Integrated energy company, Hess Corporation (HES) received a proposal from privately owned retailer BJ’s Wholesale Club Inc. for its gas station business. This is in line with the ongoing transition of the company to a pure play E&P company.

Hess’s potential divestment of its more than 1,300-store retail gas stations takes the company a step closer toward that goal. The company has already divested its U.S. East Coast bunkering business, subsidiary in Russia as well as interests in the Beryl area fields in the United Kingdom North Sea, the Azeri-Chirag-Guneshli fields offshore Azerbaijan and the Eagle Ford assets in Texas. On Monday, it also announced agreements to sell its interests in the Pangkah and Natuna A assets located off the coast of Indonesia. The agreements are expected to close before the end of first quarter 2014.

Hess plans to use the proceeds from the asset sales to lower its debt burden and add value to its financials. Also, the company has initiated its $4 billion share buyback program.

New York-based Hess Corp. is an integrated energy company engaged in oil and gas exploration, production and refining as well as marketing.

In an attempt to better manage its portfolio with respect to resource availability, project development and its intricacy, Hess intends to arrive at a 50:50 ratio between unconventional and conventional assets. Currently, the ratio of the company’s undrilled inventory is 40:60 between unconventional and conventional. The recent lease in the Bakken and augmentation of Utica acreage are in sync with its new strategy.

Going forward, we believe that the company’s strong exploration upside in Ghana and continued improvement in Bakken productivity hold a lot of promise. This would help the company to consistently deliver 5–8% annualized production growth in the near future.

Hess currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider other stocks in the energy sector that are expected to outperform in the near term. These include Zacks Ranked #1 (Strong Buy) stocks of Blueknight Energy Partners, L.P. (BKEP), Matador Resources Co. (MTDR) and Abraxas Petroleum Corp. (AXAS).

ABRAXAS PETE/NV (AXAS): Free Stock Analysis Report

BLUEKNIGHT EGY (BKEP): Free Stock Analysis Report

HESS CORP (HES): Free Stock Analysis Report

MATADOR RESOURC (MTDR): Free Stock Analysis Report

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