By MELODIE WARNER
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.
The number of demand response (DR) sites worldwide will reach 21.9 million by 2020, growing from 10.3 million in 2013, finds a new report from Navigant Research.
This year, the report says total load curtailment in the world from DR programs is estimated to be 57,764 MW. By 2020, global load curtailment is expected to reach 140,472 MW at a compound annual growth rate (CAGR) of 13.5%.
Although DR is a relatively mature market in the U.S., the report says DR programs are just getting under way in most other regions, including Europe, Asia Pacific, the Middle East and Africa. In the years ahead, countries in these regions promise to develop robust DR markets with solid growth prospects.
“While the majority of DR sites today are residences located in North America, the technology will expand rapidly to include homes, commercial buildings and industrial facilities in many countries,” says Marianne Hedin, senior research analyst with Navigant Research. “The adoption of automated demand response (ADR) looks especially promising, particularly in Asia Pacific, which will most likely leapfrog less advanced technologies, moving directly to ADR as the market accelerates.”
Both energy demand and reliance on intermittent renewable sources like wind and solar power are growing in many countries. The report says these developments make it necessary for utilities to balance the grid through DR on a continuous basis (frequently second by second) to address constant power fluctuations on the grid. In addition, new technologies (e.g., smart meters) and open standards like OpenADR and Smart Energy Profile 2.0 are opening up new DR opportunities.
For more information about Navigant Research’s report is available here.
Is your company participating in Demand Response programs? Contact Richards Energy Group for more details.