[Although the PR refers to YoY changes, it’s more instructive, IMO, to focus on 4Q11 vs 3Q11 so I’ve inserted those comparisons in the bracketed annotations below. 4Q11 production was up 7% QoQ to 367K boe/d, which includes nothing from Libya. (Although the Waha Oil JV in Libya in which HES owns an 8% stake is now producing about 200K boe/d, HES is not counting any of this production in its 2012 outlook because the political situation remains unstable.)
In the Bakken, HES is ramping up at a rapid clip: the 2011 full-year rate was 30K boe/d, the 2011 year-end rate was 50K boe/d, the 2012 guidance is 60K boe/d, and the 2015 guidance is 120K boe/d (about 1/3 of HES’ current worldwide production from all sources). HES' official long-term production guidance from all sources is an annual increase of 3-5%, but it seems to me that they will beat this easily if the Bakken production described above comes in on schedule.
In the downstream business, HES took the previously announced $525M charge to shut down the Hovensa refinery in the US Virgin Islands, a move that I consider bullish (#msg-71038661). Please see #msg-71328369 for 4Q11 CC slides and supplemental financial info.
HES’ stock price dropped about 8% since the earnings release on 1/25/12. One reasons for the sell-off, IMO, is that HES hedged a large portion of its 2012 oil production at $107/bbl, which some investors took as a sign of weakness. The company’s stated reason for the hedge is to protect the cash flow needed to fund the aggressive development plan in the Bakken without increasing the balance-sheet leverage above its current level of 25%, but this evidently didn’t ring true for some investors. Comments?]
• Net loss was $131 million, compared with net income of $58 million in the fourth quarter of 2010 • Net income excluding items affecting comparability between periods was $394 million, compared with $398 million in the fourth quarter of 2010 • Results included a previously announced after-tax charge of $525 million related to the shutdown of the HOVENSA L.L.C. refinery • Oil and gas production was 367,000 barrels of oil equivalent per day, compared with 420,000 in the fourth quarter of 2010 • Year end total proved reserves were 1,573 million barrels; reserve replacement for 2011 was 147 percent
NEW YORK--(BUSINESS WIRE)-- Hess Corporation (NYSE: HES) reported a net loss of $131 million for the fourth quarter of 2011 compared with net income of $58 million for the fourth quarter of 2010. The after-tax income (loss) by major operating activity was as follows:
Exploration and Production earnings were $527 million in the fourth quarter of 2011[compared to $422M in 3Q11] compared with $420 million in the fourth quarter of 2010. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $89.70 per barrel[up 5% from $85.81 in 3Q11], up from $71.73 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.32 per Mcf[up 10% from $5.74 in 3Q11] in the fourth quarter of 2011, up from $5.30 per Mcf in the fourth quarter of 2010. Fourth quarter oil and gas production was 367,000 barrels of oil equivalent per day[up 7% from 344K in 3Q11], compared with 420,000 barrels of oil equivalent per day in the fourth quarter a year ago, largely due to production interruptions and asset sales. Fourth quarter 2011 results included higher exploration expenses reflecting total dry hole costs of $236 million ($143 million after-tax), primarily associated with two exploration wells on the Semai V Block, offshore Indonesia.
Oil and gas proved reserves were 1,573 million barrels of oil equivalent at the end of 2011, compared with 1,537 million barrels at the end of 2010[i.e. proved reserved increased 2% during 2011 despite the divestiture in the North Sea]. During 2011, the Corporation added 203 million barrels of oil equivalent to proved reserves. These additions, which are subject to final review, replaced approximately 147 percent of the Corporation’s 2011 production, resulting in a reserve life of 11.4 years.
Marketing and Refining generated a loss of $561 million in the fourth quarter of 2011 compared with a loss of $261 million in the same period in 2010. Refining operations incurred a loss of $598 million in the fourth quarter of 2011, including the HOVENSA L.L.C. shutdown charge discussed below, and a loss of $308 million in the fourth quarter a year ago. Marketing earnings were $48 million compared with $37 million in the same quarter of 2010. Trading activities generated a loss of $11 million in the fourth quarter of 2011 and income of $10 million in the fourth quarter of last year.
The following table reflects the total after-tax income (expense) of items affecting comparability of earnings between periods:
Fourth quarter 2011 results included an after-tax charge of $525 million related to the Corporation’s investment in HOVENSA L.L.C. and the shutdown of the refinery in St. Croix, U.S. Virgin Islands.
Net cash provided by operating activities was $1,138 million in the fourth quarter of 2011, compared with $1,478 million in the same quarter of 2010. Capital and exploratory expenditures were $2,236 million, of which $2,185 million related to Exploration and Production operations. Capital and exploratory expenditures for the fourth quarter of 2010 were $2,464 million, of which $2,438 million related to Exploration and Production operations.
At December 31, 2011, cash and cash equivalents totaled $351 million compared with $1,608 million at December 31, 2010. Total debt was $6,057 million at December 31, 2011 and $5,583 million at December 31, 2010. The Corporation’s debt to capitalization ratio at December 31, 2011 was 24.6 percent[right where the company wants it] compared with 24.9 percent at the end of 2010.‹
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