Hess Corporation, a U.S.-based independent oil and gas company today reported an adjusted net loss, of $279 million for the first quarter of 2015 compared with adjusted net income of $446 million.
The company has explained that lower realized selling prices reduced adjusted net income by approximately $700 million, after-tax compared with the prior-year quarter.
In addition, first quarter 2015 results benefitted from higher crude oil and natural gas liquids production but were offset primarily by higher depreciation, depletion, and amortization expense.
On an unadjusted basis, the Corporation reported a net loss of $389 million for the first quarter of 2015 and net income of $386 million in the prior-year quarter.
Production on the rise, capex cut
Exploration and Production losses were $286 million in the first quarter of 2015, compared with net income of $508 million in the first quarter of 2014. Adjusted net loss was $193 million in the first quarter of 2015 compared with adjusted net income of $514 million in the first quarter of 2014.
During the quarter, the Hess hedged 50,000 barrels of crude oil production for the remainder of 2015 by entering into Brent crude collars with a floor price of $60 per barrel and a ceiling price of $80 per barrel. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was down 55 percent to $44.78 per barrel in the first quarter of 2015 from $99.17 per barrel in the first quarter of last year.
The average worldwide natural gas liquids selling price was $14.91 per barrel, down from $44.28 per barrel in the year-ago quarter while the average worldwide natural gas selling price was $4.74 per mcf in the first quarter of 2015 compared with $7.03 per mcf in the first quarter a year-ago.
Oil and gas production was 361,000 boepd, up 14 percent from 318,000 boepd in the first quarter of 2014. Assets contributing to the volume growth were primarily the Bakken shale play (45,000 boepd), our Utica wet gas acreage (15,000 boepd), Denmark (4,000 boepd) and the Joint Development Area of Malaysia/Thailand (3,000 boepd). Assets sales reduced production by 23,000 boepd and Norway production was 7,000 boepd lower.
In the first quarter, Hess said it aggressively reviewed its cost structure to reduce spending and met with suppliers to adjust service rates to better reflect the current commodity price environment. As a result Hess said it was lowering full year 2015 guidance for capital and exploratory expenditures by $300 million to $4.4 billion.
In addition, the Corporation forecasts its full year 2015 cash costs will be lower by approximately $250 million, or $2.00 per barrel. The Corporation will continue to pursue additional savings in 2015 and beyond to improve its financial flexibility.
“We delivered strong operating results for the quarter and captured significant cost savings for the year, with additional reductions being pursued,” Chief Executive Officer John Hess said. “With our robust balance sheet, resilient portfolio and top quartile operating capabilities, we are well positioned for both the current price environment as well as for a future recovery in oil prices.”