Hess Corporation (NYSE:HES) announced on Friday that it has entered into an agreement to sell its joint venture interests in the Utica shale play in eastern Ohio to Ascent Resources – Utica, LLC for net cash consideration of approximately $400 million, effective April 1.
“We continue to focus our portfolio by divesting lower return, non-core assets as part of our strategy to deliver long-term value to shareholders,” CEO John Hess said. “Proceeds from this transaction will be used to invest in our higher return growth opportunities in Guyana and the Bakken and to fund the company’s previously announced share repurchase program.”
Hess has been moving to secure billions of dollars to fund development in the 6.6 million acres Stabroek Block offshore Guyana, where the company has a 30 percent stake. CNOOC Nexen holds a 25 percent stake in the block with ExxonMobil as operator holding 45 percent. More than 3.2 billion barrels of recoverable crude have been discovered to date in the block and oil production is set to begin by March 2020 with the first development project – Liza Phase 1.
The Utica divestiture consists of approximately 39,000 net acres including 26,000 net undeveloped acres. For full-year 2018, net production is forecast to average 14,000 barrels of oil equivalent per day, of which approximately 70 percent is expected to be residue gas. Hess holds a 50 percent working interest as part of a joint venture with CNX Resources (NYSE: CNX).
Hess said the agreement is subject to customary closing conditions and adjustments and is expected to close by the end of third quarter 2018.
Denmark Sale Update
Hess also announced that it has decided to retain its interests in Denmark, where the company holds a 61.5 percent interest in the SouthArne Field and is the operator. The offers received in a previously announced sale process did not meet the company’s value expectations. In the normal course of business, the company will continue to look at strategic options for this asset.