Hess Says It's 'Premature' to Share Any Retail Selloff Details

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Hess Says It's 'Premature' to Share Any Retail Selloff Details


NEW YORK -- Hess Corp. executives said the company is continuing its efforts to sell its retail division, but refrained from providing any further details regarding when the transaction will take place or who potential acquirers could be.

"The retail division divestiture is well underway," CEO John Hess said during Hess' 2013 fiscal second-quarter earnings call today. "It's premature to share any details, but we are exploring all options to maximize shareholder value."

Today’s comments are almost exactly the same as what the chief executive said during the company's first-quarter earnings call on April 24. Since then, Marathon Petroleum Corp. became a potential suitor for Hess' retail division, which operates 1,714 convenience stores and gas stations, including 353 it recently acquired from WilcoHess.

"Hess has very good-looking assets," Gary Heminger, CEO of Marathon Petroleum -- parent of the Speedway LLC convenience store chain -- said during its earnings call on April 30.

Despite Hess’ resistance to discuss the sale of its retail division, the company did say it plans to spin off its midstream Bakken shale assets into a master limited partnership (MLP) in 2015. If the company goes that route, it would join several others with convenience industry ties who have already formed MLPs, including Marathon Petroleum, Susser Holdings Corp., Alon USA, Delek US Holdings and Phillips 66.

"We see good growth in our midstream assets," said John Hess, adding that the company has no intention of selling this division.

As for its second-quarter earnings, Hess considers retail a discontinued portion of its business and hence does not break down retail division earnings any longer. Downstream earnings, under which retail is housed, totaled $11 million in the latest quarter compared to $12 million during the same period in 2012.

Companywide, Hess generated a profit of $1.4 billion in its most recent quarter ended June 30. The oil company earned $549 million in the same quarter last year.

In addition to retail, Hess is selling many of its assets in an effort to become a pure-play exploration and production company. During the second quarter, Hess made asset sales totaling $2.2 billion. Yesterday, the company announced it sold its energy marketing business to Direct Energy for $1.025 billion, which will reflect on the balance sheet as a third-quarter asset sale.

The proceeds of all these sales will be used to pay down debt and initiate a share repurchase program, according to John Hess.