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Hess Says Second-Quarter Refining Loss Widens on Port Reading Maintenance

Hess Corp., the New York City-based oil company, reported a wider loss in its refining business after maintenance left its Port Reading, New Jersey, plant down for 41 days.

The loss in the segment, known as “downstream,” was $31 million compared with a loss of $26 million a year earlier, Hess said today in a statement.

The second quarter isn’t the best time for a so-called turnaround since it’s the better quarter for refining activity, said Philip Weiss, an analyst at Argus Research in New York.

“We had Valero come yesterday with a good result, BP’s refining business did pretty well, Chevron’s interim update was positive on the refining side and so to see these guys lose money in refining is a bit of a surprise,” said Weiss, who has a “hold” rating on the stock and doesn’t own any.

Hess dropped 83 cents, or 1.6 percent, to $52.47 at 4 p.m. in composite trading on the New York Stock Exchange. The shares, which have 11 buy and nine hold ratings, have fallen 13 percent this year.

“The downstream business for Hess is getting smaller and smaller relative to the overall” business, Jim Byrne, a Calgary-based analyst for BMO Capital Markets who rates Hess shares “outperform” and doesn’t own any, said before the earnings release.

Profit Rises

Second-quarter profit more than tripled, beating analysts’ estimates, as crude prices and production increased.

Net income rose to $375 million, or $1.15 a share, from $100 million, or 31 cents, from a year earlier. The company was expected to earn $1.12 a share, the average of 15 analysts’ estimates compiled by Bloomberg. Hess reported a $488 million profit in its exploration and production business.

“A lot of Hess’s success in the market hinges on positive news in their exploration and development efforts,” Weiss said. “First-quarter production also came in better than expected. I would expect that they will increase they’re guidance for the year.”

Daily crude and natural-gas production in the quarter rose 2 percent to the equivalent of 415,000 barrels of oil from 407,000 in the same period a year ago.

Oil futures in New York averaged $78.05 a barrel in the second quarter, 31 percent more than last year. Hess’s worldwide selling price for crude during the second quarter was $64.81 a barrel compared with $49.27 a barrel a year ago.

The company yesterday agreed to buy American Oil & Gas Inc. for $367 million, adding to its acreage in the Bakken formation in North Dakota.

To contact the reporter on this story: Allison Bennett in New York at

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