Hess Corp. (NYSE: HES) posted its 13th straight quarterly loss on Feb. 5 as ballooning expenses offset rising crude prices, sending shares down nearly 5%.
The results, which widely missed Wall Street estimates, are likely to embolden activist hedge fund investor Elliott Management Corp., the fourth-largest Hess shareholder, which has blasted CEO John Hess and other managers for what it called the company's "continuing underperformance."
Elliott has pushed for the company to consider cutting its 25-cent dividend and using the cash for buybacks. On a Feb. 5 conference call with investors, in one of Hess's first comments since Elliott went public with its demands in December, the CEO defended the quarterly payout.
"A number of our shareholders put a high degree of importance on that dividend as a show of confidence in our future and our ability to generate cash," said Hess, who is the company's largest shareholder, owning more than 11% of the stock.
Hess last month began cutting roughly 13% of its workforce in a plan to save $150 million annually.
RELATED: Hess Cutting Hundreds Of Workers As It Battles Activist Investor
For the fourth quarter, Hess posted a loss of $2.68 billion, or $8.57 per share, vs. a loss of $4.89 billion, or $15.65 per share, a year ago. The year-earlier period included a $3.75 billion charge on deferred tax assets.
Excluding one-time items, Hess lost $1.01 per share in the quarter. By that measure, analysts expected a loss of 91 cents, according to Thomson Reuters I/B/E/S.
The company, the third-largest oil producer in North Dakota's Bakken Formation, said total costs and expenses surged 22% to $3.78 billion. Much of that was due to a $1.7 billion impairment charge to write down the value of two U.S. Gulf of Mexico oil projects that the company operates.
Production fell about 4% to 300,000 barrels of oil equivalent per day (boe/d), even as the average selling price of crude oil jumped by nearly $10 per barrel.
For 2018, Hess expects to pump between 245,000 boe/d and 255,000 boe/d, below what some analysts have forecast.
The company plans a $2.1 billion capital budget this year, most of which will be spent in North Dakota and Guyana, which CEO Hess described as the company's "growth engines." The budget would be unchanged from the prior year.
Shares of Hess fell 4.6% to $45.57 in midday trading.
SUPER DUG: Day Two Rolls On [WATCH]
2023-05-24 - After an electric opening to Hart Energy’s SUPER DUG conference, day two saw deep dives into the Permian Basin, drilling and completions, new technologies and a keynote from retired Gen. Wesley Clark.
Welcome to SUPER DUG [WATCH]
2023-05-23 - Roughly 2,000 energy professionals from the Lower 48 and beyond gathered on the first day of Hart Energy's SUPER DUG conference to talk energy in Fort Worth, Texas.
SUPER DUG 2023: Diamondback Energy's Danny Wesson Talks M&A Competition [WATCH]
2023-05-23 - Diamondback Energy's Danny Wesson says that M&A in the Permian Basin "will continue to get more and more competitive for core inventory."
Public Mineral, Royalty Players Eye M&A After Record 2022
2023-04-21 - After a record year for oil and gas mineral and royalty deals in 2022, public consolidators are still searching for scale through M&A, experts say.
SUPER DUG: E&Ps Explore Emerging Basins, Deeper Zones in Inventory Hunt
2023-05-31 - As producers scramble to extend their inventory runways, companies are drilling deeper test wells in the Permian Basin and exploring emerging plays in the Lower 48.