Net income rose to $1.28 billion, or $3.72 a share, from $545 million, or $1.60, a year earlier, the New York-based company said in a statement today. Per-share profit excluding gains from selling Azerbaijan and North Sea assets plus liquidating some refinery inventories exceeded the $1.59 average of 19 analysts’ estimates compiled by Bloomberg. Sales rose 20 percent to $3.47 billion.
Hess has announced asset sales this year that will yield $3.4 billion as it exits refining, gasoline retail and other businesses to become a pure oil exploration and production company. Singer’s Elliott, holder of a 4.52 percent Hess stake, is soliciting shareholder support to get its five nominees on the board, citing “unrelenting underperformance” and mismanagement.
“It was an very good quarter,” Brian Youngberg, a St. Louis-based analyst for Edward Jones, said in a phone interview. “U.S. volumes grew nicely and the company has become more disciplined in managing their costs.”
Per-share profit beat his expectation by 20 cents. Youngberg rates Hess a buy, doesn’t own the shares and has taken no position on the proxy contest.
Proceeds from future asset sales will fund as much as $4 billion of share buybacks beginning in the second half, Chairman and Chief Executive Officer John Hess said in today’s statement. Hess on March 4 announced the buybacks and said it would more than double the annual dividend to $1.
“They are responding to what many shareholders are wanting, which is to shrink the company, reduce capital expenditures and return more of the cash to shareholders,” Youngberg said.
Asset sales, along with classification of the refining and marketing unit as discontinued operations, added $607 million to first-quarter results. Capital spending fell 18 percent from a year earlier to $1.63 billion.
Production from the Bakken Shale deposit in North Dakota, which Elliott wants Hess to spin off, rose 55 percent from a year earlier to the equivalent of 65,000 barrels of oil a day. Global production fell 2 percent to the equivalent of 389,000 barrels a day on asset sales and reduced output from the Valhall Field in Norway.
The announcement was made before regular trading began on U.S. markets. Hess rose 1.6 percent to $69.30 at 8:41 a.m. in New York. The shares have 13 buy and 11 hold ratings from analysts.
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