Hess 2025 Q1 Earnings Misses Targets as Net Income Declines 51.1%

Hess (HES) reported its fiscal 2025 Q1 earnings on Apr 30th, 2025. The company reported a net income of $430 million, or $1.39 per share, which fell short of analysts' expectations of $1.66 per share. The company maintained its full-year guidance but faced challenges due to lower realized oil prices. Despite this, Hess's strategic investments in exploration and production, particularly in Guyana, are expected to support future growth. Maintaining financial stability remains a priority as the company navigates market conditions.

Revenue
In the first quarter of 2025, Hess's total revenue declined by 12.0% to $2.91 billion, compared to $3.31 billion in the same period of 2024. The decline was attributable to decreased sales and other operating revenues. Additionally, the company reported $26 million in net other revenues, leading to total revenues and non-operating income of $2.94 billion.

Earnings/Net Income
Hess's earnings per share (EPS) fell by 55.9% to $1.39, down from $3.15 in the previous year's first quarter. The company's net income declined to $522 million, a 51.1% decrease from the $1.07 billion reported in Q1 2024. The significant drop in EPS reflects challenging market conditions and lower oil prices.

Price Action
The stock price of Hess has edged down 0.68% during the latest trading day, has edged down 0.75% during the most recent full trading week, and has plummeted 18.55% month-to-date.

Post-Earnings Price Action Review
Historically, Hess Corporation's earnings reports, characterized by metrics such as revenue, net income, and EPS, have negatively impacted its stock price. A comprehensive market backtest revealed that earnings report metrics generally result in negative stock returns, with the highest return recorded at -0.09% over the study period. This pattern suggests that investors may react unfavorably to earnings data, potentially due to unmet expectations or broader market conditions. As a result, Hess's stock performance often reflects these downward trends following earnings announcements.

CEO Commentary
John Gatling, President and Chief Operating Officer, emphasized Hess Midstream's robust performance in Q1 2025, despite severe winter weather challenges. He noted that while throughput volumes were initially impacted, they showed recovery in March, highlighting a resilient operational strategy. Gatling reaffirmed the company's commitment to a 4-rig drilling program in the Bakken, with expectations for net production to increase to 210,000-215,000 barrels of oil equivalent per day in Q2. The focus remains on disciplined investments to ensure sustainable growth.

Guidance
For Q2 2025, Hess Midstream anticipates net income of $170 million to $180 million and adjusted EBITDA of $300 million to $310 million, driven by higher volumes and revenues. Full-year 2025 guidance remains unchanged, with targets for net income between $715 million and $765 million and adjusted EBITDA ranging from $1.235 billion to $1.285 billion. Capital expenditures are projected at approximately $300 million, with an expected adjusted free cash flow generation of $735 million to $785 million.

Additional News
Chevron's $53 billion all-stock deal to acquire Hess Corporation, announced in October 2023, faced delays due to arbitration proceedings over the Stabroek block in Guyana. Despite securing shareholder approval and clearing antitrust reviews, the merger's completion awaits the resolution of arbitration expected by mid-2025. Chevron's CEO expressed confidence in Hess's position in the arbitration, anticipating a favorable outcome and subsequent merger closure. Meanwhile, Chevron continues to progress other global projects, including those in Angola and the Permian basin, aiming to enhance its energy portfolio.