Goldman Sachs Sees 52% Upside in Hess (HES) and Adds Stock to Conviction Buy List

(Updated - February 10, 2016 8:51 AM EST)

Goldman Sachs upgraded Hess Corp. (NYSE: HES) from Neutral to Conviction Buy with a price target of $59, suggesting upside of 52%. Analyst Brian Singer pointed out new project startups, shale flexibility, liquidity, and most importantly, exploratory resource catalysts.

"We believe HES offers one of the most significant potential resource expansion opportunities among E&Ps over the next year from multiple exploration and appraisal drilling in Guyana and the Gulf of Mexico," said Singer. "At the same time, HES screens well on our $35/bbl 3-year stress test with attractive liquidity, relative growth and upside if oil prices recover. We see key negative company-specific news – guidance for 2016 production declines and equity issuance –as now in the rear view mirror."

Discussing exploration upside, the analsyt said, "The key unique catalysts for HES are exploration and appraisal wells in Guyana (four wells operated by Exxon with initial results in 2Q) and the Gulf of Mexico (one well operated by Conoco with results expected in 2Q and one well operated by Chevron with results expected later in 2016). In Guyana, we see 0.7 bn BOE of resource and $4/share net to HES from the 2015 Liza discovery and 2016 drilling. We see an additional 2.4 bn BOE and $7 /share net to HES if just 5% of remaining acres on the vast 6.6 mn acre block in Guyana (HES 30%) is prospective. We also believe success in Guyana could drive a greater likelihood of consolidation."

For an analyst ratings summary and ratings history on Hess Corp. click here. For more ratings news on Hess Corp. click here.

Shares of Hess Corp. closed at $38.70 yesterday.

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