(HES) Hess Corporation Sheds Non-Core UK Assets

April 6th, 2010

Hess Corporation (HES) is stepping forward to sell a few of its natural gas properties for $423 million in cash. The company has entered into an agreement with Scottish & Southern Energy to sell its interest in a bunch of natural gas production and transportation assets in the UK North Sea.

The properties in question are Hess’ interests in the Everest and Lomond natural gas fields and the Central Area Transmission System in Central North Sea. It also includes the company’s interest in the Bacton Corridor and Easington Catchment Area natural gas fields located in the Southern North Sea. The sale is expected to be closed in the third quarter of this year.

Hess has been continuously optimizing its portfolio by selling off its non-core assets to grow its reserves base on a profitable and sustainable basis. Such sales will help the company to focus on its core assets.

The exploration success in Australia and Libya has improved the company’s prospects. Management has also been optimistic with the development at Bakken Shale, North Dakota. While the company has no meaningful drilling program till the end of this year, we believe that this asset divestiture and progress in the Bakken Shale play will act as positive catalysts for Hess shares.

Additionally, we like the company’s oil-weighted production profile in the face of our positive near to medium term oil outlook. However, our continued Neutral recommendation for the stock reflects valuation concerns.

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(HES) Hess Corporation Sheds Non-Core UK Assets

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(HES) Hess Corporation Sheds Non-Core UK Assets

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