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Released July 30, 2015 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Oil and gas exploration and production company Hess Corporation (NYSE:HES) (New York, New York) chalked up a net loss in second-quarter 2015 as commodity prices stayed in the doldrums. Nonetheless, the company boasted solid production numbers, with growth in the Bakken Shale and planned expansions in the Gulf of Mexico leading the way. Industrial Info is tracking $17 billion in active projects involving Hess.
The company's U.S. spending plans are dominated by the Stampede project in the Gulf of Mexico, which involves a $4 billion production platform and a separate, $2 billion subsea installation. The platform, which is to be located roughly 170 miles southeast of New Orleans, is expected to have a processing capacity of 80,000 barrels per day (BBL/d) of oil, 120 million standard cubic feet per day of natural gas, and 100,000 BBL/d of water injection from two discoveries in the Gulf, which have an estimated of 300 million to 350 million barrels of oil equivalent per day (boepd) of recoverable resources. The project is expected to wrap up in the fourth quarter of 2017, with initial production early in 2018.
The company's capital expenditures for the quarter were generally lower at $1.07 million, compared with $1.26 million in second-quarter 2014. In both cases, more than 93% was attributed to exploration and production activities.
"With this low-price oil environment... we've reduced our capital spend from $5.6 billion in 2014 to $4.4 billion in 2015, and we will further reduce capital in 2016," said John Reilley, the senior vice president and chief financial officer of Hess, in a quarterly conference call. He later said the company would be "looking at everything on the capex side, as well as the [operational expenditures] side."
Earlier this month, Hess completed the sale of a 50% interest in its Bakken Midstream assets to Global Infrastructure Partners (New York, New York) for cash consideration of $2.7 billion. The two companies will create Hess Infrastructure Partners, a midstream joint venture, with Hess Corporation retaining operational control of the related midstream assets. Hess' natural gas processing plant in Tioga, North Dakota, which is among the facilities tracked by Industrial Info, was included in the deal.
Hess reported a quarterly net loss of $567 million, compared with net income of $931 million in second-quarter 2014; total revenues stood at $1.94 billion, down from $3.58 billion. The biggest culprit was lower hydrocarbon selling prices, which took roughly $740 million out of net income. Hess also faced higher depreciation, depletion and amortization expenses. Still, the company reported strong operational results: Oil and gas production was up 23% to 391,000 boepd (excluding Libya), driven largely by the Bakken Shale, where net production increased 49% to 119,000 boepd. Net income from the Bakken activities more than quadrupled to $32 billion.
Net production also improved in the Gulf of Mexico, thanks mostly to higher volumes from the Tubular Bells Field, which is now in its second year of production; the Utica Shale; and Malaysia and Thailand. Hess also benefited from a 24% drop in drilling and completion costs in the Bakken Shale.
"In light of our strong performance year-to-date, we are raising our overall company production forecast for 2015 by 10,000 boepd to a range of 360,000 to 370,000 boepd, excluding Libya," said John Hess, the chief executive officer of Hess, in the conference call.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The company's U.S. spending plans are dominated by the Stampede project in the Gulf of Mexico, which involves a $4 billion production platform and a separate, $2 billion subsea installation. The platform, which is to be located roughly 170 miles southeast of New Orleans, is expected to have a processing capacity of 80,000 barrels per day (BBL/d) of oil, 120 million standard cubic feet per day of natural gas, and 100,000 BBL/d of water injection from two discoveries in the Gulf, which have an estimated of 300 million to 350 million barrels of oil equivalent per day (boepd) of recoverable resources. The project is expected to wrap up in the fourth quarter of 2017, with initial production early in 2018.
The company's capital expenditures for the quarter were generally lower at $1.07 million, compared with $1.26 million in second-quarter 2014. In both cases, more than 93% was attributed to exploration and production activities.
"With this low-price oil environment... we've reduced our capital spend from $5.6 billion in 2014 to $4.4 billion in 2015, and we will further reduce capital in 2016," said John Reilley, the senior vice president and chief financial officer of Hess, in a quarterly conference call. He later said the company would be "looking at everything on the capex side, as well as the [operational expenditures] side."
Earlier this month, Hess completed the sale of a 50% interest in its Bakken Midstream assets to Global Infrastructure Partners (New York, New York) for cash consideration of $2.7 billion. The two companies will create Hess Infrastructure Partners, a midstream joint venture, with Hess Corporation retaining operational control of the related midstream assets. Hess' natural gas processing plant in Tioga, North Dakota, which is among the facilities tracked by Industrial Info, was included in the deal.
Hess reported a quarterly net loss of $567 million, compared with net income of $931 million in second-quarter 2014; total revenues stood at $1.94 billion, down from $3.58 billion. The biggest culprit was lower hydrocarbon selling prices, which took roughly $740 million out of net income. Hess also faced higher depreciation, depletion and amortization expenses. Still, the company reported strong operational results: Oil and gas production was up 23% to 391,000 boepd (excluding Libya), driven largely by the Bakken Shale, where net production increased 49% to 119,000 boepd. Net income from the Bakken activities more than quadrupled to $32 billion.
Net production also improved in the Gulf of Mexico, thanks mostly to higher volumes from the Tubular Bells Field, which is now in its second year of production; the Utica Shale; and Malaysia and Thailand. Hess also benefited from a 24% drop in drilling and completion costs in the Bakken Shale.
"In light of our strong performance year-to-date, we are raising our overall company production forecast for 2015 by 10,000 boepd to a range of 360,000 to 370,000 boepd, excluding Libya," said John Hess, the chief executive officer of Hess, in the conference call.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
