Integrated energy company, Hess Corporation (HES - Free Report) , has inked a deal with marine fuel logistics company, Aegean Marine Petroleum Network Inc. (ANW - Free Report) , to sell its U.S. East Coast bunkering business. Aegean Marine would dish out $30 million plus the cost of inventory as purchase consideration.
The transaction is expected to be completed by year-end 2013. The bunkering business sale is Hess’ strategic move to shift focus from refining to exploration and production (E&P). Hess’ total divestiture year to date, stands at more than $5.5 billion.
Hess is currently the leading marketer of marine fuels along the U.S. East Coast. The Hess bunkering operation and associated assets supply to the heavily trafficked ports of New York, Philadelphia, Baltimore, Norfolk and Charleston, and include approximately 250,000 cubic meters of leased tank storage. Over the last three years, these bunkering operations averaged 1.8 million metric tons in annual sales.
This transaction not only marks Aegean's entry into supplying U.S. customers but also enables it to meaningfully expand its global full-service marine fuel platform and increase exposure to U.S. clients worldwide, including leading cruise lines.
Hess plans to use the proceeds from the asset sales to lower its debt burden and add value to its financials. Also, the company has initiated its $4 billion share buyback program.
Hess is engaged in oil and gas exploration, production and refining as well as marketing. The company now plans to work as a pure play E&P and is working toward becoming a more focused, higher growth and lower risk company.
Hess currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider other stocks in the energy sector that are expected to outperform in the near term. These include Zacks Ranked #1 (Strong Buy) stocks of SM Energy Company (SM - Free Report) and TransGlobe Energy Corp. (TGA - Free Report) .