Hess Profit Soars On Gains - Update

(RTTNews) - Energy company Hess Corp. (HES) Wednesday reported a surge in fourth-quarter profit, with asset-sale gains offsetting a decline in revenues. Nevertheless, earnings for the quarter fell short of Wall Street estimates.

Hess also agreed to sell about 74,000 acres of its dry gas acreage in the Utica Shale to an undisclosed third party for $924 million. Hess expects to receive about two-thirds of the proceeds from the Utica Shale asset sale at the end of the first quarter, which are earmarked for additional stock repurchase. Hess has been selling off assets as part of efforts to restructure its portfolio.

The New York-based company posted fourth-quarter net income of $1.93 billion or $5.76 per share, compared with $374 million or $1.10 per share last year.

Excluding items, adjusted earnings for the quarter were $319 million or $0.96 per share, compared with $409 million or $1.20 per share in the prior year. On average, 22 analysts polled by Thomson Reuters expected earnings of $1.08 per share for the quarter. Analysts' estimates typically exclude special items.

Adjusted results for the recent quarter reflects a decline of $97 million in downstream earnings, Hess said in a statement.

The company noted that a third-party-operated pipeline in the Gulf of Mexico was shut down on December 18, which reduced Hess' production volumes by about 35,000 boepd through the end of the quarter and impacted fourth quarter after-tax income by nearly $20 million.

Total revenues for the fourth quarter declined to $5.57 billion from $5.93 billion in the corresponding quarter a year ago.

The company's exploration-and-production business reported oil and gas output of 307,000 barrels of oil equivalent per day, down from 396,000 barrels a year ago.

In 2014, Hess plans to increase the rig count in the Bakken fields to 17 from 14 but is maintaining capital spending at $2.2 billion. Production is expected to average between 80,000 boepd and 90,000 boepd in 2014, an increase of 19 percent to 34 percent from 2013.

Last March, Hess announced a plan to complete its transformation into a pure play E&P company and fully exit the downstream business.

The company has generated $7.8 billion in total proceeds from asset sales, paid down $2.4 billion of short term debt and added about $1 billion of cash to the balance sheet as a cushion against future commodity price volatility.

Hess said it will determine about raising the size of its current $4 billion share repurchase program after it firms up on whether to spin off or sell its Retail business.

Hess stock is trading at $77.95, up $1.15 or 1.50%, on a volume of 2 million shares on the NYSE.