Sunday, February 5, 2023

Hess moves to buy back US$650M in company shares by year-end as quarterly profits soar

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Given its projections for strong cash flow growth and quarterly earnings totaling US$667 million, Hess Corporation disclosed that it intends to complete a massive share repurchasing programme by year-end worth US$650 million. During its recent Q2 earnings release, Hess said it already grabbed up approximately 1.8 million shares of common stock for US$190 million.

This falls under its existing US$650 million board-authorised share repurchase programme. Hess said it intends to “opportunistically” repurchase the remaining amount by year-end. The net effect of such a course of action is that it allows a direct transfer of cash to shareholders while allowing Hess to hold more shares as its value increases.

Looking ahead, Hess which holds a 30% interest in the Stabroek Block, said it plans to continue increasing its regular dividend to a level that is attractive to income-oriented investors, but sustainable in a low oil price environment. As free cash flow generation steadily increases, it noted, share repurchases will represent a growing proportion of its return of capital.

The company further noted that Guyana remains key to its cash flow strategy. On the Stabroek Block where ExxonMobil is the operator, Hess said it continues to see the potential for at least six floating production, storage, and offloading vessels (FPSOs) by 2027 with a gross production capacity of more than 1 million barrels of oil per day, and up to 10 FPSOs in the longer term to develop the discovered resources on the block.

With four projects already sanctioned, Hess said Exxon has advanced front-end engineering and design work for a fifth development called Uaru, with a plan expected to be submitted to the government by year-end.

In the meantime, Exxon and partners continue to execute a 25 well-exploration programme for the Stabroek Block.

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