Amerada Hess Profit Surges

It earns $4.31 a share, wiping out estimates.
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Updated from 8:11 a.m. EST

Amerada Hess

(AHC) - Get Report

said fourth-quarter earnings roughly doubled from a year ago as higher prices for crude and natural gas lifted profits in production and refining.

The New York-based energy company earned $452 million, or $4.31 a share, in the quarter, compared with $229 million, or $2.22 a share, last year. Sales rose 53% from a year ago to $7.06 billion. Analysts were forecasting earnings of $3.26 a share in the quarter.

Exploration and production income climbed 41% to $298 million on higher average crude and natural gas prices. In the fourth quarter, the company's average price for crude was $34.09 a barrel, up $6.78 a barrel from a year ago, while its average natural gas price doubled to $11.75 per million cubic feet.

The profit increase came despite lower production levels due to hurricane damage in the Gulf of Mexico and increased maintenance in the North Sea. Amerada Hess pumped 316,000 barrels per day in the fourth quarter last year, compared with 346,000 barrels per day in 2004.

Lost gulf output of 19,000 barrels per day shaved fourth-quarter earnings by $59 million. The exploration company's deepwater platforms were relatively undamaged from the gulf hurricanes, but outages in downstream transportation and processing cut production, John Hess, Amerada Hess' chairman and chief executive officer, said in a conference call Wednesday morning.

By the start of the year, Amerada Hess had restored 45,000 barrels of daily crude production in the Gulf out of a total of 51,000 barrels per day.

Income in refining and marketing rose to $229 million from $93 million on higher sales margins of refined products, increased volume and higher convenience store revenue and gas sales. Refining and marketing earnings each more than doubled, to $83 million and $131 million, respectively.

Amerada Hess expects its worldwide oil and natural gas production to average between 360,000 barrels to 380,000 barrels thanks to a recent acquisition in Libya. Output last year was 335,000 barrels per day, down from 342,000 barrels in 2004.

This year, capital and exploration expenses are projected to jump to $4 billion, up from $2.5 billion last year. The increase includes $3.1 billion for exploration and a $780 million charge for the acquisition of the West Med block in Egypt.