Re: Hess tops Wall St profit estimates, signals dividend increase
Adj. EPS of $1.78 matched BofA ($1.78) and beat consensus ($1.63) respectively. Production of 376 mboed was ahead of guidance (370,000 boepd) with strong output production in Guyana offsetting the impact of winter storms in the Bakken (158,000 boepd vs 165,000 – 170,000 boepd) helped by a one-cargo over lift signaled last quarter, part of which was sold in 1Q23 (~10kb/d mainly Guyana). Cash from operations (before w/c) of $1.40bn beat both BofA of $1.33bn and consensus of $1.28bn covering both capital expenditures ($818mm vs $800mm guidance) and cash returns to shareholders ($405mn, including buy backs of $290mn) as Hess continues to target 75% of FcF returned to shareholders. For 2023 we see Hess FcF around $2bn, despite a step up in spending as Guyana moves towards a 5th phase sanction (Uaru) this year, reinforcing our view that Hess as the only material FcF growth story amongst US E&Ps. Note in November 2022, Hess completed the sale of its 8% interest in the Waha concession (Libya) for $150mn, and made a 30th discovery at Fangtooth-SE.