Research Desk Line-up: Range Resources Post Earnings Coverage
LONDON, UK / ACCESSWIRE / October 26, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Hess Corp. (NYSE: HES), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=HES. The Company announced on October 24, 2017, the sale of assets in Norway as a part of its strategic plan to focus on core business and allocate capital to assets with higher returns. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Commenting on the asset sale in Norway, John Hess, CEO of Hess, said:
"Proceeds from these asset sales, along with cash on the balance sheet, will prefund development of our world-class investment opportunity in offshore Guyana, where we have participated in one of the world's largest oil discoveries of the past decade – positioning our Company to deliver more than a decade of cash generative growth and significant value for our shareholders."
Sharing his views on acquiring Hess Norge, Karl Johnny Hersvik, CEO of Aker BP, stated:
"Aker BP has a clear ambition to be the leading independent offshore E&P Company. This transaction is an important step in that direction. Acquiring this portfolio gives Aker BP a deeper exposure to one of our core areas. Taking full ownership and control allows Aker BP to pursue upsides more aggressively."
Details of assets sale
The Company has signed an agreement to sell its oil and gas interests in Norway for approximately $2 billion. The assets in Norway are owned by its subsidiary Hess Norge. Aker BP ASA, the JV Company of BP PLC (NYSE: BP) and Norway's Aker ASA, has acquired the business and assets of Hess Norge. The transaction is effective as on January 01, 2017. These assets include Hess's stake in Valhall and Hod fields in Norway which produced an average of 26,000 barrels of oil equivalent per day. Hess holds a 64.05% interest in Valhall and a 62.5% interest in Hod. The transaction is expected to be completed by end of FY17 and is subject to receiving approval from Ministry of Oil and Energy, Ministry of Finance, and other competition regulators as well as other closing conditions.
Hess has also indicated that it will start the process to line up its assets in Denmark for sale. Hess owns a 61.5% interest in South Arne Field which produced an average of 11,000 barrels of oil equivalent per day in H1 2017. The Company expects to complete the sale of South Arne Field by 2018.
Just a day before on October 23, 2017 the Company had announced the sale of its assets in interests in offshore Equatorial Guinea to Kosmos Energy (NYSE: KOS) and Trident Energy for $650 million.
Rationale behind the asset sale
The Company will realize approximately $3.25 billion in cash in the current year from the sale of its various assets including enhanced oil recovery assets in the Permian Basin, interests in Equatorial Guinea, and the current interests in Norway. The amount also includes the possible consideration from the sale of the Company's interests in Denmark. The proceeds from the sale of assets will allow the Company to write off approximately $3.2 billion in future abandonment liabilities. The Company plans to use the balance cash from the asset sale transactions to reduce its existing debts of approximately $500 million in FY18. The Company is also implementing a planned a cost-cutting program and offloading expensive assets that have a higher cash outgoing. These initiatives are expected to reduce the Company unit production costs by approximately 30% (as compared to costs in FY17) from FY20 onwards. The Company's cost-cutting initiatives plus the higher returns from growth assets after the sale of higher cost assets is expected to realize cost savings of more than $150 million annually starting from 2019.
About Hess Corp.
New York based Hess Corporation is a leading global independent energy Company engaged in the exploration and production of crude oil and natural gas. The Company was founded by Leon Hess in 1933 as Hess Incorporated. The Company's portfolio of assets is split evenly between unconventionals and conventionals; US and international; and onshore and offshore. The Company's three quarters production is liquids versus gas.
Last Close Stock Review
At the closing bell, on Wednesday, October 25, 2017, Hess' stock dropped 4.20%, ending the trading session at $42.21. A total volume of 12.12 million shares have exchanged hands, which was higher than the 3-month average volume of 3.88 million shares. The stock has a dividend yield of 2.37% and currently has a market cap of $13.42 billion.
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