Hess second-quarter net surges following Russian unit sale

7/31/2013

Hess second-quarter net surges following Russian unit sale


BY BEN FOX RUBIN
 
NEW YORK -- Hess Corp.'s second-quarter profit soared as the oil-and-gas company recorded a large gain from the sale of its Russian unit.

Hess has been shedding assets to fund drilling-and-exploration efforts as it struggles with lackluster profits and shareholder discontent. The New York company agreed in April to sell its stake in a Russian unit to Lukoil for $1.8 billion. Also, on Tuesday, Hess agreed to sell its energy-marketing business for about $1.03 billion to Direct Energy, Centrica’S North American unit, as part of its plan to exit the downstream business.

Hess reported a profit of $1.43 billion, or $4.16 a share, up from $549 million, or $1.61 a share, a year earlier. Gains on asset sales were $1.11 billion in the latest period. Excluding a gain on the Russian sale and other items, earnings were $1.51 a share in the latest quarter.

Revenue rose 24% to $4.11 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of $1.41 a share on revenue of $4.62 billion.

Earnings at Hess's exploration-and-production business jumped to $1.53 billion from $644 million, due primarily to gains on the Russian asset sale. The company's average selling price for oil, including hedging effects, increased 13% to $97.89. Average daily production was down 21% to 341,000 barrels of oil equivalent, due primarily to asset sales in Russia, the U.K. North Sea and Azerbaijan.

In May, Hess settled a months-long proxy fight, agreeing to name three directors backed by dissident hedge fund Elliott Management Corp. Elliott, which owns about 4.5% of Hess's shares, agreed to withdraw its slate of five nominees and support the Hess-backed directors at the company's annual meeting. Elliott had been calling for Hess to split into two companies in a bid to boost the stock's performance.

Shares closed Tuesday at $73.19 and were inactive premarket. The stock is up 38% so far this year.

Dow Jones Newswires

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