Here's Why Hess Corp.'s Stock Plunged 11.2% in October

Image source: Hess Corp.

What happened

Shares of Hess (NYSE: HES) got hammered in October, ending the month down by double digits. While tumbling oil prices toward the end of the month added fuel to the fire, it did not help matters that the company released weak third-quarter results on Oct. 26:

HES data by YCharts.

So what

Hess reportedan adjusted loss of $340 million, or $1.12 per share, which was deeper than the $291 million, or $1.03 per share, adjusted loss in the year-ago quarter. Driving that widening loss was a 9% decline in realized oil and gas prices as well as the fact that company's production plunged 16% to 314,000 barrels of oil equivalent per day due to reduced drilling activity, planned and unplanned downtime, and natural field declines. On a positive note, its pushed expenses were down 18%, helping to mute some of the impacts from weaker production and prices.

Hess also reported that it was cutting capex spending by $100 million, bringing its 2016 capex budget down to $2 billion while at the same time maintaining its full-year production guidance range. While that means the company is getting the same amount of production for less money, other producers are doing a better job by delivering more production for less money.

ConocoPhillips (NYSE: COP), for example, also reported that it was decreasing its full-year capex budget, by planning to reduce spending from $5.5 billion down to $5.2 billion. However, despite a roughly similar 5% spending reduction, ConocoPhillips noted that it was increasing the midpoint of its full-year production guidance by 1%. ConocoPhillips' ability to deliver better-than-expected production for less money was one of the things that kept its stock from sinking last month.

Now what

While Hess is doing a solid job of pushing down costs, it is not quite as good as some of its rivals when it comes to turning its investments into production. Because of that, it could fall behind as prices improve. It will have a longer climb to get its output back up to where it was at this point last year.

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Matt DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.