Hess CorporationHES

Morningstar Rating

Stock Research and Analysis

by Catharina Milostan

Hess has amassed a promising collection of high-profile oil and gas projects to drive long-term production growth. However, like its peers, Hess is prudently scaling back 2009 capital spending in response to the weakened global economy and lower oil Read more

Bulls Say

Hess has promising oil and gas projects on several continents to drive long-term production growth, including recent discoveries in deep-water Gulf of Mexico, Australia, Libya, and Egypt.

Hess remains on track with mid-2009 project startups at Shenzi field in Gulf of Mexico and the Pangkah Oil and LPG Project in Indonesia.

Hess and its partners' re-entry into Libya and its offshore interest in Brazil near Petrobras' Tupi discovery are intriguing prospects that may lead to future discoveries and production growth.

Hess had relatively low debt levels at year-end 2008, giving it some financial flexibility to weather industry challenges of low oil and gas prices and constrained financing options. Read more

Bears Say

Hess must keep costs in check to navigate tough industry challenges in 2009 of low oil and gas prices and lower demand for refined products amid a weakened global economy.

Hess must find ways to operate efficiently while monitoring costs in order to keep capital spending within internal cash generation in 2009 and into 2010.

Hess' production and reserve growth goals could be disrupted by delayed project startups, exploratory failures, mechanical problems, and environmental disasters.

Hess operates in several continents, exposing it to political risks. Hess has exposure to Venezuela through a 50/50 venture in a Hovensa refining complex with government-owned oil company Petroleos de Venezuela. Read more

Strategy

Hess is focused on expanding reserves and production while improving its balance sheet. In contrast with its past focus on acquisitions, Hess is committing more capital to exploration and development Read more

Management

John Hess, son of the late founder, has been chairman and CEO since 1995 and has more than 20 years of experience at Hess. Executives and board members control 12.7% of Hess' stock, with John Hess owning the lion's share at 11.3% of the outstanding Read more

Profile

New York-based Hess is an integrated oil company involved in exploration and production on several continents and refining and marketing primarily on the U.S. East Coast. Read more

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