Hess Corporation Q2 Earnings Preview

| About: Hess Corporation (HES)
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Hess Corporation (NYSE:HES) is scheduled to report its Q2 2012 results on July 25, 2012 before market opens. The Street expects EPS and revenue of $1.39 and $8.71B, respectively.

In this article, I will recap the historical results of the company, its latest EPS estimates vs. surprises, the latest news from the company and the news from its closest competitors.

Hess Corporation Revenue and Net Income History

Recent EPS Actuals vs. Estimates

The company has failed to meet analysts' estimates in the last four quarters. In the last quarter it reported $1.49 EPS, failing to meet analyst estimates of $1.53.

Hess Corporation EPS Historical Results vs Estimates

The consensus EPS estimate is $1.39 based on 18 analysts' estimates, down from $1.78 the company earned a year ago. Revenue estimates are $8.71B, down from $9.81B a year ago. The median target price by analysts for the stock is $61.46.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On May 2, 2012, Argus downgraded the company from Buy to Hold.
  • On March 6, 2012, Global Hunter Securities initiated Neutral rating for the company.

Latest News

  • On June 21, 2012, Hess Corporation announced that it has signed agreements with PETRONAS to develop the North Malay Basin, located offshore Peninsular Malaysia. The agreements creating the North Malay Basin Integrated Gas Development Project include amendments to the existing Production Sharing Contract for Block PM302, which is operated by Hess.
  • On May 30, 2012, Reuters reported that Hess Corporation is selling its stake in an oilfield off the Scottish coast to Royal Dutch Shell Plc. (NYSE:RDS.A) Financial terms were not disclosed.
  • On April 25, 2012, Statoil ASA (NYSE:STO) announced that the Company has entered an acreage in Ghana, farming into a deepwater license operated by Hess. Hess operates the 2,100 square kilometer license with a 90% working interest and carries Ghana National Petroleum Corporation's (GNPC) costs through the exploration phase for the remaining 10%. Statoil will assume a 35% working interest in the license and carry a proportional share of GNPC's interest, amounting to a total paying interest of 38.89%. Hess retains a 55% working interest and GNPC its 10% carried interest.
  • On April 5, 2012, Dow Jones reported that Royal Dutch Shell Plc and Hess Corporation are in talks with PetroChina Company Limited (PetroChina) about the creation of a joint venture aimed at development of shale oil in the Santanghu Bassin, Xinjiang, China.
  • On March 19, 2012, Hess Corporation announced that it is exploring the sale of its St. Lucia crude oil and refined products storage and transshipment terminal in the Caribbean.
  • On January 25, 2012, Hess Corporation announced that for fiscal 2012, it forecasts crude oil and natural gas production to average between 370,000 and 390,000 barrels of oil equivalent per day.


BP (NYSE:BP), ConocoPhillips (NYSE:COP), Marathon Oil Corporation (NYSE:MRO), Statoil, and Exxon Mobil (NYSE:XOM) are considered major competitors for Hess, and the table below provides the key metrics for these companies and the industry.

Hess Corporation key ratio comparison with direct competitors

The chart below compares the stock price changes as a percentage for the selected companies for the last one year period.

Click to enlarge HES Chart

HES data by YCharts

Competitors' Latest Developments

  • On July 23, 2012, Africa Oil Corp. announced that it has signed a definitive farmout agreement with Marathon Oil Corporation whereby Marathon Oil will acquire the rights to obtain an interest in two of Africa Oil's Kenyan exploration blocks.
  • On July 18, 2012, Reuters reported that BP has made a small gas find in the Norwegian Sea, with reserves preliminary estimated at between 1.2 and 2.3 billion cubic meters, in a license shared with Statoil ASA, E ON AG and Polskie Gornictwo Naftowe i Gazownictwo SA. The wildcat well drilled to a total vertical depth of 2,923 meters below the sea surface proved gas about 20 kilometers north of the Skarv field and about five kilometers east of the Marulk field.
  • On July 18, 2012, The Economic Times reported that Reliance Industries Ltd. and BP have warned that eastern offshore KG-D6 gas fields will stop producing in 2015 unless the Indian government approves investments needed to keep the nation's gas fields alive.
  • On July 18, 2012, Reuters reported that a group of Soviet-born tycoons had notified BP of its intention to start talks with the British oil major on increasing its stake in TNK-BP Holding.
  • On July 12, 2012, Reuters reported that Statoil ASA has temporarily stopped production at its Snoehvit liquefied natural gas (LNG) plant in the Barents Sea after water leaked into the gas dryers as of July 10, 2012.
  • On July 12, 2012, Reuters reported that U.S. workplace safety regulators plan to announce a settlement with BP Plc's U.S. refining subsidiary over safety violations found at the company's Texas City, Texas, refinery in 2009.
  • On July 10, 2012, Statoil ASA announced that it is preparing to resume production at installations that have been affected by a strike, after the government decided to impose compulsory arbitration in the pay settlement for the Norwegian continental shelf.
  • On July 9, 2012, RosBusinessConsulting reported that Alfa-Access-Renova (AAR) Consortium plans to acquire half of BP Plc's 50% stake in the joint venture TNK-BP Holding OAO. Following this, AAR Consortium would increase its stake in TNK-BP Holding OAO to 75%. The Consortium intends to notify BP Plc of its intention until July 19, 2012.
  • On July 6, 2012, The Wall Street Journal reported that Statoil ASA and other companies represented by Norway's Oil Industry Association have threatened to lock out workers and shut down production on the Norwegian continental shelf starting Tuesday in hopes of forcing an end to a 12-day strike that has put upward pressure on oil prices and crimped revenue.
  • On July 5, 2012, Reuters reported that Exxon Mobil Corp reported a snag in the number 2 amine treater at its 560,640 barrel-per-day (bpd) refinery in Baytown, Texas, according to a filing with the U.S. National Response Center.
  • On July 5, 2012, Statoil announced that it has started preparing to shut down production on the Norwegian continental shelf (NCS) following a notice of lockout. The Norwegian Oil Industry Association (OLF) announced that a lockout will be imposed on all members of Industry Energy (Industri Energi), the Organization of Energy Personnel (NYSE:SAFE) and the Norwegian Organization of Managers and Executives (Lederne) who are covered by the offshore pay agreements.
  • On July 4, 2012, Dow Jones reported that a group of Chinese fishermen have sued ConocoPhillips in a U.S. court, seeking over $130 million in compensation for an oil spill off China's coast last year.
  • On July 4, 2012, The Economic Times reported that India's Oil & Natural Gas Corporation Limited (ONGC) is in final-stage talks to purchase a stake in some of the Canadian oil sands assets owned by ConocoPhillips.
  • On July 2, 2012, Reuters reported that Statoil ASA has made a gas and condensate discovery in the King Lear prospect in the North Sea. King Lear lies approximately 20 kilometers North of the Ekofisk, home of the first commercial oil find on the Norwegian continental shelf, supporting the company's strategy of revitalising mature areas.
  • On June 29, 2012, Dow Jones reported that a US$20B Australian gas-export joint venture involving ConocoPhillips and Origin Energy Limited had finalized a gas sales deal with Kansai Electric Power Co. The Australian Pacific LNG venture, which also includes China Petrochemical Corp., said it's on track to make a final investment decision on a second liquefied natural gas, or LNG, processing unit by mid-2012.
  • On June 29, 2012, Reuters reported that Statoil ASA has shut oil production at its Gullfaks A oil platform in the North Sea due to a leak in a ballast tanker. Oil from the field is loaded directly into shuttle tankers, while gas is piped to the Kaarstoe gas treatment plant north of Stavanger and then on to continental Europe.
  • On June 27, 2012, Interfax reported that NK Lukoil OAO has completed the acquisition of an additional 19% of stake in Zapadnaya Kurna-2 oilfield from the Norwegian company Statoil ASA. Following this, NK Lukoil OAO's stake in Zapadnaya Kurna-2 has increased to 75%. The Remaining 25% of Zapadnaya Kyrna-2's stake belongs to Iraq's North Oil Company.
  • On June 26, 2012, BP Plc announced that it has agreed to sell its interests in the Alba and Britannia fields in the UK North Sea to Mitsui & Co., Ltd. for $280 million in cash.
  • On June 26, 2012, Reuters reported that Exxon Mobil Corp reported a leak in a supply line on the T1 tower at its 502,000 barrel per day (bpd) refinery in Baton Rouge, Louisiana, that led to a release of benzene, according to a filing with the National Response Center.
  • On June 26, 2012, Dow Jones reported that Statoil ASA decided to close further platforms due to strike by offshore workers that started on June 24, 2012. On June 24, 2012, Statoil was shutting down the Oseberg Field Centre and the Oseberg South and Oseberg East fields in the North Sea as well as the Heidrun field in the Norwegian Sea. On June 26, 2012, the closures were extended to the Huldra, Veslefrikk, Brage and Oseberg C platforms in the North Sea. The Tjeldbergodden plant on the northwest coast of Norway will also have to close, because the supply of natural gas from the Heidrun field will stop, according to Statoil.
  • On June 26, 2012, Reuters reported that Norway Labour Union announced that Statoil ASA intends to shut three additional offshore installations as a consequence of ongoing strike.
  • On June 25, 2012, BP Plc announced that it has agreed to sell its interests in the Jonah and Pinedale upstream operations in Wyoming to Linn Energy, LLC. Under the agreement, Linn Energy has agreed to pay BP $1.025 billion in cash for the assets.
  • On June 25, 2012, Dow Jones reported that according to The Sunday Times, an arm of Gazprom OAO has lodged a bid for BP Plc's $25B stake in its venture in the country.
  • On June 25, 2012, Reuters reported that PetroFrontier Corp. announced successful drilling of its second horizontal well in Southern Georgina basin, Australia in a joint venture with Statoil ASA. PetroFrontier announced that drilling results from macintyre-2h are encouraging, but the well remains a high-risk exploration venture.
  • On June 24, 2012, RIA OREANDA reported that President of NK Rosneft' OAO, Igor Sechin and CEO of Statoil ASA, Helge Lund, have signed documents aimed at implementing a cooperation agreement concluded on May 5, 2012.
  • On June 24, 2012, Reuters reported that oil workers in Norway went on strike from June 24, 2012, impacting Statoil ASA's and BP Plc's fields, shutting down oil and gas production at two fields offshore Norway after negotiations between unions and the industry association broke down during the night.
  • On June 22, 2012, Reuters reported that NK Rosneft' OAO has been in talks with Exxon Mobil Corp over the possibility of teaming up with the American company to tap Iraq's huge West Qurna-1 oilfield, Kommersant daily reported.
  • On June 22, 2012, Business Standard reported that Reliance Industries Ltd and its partners BP plc and Niko Resources Ltd. plan to spend $4 billion (INR22,000 crore) to develop satellite gas fields off India's east coast.
  • On June 22, 2012, Total Gabon SA announced that it has agreed to sell a 21.25% stake in the Diaba permit to Marathon Upstream Gabon Ltd, a subsidiary of Marathon Oil Corporation.
  • On June 21, 2012, Reuters reported that Exxon Mobil Corp will reconfigure its Fawley refinery, permanently decommissioning one crude distillation unit. The reconfiguration includes the decommissioning of one of Fawley's three 'pipestills' -installations more commonly known as distillation towers, in which crude oil is boiled to separate it into its component parts.
  • On June 20, 2012, Reuters reported that oil workers in Norway resume wage talks on June 22, 2012, threatening to go on strike within days, at Statoil ASA and BP Plc's fields, if firms fail to improve their pay offer and tackle a sensitive pension issue.
  • On June 20, 2012, Reuters reported that OMV AG has sold its 5% stake in the Beryl Area fields for USD 118 million to an unidentified buyer and bought a 17.5% stake in the Tobermory and Bunnehaven discoveries from Statoil ASA in exchange for a 30% stake in Mariner East.
  • On June 20, 2012, PetroFrontier Corp announced that through its two wholly-owned subsidiaries (PetroFrontier (Australia) Pty Ltd and Texalta (Australia) Pty Ltd), it has entered into a binding farm-in agreement (the Farm-in Agreement) with Statoil Australia Oil and Gas AS (Statoil), a wholly-owned subsidiary of Statoil ASA of Norway whereby Statoil will farm into PetroFrontier's four exploration permits and two exploration permit applications in the Southern Georgina Basin, Northern Territory, Australia.
  • On June 20, 2012, Reuters reported that Statoil ASA announced that it has found between 100 million and 200 million barrels of recoverable oil equivalent at its Mizzen prospect in the North Atlantic off Canada's East Coast.
  • On June 20, 2012, Statoil ASA announced that it was the highest bidder on 26 leases in the lease sale in the Central Gulf of Mexico. With the addition, the Company will control over 350 leases in the Gulf of Mexico.
  • On June 19, 2012, Alimentation Couche-Tard Inc. announced that through its wholly owned subsidiary Couche-Tard Norway AS, it has become owner of 243,593,717 shares, equal to 81.20% of the issued and outstanding shares (shares) in Statoil Fuel & Retail ASA (NYSE:SFR) and thereby triggered a mandatory offer obligation for all shares in SFR. The above shares are the shares tendered up to and including June 12, 2012 under the Company's voluntary offer for all shares in SFR. The acceptance period for the voluntary offer expires on June 20, 2012 at 17.30 CET, and settlement for shares tendered under the voluntary offer in the period from June 13, 2012 through June 20, 2012 at 17.30 CET, will occur on June 26, 2012.
  • On June 19, 2012, Reuters reported that Statoil ASA has received full settlement in cash after having divested the Company's 54 % stake in Statoil Fuel & Retail ASA to Alimentation Couche-Tard.
  • On June 19, 2012, Reuters reported that Statoil ASA has extended its drilling contract for Odfjell Drilling's Deepsea Bergen, which will be drilling on the Norwegian continental shelf for another five years.
  • On June 18, 2012, Reuters reported that production at Aasgard gas field operated by Statoil ASA has been down as of June 18, 2012 with volume impact of 24 million cubic meters (mcm) of gas per day. The shutdown, which started after midnight, could last for up to 24 hours.
  • On June 17, 2012, Atlantic Petroleum P/F announced the spud of the 6104/21-2 Brugdan II exploration well on Faroes License 006 operated by Statoil ASA. The well is being drilled with the COSL Pioneer semi-submersible rig in a water depth of about 450 meters.
  • On June 14, 2012, Statoil ASA announced that together with its partner ExxonMobil it has made a gas discovery in the Block 2 licence in Tanzania operated by the Company.
  • On June 13, 2012, Reuters reported that Statoil ASA and China's Sinochem agreed to buy the Peregrino floating production, storage and offloading (FPSO) vessel from AP Moeller Maersk A/S. The parties did not disclose the terms of the deal, which was the result of a tanker conversion project begun in 2007 that involved over $1 billion in investment.
  • On June 12, 2012, Reuters reported that the output at Karsto gas processing plant operated by Statoil ASA was reduced by 40 million cubic meters (mcm) per day on June 12, 2012 due to unplanned maintenance of the system.
  • On June 11, 2012, Esmerk Norwegian News reported that in a court of second instance in Nigeria, Statoil ASA has lost a dispute with former consultant John Abebe, who claims he is entitled to 1.5% of Statoil ASA's net oil revenues in the country.
  • On June 8, 2012, Reuters reported that Statoil ASA announced that it has signed a long-term deal to deliver liquefied natural gas to Petronas in Malaysia. Approximately 1 billion cubic meters of gas will be delivered aboard tankers over three and a half year.
  • On June 7, 2012, Reuters reported that Statoil ASA and Centrica PLC extended their Memorandum of Understanding to together tap gas resources in British and Norwegian waters until June 2013.
  • On June 6, 2012, Reuters reported that a Nigerian court has rejected an appeal by Statoil ASA against a local consultant who said he was not paid for helping it secure licenses for Nigerian oil fields.
  • On June 5, 2012, Reuters reported that Gazprom OAO has no plans to buy BP Plc's stake in TNK-BP Holding OAO as of now, a company executive said.
  • On June 5, 2012, Reuters reported that Oil & Natural Gas Corporation Limited, is considering bidding for part of ConocoPhillips, Canadian oil sands holdings worth around $5 billion, a source with direct knowledge of the situation told Reuters on Tuesday.
  • On June 1, 2012, Reuters reported that BP Plc put its half-share of its huge Russian joint venture up for sale on Friday. A sale of its half stake in TNK-BP could raise around $30 billion for BP BP.L, which would help to fund the ongoing cost of cleaning up the 2010 Gulf of Mexico oil spill and allow it to invest in higher growth deals.
  • On June 1, 2012, Reuters reported that Exxon Mobil Corp, plans to build a multi-billion dollar chemical plant in Texas to take advantage of cheap North American shale gas, according to a U.S. environmental filing seen by Reuters.
  • On May 30, 2012, Reuters reported that Statoil ASA has completed the exit process from West Qurna 2 field in Iraq and has transferred its 18.75% share to the operator Lukoil following the Iraqi authorities' approval of the transaction.
  • On May 16, 2012, Statoil ASA announced that it has decided to transfer the operatorship of the Vilje field in the North Sea to Marathon Oil Norge, a subsidiary of Marathon Oil Corp.
  • On May 1, 2012, ConocoPhillips reported in its Form 8-K that in connection with the Distribution, Mr. Harold W. McGraw III and Ms. Victoria J. Tschinkel resigned as Directors of ConocoPhillips.
  • On April 25, 2012, Exxon Mobil Corp announced that it has declared a cash dividend of $0.57 per share on the Common Stock, payable on June 11, 2012 to shareholders of record of Common Stock at the close of business on May 14, 2012.
  • On April 25, 2012, Marathon Oil Corporation announced that the Company's board of directors have declared a dividend of 0.17 per share on the Company's common stock. The dividend is payable on June 11, 2012, to stockholders of record on May 16, 2012.

Technical Overview

The stock has a market capitalization of $15.51B and was trading at $45.40 at the time of writing, with a 52-week range of $39.67 - $74.87. The stock's year-to-date performance has been -19.76%. It is currently trading above 20 and 50 SMA, but below 200 SMA.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.