Hess To Sell Half Of Bakken Midstream Assets For $2.68B

Hess To Sell Half Of Bakken Midstream Assets For $2.68B
Hess says it will sell half of its Bakken midstream assets to Global Infrastructure Partners for $2.68 billion.

Reuters

June 11 (Reuters) - Oil and natural gas producer Hess Corp said it would sell half of its Bakken midstream assets to private equity firm Global Infrastructure Partners for $2.68 billion and form a joint venture.

Hess' shares, which had fallen about 11 percent this year, rose as much as 6.5 percent in morning trading on Thursday.

The master limited partnership plans to file for an initial public offering of its common units upon closing of the transaction early in the third quarter this year.

"It was a positive surprise, that's why the market likes it better," said Fadel Gheit, an analyst at Oppenheimer & Co.

"Nobody really thought of a joint venture and then make it an MLP and do an IPO."

The transaction values the midstream assets at about $18.70 per share, nearly three times their estimated worth of $6.80 per share, Capital One Securities said.

Hess said in July it plans to form a publicly traded MLP comprising its pipeline and storage assets in North Dakota's Bakken oil shale field.

Including a debt offering by the joint venture, Hess will receive $3 billion in proceeds from the asset sale, the company said on Thursday.

Hess said the assets included in the joint venture are a natural gas processing plant, a crude oil truck, a pipeline terminal and a rail loading terminal in North Dakota.

The MLP will also include a propane storage cavern as well as related rail and truck loading facility in Mentor, Minnesota.

Hess, which will retain control of the midstream assets' operations, expects the MLP's net income at $145 million to $155 million for the year ending March 31.

The company also expects capital expenditures to be funded by the joint venture for the same period to be $325 million to $350 million.

Hess' shares were up about 6 percent at $69.57 on the New York Stock Exchange.

(Editing by Maju Samuel)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
M A Steiner | Jun. 12, 2015
Conclusion: Whatever pleases Wall Street is good; whatever keeps a healthy American Bakken oil patch going is not. If America were sovereign, this would probably not happen. We would stick to improving things here first, and sharing the excess with others. We are global, so there you have it.


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