Hess to sell half its Bakken midstream assets for $2.67B

By The Bakken Magazine Staff | July 15, 2015

Hess Corp., one of the largest exploration and production companies in the Bakken shale play, has agreed to sell a 50 percent interest in its Bakken midstream assets to Global Infrastructure Partners, an infrastructure investor, for cash consideration of $2.675 billion. The two companies will create a midstream joint venture—Hess Infrastructure Partners. The total after-tax cash proceeds to Hess of $3 billion include joint venture debt issuance. Hess will retain operational control of Bakken midstream assets. The venture, valued at $5.35 billion, will incur $600 million debt with proceeds distributed equally to both partners. Hess said in its company conference call, that upon closing, the joint venture plan is to continue to pursue a proposed initial public offering of Hess Midstream Partners LP common units.

The Hess midstream assets included in the joint venture are: a natural gas processing plant in Tioga, North Dakota; a rail loading terminal in Tioga and associated rail cars; crude oil truck and pipeline terminal in Williams County, North Dakota; a propane storage cavern and rail truck transloading facility in Mentor, Minnesota; and crude oil and natural gas gathering systems in North Dakota. The transaction is expected to close in the third quarter of 2015.

“This transaction delivers significant and immediate value to our shareholders,” said John Hess, CEO. “The joint venture with its strategically located assets will be one of the largest midstream operators in the Bakken. By capitalizing on the financial strength and midstream energy experience of Global Infrastructure Partners, the joint venture will be in a strong position to fund future energy infrastructure investments and continue to grow its midstream business.”

“We are excited to announce the formation of this strategic joint venture with Hess, one of the leading independent exploration and production companies in the U.S.,” said Adebayo Ogunlesi, chairman and managing partner of GIP. “This transaction builds on GIP’s already deep experience in the energy midstream infrastructure space, including our unique ability to accommodate the needs of upstream players such as Hess, and is in line with our strategy of developing partnerships with industry leaders. We look forward to working together with Hess’ best-in-class management team and further developing our relationship.”

According to the company, Hess will use proceeds from this transaction to preserve the strength of its balance sheet in the current oil price environment, provide additional financial flexibility for future growth opportunities and continue to repurchase stock in a disciplined basis.

The board of directors for Hess Infrastructure Partners will be comprised of six directors, with three members elected by Hess and three by Global Infrastructure Partners.