Morningstar Rating

Stock Research and Analysis

by Stephen Simko, CFA

Bulls Say

Hess is one of the most oil-leveraged U.S. E&Ps (68% of total production) and is also one of the least exposed to North American natural gas (6%).
Increasing dividend payouts, repurchasing shares, and slimming down its portfolio all hint that capital efficiency will markedly improve from the poor performances of the past few years.
Directors on Hess' board are now elected annually; this means that any directors (including John Hess) that oppose strategic changes must answer to shareholders every year. Read more 

Bears Say

Hess is heavily exposed to U.S. oil pricing dynamics, and with no hedges in place for its U.S. production, cash flow could be meaningfully reduced if a light crude supply glut develops in the Gulf Coast as many (including us) expect.
We doubt that John Hess is truly capable of leading a top-tier E&P, even with increased pressure and oversight from the board.
Beyond the Bakken, Hess' other growth projects (Utica/Stampede/Ghana) are all small for a company of its size. None of these are likely to move the needle. Read more 

Management

Hess' stewardship of capital historically has been poor, and there's a strong case to be made that this has been due to a combination of too little focus placed on capital efficiency and a board of directors that hasn't held CEO John Hess to account.  Read more 

Profile

Hess is a global oil and gas producer with producing properties on four continents, although most of its resource base is focused in the United States and Norway. In 2013,  Read more 

2 Energy Stocks With Plenty of Gas Left in the Tank 
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