Is Hess Corporation (HES) the Best Energy Stock to Buy Right Now?

Energy stocks have faced a turbulent start to 2025, buffeted by fluctuating oil prices, geopolitical risks, and corporate restructurings. Among them, Hess Corporation (HES) has emerged as a name investors are debating: Is it positioned to outperform its peers, or does it carry too many uncertainties? Let’s dissect the data.

Financial Performance: A Mixed Bag

Hess’s Q1 2025 results were a study in contrasts. While adjusted earnings per share ($1.81) narrowly beat estimates, net income plummeted 56% year-over-year to $430 million, driven by lower crude prices and rising operational costs. Cash operating costs for exploration and production (E&P) rose to $12.27 per barrel of oil equivalent (BOE), up from $10.79 in 2024, primarily due to maintenance in North Dakota.

The stock price reflects this tension. After peaking at $161.29 in April 2025, Hess’s shares fell sharply to $129.05 by late April, before stabilizing in the $130–$135 range. The decline coincided with concerns about the Chevron merger’s uncertain timeline and weaker oil prices.

Production: Stability in Core Assets, Challenges in Guyana

Hess’s production metrics were uneven but encouraging in key areas:
- Bakken Shale: Output rose to 195,000 BOE/d in Q1 2025, up from 190,000 BOE/d in 2024, aided by a 4-rig drilling program. Management expects Bakken production to hit 210,000–215,000 BOE/d in Q2.
- Guyana: Hess’s crown jewel, the Stabroek Block, saw output dip to 183,000 barrels of oil per day (BOPD) from 190,000 BOPD in 2024 due to reduced tax barrels. However, the Yellowtail development, set to start in Q3 2025, promises 250,000 BOPD capacity, potentially boosting Hess’s overall production to 480–490,000 BOE/d by year-end.

The Chevron Merger: A Double-Edged Sword

The $53 billion proposed merger with Chevron remains the most critical catalyst for Hess. The deal hinges on resolving an ExxonMobil arbitration case (scheduled for May 26, 2025), which could delay or alter terms. While the merger could unlock synergies and scale for Hess, uncertainty around its timeline is keeping investors cautious.

Risks and Headwinds

• Oil Price Volatility: Crude prices fell to $71.22 per barrel in Q1 2025 from $80.06 in 2024, squeezing margins. Analysts like Susquehanna now forecast $68/bbl for 2025, further pressuring earnings.
• Cost Pressures: E&P capital expenditures rose to $1.085 billion in Q1, with full-year spending projected at $4.5 billion. Rising maintenance and workover costs in the Gulf of America and Southeast Asia regions threaten profitability.
• Legal Battles: A $129 million charge for North Dakota post-production fee settlements highlights regulatory risks in core shale regions.

Analyst Sentiment: Cautious Optimism

Analysts are split but leaning bullish over the long term:
- Consensus Rating: “Moderate Buy” (16 analysts), with six “Strong Buys” and 10 “Holds.”
- Price Target: The average is $161.37 (25.3% upside from April 2025 lows), while the highest target of $199 reflects faith in Guyana’s growth.
- Near-Term Concerns: Analysts warn that delayed project timelines or a prolonged oil price slump could derail progress.

Conclusion: A Hold with Upside Potential

Hess Corporation isn’t a “best buy” without caveats. While its Guyana projects and Bakken resilience offer long-term growth, near-term risks—including the Chevron merger’s uncertainty and oil price headwinds—limit its appeal for short-term traders.

Investors should consider:
- Upside Catalysts: A favorable arbitration ruling, Yellowtail’s Q3 startup, and higher oil prices could lift the stock above $160.
- Downside Risks: A delayed merger, project delays, or a drop below $60/bbl oil could push HES below $100.

For now, Hess is a hold for most investors. Those with a 3–5 year horizon and confidence in the energy sector’s rebound might buy dips below $130, but patience is key. As CEO John Gatling noted, “Hess’s path to value creation remains intact”—but execution will determine whether it’s truly the top energy stock of 2025.

Final Call: Hold with a cautious bias toward long-term growth.