Hess sinks deeper into the red over Norwegian assets impairments
U.S. oil company Hess Corporation saw its net loss deepen during the third quarter of the year due to impairments related to its asset sale in Norway.
The company on Wednesday posted a net loss of $624 million for the third quarter 2017 compared with a net loss of $339 million in the third quarter of 2016. These results include a non-cash charge of $550 million after-tax to impair the carrying value of assets in Norway as a result of the expected sale and a $280 million after-tax gain on an asset sale.
As a reminder, Hess announced earlier this week its plan to sell the Norwegian oil and gas assets to Aker BP for total proceeds of $2 billion and intention to sell its interests in Denmark. In addition, Hess sold its assets in Equatorial Guinea to Kosmos Energy for $650 million to raise cash for offshore development project in Guyana.
On an adjusted basis, Hess’ net loss in 3Q 2017 was $324 million compared to an adjusted net loss of $340 million in the third quarter of last year. The improved adjusted results reflect higher realized crude oil selling prices and lower operating costs, depreciation, depletion and amortization, and exploration expenses.
“We are successfully executing our strategic plan to focus our portfolio by investing in our highest return assets and divesting mature higher cost assets,” Chief Executive Officer John Hess said. “These actions in turn will lower our cash unit costs, bolster our balance sheet and prefund our world class investment opportunity in Guyana, which will position us to deliver a decade plus of returns-driven growth and increasing cash generation for our shareholders.”
In the third quarter of 2017 Hess revenues increased to $1.7 billion from $1.2 billion in the same period of 2016.
Hess’ total production in the third quarter of 2017 dropped to 299,000 barrels of oil equivalent per day (boepd), excluding Libya, from to 314,000 boepd in the prior-year quarter.
The oil company’s average realized crude oil selling price was $46.97 per barrel in the third quarter of 2017, up from $41.50 per barrel in the year-ago quarter. The average realized natural gas liquids selling price in the third quarter of 2017 was $17.22 per barrel, versus $9.23 per barrel in the prior-year quarter, while the average realized natural gas selling price was $3.35 per mcf, compared with $3.20 per mcf in the third quarter of 2016.
Lower volumes were due to a reduced drilling program, natural field declines, the effect of hurricane-related downtime and an asset sale, partially offset by the start-up of production from the North Malay Basin and a temporary adjustment to entitlement and higher uptime at the JDA.
Exploration and Production (E&P) capital and exploratory expenditures were $558 million for the quarter up from $433 million in the prior-year quarter, which included increased activity at
Bakken and Guyana.
Offshore Energy Today Staff