Hess Corp. (HES) Tops Q2 EPS by 20c; Adds $2.5B to Buyback

Hess Corp. (NYSE: HES) reported Q2 EPS of $1.38, $0.20 better than the analyst estimate of $1.18. Revenue for the quarter came in at $3.6 billion versus the consensus estimate of $2.63 billion.

In conjunction with the announcement of the Corporation’s sale of its retail business, the existing share repurchase program was increased to $6.5 billion from $4 billion. In the second quarter of 2014, the Corporation repurchased approximately 8.3 million shares of common stock at a cost of approximately $768 million for an average cost per share of $91.85. Since initiation of the buyback program in August 2013, total shares repurchased through June 30, 2014 were approximately 40.2 million shares at a total cost of approximately $3.3 billion for an average cost per share of $82.09. The total shares repurchased through June 30, 2014 represent approximately 12 percent of fully diluted shares at the commencement of the repurchase program.

John Hess, chief executive officer of Hess, said: “This was another quarter of strong performance and execution of our strategic plan. We continued to grow production and reduce well costs in the Bakken, progressed development of Tubular Bells in the Gulf of Mexico and North Malay Basin in the Gulf of Thailand, and completed asset sales totaling $1.6 billion. We are excited by the potential of our portfolio and confident that we have the strategy, operational capabilities and financial flexibility to deliver 5 to 8 percent annual production growth and generate free cash flow and strong, sustainable returns for our shareholders.”

Exploration and Production:

Exploration and Production earnings were $1,057 million in the second quarter of 2014, compared with $1,533 million in the second quarter of 2013. Adjusted net income was $483 million in the second quarter of 2014 and $600 million in the second quarter of 2013.

Oil and gas production of 319,000 boepd was down from 341,000 boepd in the second quarter a year ago. Asset sales lowered production by 43,000 boepd, while extended shutdowns caused by civil unrest in Libya reduced production by approximately 24,000 boepd versus the year-ago quarter. Production from the Valhall Field offshore Norway was up 18,000 boepd from the prior year quarter, following completion of the Valhall Redevelopment Project in 2013. Higher production in the Bakken contributed an additional 16,000 boepd versus the year-ago quarter, while the North Malay Basin Early Production System, which commenced production in October 2013, contributed 7,000 boepd. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $101.70 per barrel, up from $97.89 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.35 per mcf in the second quarter of 2014, down from $6.44 per mcf in the second quarter a year ago.

Excluding production from assets sold and Libya, pro forma production was 310,000 boepd in the second quarter of 2014, an increase of 17 percent from 265,000 boepd in the second quarter of 2013. The Corporation expects pro forma production to average between 305,000 boepd and 315,000 boepd in 2014 driven by continued growth in the Bakken, higher production from the Valhall Field and the planned start-up of the Tubular Bells Field in the Gulf of Mexico in the third quarter of 2014.

For earnings history and earnings-related data on Hess Corp. (HES) click here.

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