Hess Corp CEO: “We are poised to benefit from an increase in oil prices”
Hess Corp reported a smaller-than-expected Q1 loss on Wednesday thanks to rising crude prices and cost cutting that helped the New York based energy company offset a drop in production.
According to Hess, the company’s after-tax cash flow is increased by $70 million for every $1/barrel boost in oil prices.
“We are poised to benefit from an increase in oil prices,” Reuters reported Chief Executive John Hess said on a Wednesday conference call with investors.
Hess shares rose 4.4 per cent to $50.78 in trading on Wednesday morning.
In the first quarter of 2014, excluding Libyan output, Hess produced 307,000 barrels of oil equivalent per day, which is down from the 350,000 boe/d this time last year. According to Reuters, the drop is due to cuts in investment last year that affected output.
This year, the company is reversing that decision. Hess plans to have six drilling rigs in the Bakken by the end of the year which will help bump up output well into 2018. Also, Hess will bring its Stampede oil project in the Gulf of Mexico online.
Hess’s average realized crude selling price, including the effect of hedging, was up over 41 per cent in Q1. This allowed the company to make up for its drop in production.
Hess Corp reported total revenue and non-operating income rose 28.4 per cent to $1.28 billion in the first quarter, while costs and expenses fell 13.3 per cent to $1.58 billion.
Technological improvements that help US shale producers pump more for less are also boosting optimism in the industry. Lower oilfield costs are also helping producers rein in spending.
Net attributable loss to Hess Corp narrowed to $324 million, or $1.07/share in Q1. This is down from $509 million, or $1.72/share this time last year.
