Hess Corp (HES.N) reported first-quarter earnings well above analysts’ forecasts, driven by a 28% increase in oil production from its operations in Guyana. This strong performance from Hess is seen as a positive sign for Exxon Mobil’s upcoming results, as the two companies are partners in the offshore Stabroek Block in Guyana.
Hess’s total production rose 27% to 476,000 barrels of oil and gas per day (boepd), with the Guyana output increasing by 70% year-over-year to 190,000 bpd. The company’s Bakken shale output also saw a rise.
Analysts noted that Hess reported higher-than-expected production in Guyana on much lower-than-forecast spending, indicating that the consortium’s three offshore production vessels were operating near or at full capacity. This is seen as a positive sign for Exxon’s results, as the two companies are partners in the Stabroek Block.
The Stabroek Block has been the site of more than 30 oil discoveries since 2015, making it a significant asset for both Hess and Exxon. Last October, Hess agreed to sell itself to Chevron (CVX.N) for $53 billion in stock, but the deal has been stalled by a regulatory review and challenged by Exxon, which claims a right to Hess’s Guyana assets.
Hess and Chevron dispute Exxon’s claim, which is now being heard by an arbitration panel. Hess expects any decision on the matter may not arrive until the end of the year, making it unlikely that the Chevron-Hess deal will close in 2023.
Hess’s quarterly profit of $3.16 per share significantly beat analysts’ average estimate of $1.67 per share, according to LSEG data. The company’s worldwide average realized crude oil selling price, excluding hedges, rose 7.8% to $80.06 per barrel during the quarter compared to a year earlier.