Hess to Sell Eagle Ford Assets - Analyst Blog
19 Marzo 2013 - 6:25PM
Zacks
Integrated energy company Hess Corporation
(HES) has agreed to divest its Eagle Ford assets in South Texas to
Houston-based independent Sanchez Energy
Corporation (SN) for $265 million.
The all-cash deal, which is effective since Mar 1, covers around
43,000 acres in the Eagle Ford shale in Dimmit, Frio, LaSalle and
Zavala Counties.
The deal comes amid shareholder concerns to focus its operations on
a particular sector. The funds raised from the sale are expected to
finance drilling and exploration programs and reduce overheads.
Some of these strategic alternations are in sync with hedge fund
Elliott Management Corp.’s demand.
On the other hand, the deal will enhance Sanchez’s yield by nearly
two times to touch 4,500 barrels of oil equivalent a day (Boe/d)
from its current yield of 3,800 Boe/d and add another 50 wells. The
transaction will also boost Sanchez’s total proved reserves by 13.4
million Boe (MMBoe) and increase its proved developed reserves by
around 6.6 MMBoe.
Hess is in the process of a transition from an integrated oil and
gas company to a predominantly E&P entity, thereby shifting its
growth approach from high-impact exploration to lower-risk
unconventional and a smaller, more focused exploration portfolio.
The company’s new strategy has consequently led to increased
spending on Bakken as well as North Malay Basin, Valhall and
Tubular Bells.
Hess is engaged in oil and gas exploration, production (E&P)
and refining as well as marketing. The company’s E&P activities
are concentrated in Algeria, Australia, Azerbaijan, Brazil,
Denmark, Egypt, Equatorial Guinea, Gabon, Ghana, Indonesia, Libya,
Malaysia, Norway, Russia, Thailand, the United Kingdom and the
United States.
Hess carries a Zacks Rank #3, which is equivalent to a short-term
Hold rating. However, the Zacks Ranked #1 stocks of Range
Resources Corporation (RRC) and EPL Oil & Gas,
Inc. (EPL) are expected to outperform the market over the
next few months.
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
HESS CORP (HES): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis Report
SANCHEZ ENERGY (SN): Free Stock Analysis Report
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