Back to top

Analyst Blog

U.S. energy major Hess Corporation (HES - Analyst Report) has closed the sale deal with ONGC Videsh Ltd. (OVL) with respect to farming out of a 2.72% interest in the Azeri, Chirag and Guneshli Fields (ACG) and its 2.36% interest in the associated BTC pipeline. The deal was valued at around $1 billion.

The total after-tax net proceeds received by Hess was $884 million, adjusting for net cash flow obtained since Jan 1, 2012.

Located in the south of the Caspian Sea about 62 miles (100 kilometers) off the coast of Azerbaijan – the ACG fields are operated by BP plc (BP - Analyst Report) with a stake of 34.1%. The field was commissioned in 1997. The field generates about 700,000 barrels per day (bpd) of crude, of which OVL’s share would be over 19,000 bpd. ACG is the largest oil and gas field complex in Azerbaijan and one of the largest producing oil fields in the world. It has a total reserve of more than 6.5 billion barrels.

Other partners in the field are Chevron Corporation (CVX - Analyst Report), State Oil Company of Azerbaijan Republic (SOCAR), Inpex, Statoil ASA (STO - Analyst Report), ExxonMobil Corporation (XOM), Turkish national oil company TPAO and Japanese Itochu with interests of 15.8%, 10%, 10%, 8.6%, 8%, 6.8% and 3.9%, respectively.

BTC pipeline is among the primary export routes for Caspian oil yield and carries liquids from Baku – the capital city of Azeri – to the Ceyhan terminal in the Mediterranean Sea in Turkey through Georgia. The pipeline has a capacity of about 1 million bpd and offers OVL the chance to augment its portfolio around the Caspian Sea and transport crude from the assets it may purchase in the region in the future.

Hess remains on track with its strategy of becoming a purely E&P company while boosting its shareholder value. In this regard, it may be mentioned that Hess plans to pursue the sale of 20 oil storage terminals in the U.S. and the Caribbean and exit its refining business. Further, the latest sale validates its growing presence as a focused, higher growth, lower risk pure play exploration and production company.

Hess holds a Zacks Rank #3 (short-term Hold rating).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
THE PANTRY… PTRY 21.02 +2.09%
INTEL CP INTC 35.15 +1.88%
CLAYTON WIL… CWEI 117.30 +1.78%