Hess Retail Spinoff to be Completed in Mid-2014

NEW YORK CITY -- Hess Corp. filed a Form 10 with the U.S. Securities and Exchange Commission and will spin off its entire retail division in mid-2014, CEO John Hess stated during today's 2013 fiscal fourth-quarter earnings call.

At the same time, the oil and gas company is currently conducting a parallel effort to sell the retail division, comprised of more than 1,300 convenience stores and gas stations primarily located in the Northeast.

"The parallel sales process is ongoing to see which process will be the best option for us," John Hess said during the call. The CEO did not note whether Hess is leaning toward spinning off or selling its retail division at this point.

If Hess goes the spinoff route, the company will be traded on the New York Stock Exchange under the symbol HRE. The Internal Revenue Service has already determined the spinoff will be a tax-free transaction to Hess shareholders.

If a sale of the retail division is determined to be the best option, Circle K parent Alimentation Couche-Tard Inc., Speedway LLC parent Marathon Petroleum Corp. and BJ's Wholesale Club Inc. have been identified as the most likely buyers. If a sale is consummated, it would not be a tax-free transaction, the company confirmed.

Selling or spinning off the retail division is the main item left on Hess' agenda in its effort to convert to a pure-play exploration and production business. "By any measure, our progress has been remarkable," John Hess said. "We received $7.8 billion in net proceeds from asset sales in 2013. We used $1.9 billion of that [cash] to repurchase stock in our stock repurchase program."

Overall, Hess downstream -- parent to its retail division -- earned $1.01 billion for its 2013 fourth quarter ended Dec. 31. This figure compares to a $159-million profit during the same period in 2012. Energy marketing and terminal sales accounted for much of the profit increase.

Companywide, New York City-based Hess earned adjusted net earnings of $319 million for its latest quarter, compared to $409 million in the prior-year period.

"We had a fantastic 2013," concluded John Hess. "… We are successfully shifting to lower-risk, higher-growth assets."

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