Hess’ CEO promises annual output growth of 5 – 8%
- Business & Finance
Hess Corporation today reported net income of $931 million for the quarter ended June 30, 2014. Adjusted net income, which excludes items affecting comparability, was $432 million or $1.38 per common share, compared with $520 million or $1.51 per share in the prior year quarter.
The company said that the decrease in adjusted net income was primarily due to the impact on operating earnings of divesting E&P assets and downstream businesses.
The company in the second quarter of the year completed asset sales totaling $1.6 billion comprising approximately $805 million for its Thailand assets, $485 million for 30,000 net acres in the Utica dry gas shale play and $320 million for the Newark, New Jersey power plant.
John Hess, chief executive officer of Hess, said: “This was another quarter of strong performance and execution of our strategic plan. We continued to grow production and reduce well costs in the Bakken, progressed development of Tubular Bells in the Gulf of Mexico and North Malay Basin in the Gulf of Thailand, and completed asset sales totaling $1.6 billion. We are excited by the potential of our portfolio and confident that we have the strategy, operational capabilities and financial flexibility to deliver 5 to 8 percent annual production growth and generate free cash flow and strong, sustainable returns for our shareholders.”
Exploration and Production earnings were $1,057 million in the second quarter of 2014, compared with $1,533 million in the second quarter of 2013. Adjusted net income was $483 million in the second quarter of 2014 and $600 million in the second quarter of 2013.
Oil and gas production of 319,000 boepd was down from 341,000 boepd in the second quarter a year ago. Asset sales lowered production by 43,000 boepd, while extended shutdowns caused by civil unrest in Libya reduced production by approximately 24,000 boepd versus the year-ago quarter.
Production from the Valhall Field offshore Norway was up 18,000 boepd from the prior year quarter, following completion of the Valhall Redevelopment Project in 2013.
Higher production in the Bakken contributed an additional 16,000 boepd versus the year-ago quarter, while the North Malay Basin Early Production System, which commenced production in October 2013, contributed 7,000 boepd. Hess’ average worldwide crude oil selling price, including the effect of hedging, was $101.70 per barrel, up from $97.89 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.35 per mcf in the second quarter of 2014, down from $6.44 per mcf in the second quarter a year ago.
Excluding production from assets sold and Libya, pro forma production was 310,000 boepd in the second quarter of 2014, an increase of 17 percent from 265,000 boepd in the second quarter of 2013.
Hess expects pro forma production to average between 305,000 boepd and 315,000 boepd in 2014 driven by continued growth in the Bakken, higher production from the Valhall Field in Norway and the planned start-up of the Tubular Bells Field in the Gulf of Mexico in the third quarter of 2014.