Friday, July 27, 2012

HESS: Data Points From The 2Q12 Earnings Conference Call

Hess beats by $0.20, beats on revs: Reports Q2 (Jun) earnings of $1.61 per share, $0.20 better than the Capital IQ Consensus Estimate of $1.41; revenues fell 5.1% year/year to $9.31 bln vs the $8.82 bln consensus. Oil and gas production increased to 429,000 barrels of oil equivalent per day, up from 372,000 in Q2 of 2011. Oil and gas production from the Bakken increased to 55,000 barrels of oil equivalent per day, up from 25,000 in Q2 of 2011; transcript;

Data points from the earnings conference call:
  • increasing CAPEX, mostly due to the Bakken
  • will fund with internal cash flow; if more needed, assets sale (gas to oil switch)
  • Bakken wells costing $13.4 million; will decrease to under $10 million
  • using costly hybrid (plug-and-perf) for HBP wells; will use less costly sliding sleeve for infill
  • $8.9 million to complete an Eagle Ford well; it was $10.3 million in 2011 (see transcript for discussion of daily production of Bakken wells vs Eagle Ford wells)  
  • completed their CBY facility; in April, shipped an average of 29,000 bopd to higher-value mkts
  • still relatively early in the Bakken
  • 2012 exit rate as high as 68,000 boepd
  • Tioga gas plant to be completed in 2013
"We're nearing the end of HBP mode, what we are doing is we're doing a comprehensive development strategy for the Bakken. So this a long-term development strategy with a goal of maximizing profitability and capital efficiency. And so the results of that study will be used to optimize the drilling program in 2013 and beyond."
This was an interesting exchange:
Q: Do you engage in controlling flowback techniques to increase EURs?
A: In Utica, yes: shut in the well for an extended period of time. The nature of the Utica is quite different from the Bakken. In the Bakken: no.

Enola Gay, Hillbilly Moon Explosion 

See You Round Like A Record, Rocky Horror Show, Little Nell
It's Not Fair, Lily Allen

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