Shares of Hess Corp. (NYSE: HES
) gained on Monday after the Company said that it intends to sell 20 storage terminals in the United States and the Caribbean, and move out of its refining business –a move which would allow the company to generate $1 billion in capital as it looks to shift its focus on oil and gas exploration and production business.
“By closing the Port Reading refinery and selling our terminal network, Hess will complete its transformation from an integrated oil and gas company to one that is predominantly an exploration and production company and be able to redeploy substantial additional capital to fund its future growth opportunities,” said John Hess, Company’s Chairman and Chief Executive in a statement.
While the 19-terminal network located in the East Coast of the United States has a storage capacity of 28 million barrels, the storage capacity at Company’s St Lucia terminal is 10 million barrels. The Company has hired Goldman Sachs to lead the sales process.
The network turned redundant after Hess shut down its Hovensa refinery last year and started depending on third parties to obtain refined products for its retail and energy marketing divisions.
The Company said that it will exit its refining business by shutting its Port Reading, NJ Refinery.
By announcing its intention to move out of refining and storage terminals business, Hess joined a list of companies such as Conoco Philips (NYSE: COP
) and Marathon Oil (NYSE: MRO
) that have decided to spin off slow growing refining business in order to focus on more profitable and faster growing exploration and production business.
Meanwhile, the Company also disclosed on Monday it has received a communiqué from a hedge fund, Elliott Associates and its associated entity Elliott International on Friday, stating that they intend to seek regulatory approvals to obtain additional stake in Hess.