Seeking Alpha

Hess sells energy marketing business for $1.03B

  • Hess (HES) agrees to sell its energy marketing business to British utility Centrica's (CPYYF.PK) North American subsidiary Direct Energy Business $731M in cash plus net working capital of ~$300M.
  • The sale is part of Hess' plan to focus on its E&P activities, and brings YTD asset sales to $4.5B; Hess says the sale will allow it to start buying back shares under an existing $4B repurchase program.
  • Centrica says the deal makes Direct Energy the largest business gas supplier on the U.S. east coast and the second largest business supplier in the U.S. retail power market.
Comments (2)
  • The integrated model is now over for all but the largest global energy companies and for the various inefficient and protected state owned national oil and gas companies.
    Hess is rather late in purifying its strategy and simplifying its business model.
    If Hess has a genuine competitive advantage as a large North American independent, it is not immediately apparent but Management now has an opportunity to communicate and convince.
    Share buybacks ,while useful, also raise the issue whether the company has enough of a prospect portfolio to profitably deploy capital.
    30 Jul 2013, 02:02 PM Reply Like
  • $HES $100 ez imo. Long.
    30 Jul 2013, 03:14 PM Reply Like
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