By SAABIRA CHAUDHURI
Hess Corp. said it is exploring options for its entire downstream business and pruning its Asian portfolio, while also unveiling a share buyback program of up to $4 billion and more than doubling its quarterly dividend.
The moves come as Hess continues to battle with an activist investor seeking to replace much of its board and restructure the company.
In a letter to shareholders highlighting actions Hess is taking to turn itself into a pure play exploration and production company, Hess said it is further focusing its E&P portfolio by divesting Indonesia and Thailand assets, looking to generate money from its Bakken midstream assets -- which is expected to be completed in 2015--and fully exiting the downstream businesses, including retail, energy marketing, and energy trading.
Hess is raising its quarterly common dividend 150% to $1 a share on an annual basis, beginning in third quarter of this year.
The company also said it is adding six new independent directors to its board, including the chief executive of GE's energy business, John Krenicki Jr., and ConocoPhillips's former senior vice president of E&P for the Americas, Kevin Meyers.
"By 2014, Hess will be a pure play E&P company with a tremendous portfolio comprised of higher growth, lower risk assets," CEO John Hess said.
Elliott Management Corp. -- which amassed a 4% stake in Hess, has previously said Hess's portfolio is scattered. Elliott has noted the company would be much more valuable if it spun off its assets in the oil-rich Bakken shale region and other US unconventional formations from less prolific international assets as it pressed the company to separate its assets in the oil-rich Bakken Shale region from less-prolific international assets and its vast network of gasoline stations.
The investors are seeking to replace Hess's board members at the company's annual meeting in order to press for changes.
On Monday, Hess said Elliott, which it described as "a hedge fund with almost no oil and gas experience and known for aggressive tactics," had a central thesis amounting to "little more than financial engineering based on flawed assumptions."
It said Elliott's founder, Paul Singer's proposals "demonstrate no meaningful operational insight" into its business.
"For the most part, his proposals would orphan our most promising assets and foreclose the potential for future real value creation," Hess said in its letter. "We are convinced that Singer's agenda would destroy shareholder value."
Dow Jones Newswires