The Zacks Analyst Blog Highlights: Hess, ZaZa Energy, Jefferies Group, ConocoPhillips and Starwood Hotels & Resorts Worldwide

Zacks

For Immediate Release

Chicago, IL – June 13, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Hess Corporation (HES), ZaZa Energy Corporation (ZAZA), Jefferies Group, Inc. (JEF) , ConocoPhillips (COP) and  Starwood Hotels & Resorts Worldwide Inc. (HOT).

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Here are highlights from Tuesday’s Analyst Blog:

Hess, ZaZa End Partnership

 

Integrated oil company Hess Corporation’s (HES) partnership agreement with Houston-based energy firm ZaZa Energy Corporation (ZAZA) was terminated by the latter. The pact, formed in 2010, comprised exploration and development of the Eagle Ford Shale formation in Texas and the Paris basin in France.

Hess made a direct payment of $15 million to end the agreement for Eagle Ford and is liable to shell out a further $70 million in cash upon closure. The companies also plan to conclude their partnership agreement in the Paris basin. The companies expect to sign definitive agreements to this intent by June 29, with closure scheduled before August 15.

Upon termination, ZaZa’s core holdings in the proved, productive regions of the oil-rich Eagle Ford would be augmented to reach 72,000 acres from its recent holding of 11,500 acres. But its conventional producing assets in the Paris basin will remain at about 24,260 acres.

ZaZa has hired Jefferies Group, Inc. (JEF) to assist it in finding another joint venture partner for its assets in the Eagle Ford and the emerging Woodbine region. Jefferies is also responsible for assessing the strategic prospects available to ZaZa.

The new transaction would include transfer of some oil, gas and mineral interests, well bores and production in the Eagle Ford Shale and Paris basin. Per the deal terms, Hess is entitled to receive royalty payments.

We believe Hess has a competitive advantage over its peers based on improving fundamentals, commodity price leverage and exposure to areas with high resource potential (such as Brazil, Ghana, Libya and offshore Australia). We continue to see an upstream momentum on the back of the company's large inventory of exploration and development projects. The termination of one agreement is unlikely to affect its strong revenue base.

We are maintaining our long-term Neutral recommendation on the stock. Hess, which faces competition from ConocoPhillips (COP), currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

 

Starwood Beefs Up Luxury Connection

 

Starwood Hotels & Resorts Worldwide Inc. (HOT) recently revealed that it remains on track to unveil 10 new Luxury Collection Hotels & Resorts globally in the near term. The company has properties coming up in countries like China, India, Indonesia and Thailand.

We view the White Plains, New York-based company’s focus on enhancing luxury as quite strategic. Of its total pipeline of 95,000 rooms, 80% occupies the upper upscale and luxury segments. According to management, the extremely high net worth individuals were less affected by the global recession and increased by almost 30% since 2006. Hence, management plans to attract those guests.

Moreover, increased room rates lead to higher fees and eventually to a monetarily enriched portfolio. Management stated that, at the current level, its luxury brands comprise 10% of its total rooms and contribute 20% to its fees.

Luxury Collection Hotels & Resorts fall in the eponymous category. Management commented that luxury resorts generally have a higher demand abroad and hence Starwood has 90% of its Luxury pipeline outside North America.

Launched in 1906, the brand rides on a high growth trajectory and has already spread globally with 80 hotels in more than 30 countries. Well known for its upper-upscale hospitality and individuality, management sees the brand as a lucrative addition to its luxury hotels and invests $100 million in it. According to management, in the last five years, the brand’s reach has widened by 40% and achieved 270 points in RevPAR index.

 

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Read the analyst report on HES

Read the analyst report on ZAZA

Read the analyst report on JEF

Read the analyst report on COP

Read the analyst report on HOT

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