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Why Were the 4Q15 Earnings Estimates for Hess Lowered?

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Jan. 21 2016, Updated 9:47 a.m. ET

Hess’s 4Q15 earnings release and revenue estimate

Hess Corporation (HES) is expected to release its 4Q15 earnings on January 27, 2016. Hess’s 4Q15 revenue estimates are lower than its revenue estimates for the previous quarter.

For 4Q15, Hess’s revenue estimate is around $1.45 billion, or ~14% lower than the previous quarter’s revenue, and ~42% lower than the corresponding quarter’s revenue in 2014. The graph above notes that Hess’s revenue had beaten the estimate in the previous quarter. Investors will watch to see if this trend would continue in 4Q15.

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Hess’s EPS estimates

Hess’s EPS (earnings per share) estimates were lower than the previous quarter’s estimates. Its 4Q15 loss per share estimate is $1.41. The 3Q15 loss per share was $1.03. The corresponding quarter’s EPS in 2014 was $0.18.

Why were Hess’s revenue and EPS estimates lowered?

The fourth quarter was particularly bad for upstream oil companies given the sub-$40 oil prices. As a result, Hess’s stock rapidly started falling in 4Q15. Lower prices would mean lower price realizations for HES, and that could certainly hurt its revenues and earnings, and also explains the lower 4Q15 estimates.

3Q15 earnings recap

Hess had reported a 3Q15 adjusted net loss of $291 million compared to the adjusted earnings of $332 million in 3Q14. Hess’s peers Apache (APA), Anadarko Petroleum (APC), and Marathon Oil (MRO) recorded adjusted net losses of $21 million, $358 million, and $138 million, respectively, during the same period.

If combined, these companies make up ~5% of the Vanguard Energy ETF (VDE).

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