Wednesday, June 7, 2023

Hess maintains financial strength with US$155M net income in Q3

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Hess Corporation disclosed during its earnings call on Wednesday that it closed the 2021 third quarter with a net income of US$115 million, or US$0.37 per common share, compared with a net loss of US$243 million, or US$0.80 per common share, during the same period last year.

On an adjusted basis, the corporation reported net income of US$86 million, or US$0.28 per common share, in the third quarter of 2021, compared with an adjusted loss of US$216 million, or $0.71 per common share, in the prior-year’s quarter.

The Stabroek Block partner said the improvement in adjusted after-tax results compared with the prior-year period was primarily due to higher realized selling prices in the third quarter of 2021, partially offset by the impact of lower net production, including curtailed production in the Bakken and the Gulf of Mexico production due to Hurricane Ida.

With the foregoing in mind, along with other analytical data from its balance sheet, Chief Executive Officer (CEO) John Hess posited that the company “continued to maintain financial strength as well as managing for risk.”

Expounding further, he noted that as of September 30 last, Hess had US$2.4 billion of cash on the balance sheet. In July, the CEO said the oil company prepaid half of its US$1 billion term loan maturing in March 2023, while adding that plans are in place to repay the remaining US$500 million in 2022.

He said this debt reduction combined with the startup of Liza Phase 2 in Guyana early next year is expected to enable the increasing of cash returns to shareholders. As regards its long-term strategy, he reminded that the new oil producing South American country remains the main focal point as it is one of the industry’s best investments.

He said, “On the Stabroek Block, where Hess has a 30% interest and ExxonMobil is the operator, we announced the 19th and 20th significant discoveries during the third quarter at Whiptail and Pinktail, and on October 7 we announced the 21st significant discovery on the block at Cataback. These discoveries will underpin our queue of future low-cost oil developments.”

The CEO added, “We see the potential for at least six FPSOs on the Stabroek Block producing more than 1 million gross barrels of oil per day in 2027, and up to 10 FPSOs to develop the discovered resources on the block.”

He also informed shareholders during the call that on October 7, last, the joint venture partners increased the gross discovered recoverable resource estimate for the Stabroek block to approximately 10 billion barrels of oil equivalent, up from the previous estimate of more than 9 billion barrels of oil equivalent.

In terms of current Guyana developments, the CEO noted that gross production from the Liza Phase 1 complex averaged 124,000 barrels of oil per day in the third quarter. He said the Liza Phase 2 development is on track for startup in early 2022 with a gross production capacity of 220,000 barrels of oil per day, while adding that the Liza Unity FPSO arrived in Guyana on Monday.

With respect to its third development on the Stabroek Block at the Payara Field, Hess said this is on track to achieve first oil in 2024, with a gross capacity of 220,000 barrels of oil per day. He said the three sanctioned oil developments have a breakeven Brent oil price of between $25 and $35 per barrel.

As for the fourth development plan for Yellowtail, Hess said this was recently submitted to the Government of Guyana for approval. Pending this, the project is envisioned to have a gross capacity of approximately 250,000 barrels of oil per day with first oil in 2025.

In summary, the CEO said the company remains focused on executing its strategy and achieving strong operational performance.

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