Back in October, I highlighted concerns I see with Hess (HES +0.00%), pointing out that the company was selling off too many assets too quickly and would need to do something to maintain its value with shareholders. That hasn't happened.
Since our October video, the company has actually issued an earnings warning to shareholders largely due to the widening spread during the quarter between WTI crude and Brent crude. This, again, suggests to me that the new, slimmer Hess has become entirely too dependent on higher WTI oil prices for growth. This should raise even more red flags with investors and strengthens my argument that present valuation is still too lofty for this E&P player, especially since the company doesn't seem to have a strong gameplan to play offense if crude oil prices weaken. Additionally, the company's 8.13% stake in the Waha oilfield asset in Libya remains problematic due to geopolitical and production issues which could mean a fire-sale for the asset could be forthcoming if earnings don't improve for Hess in the first half of 2014.
