Hess Corp. officials put the impact of falling crude oil prices in stark terms during Wednesday, telling investors for every $1 decrease in crude oil prices, fourth quarter net income will fall about $8 million.
On a week in which many executives have tried to downplay concerns about declining crude oil prices, the message provided one of the clearest pictures yet of how, exactly, the latest slide would affect earnings.
Still, company leaders did not reveal details about how those falling prices would affect their 2015 budgets, instead telling analysts on a third quarter earnings call to wait for more details next month.
“(We) are reviewing our plans and action we might take in a lower price environment,” said John Hess, the company’s chief executive.
He said in the long-term, the company would keep its capital expenditures in line with the limitations imposed by cash flow.
Company leaders noted that many wells were still generating strong returns, even with the recent slide in prices.
But what they didn’t say was whether Hess would be willing to spend more than their cash-flow in the short-term amid Brent crude that was priced at $87.02 per barrel Wednesday morning. Other companies have offered similarly guarded responses.
The company will hold an investor day event Nov. 10.
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