Zacks Analyst Blog Highlights: Hess, Total SA, BP plc, Royal Dutch Shell and Dollar Tree

For Immediate Release

Chicago, IL – June 23, 2010 – Zacks.com Analyst Blog features: Hess Corporation (HES - Analyst Report), Total SA (TOT - Analyst Report), BP plc (BP - Analyst Report), Royal Dutch Shell (RDS.A - Analyst Report) and Dollar Tree Inc. (DLTR - Snapshot Report).

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Here are highlights from Tuesday’s Analyst Blog:

Hess Gains Momentum in Norway

The U.S. oil integrated company Hess Corporation (HES - Analyst Report) beefed up its interest in two offshore fields in Norway – Valhall and Hod – by exercising its right to pre-empt Total SA's (TOT - Analyst Report) sale of interests to BP plc (BP - Analyst Report). Hess will assume 7.85% and 12.5% interest in Valhall and Hod fields, respectively, for a total consideration of $496 million. The agreement is subject to regulatory approvals and is expected to be completed by the end of the third quarter of 2010.

The transaction will bring Hess’ interests in Valhall and Hod to 64.05% and 62.5%, respectively. In December, Hess joined with Royal Dutch Shell (RDS.A - Analyst Report) for a strategic asset swap deal. The deal had doubled Hess’ interest in these two fields to 56.2% and 50%, respectively.

The increasing stake in the offshore Norway fields has a favorable impact on Hess. This will support Hess’ long-term objective of profitably increasing its reserves and production.

The company’s improving fundamentals, commodity price leverage and exposure to areas with high resource potential (such as Brazil, Ghana, Indonesia and offshore Australia) position the stock to outperform its peers. We continue to see upstream momentum on the back of the company's large inventory of exploration and development projects.

Management pointed out that the drilling moratorium on offshore Gulf of Mexico would have no material impact on the company’s operations considering that Hess currently has no exposure in this region. Hess is optimistic with its international operations. While the stake increase in the off-Norway fields is a notable development, the company’s plan to invest in the Paris Basin and Bakken shale play later this year will act as catalysts in the near to medium term, in our view.

Dollar Tree Boosts Shareholder Value 

Dollar Tree Inc. (DLTR - Snapshot Report), one of the leading operators of discount variety stores, announced a share buyback for an additional $500 million of its common stock in an effort to boost shareholder value.

The current buyback is an add-on to the previously-announced share repurchase plan announced on October 7, 2007 for $500 million of which Dollar Tree still has $42 million remaining to expend. Therefore, the current authorization expands the funds available for share repurchases to $542 million. At a price of $63.05, the current authorization represents approximately 8.6 million shares. As of May 1, 2010, Dollar Tree had 84.8 million of common shares outstanding. The current share repurchase authorization will inflate the figure to 93.4 million of common shares outstanding.

The company, which has a market capitalization of $5.35 billion, has utilized $1.4 billion to repurchase shares since 2003, $218 million of which was spent in the first quarter of 2010.

Dollar Tree’s continuous effort to increase shareholder wealth through consistent share repurchase announcements reflects the company’s ability to generate strong cash. As of May 1, 2010, the company had cash and cash equivalents of $338.6 million, which represents a healthy cash position and the ability to provide good value to its shareholders.

Dollar Tree commands an industry leading return on equity (ROE); its trailing twelve months’ return on equity of 25.15% surpasses the industry return on equity of 13.53%.

Companies can use excess cash for strategic acquisitions and share repurchase activity. Share repurchases, however, represent an effective means to increase the value of shareholders. Thus, the best investment tool for a company is in its own shares.

Our Take

Share buyback programs are returning this year after they were held back last year when companies hoarded cash in the wake of the financial crisis. We believe this share repurchase announcement depicts that the company is in good shape and is well positioned for future growth.

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Read the full analyst report on HES

Read the full analyst report on TOT

Read the full analyst report on BP

Read the full analyst report on RDS.A

Read the full analyst report on DLTR