Hess sells 50 pc stake in Bakken Midstream Assets $2.675 billion

Hess sells 50 pc stake in Bakken Midstream Assets for $2.675 billion

3:18 PM, 13th June 2015
Hess sells 50 pc stake in Bakken Midstream Assets for $2.675 billion
John Hess, chief executive officer, Hess Corporation. (File photo)

NEW YORK, US: Hess Corporation said it has agreed to sell a 50 percent interest in its Bakken midstream assets to Global Infrastructure Partners for $2.675 billion in cash and the two companies will create a premier midstream joint venture - Hess Infrastructure Partners. The transaction is expected to be completed early in the third quarter of 2015.

Upon closing, the joint venture plans to pursue a proposed initial public offering (IPO) of Hess Midstream Partners LP common units. Also with the proceeds from this transaction, plus cash on hand and an untapped $4 billion revolving credit facility, Hess will have a highly advantaged liquidity position compared to its peer group. Consistent with its financial strategy, the company will use proceeds from this transaction to preserve the strength of its balance sheet in the current oil price environment, provide additional financial flexibility for future growth opportunities and continue to repurchase stock on a disciplined basis, it said.

“This transaction delivers significant and immediate value to our shareholders. The joint venture with its strategically located assets will be one of the largest midstream operators in the Bakken. By capitalizing on the financial strength and midstream energy experience of Global Infrastructure Partners, the joint venture will be in a strong position to fund future energy infrastructure investments and continue to grow its midstream business,” said John Hess, chief executive officer, Hess Corporation.

As a result of the joint venture, Hess will begin reporting its Bakken-related midstream operations as a separate midstream segment. For the three months ended 31 March, the midstream segment had net income of $27 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of $64 million. Hess expects midstream segment EBITDA for the twelve months ending 31 March, 2016 to be $290 million to $300 million, it said.

The board of directors for Hess Infrastructure Partners will be comprised of six directors, with three members elected by Hess and three by Global Infrastructure Partners. Also Hess will operate the assets owned by the JV as a contract service provider, the company said.

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