Hess sells 50 percent interest in Bakken midstream assets
Hess Corp. has added its Bakken midstream assets to the list of those it is or has monetized over the last three years as part of its transition to a pure-play exploration and production company. For two years Hess Corp. has been discussing plans to sell partial interest in the Bakken midstream assets by 2015 ― now that day has come.
On June 11, Hess Corp. announced plans to sell a 50 percent interest in its Bakken midstream assets to Global Infrastructure Partners for a cash consideration of $2.675 billion. In North Dakota those assets include crude oil and natural gas gathering systems, the Tioga natural gas processing plant, the Tioga rail loading terminal, and a crude oil truck and pipeline terminal in Williams County. The assets also include rail cars associated with the Tioga terminal as well as a rail and truck transloading facility in Mentor in western Minnesota near Grand Forks.
The transaction will result in a new midstream joint venture known as Hess Infrastructure Partners overseen by a six-member board of directors with each partner electing three members. Hess Corp. will retain operational control of the assets, including budgeting, and all employees currently working within the assets will remain Hess employees. However, all other decisions such as new contracts, debt and equity offerings and capital structure will be made by the elected directors.
In the deal, the new partnership will incur $600 million in debt through a five-year term loan to be equally distributed between the two partners giving Hess Corp. net after-tax proceeds of $3 billion.
“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,” Hess Corp. said in a June 11 press release. “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.”
Global Infrastructure Partners is an international, independent energy, transport and water/waste infrastructure investor with offices in New York, Connecticut, London and Sydney, Australia. It is not to be confused with Global Partners, the Massachusetts-based domestic crude oil and petroleum products distributor which owns and operates rail loading terminals in Burke and Mercer counties, North Dakota.
- Mike Ellerd