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A Post-Earnings Analysis of Hess Corporation's 4Q16

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Part 3
A Post-Earnings Analysis of Hess Corporation's 4Q16 PART 3 OF 6

What’s Hess’s Production Guidance for 2017?

Key operational highlights

Hess Corporation’s (HES) 4Q16 production volumes totaled 311 Mboepd (thousand barrels of oil equivalent per day). In comparison, its 4Q15 production volumes were 368 Mboepd, and its 3Q16 production volumes totaled 314 Mboepd. Bakken volumes in 4Q16 amounted to 123 Mboepd, making up ~40% of Hess’s total 4Q16 production.

Bakken volumes in 4Q16 amounted to 123 Mboepd, making up ~40% of Hess’s total 4Q16 production.

What&#8217;s Hess’s Production Guidance for 2017?

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Hess noted in its 4Q16 earnings release that its production was lower YoY (year-over-year) on account fewer drilling programs, natural field declines, and planned and unplanned downtime.

Speaking about its 2017 growth plans, Hess noted in its 4Q16 earnings release, “We are increasing activity in the Bakken, our two offshore developments at North Malay Basin in the Gulf of Thailand and Stampede in the Gulf of Mexico are on track to come online in 2017 and 2018, and the Liza Field in Guyana is one of the industry’s largest oil discoveries in the last 10 years.”

The North Malay Basin and Stampede projects are two of Hess’s most important growth projects. Apart from the Bakken, the company has been focusing on its international operations in Guyana and the Gulf of Mexico.

4Q16 realized prices

HES’s average realized price of crude oil (OIL) and condensates rose from $43.73 per barrel in 4Q15 to $45.97 per barrel in 4Q16. Its average realized price for natural gas (UNG) fell from $3.44 per thousand cubic feet in 4Q15 to $3.24 per thousand cubic feet in 4Q16.

On the other hand, its average realized price for natural gas liquids rose from $9.61 per barrel in 4Q15 to $14.68 per barrel in 4Q16.

2017 production and capex guidances

Hess’s 2017 production guidance range excluding Libya is 300–310 Mboepd, ~5% lower at the midpoint than the company’s 2016 production levels.

Hess’s 2017 capital expenditure (or capex) guidance is ~$2.3 billion. Its capex was ~$1.9 billion in 2016.

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