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.
“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.
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.