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Oil Might Push Hess’s EPS into Negative Territory

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Oil prices and Hess’s earnings

Hess Corporation (HES) is scheduled to report its fourth-quarter earnings results on January 30. The company may report adjusted EPS of -$0.34 in the fourth quarter compared to adjusted EPS of $0.38 in the previous quarter. In the fourth quarter, Brent crude prices fell 14.7% on a sequential basis—an important factor that could drag on Hess’s earnings.

Hess operates with a production mix of ~66% liquids, which include crude oil and natural gas liquids.

The graph above shows how oil prices have affected the company’s earnings.

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HES operates with a production mix of 34% in natural gas. In the fourth quarter, natural gas prices were ~29.6% higher than in the previous quarter, which could be an important driver of Hess’s earnings. In the quarter, total production could fall 5% on a sequential basis, affecting the company’s overall sales.

Other peers

ConocoPhillips (COP), EOG Resources (EOG), Occidental Petroleum (OXY), Anadarko Petroleum (APC), and Concho Resources (CXO), the S&P 500 Index’s (SPY) largest holdings in the upstream subsector, could report sequential downsides of 28%, 19.4%, 33.9%, 23.2%, and 19%, respectively, in their fourth-quarter earnings.

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