* Books one-time gain of $588 mln, largely on asset sales
* Adjusted profit $1.95/share vs Wall Street estimate $1.59
* Bakken oil output rises 55 pct
* Shares up nearly 3 percent
By Anna Driver
April 24 Hess Corp, under pressure from
investors to improve returns, reported a better-than-expected
first-quarter profit on Wednesday, helped by higher oil and
natural gas prices and lower costs.
Shares of Hess rose nearly 3 percent to $70.20 in midday New
York Stock Exchange trading.
Earlier this year, in response to criticism from hedge fund
Elliott Management, Hess accelerated its plans to turn itself
into a company focused solely on oil and gas exploration and
Roger Read, a Wells Fargo analyst, said in a note to clients
that the earnings beat "could bode well for Hess management" in
its proxy fight with Elliott.
"We are making substantial progress toward our goal of
becoming a pure-play exploration and production company.
However, there is still much to do," Hess Chief Executive John
Hess told analysts on a conference call.
As part of its strategy, Hess has announced the sale of
assets in Texas and Russia and other international properties
and has said it will exit the refining and retail businesses.
. Proceeds from the asset sales will first be
allocated to retire $2.5 billion in short-term debt, Hess said.
Elliott Management, which owns 4.5 percent of Hess' shares,
has accused management of destroying shareholder value and has
asked the company to consider spinning off its U.S. onshore
assets. Elliott is also pushing to elect five independent
directors to the board of the New York-based company.
Hess took action to increase shareholder returns in March,
announcing a higher dividend and a $4 billion share buyback. It
has also said it will nominate six new directors at the annual
meeting in May in the wake of criticism that the current board
First-quarter net income soared to $1.28 billion, or $3.72
per share, from $545 million, or $1.60 per share, a year
earlier, boosted by a gain of $588 million, largely from the
sale of assets in the UK North Sea and
Excluding certain special items, Hess earned $1.95 per
share. On that basis, analysts' average forecast was $1.59,
according to Thomson Reuters I/B/E/S.
Revenue soared 39 percent to $4.12 billion.
Production fell 2 percent to 389,000 barrels of oil
equivalent (boe) per day due to the asset sales and lower output
in the Valhall field in Norway.
Production from the oil-rich Bakken shale in North Dakota
was up 55 percent at 65,000 boe per day. Bakken production in
May will likely stay around that level as the company builds an
inventory of wells that have been drilled but not yet completed,
Hess said on the call.
Analysts at CapitalOne SouthCoast said Hess' earnings beat
was driven by higher-than-expected oil and gas prices and lower
Hess said its average worldwide crude oil selling price rose
about 5 percent from a year earlier to $94.50 per barrel in the
quarter. The company's natural gas price was $6.62 per thousand
cubic feet (mcf), up from $6.23 per mcf a year earlier.
The cost to drill a well in the Bakken fell 36 percent from
a year earlier to $8.6 million, Hess said.