Integrated energy company,
), announced two separate agreements with a joint venture between
state-owned Indonesian oil and natural gas company, PT Pertamina
and Thai oil and gas company, PTT Exploration and Production
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Per the agreements, Hess would sell its interests in both the
Pangkah and Natuna A assets located off the coast of Indonesia
for a total after-tax consideration of $1.3 billion. Together,
the two assets produced an average of 15,000 barrels of oil
equivalent per day net to Hess in the first three quarters of
Hess plans to use the proceeds from the asset sales on buying
back shares under its existing $4 billion share repurchase
program. The agreements are expected to close before the end of
the first quarter of 2014.
New York-based Hess Corp. is an integrated energy company engaged
in oil and gas exploration, production and refining as well as
Hess, however, remains on track with its transition to a pure
play E&P company while boosting shareholder value. The
company has already divested its U.S. East Coast bunkering
business, subsidiary in Russia as well as interests in the Beryl
area fields in the United Kingdom North Sea, the
Azeri-Chirag-Guneshli fields offshore Azerbaijan and the Eagle
Ford assets in Texas.
In an attempt to better manage its portfolio with respect to
resource availability, project development and its intricacy,
Hess intends to arrive at a 50:50 ratio between unconventional
and conventional assets. Currently, the ratio of the company's
undrilled inventory is 40:60 between unconventional and
conventional. The recent lease in the Bakken and augmentation of
Utica acreage are in sync with its new strategy.
Going forward, we believe that the company's strong exploration
upside in Ghana and continued improvement in Bakken productivity
hold a lot of promise. This would help the company to
consistently deliver 5-8% annualized production growth in the
Hess currently holds a Zacks Rank #3 (Hold), implying that it is
expected to perform in line with the broader U.S. equity market
over the next one to three months.
Meanwhile, one can consider other stocks in the energy sector
that are expected to outperform in the near term. These include
Zacks Ranked #1 (Strong Buy) stocks of
SM Energy Company
Matador Resources Co.
Abraxas Petroleum Corp.