Hess Corp's Q1 Results: A Stable Foundation Amid Headwinds – But Can It Hold?

Hess Corporation’s Q1 2025 production figures show a steady hand in turbulent waters, with net oil and gas output holding steady at 476,000 barrels of oil equivalent per day (boepd)—unchanged from the same period in 2024. But beneath the surface, this energy giant is grappling with a mix of operational triumphs, financial headwinds, and the looming shadow of its pending merger with Chevron. Let’s dive into the details to separate the oil from the water.

The Production Picture: Stability Amid Regional Shifts

The headline number—476,000 boepd—hides a nuanced story. Hess’s Guyana operations, its crown jewel, saw net production dip to 183,000 barrels per day (bopd) from 190,000 bopd in Q1 2024 due to reduced tax barrels (a government take in resource-rich nations). Meanwhile, the Bakken shale play in North Dakota delivered a much-needed boost, rising to 195,000 boepd from 190,000 boepd, fueled by aggressive drilling. The Gulf of America also shone, with output jumping to 41,000 boepd after the Pickerel well’s successful start-up.

The Financial Tightrope: Lower Prices, Higher Costs

Despite stable production, Hess’s net income cratered to $430 million ($1.39 per share) in Q1 2025, a 56% drop from $972 million ($3.16 per share) in 2024. The culprit? Crude oil prices plummeted from $80.06 per barrel to $71.22 per barrel, while cash operating costs spiked to $12.27 per boe—up 14% year-over-year—due to maintenance in North Dakota and looming Gulf of Mexico workover costs.

But here’s the kicker: Hess’s adjusted net income (excluding a $129 million legal charge over North Dakota post-production fees) held steady at $559 million ($1.81 per share). This suggests the company’s core operations are intact, but external factors—like legal battles and commodity price swings—are the real wild cards.

The Guyana Gamble: A Long-Term Payday

Hess’s future hinges on Guyana, where it’s partnering with ExxonMobil to develop the Stabroek Block. The Yellowtail project, set to start production in Q3 2025 with a capacity of 250,000 bopd, is a game-changer. Add the Uaru and Hammerhead developments—targeting combined capacity of 400,000 bopd by 2029—and you’ve got a multi-decade growth machine.

Yet, these projects require massive capital. Hess spent $613 million on Guyana alone in Q1 2025, and full-year E&P spending is projected at $4.5 billion. The question: Can Hess balance near-term cash flow hits with long-term rewards?

The Chevron Merger: A Wild Card in Disguise

Hess’s pending merger with Chevron—a $31 billion deal—adds another layer of uncertainty. The merger, expected to close in late 2025, means Hess won’t hold its usual earnings calls until post-merger integration. For investors, this means a period of reduced transparency.

The merger’s benefits? Synergies, scale, and Chevron’s deep pockets to fund Hess’s projects. The risk? Shareholder dilution and execution delays.

The Bottom Line: Hold for Now, but Watch Oil Prices

Hess is a hold for now. The stock trades at $48.50 (as of Q1 2025), down 15% year-to-date, but its balance sheet is sturdy: $1.3 billion in cash, and debt at 27.8% of capitalization—comfortably within investment-grade metrics.

Buy the dip? Possibly—but only if oil prices rebound. A sustained Brent price above $80/barrel would supercharge Hess’s margins. Avoid if crude stays below $70, as costs may outpace revenues.

Conclusion: A Company Built for the Long Game

Hess’s Q1 results underscore a truth in energy investing: Production matters, but profitability is king. While Hess’s output stability and Guyana’s growth are positives, lower oil prices and rising costs have investors on edge. The Chevron merger could be the catalyst to turn Hess’s potential into reality—but until then, this stock is for those who can stomach volatility and believe in the Guyana story.

Final Verdict: Hold for now, but keep a close eye on oil prices and merger progress. If crude rallies and the deal closes smoothly, Hess could be a buy by year-end. For now? Stay patient, and don’t get buried in the shale.