Oil and gas company
) share price dropped 0.7% on the announcement that it has inked
an agreement with an undisclosed third party to divest about
74,000 acres of its dry gas acreage in the Utica Shale. The
transaction is valued at $924 million.
Around two-thirds of the transaction amount is anticipated by
the end of the current quarter of the year, while the balance is
likely to be received in the third quarter.
The funds raised from this sale will be used for further share
repurchases as they are in excess of the expected target of the
divestiture program announced by Hess on Mar 4, 2013. The company
is likely to decide on whether or not to seek an increase to its
existing $4 billion share repurchase authorization, approved as
part of its Mar 4 announcement, after a final decision is made
either to spin or sell Hess Retail.
Hess is undergoing a transition from an integrated oil and gas
company to a predominantly E&P entity, thereby shifting its
growth approach from high-impact exploration to lower-risk
unconventionals and a smaller, more focused exploration
portfolio. It announced the closure of Port Reading, its New
Jersey refinery, which marked the company's complete exit from
the refining business.
Hess also aims to shed assets in Indonesia and Thailand as
well as its terminals, retail, energy marketing and trading
businesses in the downstream. The company also announced a share
repurchase plan of up to $4 billion, and a boost in its annual
dividend to $1 a share, begun in the third quarter, which has
more than doubled its quarterly dividend. In view of the global
economic slowdown and new refining capacity entering the world
market, these aforesaid decisions will help raise Hess'
Hess currently carries a Zacks Rank #3 (Hold). Stocks with a
Zacks Rank #1 (Strong Buy) that appear more rewarding in the
short term are
Pembina Pipeline Corp.
Marathon Petroleum Corp.
NGL Energy Partners LP
HESS CORP (HES): Free Stock Analysis Report
MARATHON PETROL (MPC): Free Stock Analysis
NGL ENERGY PART (NGL): Free Stock Analysis
PEMBINA PIPELN (PBA): Free Stock Analysis
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