Hess tops Wall St profit estimates, signals dividend increase | The Mighty 790 KFGO
By Sabrina Valle, Liz Hampton and Sourasis Bose
(Reuters) – US oil and gas producer Hess Corp on Wednesday beat Wall Street estimates for fourth-quarter earnings on better-than-expected production in Guyana, allowing it to consider a dividend hike this quarter .
The tiny South American country, one of the fastest-growing oil nations, is flooding Hess with revenue from its first two oil rigs operating above expected capacity. Hess has a 30% stake in the Exxon Mobil Corp-led consortium, which is responsible for all production in Guyana.
The company expects cash flows to increase from a third platform, which is expected to start production in December. Hess said 75% of its free cash flow is dedicated to shareholders in the form of dividends or buybacks.
“The first priority is to grow our dividend,” Chief Executive John Hess said in a webcast with analysts, adding that the board will “strongly consider” increasing dividend payments as early as this quarter.
Guyana’s third development, Payara, is 93% complete and should add net production of up to 60,000 barrels of oil equivalent per day (boed) at full capacity, adding $1 billion in additional cash flow, Hess said.
Shares rose 2.61% to $157.90 each.
Exxon’s first two floating platforms in Guyana delivered more than 380,000 boed in the fourth quarter, or 40,000 boed more than originally planned. The company also said that Exxon’s Fangtooth discovery could justify plans for a seventh platform in the country.
Hess also benefited from higher international energy prices in the quarter. It sold oil, including hedges, for the quarter for an average of $76.07 a barrel, up $5 from a year ago.
On Tuesday, Hess announced it would increase spending on capital projects this year by $1 billion to $3.7 billion, primarily on the Bakken shale field projects in Guyana and North Dakota.
Excluding Libya, the company produced 376,000 boed in the fourth quarter versus 295,000 boed last year, despite weaker production in North Dakota.
Bakken’s operations shipped 158,000 boed in the fourth quarter, which is about 6% below median expectations due to severe winter weather. Hess plans to continuously increase production in the basin to 200,000 boed by 2025.
The New York City-based company reported net income excluding items of $548 million, or $1.78 per share, for the three months ended December 31, compared to analyst estimates of $1.64 per share , according to data from Refinitiv.
(Reporting by Sourasis Bose in Bengaluru, Sabrina Valle in Houston and Liz Hampton in Denver; Editing by Vinay Dwivedi, Diane Craft and Christian Schmollinger)