Hess Corporation (HES - Free Report) has inked an agreement with Ascent Resources – Utica, LLC to divest joint venture interests in the Utica shale play in eastern Ohio.
Effective Apr 1, the transaction is expected to raise net cash consideration of about $400 million. The sale comprises net acres of about 39,000, of which 26,000 acres is net undeveloped. In 2018, the assets are estimated to produce an average of 14,000 barrels of oil equivalent per day, of which about 70% is expected to be residue gas. In the joint venture, Hess has a working interest of 50%. The other partner is CNX Resources (CNX - Free Report) . The transaction is expected to close by the end of third-quarter 2018.
Update on Denmark Sale
Hess, as the operator of the South Arne Field in Denmark, decided to retain its interest of 61.5% in the field as the offers received for the earlier announced sale did not meet expectations. However, the company will continue to seek strategic options for this asset in the normal course of business.
Hess has been divesting non-core assets to focus on projects which will benefit the company in the long run. The company is planning to allocate the proceeds from the sale toward offshore Guyana project. Till date, Hess has made seven world-class oil discoveries at the Stabroek Block, located off the coast of Guyana. Hess raised gross recoverable resources projection to 3.2 billion barrels of oil equivalent (boe) from 2.25-2.75 billion boe. The company expects production from offshore Guyana’s Liza prospects to commence by 2020.
Hess is also among the leading producers of crude in the Bakken oil shale play in North Dakota. The company has interests in the best areas of the plays.
In the past three months, Hess’ shares have surged 37.9% compared with the industry’s 23.1% rally.
Zacks Rank & Other Key Picks
Hess currently has a Zacks Rank #2 (Buy).
A few other top-ranked players in the same sector are Occidental Petroleum Corporation (OXY - Free Report) and China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec. These stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.
Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the last four quarters.
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