This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Hess Hits New One-Year High On $2.1B Russia Sale

Stocks in this article: HESCHKRIGSN

NEW YORK ( TheStreet) -- Hess (HES) hit a new one-year high on Monday after the energy giant said it sold a Russian subsidiary to OAO Lukoil (LUKOY) for $2.1 billion.

The move comes amid a breakup plan pitched by the New York-based driller and opposition to the company's efforts from activist investors Elliott Management and Relational Investors, which argue the company still isn't going far enough in unlocking the value of its assets and restructuring its oft-criticized Board of Directors.

While some recent asset sales may have underwhelmed investors and Wall Street analysts, Hess's Monday deal was received strongly, as shares gained over 2% to a new one-year high of $73.87 in early afternoon trading.

Hess shares have gained nearly 40% year-to-date as the company works to sell terminal, refining and non-core energy assets and become more focused on drilling assets in promising U.S.-based shale basins.

Hess will be selling 100% of its Russian subsidiary Samara-Nafta to OAO Lukoil, in a deal the company says will garner after-tax proceeds of $1.8 billion. Samara-Nafta is currently producing 50,000 barrels of oil equivalent per day in the Volga-Urals region of Russia, Hess said in a press release announcing the deal.

"As the sale of Samara-Nafta indicates, we are making excellent progress in executing our asset sales program, which is a central component of our plan to transform Hess into a more focused, higher growth, lower risk pure play exploration and production company," John B. Hess, Hess Chairman and CEO, said in a Monday statement.

In March, Hess said it sold a 4,300-acre Eagle Ford Shale oilfield to Sanchez Energy (SN) for $265 million, in a deal that fetched about a third of the value that more optimistic analyst had forecast when the New York-based driller put the assets up for sale in 2012.

According to Hess, the company has raised $3.4 billion in announced or completed deals to sell interests in the Beryl field in the U.K. North Sea, the Eagle Ford play in Texas, and the Azeri, Chirag and Guneshli fields in Azerbaijan.

" By applying the proceeds from these divestitures to reduce debt and strengthen our balance sheet, Hess will have the financial flexibility both to fund its future growth and also to direct most of the proceeds from additional asset sales to returning capital directly to its shareholders," CEO Hess added in the Monday statement.

Asset sales come at a crucial time for Hess, which is embarking on an ambitious strategy to spin off its refining and marketing businesses and become a pure-play oil and gas driller with a leading position in promising shales like the Bakken.

Still, as Hess continues a sharp 2013 share price rise on optimism that it may be prodded into unlocking the full value of the company, management continues to face scrutiny from large investors.

Hess's proposed split off of downstream businesses, its recent announcement of a $4 billion share repurchase plan and a previous planned sale of its East Coast terminal network come just as activist hedge funds Elliott Management and Relational Investors take large positions in the driller and seek board seats.

Unimpressed by the details of Hess's decision to deconsolidate its integrated energy empire, Elliott and Relational are pressing their own slate of directors to counter the company's proposed board reconstitution, which will add directors with experience at TNK-BP Russia and Royal Dutch Shell and lead to a board of 13 of 14 independent members.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs