Hess Corporation (NYSE: HES) announced today that it will pursue the sale of its terminal network in the United States. Hess also announced that it will complete its exit from the refining business by closing its Port Reading, New Jersey refinery.
The terminal network is located along the U.S. East Coast and has a total of 28 million barrels of storage capacity in 19 terminals, 12 of which have deep water access. The terminals previously served as the primary outlet for Hess’ share of production from its HOVENSA joint venture refinery, most of which was used to supply Hess’ Retail and Energy Marketing businesses. With the closure of the HOVENSA refinery in 2012 as well as Hess’ ability to access refined products from third parties to supply these marketing businesses, the terminal system is no longer core to the company’s operations. The company’s St. Lucia oil storage terminal in the Caribbean with 10 million barrels of capacity will also be included in the package for divestiture. In addition to the proceeds from the sale of the terminal network, the transaction should also release approximately $1 billion of working capital for redeployment to fund Hess’ future growth opportunities.
Hess will continue its long term commitment to the Retail and Energy Marketing businesses and take all the necessary steps to ensure supply security, competitive prices and high quality service for its customers.
The Port Reading refinery, which will be closed by the end of February, is comprised solely of a Fluid Catalytic Cracking unit and it primarily manufactures gasoline and components used for blending heating oil. The refinery incurred losses in two of the past three years. The financial outlook for the facility is expected to remain challenged due to the requirement for future expenditures to comply with environmental regulations for low sulfur heating oil and the weak forecast for gasoline refining margins.