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Post-Earnings Analysis: Hess Released 3Q16 Earnings on October 26

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Part 3
Post-Earnings Analysis: Hess Released 3Q16 Earnings on October 26 PART 3 OF 6

Hess’s Production in 3Q16 and Guidance for 4Q16, Fiscal 2016

Hess’s key operational highlights

Hess’s (HES) 3Q16 production volumes totaled 314 Mboepd (thousand barrels of oil equivalent per day). By comparison, 3Q15 production volumes were 380 Mboepd. HES’s 2Q16 production volumes totaled 313 Mboepd. Bakken volumes in 3Q16 amounted to 107 Mboepd, making up 34% of Hess’s total production.

Hess’s Production in 3Q16 and Guidance for 4Q16, Fiscal 2016

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Hess noted in its 3Q16 earnings release that production was lower YoY (year-over-year) on account of its fewer drilling programs, natural field declines, and planned and unplanned downtimes.

Speaking about its expectations in the Bakken, Hess noted in the 3Q16 earnings conference the following: “Our high-quality Bakken acreage, industry-leading drilling and completion costs, and advantaged infrastructure position our Bakken asset to be a major contributor to the company’s future production and cash flow growth.”

Hess’s 3Q16 realized prices

HES’s average realized price of crude oil (OIL) and condensates fell from $45.66 per barrel in 3Q15 to $41.50 per barrel in 3Q16. Its average realized price for natural gas (UNG) fell from $4.02 per thousand cubic feet in 3Q15 to $3.20 per thousand cubic feet in 3Q16.

On the other hand, its average realized price for natural gas liquids rose from $7.17 per barrel in 3Q15 to $9.23 per barrel in 3Q16.

Hess’s 2016 production guidance

Hess’s 2016 production guidance range is 315–325 Mboepd, which would be 15% lower at the midpoint than the company’s 2015 production levels.

Hess’s 4Q16 production guidance was ~305 Mboepd. Bakken production in 4Q16 is expected to average between 100 Mboepd and 105 Mboepd.

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