Summary
Hess Corporation's long-term outlook is looking good as the company's production could climb significantly from 2020 when its major offshore project in Guyana comes online.
Its output from Bakken will rise in the short term, but its total production will still fall in 2018 as compared to 2017, thanks to asset sales.
The company has been reporting quarterly losses and negative free cash flows for the last several quarters.
Hess stock has risen by 48% this year, and it seems unlikely that it will continue to outperform.
Hess Corporation (HES) is well positioned to turn around in the long term by significantly growing its oil production driven by the start-up of its project in Guyana. This will also have a positive impact on the company's cost structure. But the company has a poor track record of generating profits and free cash flows, and it could report weak production numbers in the short term.
Hess Corporation is one of the biggest operators at the Bakken field with leading positions at the core of the shale oil play. But the company's future is underpinned in large part by the offshore oil production project in Guyana. Hess owns a 30% stake in the Stabroek Block which is located around 130 miles offshore Guyana and is operated by Exxon Mobil (XOM). The block, which is spread over 6.6 million acres, holds more than 4 billion barrels of oil equivalent resources, although this estimate may climb significantly in the future as Hess and Exxon Mobil continue with exploration and appraisal work.
