Hess Earnings: Superb Execution but Shares Are Still Very Pricey

Oil prices and Hess shares both traded sideways in the first session after the firm announced its second-quarter financial and operating results. That’s surprising, as it shattered its own estimates for production in the period (firmwide output was 387 mboe/d, compared with guidance of 355-360 mboe/d). This was accomplished without a commensurate increase in expenses (cash costs were $13.97/boe, compared with guidance of $15.50-$16). And while the full-year budget was unchanged at $3.7 billion, management raised its 2023 production outlook by 5%. We intend to incorporate these results shortly, but after this first look our fair value and narrow moat rating are unchanged.