Hess Sticks to Low-CAPEX Diet during Industry Slump, Sees Loss Widen in First Quarter

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Researched by Industrial Info Resources (Sugar Land, Texas)--Hess Corporation's (NYSE:HES) (New York City, New York) Exploration and Production (E & P) capital and exploratory expenditures were $544 million for first-quarter 2016, down 56% from the same period last year to reflect reduced activities in the U.S., Norway, Equatorial Guinea and Malaysia/Thailand, the oil & gas producer reported Wednesday. Industrial Info is tracking 32 active Hess-related projects worth $13.84 billion.

Click the image on the right for a chart detailing Hess project expenditures by country.

E & P Capital and exploratory expenditures in the U.S. totaled $343 million in the first quarter, down from $793 million in the same quarter last year. E & P expenditures in Europe, Africa, Asia and other areas also fell substantially.

The company reported its net loss widened to $509 million from a loss of $389 million in first-quarter 2015. Lower realized selling prices reduced first-quarter 2016 after-tax results by about $230 million as a result of weak commodity prices, according to Hess' earnings press release. This included an E & P net loss of $451 million in the just-ended quarter, compared with $314 million loss a year earlier. Still, the numbers were better than what most investment analysts had forecasted.

Revenues and non-operating income for the first quarter totaled $993 million, down from $1.55 billion in first-quarter 2015.

Net production in the first quarter this year was 350,000 barrels of oil equivalent per day (BOE/D), compared with 355,000 barrels in first-quarter 2015, the company reported. Production from the Bakken region in the U.S. increased to 111,000 BOE/D from 108,000 BOE/D as a result of higher natural gas liquids and natural gas production.

However, Hess has reduced operations in the Bakken region from three rigs to two rigs during the first quarter and the situation there will remain that way until oil prices substantially rise, executives said. Also, Hess has released its only rig in the Utica region and plans no more drilling there until market conditions improve.

Industrial info is tracking two Hess projects totaling $6 billion to develop the Stampede Oil & Gas Production Platform in the U.S. Gulf of Mexico. Drilling at the Hess operated development project in the Green Canyon area of the Gulf of Mexico began in the first quarter, the company said. Hess holds a 25% working interest in the project and is the operator. Company executives said Hess has successfully floated the topsides main deck onto the production deck, set the whole structure into an offshore floating dock and installed the oil export line. Drilling operations are under way on the first production well and first oil remains on schedule for 2018, they said.

For related information, see January 28, 2016, article - Hess Corporation Reports Net Loss of $1.8 Billion for Fourth-Quarter 2015, Targets $2.4 Billion Capex for 2016.

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