U.S. energy company Hess Corporation ( HES )
entered into an agreement with Europe's largest oil company
Royal Dutch Shell plc ( RDS.A
) to sell its interest in the Beryl area fields and the Scottish
Area Gas Evacuation System. Shell will pay $525 million for this
deal.APACHE CORP (APA): Free Stock Analysis ReportHESS CORP (HES): Free Stock Analysis ReportROYAL DTCH SH-A (RDS.A): Free Stock Analysis
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The fields, which are located in the North Sea near Aberdeen,
Scotland, are jointly operated by Hess Corp. with Apache
Corporation ( APA ).
During the first nine months of 2012, the Beryl field produced
14,000 barrels of oil equivalent per day. Shell's current interest
in the Beryl field yields 9,000 barrels of oil equivalent per day.
Following the acquisition, the company plans to increase production
to up to 24,000 barrels of oil equivalent per day. Shell's
interest in the fields will increase in a range of 9-65%.
Last month, Hess Corp. sold its interest in Azeri, Chirag and
Guneshli fields (ACG) in Azerbaijan and the BTC pipeline to ONGC
Videsh Ltd. for $1 billion. Earlier this year, the company
offloaded $2.4 billion worth of assets, including this
The sale is anticipated to complete in the first quarter of 2013,
subject to regulatory approval.
New York City, New York-based Hess Corporation, previously known
as Amerada Hess Corporation, is an integrated energy company
engaged in oil and gas exploration and production (E&P) and
refining as well as marketing.
Hess' new strategy of concentrating on high-impact exploration
areas compared to low risk areas; its exposure to areas with high
resource potential (such as Brazil, Ghana, Libya and offshore
Australia), strong growth throughout the Bakken oil shale play,
along with robust holdings in the Eagle Ford Shale and the Utica
Shale are expected to raise its earnings, cash flow and
However, we believe that future asset sales will likely hamper the
company's production and bring down its profitability levels.
Considering the situation, we expect the stock to perform in line
with other industry players and the broader market and maintain our
long-term Neutral recommendation on Hess. The company retains a
Zacks #3 Rank (equivalent to a short-term Hold rating).