Oil and gas company
) wholly owned subsidiary Hess Retail Corporation has filed
paperwork with the U.S. Securities and Exchange Commission (SEC)
for a potential spin-off of its retail unit.
HESS CORP (HES): Free Stock Analysis Report
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HELMERICH&PAYNE (HP): Free Stock Analysis
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The spin-off of Hess' gasoline stations and convenience store
network is in response to a campaign by activist investor Elliott
Management and comes almost a year after Hess planned to exit the
energy trading and marketing businesses.
Per the analysts, the retail business is estimated at over $1.5
billion. Hess intends to exit the retail gasoline business by
2015. Last year, Hess broke up its huge energy business to focus
more on U.S. exploration and production.
According to the company's filing with the SEC, Hess Retail,
which runs over 1,200 gas stations and convenience stores, is the
largest operator of gas convenience stores along the U.S. East
The spin-off is expected to have several benefits, tax advantage
being one of them. Moreover, shareholders would benefit more from
a spin-off rather than a sale as the standalone retail company
would be well poised for growth.
Additionally, Hess has received a ruling from the Internal
Revenue Service that would facilitate it to distribute its retail
business to shareholders in a tax-free spin-off. Per the latest
SEC filing, Hess shareholders would receive one share in the
spun-off retail company for each Hess share held.
Hess has already divested its refining, terminal business and
some overseas oil and gas assets. In 2013, the company raised
about $7.8 billion of after-tax proceeds from these sales.
HES carries a Zacks Rank #3 (Hold). Some better-ranked stocks in
the oil and gas sector include
Harvest Natural Resources Inc.
Stone Energy Corp.
Helmerich & Payne, Inc.
). All these stocks hold a Zacks Rank #1 (Strong Buy).