Production is also slated to be 10,000 barrels below the company’s earlier estimate of 320,000 barrels a day. Hess expects production costs to be in line with its previous estimate of $48 to $50 a barrel. So far this year, the company has completed or announced the sale of $7.8 billion in assets.
The stock price is up nearly 50% since January, when the company announced late in the month that it was closing two U.S. east coast refineries and would sell 28 million barrels of tank storage. Gasoline prices on the east coast jumped sharply, dragging the rest of the country behind on the announcement, and it was not until late summer that gasoline prices began to moderate again across the United States.
The dilemma Hess faces now is that continued increases in U.S. production and increased transportation options to get crude to the Gulf and east coasts has weighed on WTI prices and recently driven down the price of LLS. For now, refiners are able to tell producers what the price will be for a barrel of crude, and that turn of events was largely unexpected. The disconnection between what U.S. refiners pay for WTI and LLS compared with international prices for crude grades tied to the Brent benchmark works in favor of consumers and refiners and against producers. And this state of affairs could last for months or even years.
Shares of Hess were not getting too badly beaten on the announcement, in fact gaining about 0.5% to trade at $79.34 shortly before noon Monday. The stock’s 52-week range is $50.90 to $85.15.
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