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Hess to sell terminal network, close refinery
Monday - 1/28/2013, 6:16pm EST
NEW YORK (AP) - Hess Corp. said Monday that it plans to sell its U.S. terminal network and shutter its New Jersey refinery, completing its exit from the refining business and continuing its shift in focus toward exploration and production.
The New York-based company also disclosed that Elliott Associates LP and one of its affiliates plan to ask federal regulators for permission to buy a major stake in the company and may seek board seats at the annual meeting in May.
The investment firm did not conduct talks with Hess before notifying the company of its plans. It could ask to buy shares worth more than $800 million, Hess said.
The news sent Hess shares up more than 6 percent Monday, making it one of the market's biggest gainers.
John Hess said the company has worked to shift its focus toward exploration and production as part of a multi-year strategy to boost value for its shareholders. He noted that in the months since Hess's July announcement of the new strategy its shares have risen about 34 percent. In comparison, those of its competition have risen on average about 13 percent.
The terminal network is located along the East Coast and has a total of 28 million barrels of storage capacity in 19 terminals.Â The terminals previously served as the main outlet for Hess' share of production from its former Hovensa joint venture refinery.
Hess said that in light of that refinery's closure last year and its ability to buy refined products from outside sources, the terminal system is no longer needed. Hess said it has hired Goldman, Sachs & Co. to help with the sale.
The Port Reading, N.J., refinery, which will be closed by the end of February, includes a fluid catalytic cracking unit and mainly makes gasoline and components used for blending heating oil. The closure will affect about 170 jobs at the refinery, which currently employs 217 people. The remaining employees will continue to work at the complex's oil storage terminal, Hess said.
The refinery incurred losses in two of the past three years and its financial outlook is expected to remain challenged as a result of new environmental regulations and a weak forecast for gasoline refining profitability, Hess said.
Hess' St. Lucia oil storage terminal in the Caribbean with 10 million barrels of capacity is also being put up for sale. In addition to generating proceeds, the sale of the terminal network is expected to free up about $1 billion in working capital, the company said.
Hess shares rose $3.58, or 6.1 percent, to close at $62.48 Monday after peaking at $63.76 earlier. Over the past 52 weeks, the company's shares have traded between $39.67 and $67.86.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)