Investors pushing for a change in the setup of the oil and gas company Hess Corp (NYSE: HES), have finally got their way as the New York based energy company made an announcement to sell its Russian unit, Samara Nafta, for $2.05 billion.
In efforts to reshape and refocus its sprawling business Hess will sell its 90% stake in Samara Nafta to Lukoil, Russia’s second largest crude oil producer.
Lukoil is interested in purchasing oil assets as part of its long term strategy to halt falling output. Production has been in steady decline over the past three years due to rapidly depleting wells in West Siberia, and disappointing output from new drill sites in the Timan-Pechora region in northern Russia.
Related article: TNK-BP Billionaires Seek New Oil & Gas Prowess
Samara-Nefta, from its operations in the Volga-Urals region of Russia currently produces around 50,000 barrels of oil equivalent a day, and has a reported 85 million tonnes of oil in proven reserves. Hess expects its 90% stake to fetch about $1.8 billion after tax.
In line with its streamlining plans, Hess has also announced the sale of assets in the North Sea, Texas, and Azerbaijan, hoping to net about $3.4 billion after tax. Chief Executive John Hess, stated that the plan is to use most of the proceeds to return capital to the shareholders.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com