Hess Says Retail Division Selloff Well Underway
NEW YORK -- Despite a vocal effort by activist hedge fund group Elliott Management Corp. to take Hess Corp. in a different direction, the company continues to successfully implement its own plan to become a pure-play exploration and production (E&P) provider.
A main component of this process is selling the 1,361 convenience stores and gas stations the company owned as of Dec. 31. "We are looking at all options [regarding selling retail outlets] to maximize shareholder value," Chairman and CEO John B. Hess said during the company's 2013 first-quarter earnings call today."The sales process is well underway."
Hess offered no additional details about who will buy the c-stores and gas stations, or when such transactions may be completed.
However, based upon Hess Corp.’s earnings report, the company officially no longer considers itself to be a retail operator. It placed its retail earnings, as well as its marketing and refining earnings, under the "discontinued operations" category for its 2013 first quarter, which ended March 31. The entire discontinued segment of Hess Corp.'s business earned $100 million in its latest quarter. Exact retail earnings were not specified.
As for its response to Elliott Management, which has criticized Hess' leadership, the chief executive did not address the concerns directly. But he did take time at the end of the earnings call to promote the qualifications of the six people the company nominated to its board of directors.
Elliott Management, which owns more than 4 percent of Hess Corp., nominated its own five members to the board of directors as part of its efforts to reinvigorate the company. The activist group has stated on several occasions that Hess Corp. stock is considerably undervalued.
In fact, Elliott Management created a website, www.reassesshess.com, and scheduled a town hall-style meeting to discuss its proposed board of director nominees at New York City’s Le Parker Meridien hotel on April 30.
Hess stated in the past that Wall Street analysts have applauded the company's conversion to a pure-play E&P company. Although the CEO acknowledged the company "still has work to do" to complete its transformation, shareholders who want to see results can look at the company's latest earnings report, he said.
Hess Corp. earned net income of $1.276 billion in its latest quarter, more than double the $545 million it earned during the same period in 2012. Several asset sales helped propel company earnings in its most recent quarter.
A $4 billion share repurchasing program and a hefty increase of its dividend further prove Hess Corp. is in a strong financial position, Hess concluded.
Hess Corp. shareholders will vote on its new board of directors on or before the company's annual meeting on May 16.