Hess Rises Most Since 2008 as It Cuts Spending to Conserve Cash

  • Company reported first annual loss since 2002 amid price rout
  • Hess to reduce spending by 40% this year to $2.4 billion

Hess Corp. rose as much as 14 percent, the most since November 2008, as it emphasized maintaining a strong balance sheet was the top priority amid the oil slump.

Shares climbed 9.5 percent to $38.30 at 1:38 p.m. in New York, and are down 21 percent this year.

Hess is focused on its balance sheet while also preserving operating capabilities and long-term growth options, Chief Executive Officer John Hess said during a conference call to discuss the company’s fourth-quarter results. Hess said earlier Wednesday it has $2.7 billion in cash, up from $2.4 billion a year ago.

The company’s cash and liquidity indicates it has some flexibility amid the oil slump that has led to producers to cut spending and face losses, said Brian Youngberg, an energy analyst at Edward Jones who rates Hess at hold. Its liquidity is strong relative to its peers, he said.

"Investors took more comfort that they can survive the weak environment," he said.

Annual Loss

Hess reported its first annual loss in 13 years as it cut spending to weather a prolonged slump in oil prices. The oil and gas producer posted a net loss of $1.82 billion, or $6.43 a share, in the fourth quarter compared with a deficit of $8 million, or 3 cents, a year earlier, the company said in a statement Wednesday. The loss included a $1.36 billion after-tax charge. For the full year, the loss was $3.06 billion. Excluding one-time items, the per-share loss was $1.40, beating the average estimated loss of $1.47 from analysts in a Bloomberg survey.

The company will cut spending by 40 percent this year to $2.4 billion as it pulls back in all regions and seeks further cost reductions and efficiency gains, it said Tuesday in a statement. Oil prices have tumbled more than 70 percent from a June 2014 peak.

Hess also reduced its estimate of proved oil and gas reserves to 1.086 billion barrels of oil equivalent as of Dec. 31, down from 1.431 billion a year earlier, as a result of lower crude prices and reduced drilling plans.

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