Hess Corporation (HES) has increased its quarterly common stock dividend by 150% to 25 cents per share. The new dividend will be paid on Sep 30, 2013 to shareholders of record as of Sep 16. The company had paid a dividend of 10 cents in the previous quarter.
New York-based Hess Corp. is an integrated energy company engaged in oil and gas exploration, production and refining as well as marketing.
Hess, however, remains on track with its transition to a pure play E&P company while boosting shareholder value, much like ConocoPhillips (COP) and Marathon Oil Corporation (MRO).
The company has already divested its subsidiary in Russia and its interests in the Beryl area fields in the United Kingdom North Sea, the Azeri-Chirag-Guneshli fields offshore Azerbaijan and the Eagle Ford assets in Texas. In this regard, the company has brought home $3.5 billion to date. The downstream businesses yet to be divested consist of terminal, retail and trading operations.
In an attempt to better manage its portfolio with respect to resource availability, project development and its intricacy, Hess intends to arrive at a 50:50 ratio between unconventional and conventional assets by 2013 from the existing 80:20. Currently, the ratio of the company’s undrilled inventory is 40:60 between unconventional and conventional. The recent lease in the Bakken and augmentation of Utica acreage are in sync with its new strategy.
Going forward, we believe that the company’s strong exploration upside in Ghana and continued improvement in Bakken productivity hold a lot of promise. This would help the company to consistently deliver 5–8% annualized production growth in the near future.
The company has also announced that it would resume share repurchases under its pre-existing $4 billion authorization. All these endeavors would undoubtedly add to shareholder value.
Hess shares currently retain a Zacks Rank #3, which translates into a short-term Hold rating. While this indicates that the stock will perform in-line with the broader market, there are other stocks that are likely to outperform. These include Carrizo Oil & Gas Inc. (CRZO), which looks attractive with a Zacks Rank #1 (Strong Buy).
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