This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hess Corporation - The Start Of A Turnaround?

Sherif Ahmad, Kapitall   Hess Corporation (HES) announced a handful of proposals on March 4 to boost the firm’s share price and to satisfy the demands of Elliot Management, the activist hedge fund that has recently attempted to use its sway to usher in a change of course for the struggling oil company. Investors are closely watching the ordeal for any signs of a true turnaround, which could provide significant value to shareholders. [More analysis:  Carrizo Oil & Gas – A Smart Small-Cap Energy Buy?]

Elliot Management & Monday’s Announcements

Back in January, the activist hedge fund Elliot Management purchased a 4% stake in Hess Corporation. Paul Singer, founder of Elliot Management, immediately voiced his displeasure in the company’s performance and attempted to leverage the fund’s large position to convince Hess to restructure. Hess Corporation finally reacted yesterday with its announcement to name six new board members, divest its energy trading business and sell off its 1,300+ gas stations by 2015. Hess hopes to focus strictly on oil and gas exploration and production in mostly the US, Norway, Malaysia and Ghana. Additionally, the firm also announced its plan to buy back $4bn of shares and double its dividend payout.

Elliot Management, however, was not satisfied with the announcement. In its original proposal to Hess, the hedge fund suggested splitting the firm into onshore and offshore operations in order to deliver more value. John Hess, the CEO of Hess, quickly dismissed the validity of such a proposal and argued that Singer and his team failed to acknowledge the risk in such a move.

Recent Performance & Outlook

Since Elliot Management’s proposal hit the media, Hess stock has jumped by 17% and by over 3% since yesterday’s announcement. Hess plans to use the money generated by divesting its trading and retail gasoline segments to pay back $2.5bn of debt, inject more cash onto the balance sheet and fund long-term projects. With a healthier balance sheet and a narrower focus, Hess’s share price could very well continue to climb in coming months and years. Last year, exploration and production contributed 91% of Hess’s profits, a sign that a narrower focus could boost the return on assets. The firm has devoted much of its attention to North Dakota’s Bakken Shale, which analysts predict could yield revenue as early as 2015.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs