Hess Q2 Profit More Than Doubles, Affirms 2013 Production Outlook

(RTTNews) - Oil and gas company Hess Corp. (HES) on Wednesday reported a profit for the second quarter that more than doubled from last year, helped by a gain on the sale of the company's Russian subsidiary Samara-Nafta.

In addition, lower production in the quarter was more than offset by higher oil and gas prices. Looking ahead, the company maintained its fiscal 2013 production guidance.

The exploration and production segment earnings for the second quarter more than doubled to $1.53 billion from $644 million in the prior-year period. The latest quarter's results include $933 million of income, while the prior-year period's results include an after-tax charge of $36 million from items affecting comparability of earnings.

Hess' oil and gas production for the quarter declined 21 percent from the prior-year period to 341,000 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, partially offset by an increase in Bakken production.

Hess' average worldwide crude oil selling price, including the effect of hedging, rose 13 percent from the same period last year to $97.89 per barrel. The average worldwide natural gas selling price increased 8 percent from the prior-year period to $6.44 per mcf.

The New York-based company's second-quarter net income was $1.43 billion or $4.16 per share, up from $549 million or $1.61 per share in the previous-year quarter.

Adjusted earnings for the quarter, which excludes the gain on sale of the company's Russian subsidiary and other items affecting comparability, were $520 million or $1.51 per share. On average, twenty analysts polled by Thomson Reuters expected the company to report earnings of $1.41 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues and non-operating income for the quarter rose 24 percent to $4.11 billion from $3.32 billion in the prior year quarter. Analysts had a consensus revenue estimate for the quarter of $4.62 billion.

Hess has announced significant asset divestitures as part of its transformation to a pure play exploration and production company.

In 2013, Hess completed the sale of 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 the Eagle Ford assets in Texas. Total proceeds from these sales were $3.5 billion.

In addition, Hess announced earlier in the week the sale of its Energy Marketing business to Direct Energy for $1.025 billion. The company noted that the remaining divestiture processes for its upstream assets in Indonesia and Thailand, as well as downstream terminals, retail, and trading businesses were well underway.

Looking ahead to fiscal 2013, Hess maintained its production guidance at 340,000 to 355,000 barrels of oil equivalent per day.

Hess has previously announced a 150 percent increase in the annual dividend to $1 per common share commencing in the third quarter of 2013 and a share repurchase plan of up to $4 billion.

Hess noted that its plan to sell its energy marketing business for $1.025 billion, which was announced earlier in the week, now puts it in a position to commence the share repurchase program. The company also plans to monetize its Bakken infrastructure assets by 2015 and return additional cash to shareholders.

In Wednesday's regular trading session, HES is trading at $74.72, up $1.53 or 2.09 percent on a volume of 500,048 shares.