"There is growth in the contributed assets of the Tioga gas plant and an expansion of the gathering system in the core of the Bakken, Williston Basin of central North America," analysts at Credit Suisse said.
Hess also owns logistics assets outside the Bakken in the Gulf of Mexico and West Texas and will need infrastructure for its Utica holdings, which could provide drop down proceeds to the company, Credit Suisse added.
Hess announced yesterday that it will sell half of its Bakken midstream assets to Global Infrastructure Partners for $2.68 billion in a joint venture valued at $5.35 billion.
Hess is a global exploration and production company that develops, produces, purchases, transports and sells crude oil and natural gas.
Shares of Hess are down 0.92% to $67.95 in morning trading Friday.
Separately, TheStreet Ratings team rates HESS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate HESS CORP (HES) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HES's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
- 46.68% is the gross profit margin for HESS CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, HES's net profit margin of -25.29% significantly underperformed when compared to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, HESS CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has significantly decreased to $362.00 million or 68.73% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: HES Ratings Report