Hess Corp to exit downstream business and focus on E&P

US independent integrated energy giant Hess Corp yesterday said that it will sell its energy trading arm, Hetco, and exit its retail gasoline and convenience store operations by 2015 and transform itself into a pure-play exploration and production company.

Hess, which last year sold its interests in oil fields in Azerbaijan to ONGC for $1 billion, is also divesting businesses in Indonesia and Thailand to focus on exploration and production from oil and gas fields in the US, Norway, Malaysia and Ghana.

The New York-based company will offload its remaining downstream assets, including more than 1,350 gas stations in 16 US east coast states, sell some 28 million barrels of storage terminals and complete its exit from the refining business when it closes its refinery in New Jersey.

It will seek to monetise its pipelines, gathering systems and processing plants assets in the Bakken shale operations, distribute the money to shareholders through higher dividends and launch a new $4-billion share buyback program.

Hess said that it had started the transformation in 2010 by focusing on the exploration and development of its most promising lower risk, higher growth, oil-linked E&P assets.

In the first phase of transformation, Hess invested in its most promising assets, including increasing its leadership in the Bakken oil shale, and entering the Utica shale, while acquiring an additional ownership stake in the Valhall Field in Norway.