Hess 2Q profit beats on strong Guyana output

Aug 01, 2024 News

Hess logo is seen displayed in this illustration taken April 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – Hess Corp (HES.N), beat estimates for second-quarter profit on Wednesday, helped by sharply higher oil production in Guyana and stronger prices.

The South American country and its lucrative oil assets are at the center of a dispute between Hess, Chevron (CVX.N), and Exxon (XOM.N). Last October, Hess agreed to sell itself to Chevron for $53 billion in stock, but the deal has been stalled by a regulatory review and challenged by Exxon, which claims a right to Hess’s Guyana assets.

Hess’s production rose 27.6% to 494,000 barrels of oil and gas per day (boepd), on nearly 75% year-over-year increase in Guyana to 192,000 bpd. Its Bakken shale output also rose, the company said. It, however, expects a fall in current-quarter production due to planned downtime in Guyana and Southeast Asia. Third-quarter net production is expected to be in the range of 460,000 boepd to 470,000 boepd.

Hess said it expects its Guyana output to fall 10% as a natural gas pipeline is connected this quarter, and expects its North Dakota output to drop 4.5% on planned maintenance. The company’s average realized crude oil selling price also rose nearly 13% to $80.29 per barrel in the second quarter. A three-person arbitration panel is expected to decide on the dispute with Exxon. Exxon believes the process could extend to 2025 while both Chevron and Hess expect a resolution by the end of the year. Hess’ quarterly profit of $2.62 per share beat analysts’ average estimate of $2.48 per share, according to LSEG data.

Back in April Hess Corporation had announced that its profits leapt by $626M in the first quarter of 2024 thanks to higher production volumes in the Bakken shale in the US and the Stabroek block offshore Guyana. Back then Hess’ net income, the company said, was US$972M in the three months ended 31 March, compared to $346 million in the first quarter of 2023, according to the company’s latest earnings report.

This would mean that Hess’s profits have almost tripled over the previous reporting period. According to Hess, its overall net production of oil and gas was 476,000 barrels of oil equivalent per day, up 27 percent from 374,000 barrels of oil per day (bpd) in 2023.

The Bakken production surged by 27,000 (bpd), according to Hess, “while Guyana offered up an additional 78,000 (bpd) this quarter.” The first quarter results “substantially outperformed” expectations, according to a report from analyst firm TD Cowen back then. Overall production beat projections by 9 percent, while Hess’ Guyana output beat consensus by 28 percent, Cowen had noted.

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