Hess Corporation (NYSE: HES) on Wednesday reported a net loss of $130 million, or $0.48 per common share, in the second quarter of 2018, compared to a net loss of $449 million, or $1.46 per common share, in the second quarter of 2017.
On an adjusted basis, the Corporation reported an after-tax net loss of $56 million, or $0.23 per common share, in the second quarter of 2018. The improved after-tax adjusted results reflect higher realized crude oil selling prices, lower operating costs and depreciation, depletion and amortization expense, partially offset by lower production volumes, primarily due to asset sales.
“We delivered strong operational performance in the quarter – exceeding our production guidance – and further focused our portfolio with the sale of our joint venture interests in the Utica,” Chief Executive Officer John Hess said.
“In June, we announced another significant oil discovery at Longtail, offshore Guyana, and in July we increased the estimate of gross discovered recoverable resources for the Stabroek Block to more than 4 billion barrels of oil equivalent,” he added.
Hess has a 30 percent stake in the Stabroek Block offshore Guyana where more than 4 billion barrels of recoverable oil has been found, with potential for more discoveries. The company has been focusing intensely on its Guyana assets, where oil production is set to get underway by 2020, followed by multiple new developments that are expected to push production to 750,000 barrels of oil per day by 2025.
Exploration and Production
Hess said Exploration and Production (E&P) net income in the second quarter of 2018 was $31 million, compared to a net loss of $354 million in the second quarter of 2017. On an adjusted basis, second quarter 2018 net income was $21 million. The Corporation’s average realized crude oil selling price, including the effect of hedging, was $62.65 per barrel in the second quarter of 2018, up from $45.95 per barrel in the year-ago quarter. Noncash losses on crude oil hedging contracts reduced second quarter 2018 after-tax results by $47 million. The average realized natural gas liquids selling price in the second quarter of 2018 was $20.51 per barrel, versus $14.85 per barrel in the prior-year quarter, while the average realized natural gas selling price was $4.12 per mcf, compared to $3.19 per mcf in the second quarter of 2017.
Net production, excluding Libya, was 247,000 boepd in the second quarter of 2018, compared to 294,000 boepd in the prior-year quarter. Excluding assets sold and Libya, second quarter 2017 net production was 237,000 boepd. Libya net production was 18,000 boepd in the second quarter of 2018, compared with 6,000 boepd in the year-ago quarter. Our full year production guidance, excluding Libya, continues to be 245,000 boepd to 255,000 boepd, even with the loss of volumes from the sale of our Utica joint venture interests.
Excluding items affecting comparability of earnings between periods and including Libya, cash operating costs, which include operating costs and expenses, production and severance taxes, and E&P general and administrative expenses, were $13.37 per barrel of oil equivalent (boe) in the second quarter, down eight percent from $14.60 per boe in the prior-year quarter due to increased low-cost production from North Malay Basin, cost savings initiatives, and sales of higher cost assets. Second quarter 2018 cash costs per boe were negatively impacted by deferred production related to downtime at the third-party operated Enchilada platform in the Gulf of Mexico. E&P income tax expense increased in the second quarter of 2018, compared to the prior-year quarter, primarily due to higher Libya sales volumes, the company stated.