Hess 'Looking Carefully' at Investor's Request to Divest Retail
NEW YORK -- Hess Corp. Chairman and CEO John B. Hess said the company is "looking carefully" at a proposal by investor group Elliott Management Corp. that calls for Hess to sell off its entire retail division and break into three separate companies.
During its 2012 fourth-quarter earnings call this morning, the CEO stated that Hess will respond to Elliott Management’s proposal "shortly," noting that the earnings call is "not the proper time to respond."
"We look at everything to enhance long-term shareholder value and are happy to discuss ideas with shareholders," the chief executive said.
Elliott Management recently purchased a 4-percent stake in Hess, valued today at about $900 million. In addition to urging Hess to sell its convenience store and gas station division, the firm recommended the oil company spin-off its lucrative acreage in the Bakken shale of North Dakota, as well as form different divisions for its upstream and downstream operations.
The investor group also nominated five of its executives to Hess' board, perhaps in an effort to more easily push through its agenda.
Elliott Management's 4-percent stake in the company is second only to John Hess' share ownership.
Although the CEO didn't yet have a response to the Elliott Management proposal, he did report the company is in a strong financial position and he is "confident selling non-core assets is the right [approach]." He was referring to an announcement the company made last year that it was divesting $2.4 billion worth of assets, primarily comprised of sales in its exploration and asset portfolio.
As CSNews Online previously reported, Hess also announced on Monday that it would exit the refinery business by closing its Port Reading, N.J., refinery at the end of February.
"The divestitures will complete the strategic positioning of our portfolio," John Hess said. "We expect those divestitures to be complete by the end of 2013."
As for the company’s earnings report, Hess' retail division earned $268 in revenues for its 2012 fiscal fourth quarter, which ended on Dec. 31. That compares to $290 million during the same quarter of 2011.
For the entire 2012 year, Hess achieved $1.123 billion in revenues at its retail locations vs. $1.189 billion for fiscal year 2011.
The company had 1,361 c-stores and gas stations as of Dec. 31.
Companywide, Hess earned a net profit of $566 million for its latest quarter, compared to a loss of $131 million in 2011's fourth quarter. Hess' marketing and refining division primarily accounted for the 2012 Q4 profit, earning $159 million compared to a loss of $561 million during the same quarter last year.