Hess Corporation (HES) reported solid second-quarter results backed by higher commodity prices. Shares jumped 4.6% on the news to close at $77.49 on July 28. (See Hess stock charts on TipRanks)
Adjusted earnings for the quarter stood at $0.24 per share, surpassing the Street’s estimate of $0.19 per share. The company recorded an adjusted loss of $1.05 per share in the prior-year period.
Revenue came in at $1.6 billion, up 92% year-over-year, and beat the consensus estimate of $1.4 billion.
The company’s oil and gas net production (excluding Libya) was 307,000 barrels of oil equivalent per day (boepd), including Bakken net production of 159,000 boepd.
Additionally, in July, the company repaid half of its $1 billion term loan maturing in March 2023 and expects to repay it in full by 2022, subject to market conditions.
John Hess, the company’s CEO, said, “Debt reduction, combined with increasing cash flows from our Guyana developments, will allow us to significantly increase cash returns to shareholders in the coming years through dividend increases and opportunistic share repurchases.”
In the third quarter and for the full year 2021, HES guided for net production (excluding Libya) to be approximately 265,000 boepd and 295,000 boepd, respectively.
The company also announced the oil discovery at Whiptail located in the Stabroek Block offshore Guyana, which will add to its previous estimate of gross discovered recoverable resource of approximately 9 billion barrels of oil equivalent (boe).
Moreover, based on the continued strength in oil prices, the company plans to add a third rig in the Bakken in September, which will boost the company’s cash flows in the future.
Recently, Piper Sandler analyst Ryan Todd reiterated a Buy rating on the stock and lifted the price target to $104 (34.2% upside potential) from $94.
Todd is “unquestionably positive” about the sector and believes that the discounted valuations of exploration and production (E&P) companies bode well for investors in the long run.
The stock commands a Strong Buy consensus rating based on 12 Buys and 3 Holds. The average Hess price target of $99.77 implies 28.8% upside potential to current levels. Shares have gained 55% over the past year.
Related News:
Pfizer Delivers Blowout Quarter, Raises Guidance
Wingstop Q2 Results Top Expectations; Shares Fall Amid Inflationary Concerns
AMD Delivers Stellar Q2 Results, Beats Expectations
