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Introduction & Market Context
Hess Corporation (NYSE:HES) released its first quarter 2025 earnings presentation on April 30, showing a significant year-over-year decline in adjusted earnings despite stable production levels. The oil and gas producer’s stock has been trading down 0.97% at $132.54 in the previous session, with premarket activity showing further weakness.
The company’s presentation revealed how lower oil prices and increased operating costs impacted financial performance, even as production volumes remained steady compared to the year-ago period. Hess continues to focus on its core operations in the Bakken shale play and Guyana, where it partners with Exxon Mobil (NYSE:XOM).
Quarterly Performance Highlights
Hess reported adjusted net income of $559 million ($1.81 per share) for Q1 2025, a substantial 42.5% decrease from $972 million ($3.16 per share) in Q1 2024, though slightly higher than the $542 million ($1.76 per share) recorded in Q4 2024.
As shown in the following detailed financial results table:
The company’s reported net income was $430 million ($1.39 per share), impacted by a $129 million charge for an anticipated settlement of legal claims related to post-production gathering, processing, and transportation fees in North Dakota. This charge was classified as an item affecting comparability between periods.
The year-over-year decline in adjusted earnings was primarily driven by lower realized oil prices and increased operating costs, as illustrated in this waterfall chart showing the components of the change:
Production Performance
Hess maintained worldwide production at 476,000 barrels of oil equivalent per day (MBOEPD) in Q1 2025, unchanged from Q1 2024 but down from 495,000 MBOEPD in Q4 2024. The production mix showed regional variations, with increases in U.S. production offset by decreases in Guyana and Malaysia.
The following chart illustrates the production changes across regions:
Notably, the company’s actual production of 476,000 MBOEPD fell slightly short of its guidance range of 480,000-490,000 MBOEPD. Bakken production significantly underperformed at 195,000 MBOEPD versus guidance of 210,000-215,000 MBOEPD, while Guyana slightly exceeded expectations at 183,000 MBOEPD compared to guidance of approximately 180,000 MBOEPD.
The comparison between guidance and actual results is detailed in this table:
Capital Expenditure and Debt Position
Hess reported capital and exploratory expenditures of $1.085 billion for Q1 2025, with the majority allocated to development activities in the United States and Guyana. The breakdown of these expenditures is shown below:
The company has maintained a strong balance sheet, with its E&P debt to adjusted EBITDAX ratio improving to 0.8x in Q1 2025 from 1.0x in Q1 2024. This improvement reflects the company’s focus on financial discipline despite challenging market conditions.
The debt metrics over time are illustrated in this comprehensive table:
Midstream Operations
Hess’s midstream segment contributed $70 million to adjusted net income in Q1 2025, slightly higher than the $67 million reported in Q1 2024. The midstream business continues to provide stable cash flow to support the company’s overall operations.
The following breakdown shows the midstream cash flow dynamics:
Forward-Looking Statements
Despite the production shortfall in Q1, Hess maintained its 2025 production guidance of 480,000-490,000 MBOEPD, suggesting expectations for improved output in the remaining quarters. The company demonstrated effective cost control, with actual cash costs of $12.27 per barrel of oil equivalent (BOE) coming in below guidance of approximately $13.50 per BOE.
Total (EPA:TTEF) production costs of $25.52 per BOE were also lower than the guided range of $26.50-$27.00, indicating successful efficiency initiatives despite inflationary pressures in the industry. The company’s capital and exploratory expenditures of $1.085 billion for the quarter were tracking below the annual guidance of approximately $1.275 billion per quarter.
As Hess continues to navigate a challenging price environment, its focus remains on optimizing production from its core assets while maintaining financial discipline. The company’s improved debt metrics provide flexibility as it continues to develop its significant resources in Guyana, which remains a key growth driver despite the quarterly fluctuations in production volumes.
Full presentation:
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