01 November 2018, News Wires — U.S. oil and gas producer Hess Corp posted its first profit in about four years in the third quarter and also easily beat analysts’ estimates, as the company sold oil at higher prices and managed to slash costs by 62 percent.
New York-based Hess has been under intense pressure to follow its peers and turn in a profit following the recovery in oil prices from a two-year slump.
The company’s shares rose 4.6 percent to $59.70 in early trading on Wednesday. The broader S&P 500 was up about 1 percent.
Hess also said it expects full-year production to be at the upper end of its forecast of 245,000 to 255,000 barrels of oil equivalent per day.
That helped offset a 7 percent drop in production during the quarter.
“Years of lowering their cost structure and focusing on the oil levered plays with larger margins (have) come to fruition,” said MUFG Securities analyst Michael McAllister.
Hess has been selling many of its high-cost assets, including a stake in a joint venture focused on the gas-rich Utica shale. The company is now focusing on the Bakken oil patch and offshore Guyana.
The company, which has also been using new well completion designs to bring down drilling expenses, said total costs and expenses in the quarter dropped by 62 percent to $1.61 billion.
Net income attributable to Hess was $52 million, or 14 cents per share, in the third quarter ended Sept. 30, compared with a loss of $624 million, or $2.02 per share, a year earlier.
On an adjusted basis, the company earned 38 cents per share, compared with projections for just breaking even, according to Refinitiv data.