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Why Hess Lowered Its 2016 Production Guidance Range

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Hess’s key operational highlights

Hess Corp’s (HES) 2Q16 production volumes totaled 313,000 barrels of oil equivalent per day (Mboe/d). In comparison, 2Q15 production volumes were 391 Mboe/d. HES’s 1Q16 production volumes amounted to 350 Mboe/d.

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Hess’s 2Q16 realized prices

HES’s average realized price of crude oil (OIL) and condensates fell from $55.83 per barrel in 2Q15 to $41.95 per barrel in 2Q16. Its average realized price for natural gas (UNG) fell from $4.49 per thousand cubic feet in 2Q15 to $3.58 per thousand cubic feet in 2Q16. Its average realized price for natural gas liquids fell from $11.06 per barrel in 2Q15 to $9.03 per barrel in 2Q16.

Hess’s 2016 production guidance

HES updated its 2016 production guidance was 315 Mboe/d to 328 Mboe/d. The previous guidance range it had provided in 1Q16 was 330 Mboe/d to 350 Mboe/d. Hess’s 2Q16 earnings release noted that the decline in its guidance came from unplanned downtime in the Tubular Bells Field, Gulf of Mexico. Plus, lower production levels in the Bakken and Equatorial Guinea, due to lower capital invested, also played a role in reduced forecasts for 2016 production.

The updated guidance range is 12% lower, at the mid-point, than the 2015 production levels.

In comparison, Oasis Petroleum (OAS) has provided growth guidance of -6% at the midpoint. Concho Resources (CXO) has provided a growth range of -5% to 0%. PDC Energy (PDCE), on the other hand, expects its annual production to rise 30% to 40% in 2016.

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