Don’t Mess With Hess $HES
We like Hess Corporation (HES) because it is trading at the latest point since the bottom of the 2008 market / oil collapse and it has increased interests in shale production regions domestically which we favor for supporting American jobs and energy independence. Through our research we have identified the Growth Prospects and Outlook.
Growth Prospects
- The company has acquired strategic acreage in the Utica shale play in Ohio, U.S., and the Kurdistan region of Iraq in 2011.
- The company is expected to witness growth from its production in the Bakken Shale, North Dakota.
- The company intends to continue the appraisal of the Eagle Ford Shale, Texas.
- The company continued investment in it Tubular bells project in the deep water Gulf of Mexico.
- The company has made significant progress on its assets in Australia, and expects further development going forward.
- The company announced a discovery in offshore Ghana. The discovered well is expected to have 490 net feet of oil and condensate. The company is expected to continue drilling in 2012.
- Petronas signed three production sharing contracts with HES for its gas fields off Malaysia’s East Coast.
Outlook
HES has strong growth prospects with its increased interests in shale plays in the U.S., and internationally. With the shutdown of its loss-making joint venture, its focus on improving its retail station network with improved convenience stores, and significant oil reserves, we are of the view that the company should witness its profitability improve going forward.
HES is trading at a cheaper P/E, P/B and P/S ratio of 6.13X, 0.75X and 0.38X. It offers a dividend yield of 0.90%, which is much lower as compared to its peers. Currently, we have a Positive stance on the stock, even though we believe there are other opportunities in the Oil and Gas Industry with similar growth prospects, offering higher dividend yields (mentioned below are a few of our reports for other stocks offering higher dividend yields). However, valuations are much higher for those stocks.
Excerpts taken from: http://seekingalpha.com/article/723681-buy-hess-one-of-the-cheapest-oil-plays
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