Hess to Sell Energy Marketing Business to Direct Energy

Hess Corp. HES +3.18% agreed to sell its energy-marketing business for about $1.03 billion to Direct Energy, Centrica CNA.LN +2.13% PLC’s North American unit, as part of its plan to exit the downstream business.

Hess has been shedding assets to fund drilling-and-exploration efforts as it struggles with lackluster profits and a shareholder revolt. The New York oil-and-gas producer agreed in April to sell its stake in a Russian subsidiary to OAO Lukoil LUKOY -1.17% for $1.8 billion.

The energy marketing business supplies natural gas and electricity to 23,000 customers in the eastern half of the U.S.

Hess said the energy marketing sale raises its total divestitures so far this year to $4.5 billion.

Hess has used proceeds from its prior asset sales to repay $2.4 billion of debt. The company said it will use the funds from the latest sale to buy back stock under its existing $4 billion share repurchase authorization.

Hess has been battling criticism from dissident investor Elliott Management Corp., which has aimed to elect five board members. The hedge fund, which controls 4.4% of Hess’s shares, also wants to split Hess into two companies in a bid to boost the stock’s performance. Hess had offered to appoint two directors nominated by Elliott if the shareholder withdrew its five nominees to the board, but Elliott rejected the offer in May.

Hess reported in April its first-quarter earnings more than doubled on gains from asset sales, while revenue jumped 39% despite lower production.

via Hess to Sell Energy Marketing Business to Centrica Unit – WSJ.com.

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