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Hess Corp. has posted $504 million in net profit for the third quarter, down from $515 million for the same period last year on lower realized prices.
The exploration and production company, set to be absorbed by competitor Chevron Corp. next year, saw a 13 percent year-on-year increase in average net oil and gas production to 395,000 barrels of oil equivalent per day (boepd), offsetting lower selling prices. The Bakken formation in the USA yielded 190,000 boepd net, up 14 percent against the same period last year. Guyana production contributed 108,000 barrels of oil per day (bopd), up 10,000 bopd year-over-year, Hess said in a press release.
Hess’ 30 percent-owned Guyana asset, the Stabroek block, and Bakken in the Permian Basin were highlighted by Chevron, when announcing the purchase of Hess, as industry-leading in terms of cash generation.
New York City-based Hess sold crude oil at an average realized price of $81.53 a barrel, including the impact of hedging, during the July–September 2023 period, down from $85.32 year-on-year. Its natural gas liquids sold at an average realized price of $20.17 per barrel, down from $35.44 in July–September 2022. Hess sold natural gas at an average realized price of $4.57 per thousand cubic feet (mcf), down from $5.85 per mcf in the same quarter 2022.
When adjusted for non-recurring or extraordinary items, Hess’ net income for the 2023 third quarter becomes $583 million. Net cash from operating activities totaled $986 million, down from $1.34 billion for the third quarter of 2022.
Hess earlier announced September 6 a regular quarterly dividend per common share of 43.75 cents, compared to $1.64 in earnings per share for the third quarter, or $1.89 adjusted.
Hess stocks are valued at $171 per unit in the purchase price it has agreed with San Ramon, California-based Chevron. Hess shareholders have yet to vote on the acquisition, which the companies expect to close in the first half of 2024.
Hess has now forecast full-year production to be 390,000 boepd, the upper end of its previous guidance. It expects its third development in Guyana, the Payara field, to come onstream in the next quarter with 220,000 gross bopd in production capacity.
Two more developments in the Caribbean country’s Stabroek block, Yellowtail and Uaru, are expected to start up 2025 and 2026 respectively with a combined capacity of 500,000 bopd gross.
Stabroek is operated by another USA energy giant, ExxonMobil Corp. (45 percent stake). China National Offshore Oil Corp. is the other partner with a 25 percent interest.
Hess enters the final quarter of the year with cash and cash equivalents of $2 billion and debt and finance lease obligations totaling $5.6 billion.
The merger agreement with Chevron transfers its debt obligation to the absorbing company for a total purchase transaction of $60 billion, according to Chevron’s announcement October 23.
In the acquisition announcement, Chevron highlighted, “The acquisition of Hess upgrades and diversifies Chevron’s already advantaged portfolio”.
“The Stabroek block in Guyana is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade”, it added. “Hess’ Bakken assets add another leading U.S. shale position to Chevron’s DJ and Permian basin operations and further strengthen domestic energy security”.
Hess chief executive John Hess said in a statement for the Chevron press release Hess “has one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer”.
To contact the author, email jov.onsat@rigzone.com
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