Hess Falls 5% on Mixed Q3 Results

Hess Corporation (HES) delivered mixed third-quarter results driven by a mix of increased selling prices and lower net production. Shares fell 5% on the news, closing at $84.68 on October 27.  

The company posted adjusted earnings of $0.28 per share, much lower than analyst estimates of $0.44 per share. In the prior-year quarter, HES reported an adjusted quarterly loss of $0.71 per share.

Further, total revenue stood at $1.81 billion, up 53.4% year-over-year, and outpaced Street estimates of $1.46 billion.

During the quarter, Hess produced 284,000 barrels of oil equivalent per day (Boepd), 11.5% lower than the prior-year quarter and 13.4% lower than Q2FY21. The decline in Q3 was due to lower production in the Bakken and Gulf of Mexico, partially offset by higher production in Guyana.

Moreover, the company’s Exploration & Production (E&P) capital and exploratory expenditures increased 50.5% year-over-year to $498 million driven by higher drilling activity in the Bakken, Guyana, and JDA, partially offset by lower drilling activity in the Gulf of Mexico. (See Insiders’ Hot Stocks on TipRanks)

Commenting on the results, CEO John Hess said, “Our company continues to successfully execute our strategy – to grow our resource base, have a low cost of supply and sustain cash flow growth – while delivering industry-leading environmental, social and governance performance and disclosure.”

Recently, Mizuho Securities analyst Vincent Lovaglio lifted the price target on the stock to $130 (53.5% upside potential) from $116 while maintaining a Buy rating.  

In an E&P Q3 preview report, Lovaglio said he was optimistic about both oil and gas E&P and increased the price targets across the oil E&P segment.

Overall, the stock commands a Strong Buy consensus rating based on 10 Buys and 3 Holds. The average Hess price target of $107.83 implies 27.3% upside potential to current levels. Shares have exploded 134.4% over the past year.

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