Continued Execution of Strategic Plan to Focus Portfolio on Higher
Return Assets, Prefund Development of World Class Guyana Investment
Opportunity
NEW YORK--(BUSINESS WIRE)--Oct. 24, 2017--
Hess Corporation (NYSE: HES) today announced several additional steps in
the continued execution of its strategic plan to further focus the
company’s portfolio and allocate capital to higher return assets:
-
An agreement to sell its oil and gas interests in Norway for total
proceeds of $2 billion
-
Commencement of a process to sell its interests in Denmark
-
Implementation of a cost reduction program expected to deliver annual
cost savings of more than $150 million starting in 2019
“With the continued success of our asset sale program, we are focusing
our portfolio on higher return assets and reducing our breakeven oil
price,” CEO John Hess said. “Proceeds from these asset sales, along with
cash on the balance sheet, will prefund development of our world class
investment opportunity in offshore Guyana, where we have participated in
one of the world’s largest oil discoveries of the past decade –
positioning our company to deliver more than a decade of cash generative
growth and significant value for our shareholders.”
The sale of its interests in Norway combined with the company’s
previously announced divestitures of its enhanced oil recovery assets in
the Permian Basin and interests in Equatorial Guinea have captured
approximately $3.25 billion in cash proceeds year to date. These
reshaping moves including the planned sale of interests in Denmark will
also extinguish approximately $3.2 billion in future abandonment
liabilities. In addition, with a portion of these cash proceeds, we
expect to reduce Hess Corporation debt (excluding midstream) by $500
million in 2018. Together with the planned $150 million annual cost
reduction program, these actions are expected to reduce cash unit
production costs by approximately 30 percent – to less than $10 per BOE
– by 2020.
Sale of Interests in Norway, Sales Process in Denmark
Hess has entered into an agreement to sell its subsidiary Hess Norge,
which owns interests in the Valhall and Hod fields in Norway, to Aker BP
ASA for total proceeds of $2 billion, effective January 1, 2017. The
Valhall and Hod fields produced an average of 26,000 barrels of oil
equivalent per day net to Hess over the first six months of 2017. Hess
holds a 64.05 percent interest in Valhall and a 62.5 percent interest in
Hod. The sale is subject to customary conditions for completion,
including approval by the Ministry of Oil and Energy, Ministry of
Finance and relevant competition clearance and is expected to be
completed by year end 2017.
In addition, Hess will commence a process to sell its interests in
Denmark, where it holds a 61.5 percent interest in the South Arne Field.
This sales process is expected to be completed in 2018. The South Arne
Field produced an average of 11,000 barrels of oil equivalent per day
net to Hess in the first six months of 2017.
Lower Cash Unit Costs from Portfolio Reshaping and Associated Cost
Reduction Program
Starting in 2020, cash unit costs are expected to be reduced by
approximately 30 percent from 2017 levels. This reduction results from
investment in higher return growth assets, the sale of higher cost
assets and a cost reduction program that is expected to deliver annual
cost savings of more than $150 million starting in 2019.
Hess Corporation is a leading global independent energy company engaged
in the exploration and production of crude oil and natural gas. More
information on Hess Corporation is available at http://www.hess.com.
Cautionary Statements
This news release contains projections and other forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These
projections and statements reflect the company’s current views with
respect to future events and financial performance. No assurances
can be given, however, that these events will occur or that these
projections will be achieved, and actual results could differ materially
from those projected as a result of certain risk factors. A
discussion of these risk factors is included in the company’s periodic
reports filed with the Securities and Exchange Commission.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171023006582/en/
Source: HESS CORPORATION
Hess Corporation
Investor:
Jay Wilson, (212)
536-8940
jrwilson@hess.com
or
Media:
Lorrie
Hecker, (212) 536-8250
lhecker@hess.com