Hess Corporation (HES): A Wild Ride Ahead with Guyana and Chevron?

Investors, buckle up! Hess Corporation (HES) is at a pivotal crossroads—riding the waves of soaring production in Guyana, navigating a potential $53 billion merger with Chevron (CVX), and battling headwinds from plunging oil prices. Let’s break down the opportunities and risks in this energy giant’s stock.

The Guyana Gold Rush: A Game-Changer

Hess’s crown jewel is its stake in Guyana’s Stabroek Block, where the Yellowtail project is set to start production in Q3 2025. This project alone could add 250,000 barrels per day (bpd) of capacity, a massive boost to Hess’s output. The ONE GUYANA FPSO (floating production, storage, and offloading vessel), which arrived offshore in April, is the linchpin of this expansion. Analysts estimate that Guyana’s total production could hit 1 million bpd by 2027, making Hess a top player in one of the world’s most prolific oil basins.

But here’s the catch: Hess’s Q1 2025 net income dropped 56% year-over-year to $430 million, driven by a $71.22/barrel average crude price—down from $80.06 in 2024. If oil prices stay depressed, this growth might not translate to profit.

The Chevron Merger: A Double-Edged Sword

The proposed merger with Chevron is a “buy or sell” moment for Hess shareholders. The deal, announced in late 2024, would make Hess part of Chevron’s empire, potentially unlocking synergies worth billions. But regulatory hurdles loom large. A May 26 arbitration hearing between ExxonMobil and Chevron over rights to Guyana’s Stabroek Block could delay or even derail the merger.

Investors, pay attention: If the merger goes through, Hess’s stock could soar on the $164.18 average analyst price target (up 27% from recent levels). If it fails, Hess might face a shareholder revolt and a sharp selloff.

The Numbers That Matter

• Production Growth: Hess expects Q2 2025 production to hit 480,000–490,000 barrels of oil equivalent per day (boepd), up from 476,000 in Q1.
• Cost Pressures: Cash operating costs rose to $12.27/boe in Q1, up from $10.79 in 2024, due to maintenance in North Dakota. If costs keep rising, margins will squeeze.
• Debt Load: Hess’s debt stands at $8.65 billion, but its debt-to-capital ratio of 27.8% is manageable—so long as cash flows stay steady.

Analyst Take: Buy the Dip or Bail?

The Street is cautiously bullish. Analysts rate HES a “Buy” with an average price target of $164.18, but risks abound:
- Oil Prices: A rebound above $80/barrel would supercharge Hess’s cash flow.
- Merger Timeline: Regulatory approvals could take months.
- Guyana Execution: Delays in Yellowtail or cost overruns could dent investor confidence.

The Bottom Line: A High-Reward, High-Risk Play

Hess is a “buy the dip” candidate for aggressive investors. The Guyana projects and merger potential justify the 27% upside to $164, but only if oil prices stabilize and the Chevron deal closes.

For the cautious: Wait until the merger’s fate is clearer and oil prices show a sustained rebound.

For the bold: Dive in now—Hess’s $1.5 billion Gulf of Mexico investment and 500 MW solar project show it’s diversifying. The stock’s $129 price is a steal if Yellowtail hits its stride.

In short, Hess is a “call it like you see it” stock: Hold your nose for the near-term volatility, but keep one eye on that Guyana gold mine.

Final Verdict: Buy, but keep a close watch on oil prices and merger updates.

Data Points to Watch:
- Q3 2025 Yellowtail production start date.
- Chevron merger regulatory updates (targeting 2025 close).
- WTI crude price trends (currently under $70/barrel—a red flag).