Hess Corp. (NYSE: HES) released its second quarter earnings report on Wednesday, showing an increase in production, particularly in Bakken oil production in North Dakota.
Hess Corp is a natural gas and crude oil exploration, refining, and production company headquartered in New York City. The company has operations in the Eagle Ford and Bakken shale formations in the U.S., as well as production facilities all over the world.
The second quarter report showed an overall earnings loss of 10% due mainly to a dip in crude oil prices.
Profits were down to $549 million from last year’s $607 million, and revenue fell 5.1% to $9.31 billion.
But the company was able to increase production in the second quarter, especially in the Bakken, more than doubling last year’s 25,000 barrels of oil equivalent (BOE) to 55,000 BOE in the second quarter.
Hess increased its estimates of well spending to an average $11 million per Bakken well from $8.5 million after an expensive first quarter of $13.4 per well. They were able to reduce this to $11.6 million in the second quarter.
Its total Bakken shale budget increased to $3 billion from $1 billion.
Hess also announced that it would be selling up to $2 billion in assets to keep up with this production increase, though it has not revealed which assets would be for sale.
From Fox Business:
“They will be more mature, not as strategic,” Chief Executive John Hess said of what the company is trying to sell. “We’re going to be shedding assets that are smaller-interest, that have capital expenses associated with them that are not attractive.”
The company is putting heavy focus on its Bakken and Eagle Ford production. Several months ago the company built a rail terminal near its Bakken assets, from which it now ships roughly 29,000 barrels per day.
Now, estimated expenditure for 2012 is $8.5 billion. This is a 25% increase from earlier estimates.
Paul Cheng, a Barclays analyst, told Fox Business this “is not sitting well with investors.”
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But Hess closed up 3.48% on Monday at $45.46 after a significant drop earlier in the day. The plan for asset sales to balance out spending may have eased some fears. John Hess said to Fox Business:
“We’re at the peak of our capex. As we move forward, we expect significantly lower capital costs.”
The company’s total daily production of oil equivalent rose 15% in the second quarter to 429,000 barrels.
That’s all for now,
Brianna
