{ "docId": "019dd923-622c-750b-8b9c-323283670cec", "docSlug": "3a1e7040a25b", "documentTitle": "Hess Corporation (HES)", "authorId": "02_Elliott_Management", "authorName": "Elliott Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2013-01-29 00:00:00", "orientation": "landscape", "aspectRatio": 1.2941177, "pageNumber": 36, "pageCount": 48, "prevPage": 35, "nextPage": 37, "slideType": "cite_precedent", "function": "cite_precedent", "density": "overcrowded", "nDataPoints": 1, "notes": "The slide uses external validation (analyst reports) to frame management as the primary cause of valuation discount.", "elementsJson": [ "headline_text", "quote_block", "logo_grid" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9c-323283670cec/36", "deckHref": "/decks/019dd923-622c-750b-8b9c-323283670cec", "deckJsonHref": "/decks/019dd923-622c-750b-8b9c-323283670cec.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9c-323283670cec#slide-36", "components": [ { "bbox": null, "kind": "callout", "text": "The stock price reflects concern about ballooning capital costs, chronic lack of free cash flow, a high oil price breakeven, and recent difficulty executing against guidance and expectations.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-fb90-708a-8689-66cd11c19c61", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.05, "x": 0.88, "y": 0.08 }, "kind": "image", "text": "HESS", "attrs": null, "subkind": "logo", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "197363d8-8a01-4b9f-b1fe-d6f2e68b9ff0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.85, "x": 0.07, "y": 0.42 }, "kind": "quote", "text": "The 7% pullback in the stock was severe, and in our view, is indicative of a loss of investor confidence in HES's execution capabilities, following a string of production misses and a lack of notable exploration success, in addition to a growing deficit between capex and cash flow. Entering 1Q'12, HES had missed its production guidance for four of the preceding 5 quarters, meaning execution was at a premium.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "170b6a0c-d496-4a14-9ff3-d8e7aa11786c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.85, "x": 0.07, "y": 0.315 }, "kind": "quote", "text": "The stock price reflects concern about ballooning capital costs, chronic lack of free cash flow, a high oil price breakeven, and recent difficulty executing against guidance and expectations.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5e898137-5b58-4429-937e-13ad77a258a3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.85, "x": 0.07, "y": 0.58 }, "kind": "quote", "text": "We think the market will largely adopt a wait and see approach and not give any free passes to management until clear path towards their cash flow targets and execution capability is evidenced...From a valuation perspective, we think the stock is relatively cheap as a result of the company's less-than-stellar historical performance record and perceived execution risk.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "658601dc-1c4b-4b7d-9ba4-a96dd3c154d6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.85, "x": 0.07, "y": 0.195 }, "kind": "quote", "text": "Although we think the company's underlying asset value is worth significantly higher than our near-term price target, we now believe the shares will likely continue to struggle throughout this year and will trade substantially below our estimate of its fair asset value due to the lack of visible catalysts as well increased investor skepticism over management's execution record...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6ab27459-8b39-47e5-8a59-3ea8c250d225", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"Although we think the company's underlying asset value is worth significantly higher than our near-term price target, we now believe the shares will likely continue to struggle throughout this year and will trade substantially below our estimate of its fair asset value due to the lack of visible catalysts as well increased investor skepticism over management's execution record...\" — Barclays (April 26, 2012); \"The 7% pullback in the stock was severe, and in our view, is indicative of a loss of investor confidence in HES's execution capabilities, following a string of production misses and a lack of notable exploration success, in addition to a growing deficit between capex and cash flow. Entering 1Q'12, HES had missed its production guidance for four of the preceding 5 quarters, meaning execution was at a premium.\" — Simmons (April 26, 2012); \"We think the market will largely adopt a wait and see approach and not give any free passes to management until clear path towards their cash flow targets and execution capability is evidenced...From a valuation perspective, we think the stock is relatively cheap as a result of the company's less-than-stellar historical performance record and perceived execution risk.\" — Barclays (July 26, 2012)", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-fb90-708a-8689-69c4e4c837a7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.85, "x": 0.07, "y": 0.11 }, "kind": "title", "text": "Management's Record of Failed Execution Has Hurt Confidence and Valuation", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "30cba176-10ab-4364-ad1e-e1ee3c6d2c58", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "authority-citation", "slug": null, "matchId": "f5f1a12f-2c88-4b78-a929-03412d875bf1", "evidence": "Uses analyst reports to validate the thesis of management failure.", "confidence": 0.9 } ], "arcBeats": [ { "to": 45, "from": 24, "beatId": "c09c4ff2-396f-478e-9eb3-d91ee1432367", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Solution (Provide relief)", "beatSlug": "problem-agitate-solution-solution-provide-relief", "evidence": "The document proposes a solution to unlock Hess's intrinsic value, including refocusing the portfolio, reassessing and refocusing Hess, and replacing the board of directors.", "position": 2, "confidence": 0.8, "parentBeatName": "Resolution", "parentBeatSlug": "resolution" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }