Comprehensive Financial Analysis of Hess Corporation (CIK: 0000004447) for 2024

Key Summary

• Recommendation: Hold
• Current Net Income: $2,780 million for 2024, a significant increase from $1,382 million in 2023.
• Total Sales and Other Operating Revenues: $12,869 million, a 13.7% increase year-over-year.
• Total Capital Expenditures: $7,936 million, signaling continued investment in growth.
• Key Risks: Exposure to commodity price fluctuations and ongoing legal challenges related to environmental issues.

Financial Highlights

Hess Corporation has shown a remarkable recovery in its financial performance for the fiscal year 2024, highlighted by substantial growth in revenues and net income compared to the previous year. Below is a detailed breakdown of the financial components that investors should focus on:

Revenue Growth

• Total Sales and Other Operating Revenues: $12,869 million in 2024 compared to $11,324 million in 2023.
• Crude Oil Revenue: Increased to $3,205 million from $3,058 million in 2023.
• Natural Gas Liquids Revenue: Rose to $613 million from $529 million.
• Natural Gas Revenue: Increased to $146 million from $182 million.

This upward trend in revenue indicates successful operational strategies and market positioning, particularly in the oil and gas sectors.

Profitability Metrics

• Net Income: Increased to $2,780 million in 2024, up from $1,382 million in 2023.
• Basic Earnings Per Share (EPS): $9.03 for 2024, up from $4.52 in 2023.
• Diluted EPS: $8.98 for 2024 compared to $4.49 in 2023.

These figures illustrate a solid profitability rebound, making Hess Corporation an attractive prospect for investors looking for growth.

EBITDA and Operating Costs

• EBITDA: While specific EBITDA figures are not provided, the substantial increase in net income suggests strong operational efficiency and effective management of costs.
• Operating Expenses: Total operating costs were reported at $1,186 million, indicating a focus on maintaining efficiency amidst increased production activities.

Capital Expenditures

• Total Capital Expenditures: $7,936 million for 2024, up from $4,714 million in 2022.
• This reflects a strategic commitment to expanding exploration and production capabilities, particularly in high-potential regions like Guyana.

Segment Analysis

Exploration and Production

• The E&P segment continues to be the backbone of Hess Corporation's revenue stream, with significant contributions from both domestic and international operations.
• The company has made substantial investments in exploration activities, particularly in the Stabroek Block, which is promising for future revenue generation.

Midstream Operations

• The Midstream segment provides steady income through tariffs, supporting overall revenue stability.

Macro Environment Considerations

• Commodity Prices: Hess is sensitive to fluctuations in crude oil and natural gas prices, which can significantly impact revenues and profitability.
• Regulatory Issues: Ongoing litigation related to environmental concerns presents potential financial risks, although the company assesses these as manageable.

Debt and Risk Management

• Total Debt: The company reported total debt of approximately $8,578 million as of the end of 2024.
• Interest Rate Hedging: Hess has employed interest rate swaps to manage financing costs, ensuring stability amidst rising interest rates.

Looking Ahead: 12-Month Outlook

• The company is well-positioned for growth, supported by strategic capital investments and a rebound in operational efficiency. However, investors should remain vigilant regarding commodity price movements and regulatory challenges that could affect future performance.

Conclusion

Hess Corporation's strong financial performance in 2024 positions it favorably for continued growth and profitability. With significant capital investments and a solid revenue base, the company remains a compelling option for investors. However, the recommendation to hold reflects the need for caution amid potential market volatility and legal exposures. Investors are encouraged to monitor the evolving market landscape and Hess's strategic responses closely.