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What’s Behind Hess’s Strong Performance This Year?

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Hess: XLE’s second-strongest energy stock

This year, Hess (HES) has been the Energy Select Sector SPDR ETF’s (XLE) second-strongest energy stock. Hess, a global crude oil and natural gas exploration and production company, has operations in the Bakken Shale, Utica Shale, US Gulf of Mexico, Peninsular Malaysia, and Thailand.

HES has risen ~29% this year, strongly outperforming crude oil (SCO) and natural gas (BOIL), which have returned ~8% and -2%. In Q1 2018, crude oil comprised ~53% of Hess’s production mix. In comparison, XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) have risen ~3% and ~12%, respectively.

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Hess’s revenue and earnings

In Q1 2018, Hess’s revenue rose ~9% YoY (year-over-year) to ~$1.4 billion from ~$1.3 billion, and its adjusted loss shrank ~81% YoY to ~$83 million from ~$427 million. HES’s adjusted loss per share shrank YoY to $0.27 from $1.36.

In April, HES commenced an accelerated share repurchase program of $500 million, which is expected to be completed by Q2 2018. This year, HES plans to repurchase $1.5 billion in shares. Next, we’ll compare Anadarko Petroleum’s (APC) 2018 returns with those of various energy ETFs and energy commodities, and analyze its performance in the last quarter.

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