Hess selling Utica joint-venture interests for $400 million

By Patrick C. Miller | July 31, 2018

In its second quarter report, Hess Corp. said it will sell its joint-venture interests in the Utica shale play of eastern Ohio for around $400 million by the end of this year’s third quarter.

CEO John Hess said sale of the Utica assets will help the company further focus its portfolio. He noted that the company delivered strong performance during the quarter, exceeding its production guidance by averaging 247,000 barrels of oil equivalent per day (boepd). Of that amount, 114,000 barrels were produced in the Bakken where Hess has five rigs operating and plans to add a sixth.

Overall, Hess reported a net loss of $130 million for the quarter (48 cents per common share) compared to a net loss of $449million for the same quarter a year ago. On an adjusted basis, the company reported an after-tax net loss of $56 million (23 cents per common share) in the second quarter of 2018. The improved after-tax adjusted results reflect higher realized crude oil selling prices, lower operating costs and depreciation, depletion and amortization expense, partially offset by lower production volumes, primarily due to asset sales.

Net production from the Bakken increased six percent to 114,000 boepd, up from 108,000 boepd a year ago. Hess attributed the increase to ongoing drilling activity and improved well performance. Production in the second quarter of 2018 was impacted by weather-related downtime in June. The company operated an average of four rigs in the second quarter, drilling 28 wells and bringing 27 new wells online. Full year production guidance for the Bakken remains 115,000 boepd to 120,000 boepd.

In the second quarter, Hess completed the purchase of $500 million in common stock, as part of our previously announced $1.5 billion share repurchase program, bringing total purchases to $1 billion. The remaining $500 million is expected to be completed during 2018. The company also completed $500 million of total debt repurchases as of quarter-end, including purchases of approximately $110 million of public notes during the second quarter

Exploration and production net income in the second quarter was $31 million, compared to a net loss of $354 million a year ago. On an adjusted basis, second quarter 2018 net income was $21 million. The company’s average realized crude oil selling price—including the effect of hedging—was $62.65 per barrel, up from $45.95 per barrel at the same time a year ago.

Noncash losses on crude oil hedging contracts reduced second quarter 2018 after-tax results by $47 million. The average realized natural gas liquids selling price in the second quarter of 2018 was $20.51 per barrel, versus $14.85 per barrel in the prior-year quarter. The average realized natural gas selling price was $4.12 per mcf, compared to $3.19 per mcf in the second quarter of 2017.