Seeking Alpha

Scrutiny facing Bakken crude rail transport could hurt Hess, Mizuho says

  • Hess (HES -2.5%), increasingly reliant on rail to move its growing Bakken output, could be especially vulnerable to the possibility of more regulation on Bakken crude-by-rail transport, Mizuho says (Briefing.com).
  • HES' Tioga rail facility handled 54K bbl/day of crude during Q3 2013, equivalent to 76% of HES' Q3 Bakken production and 83% of liquids production, the firm calculates.
  • The Bakken already saw softer pricing in Q4; the WTI/Clearbrook differential was $11.53 in Q4 vs. less than $5 in Q3,  and additional costs associated with stricter transport standards could squeeze margins further going forward for HES and Marathon Petroleum (MPC -2.7%), the firm says.
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