Hess Corp. (NYSE:HES) entered into an agreement with Direct Energy, Centrica PLC (OTCMKTS:CPYYY) (LON:CNA)’s North American Unit to sell its energy marketing business for $1.03 billion.
The proposed deal involves Centrica PLC (OTCMKTS:CPYYY) (LON:CNA) buying Hess’ energy marketing business for $731 million in cash and about $300 million in working capital.
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Hess Corp. (NYSE:HES)’ energy marketing business serves 23,000 commercial, industrial and small business customers spread across 18 states in eastern United States. The proposed deal would help Centrica to expand its presence in North America.
Sale to facilitate buyback
Hess Corp. (NYSE:HES) indicated the proceeds from sale of its energy marketing business would facilitate the company to start its buyback program under an existing $4 billion repurchase program.
Earlier, the leading independent global energy company, Hess agreed in April to sell its stake in a Russian subsidiary Samara-Nafta to OAO Lukoil for $1.8 billion.
During March, the energy company completed the sale of its 2.72 percent interest in Azeri, Chirag and Guneshli Fields (ACG) and its 2.36 percent interest in the Associated BTC pipeline to ONGC Videsh Ltd for $1 billion.
The New York oil-and-gas producer used the proceeds to repay its $2.4 billion debt, besides strengthening its balance sheet for future growth.
Hess on reshaping drive
The proposed sale transaction with Centrica PLC (OTCMKTS:CPYYY) (LON:CNA) brings year-to-date asset sales for Hess to $4.5 billion. The energy major has been working on reshaping its business.
The energy major has been shedding assets to fund drilling-and-exploration efforts as it struggles with lackluster profits and a shareholder revolt.
Earlier in May, Hess Corp. (NYSE:HES) and activist hedge fund Elliott Management finally ended their four month long proxy fight and reached an agreement on the board. The two sides resolved the issue only a few hours before shareholders started coming to attend Hess Corp. (NYSE:HES)’s annual investor meeting. The oil company finally agreed to give Elliott three board seats to gain the hedge fund’s support for its five directors.
Hess’ marketing business sale to Centrica PLC (OTCMKTS:CPYYY) (LON:CNA) is expected to close in the fourth quarter, subject to regulatory approvals and other customary closing conditions.