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Hess’s 4Q15 Earnings: Better Than the Estimates

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Hess’s 4Q15 earnings

Hess (HES) reported its 4Q15 earnings on January 27, 2016. The company announced an adjusted loss per share of $1.40. The consensus Wall Street analyst estimate was $1.47 loss per share.

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Hess’s earnings analysis

Hess reported an adjusted net loss of $396 million in 4Q15. Adjusted net income in the corresponding period in 2014 was $53 million. In 3Q15, Hess reported an adjusted net loss of $291 million.

Hess’s 4Q15 revenue was $1.5 billion compared to an estimate of $1.4 billion. Year-ago revenues in the corresponding quarter were $2.6 billion. Revenue in 3Q15 was $1.7 billion.

As we can see in the above graphs, Hess’s earnings and revenues have come in better than expected every quarter in 2015. Having said that, except for 2Q15, Hess’s revenue has declined over the quarters. Its quarterly losses per share have increased.

Peer comparison

Hess’s peers include Apache (APA), Anadarko Petroleum (APC), and Marathon Oil (MRO). They haven’t announced their 4Q15 earnings yet. Analysts expect the loss per share for these companies to come in at $0.50, $1.10, and $0.47, respectively. Watch this space for earnings coverage on these companies.

All the above companies make up ~6.7% of the Energy Select Sector SPDR ETF (XLE).

What drove Hess’s earnings lower?

According to Hess’s 4Q15 earnings release, lower realized energy prices reduced adjusted net income by ~$420 million compared to last year. Results for 4Q15 were also inclusive of non-cash goodwill and other impairment-related charges, which amounted to ~$1.4 billion after tax.

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