Hess Corp. (HES), the fifth-biggest U.S. oil company, posted a $538 million first-quarter profit, beating analysts’ estimates as crude prices rebounded from the lowest quarterly average in more than five years.
The net income compares with a $59 million loss a year earlier, Hess said in a statement today. The per-share profit was $1.49, compared with a net 9-cent loss last year, said Jon Pepper, spokesman for the New York-based company. The company was forecast to earn $1.11 a share, the average of five analysts’ estimates compiled by Bloomberg.
Hess more than doubled its crude production in the U.S., boosting it to 71,000 barrels a day. Crude-oil volumes in Europe were also higher than expected, said Katherine Lucas Minyard, an analyst with Collins Stewart LLC in New York.
“It just looks like solid production numbers all around, it doesn’t look like there’s one single factor” for their improved performance, said Lucas Minyard. She has a buy rating on the shares, with a $77 price target, and says she doesn’t own any of the stock.
Oil futures in New York averaged $78.89 a barrel in the first three months of the year, up 82 percent from a year earlier, when they hit a low of $43.34. That was the lowest quarterly average since the middle of 2004, according to data compiled by Bloomberg.
“Hess is going to trade extremely well with crude oil and markets up,” said Ryan Cournoyer, director of equities at Lighthouse Financial Group LLC in New York. “The real story is that crude oil feels like it wants to go up toward the $85 to $88 range, so that should help Hess.”
Hess rose 32 cents to $63.67 at 4:01 p.m. in composite trading on the New York Stock Exchange. The company’s shares have gained 5.2 percent this year.
The company is vulnerable to crude price swings, Philip Weiss, an analyst with Argus Research in New York, said in an interview before the earnings were released. Hess’s oil- production costs are higher than that of larger oil companies like Exxon Mobil Corp. and Occidental Petroleum Corp., he said.
“Hess is a lot of an exploration story and a growth story,” said Weiss, who has a hold rating on the shares and doesn’t own any. The company’s exploration projects will benefit from increases in crude prices in the long run, he said.
Hess reported an $87 million profit in its refining and marketing unit. Valero Energy Corp., the largest U.S. independent refiner, reported a $113 million net loss yesterday for its refining business.
First-quarter revenue for Hess climbed 33 percent to $9.2 billion, from $6.9 billion a year ago. Production gained 8.5 percent to the equivalent of 423,000 barrels of oil a day, from 390,000 barrels last year, the company said.
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