U.S. energy major
) has inked an agreement with OAO Lukoil to divest its interest
in its Russian subsidiary Samara-Nafta. The transaction value is
estimated at $2.05 billion.
Hess has a 90% interest in Samara-Nafta, based on which the
total after-tax proceeds to the company will be around $1.8
billion. The Russian subsidiary's current yield is 50,000 barrels
of oil equivalent per day in the Volga-Urals region of the
The remaining 10% is held by the chairman of Russia's Yukos
Oil Co. Simon Kukes, who will also sell his 10% stake to Lukoil.
Total after-tax proceeds for the entire company will be $2
The closure of the deal is subject to the customary approval
process of the state anti-trust authorities. Hess intends to file
its application for the approval by mid April.
Hess has been on a divestment spree since 2012 and has raised
about $3.4 billion from the sale of its assets including the
latest one. The assets sold so far consist of its interests in
the Beryl field in the U.K. North Sea, the Eagle Ford play in
Texas, as well as the Azeri, Chirag and Guneshli fields in
Azerbaijan and the associated pipeline.
Hess has being selling assets to raise proceeds for reducing
its debt and strengthening its balance sheet in view of its
lackluster profits and a shareholder revolt.
Hess remains on track with its strategy of becoming a purely
E&P company while boosting its shareholder value. In this
respect, 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). However,
there are other stocks in the sector that appear rewarding. Among
Stone Energy Corporation
Range Resources Corporation
EPL Oil & Gas, Inc.
), are expected to perform impressively over the next few months
and carry a Zacks Rank #1 (Strong Buy).
EPL OIL&GAS INC (EPL): Free Stock Analysis
HESS CORP (HES): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis
STONE ENERGY CP (SGY): Free Stock Analysis
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