Hess Q3 Profit Down 25%, Sees Full-year Output At Low End Of Range

(RTTNews) - Oil and gas company Hess Corp. (HES) on Wednesday reported a 25 percent decline in profit for the third quarter from last year, reflecting lower revenues as well as production that more than offset higher oil and gas prices.

Looking ahead, Hess now forecasts production at the low end of its 2013 guidance range, citing the civil unrest in Libya. Shares of the company are down almost 3 percent in pre-market trades.

The company's exploration and production segment earnings for the third quarter declined 25 percent from the prior-year period to $455 million.

Earnings for the quarter were negatively impacted by an estimated $30 million resulting from sales volumes being underlifted, compared to production by 1.2 million barrels. In addition, extended shutdowns for seasonal maintenance at non-operated fields in the Gulf of Mexico reduced earnings by an estimated $30 million.

Hess' oil and gas production for the quarter declined 23 percent from the prior-year period to 310,000 barrels of oil equivalent per day.

The decrease in production primarily reflects the impact of asset sales in Russia, the United Kingdom North Sea and Azerbaijan, extended shutdowns in the Gulf of Mexico, lower production in Libya, as well as other maintenance and declines. Meanwhile, production from the Bakken oil shale play increased 14 percent from the year-ago period to 71,000 barrels of oil equivalent per day.

Hess' average worldwide crude oil selling price, including the effect of hedging, rose 21 percent from the same period last year to $104.95 per barrel. The average worldwide natural gas selling price increased 11 percent from the prior-year period to $6.52 per mcf.

The New York-based company's third-quarter net income was $420 million or $1.23 per share, down from $557 million or $1.64 per share in the previous-year quarter. The latest quarter's results include after-tax charges of $8 million for employee severance expenses associated with Hess' transformation to a pure-play exploration and production or E&P company.

Adjusted earnings, which excludes items affecting comparability, were $405 million or $1.18 per share for the quarter. On average, twenty three analysts polled by Thomson Reuters expected the company to report earnings of $1.44 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues and non-operating income for the quarter declined 23 percent to $2.70 billion from $3.49 billion in the prior-year quarter. Analysts had a consensus revenue estimate for the quarter of $2.67 billion.

Total costs and expenses for the quarter were $2.01 billion, down 20 percent from $2.50 billion in the previous-year quarter.

Hess noted that, to date in 2013, it has sold its subsidiary in Russia and its interests in the Beryl area fields in the United Kingdom North Sea, the Azeri-Chirag-Guneshli fields offshore Azerbaijan, and its Eagle Ford shale assets in Texas. In addition, the company has announced the sale of its energy marketing business and its terminal network.

Total proceeds from these completed and announced asset sales, including an expected release of working capital, amount to about $6.3 billion. During the third quarter, Hess also advanced divestiture processes for its upstream assets in Indonesia and Thailand, as well as the retail and trading businesses.

During the quarter, Hess increased its returns to shareholders through a 150 percent increase in the quarterly dividend to $0.25 per common share, and the purchase of about 6.53 million shares of common stock for about $500 million under its authorized $4 billion share repurchase program.

Looking ahead to fiscal 2013, Hess now expects production to be at the low end of its guidance range of 340,000 to 355,000 barrels of oil equivalent per day.

HES closed Tuesday's trading at $83.50. In Wednesday's pre-market trades, the stock is down $2.50 or 2.99 percent to $81.00.