Hess U-Turn on Denmark Disappoints, but Utica Sale Adds Value
Hess surprised the market June 29 by agreeing to sell its Utica assets for $400 million ($1.30/share)--a much higher price tag than we expected. The divestiture includes 39,000 net acres in eastern Ohio, of which 26,000 are undeveloped. Hess anticipates production of 14,000 boe/d from the package in 2018, of which 70% is natural gas. That pegs the deal terms at approximately $9,000 per undeveloped acre (assuming $3,000 per flowing mcf of natural gas and $30,000 per flowing barrel of liquids). We...Hess is a global exploration and production company engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquid (NGL), and natural gas with production operations located primarily in the United States, Guyana, the Malaysia/Thailand Joint Development Area, Malaysia and Denmark. The company's Midstream operating segment provides fee-based services, including gathering, compressing and processing natural gas and fractionating NGL; gathering, terminaling, loading and transporting crude oil and NGL; storing and terminaling propane, and water handling services primarily in the Bakken shale play in the Williston Basin area of North Dakota.
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