Key management discussions and objectives
Hess Corporation (HES) has taken several steps to counter the lower commodity prices, including capital and cost reductions. The company reduced its 2016 capex by 40% compared to 2015.
Many upstream companies have been reducing their 2016 capex due to low energy prices (USO) (UNG). ConocoPhillips (COP) and Anadarko Petroleum (APC) lowered theirs by 37% and 50%, respectively, compared to 2015. Marathon Oil’s (MRO) 2016 capex is expected to be less than half its 2015 capex. These companies make up ~8% of the Energy Select Sector SPDR ETF (XLE).
Key management comments
John Hess, CEO of Hess Corporation, commented in the company’s 4Q15 earnings conference, “Three principles are guiding us through this lower-for-longer oil price environment. Preserve the strength of our balance sheet, preserve our operating capabilities and preserve our long-term growth options.”
He also stressed that maintaining a strong balance sheet is the top priority for the company. He also remarked, “Our focus is on value, not volume, and we do not think it makes sense to accelerate production in the current price environment, particularly given the recent further deterioration in the oil markets.”
Analyst targets for Hess Corporation
The above graph notes the high, low, average, and median analyst target prices for HES. Compared to current levels, the consensus target price of $56.50 indicates positive returns of about 11% for Hess over the next 12 months.
Continue to the next part to read about how Hess’s production mix and realized prices have evolved.