Hess Corp. swung to fourth-quarter profit as the oil-and-gas producer's refining and marketing operations returned to the black, even as the company has come under pressure from an activist investor to make major changes in how the company is structured.
Hess reported a profit of $566 million, or $1.66 a share, compared with a year-earlier loss of $131 million, or 39 cents a share.
The latest period included net asset sale gains of $152 million. The year-earlier period included a charge of $525 million related to its closing of its Hovensa refinery--a joint venture with Petroleos de Venezuela SA.
Revenue increased 9.9% to $9.7 billion.
Hess reported adjusted earnings of about $1.20 a share, in line with expectations of analysts polled by Thomson Reuters, who most recently projected earnings of $1.20 a share on revenue of $9.63 billion.
But Raymond James analysts wrote in a client note Wednesday morning that the results contained "few surprises" and likely won't take attention from the activist-investor campaign aimed at splitting the oil company apart.
Shares of Hess fell 0.7% to $67.57 early Wednesday, after gaining 16% Monday and Tuesday.
Elliott Management Corp., which recently took a 4% stake in Hess, on Tuesday confirmed it is seeking five seats on Hess's board as it aims to press the company to separate its assets in the oil-rich Bakken Shale region from less-prolific international assets and to sell its vast network of gasoline stations.
On Monday, Hess disclosed it is exiting the refinery business, and will close down its Port Reading, N.J., refinery at the end of next month. The refinery has lost money in two of the last three years, but earned $8 million in operating income in the fourth quarter due to higher margins. The company will also sell its network of storage terminals in the U.S. and St. Lucia.
Elliott Management acknowledged these efforts, but said the problems at the company go deeper.
Chairman and Chief Executive John Hess has defended his company's strategic shift to refocus on exploration and production as well as retail.
Hess has been pruning its portfolio to fund drilling and exploration efforts--including deals to sell its stake in the Beryl area fields in the U.K. North Sea and the Scottish Area Gas Evacuation System to Royal Dutch Shell PLC and to sell some minority stakes it holds in fields in Azerbaijan to India's ONGC Videsh Ltd.
The company said Wednesday that its announced sales, which totaled $2.4 billion, will allow it to narrow its focus on its most-promising assets.
Though average daily production grew due to growth in the Bakken formation in North Dakota and resumption of operations in Libya, prices declined and Hess said earnings at its exploration-and-production business fell 1.9%.
At year's end, total proved reserves were 1.55 billion barrels of oil equivalent, down from 1.57 billion barrels a year earlier. The company's reserve replacement for 2012 was 141%, as Hess added 214 million barrels of oil equivalent to proved reserves and sold 83 million barrels of oil equivalent of proved reserves through asset dispositions.
Copyright (c) 2012 Dow Jones & Company, Inc.
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