U.S. energy major
) has closed the sale deal with ONGC Videsh Ltd. (OVL) with
respect to farming out of a 2.72% interest in the Azeri, Chirag
and Guneshli Fields (ACG) and its 2.36% interest in the
associated BTC pipeline. The deal was valued at around $1
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The total after-tax net proceeds received by Hess was $884
million, adjusting for net cash flow obtained since Jan 1, 2012.
Located in the south of the Caspian Sea about 62 miles (100
kilometers) off the coast of Azerbaijan - the ACG fields are
) with a stake of 34.1%. The field was commissioned in 1997. The
field generates about 700,000 barrels per day (bpd) of crude, of
which OVL's share would be over 19,000 bpd. ACG is the largest
oil and gas field complex in Azerbaijan and one of the largest
producing oil fields in the world. It has a total reserve of more
than 6.5 billion barrels.
Other partners in the field are
), State Oil Company of Azerbaijan Republic (SOCAR), Inpex,
), ExxonMobil Corporation (XOM), Turkish national oil company
TPAO and Japanese Itochu with interests of 15.8%, 10%, 10%, 8.6%,
8%, 6.8% and 3.9%, respectively.
BTC pipeline is among the primary export routes for Caspian oil
yield and carries liquids from Baku - the capital city of Azeri -
to the Ceyhan terminal in the Mediterranean Sea in Turkey through
Georgia. The pipeline has a capacity of about 1 million bpd and
offers OVL the chance to augment its portfolio around the Caspian
Sea and transport crude from the assets it may purchase in the
region in the future.
Hess remains on track with its strategy of becoming a purely
E&P company while boosting its shareholder value. In this
regard, it may be mentioned that Hess plans to pursue the sale of
20 oil storage terminals in the U.S. and the Caribbean and exit
its refining business. Further, the latest sale validates its
growing presence as a focused, higher growth, lower risk pure
play exploration and production company.
Hess holds a Zacks Rank #3 (short-term Hold rating).