost, however. Even a modest recovery in ...
- Stephen Simko
Oil and Gas Sector Likely to Fare Well Under Trump Administration
For global energy markets, the potential knock-on impacts of a Donald Trump presidency could be meaningful in a few areas. With respect to U.S. oil and gas producers, we can say that the tail risk for regulation of hydraulic fracturing and methane emissions is now somewhat lower. Thus far, the Environmental Protection Agency has maintained that the systemic environmental impact of hydraulic fracturing is benign. A Trump-led EPA is less likely to reverse this view than a Hillary Clinton-led EPA. ...
- Stephen Simko
Hess Announces Third Liza Success and Beats Third-Quarter Forecasts
Hess' financial results were a little ahead of analyst expectations in the third quarter, with the firm reporting an adjusted net loss of $1.12 per share (beating the Street's negative $1.24 estimate). And while 2016 production guidance was reaffirmed at 315-325 mboe/d, the firm shaved off around $100 million from its full-year capital budget. Total exploration and production spending is now expected to come in at $2 billion this year. Unfortunately, the mechanical issues announced after the sec...
- Stephen Simko
OPEC Cuts, U.S. E&Ps Drill: Our Oil Price Outlook Remains Unchanged
In a somewhat surprising development, OPEC members have tentatively agreed to a production target of between 32.5 million and 33.3 million barrels per day, representing a reduction of up to 700 mb/d from current production levels of 33.2 mmb/d. Oil prices rallied on the news, but our view for continued low prices of $50/bbl in 2017 (detailed in our Aug. 26 report) remains unchanged, as we do not believe the potential reduction will have a meaningful sustainable impact on oil prices. While the lo...
- Stephen Simko
Crude-Market Fundamentals Continue to Tighten, but the Recovery Still ...
Crude markets have tightened a good deal in recent months, as strong oil demand growth and supply issues have pulled forward the industry recovery by about a year compared with the outlook we published in April. Even so, 2017 fundamentals are far from robust from an oil price perspective, and don't appear supportive of prices moving much above the $50 per barrel threshold. Another large uptick in rig additions in the U.S. could be enough to eliminate near-term inventory draws altogether, which i...
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