Hess sells 50pc stake in Bakken midstream

OREANDA-NEWS. June 18, 2015. Hess sold a 50pc stake in its Bakken midstream assets to Global Infrastructure Partners for \\$2.675bn, joining a growing number of independents who are selling similar facilities to reinforce balance sheets and fund drilling activities.

The deal, expected to close early in the third quarter, will improve Hess' access to cash and provide flexibility to tap future growth opportunities, Hess said. The joint venture also plans an initial public offering of shares under the name Hess Midstream Partners.

The assets that will be included in the venture include a natural gas processing plant and rail loading terminal in Tioga, North Dakota, associated rail cars, a crude oil truck and a pipeline terminal in Williams county. Crude and natural gas gathering systems in North Dakota and a propane storage cavern and rail and truck transloading facility in Mentor, Minnesota, will also be part of the deal.

Following the deal Hess will begin reporting its Bakken-related midstream operations separately. For the three months ended 31 March, the midstream segment had a net income of \\$27mn. For the 12 months ending 31 March, 2016, its capital expenditure (capex) is expected to be \\$325mn-\\$350mn.

The deal is the latest in a string of midstream asset sales and ventures that independent exploration companies and other firms have undertaken to help raise cash following the steep drop in crude prices over the past year.

Ferrellgas earlier this month said it would buy midstream company Bridger Logistics for \\$837mn. Pioneer Natural Resources and Reliance Industries also said they would sell their Eagle Ford shale condensate and natural gas gathering joint venture for \\$2.15bn to Enterprise Products Partners.

Kinder Morgan in January spent \\$3bn to acquire Bakken pipeline company Hiland Partners from Continental Resources chief executive Harold Hamm. The company also shelled out \\$158mn in February on terminals from Royal Vopak. Last November, Enterprise Products Partners and Oiltanking Partners agreed to merge, combining two major operators of crude storage and pipelines on the Gulf coast.

Others that may sell midstream assets include Oasis Petroleum, which is "looking at different options" to monetize its Oasis Midstream Services water disposal unit in the Bakken. Whiting Petroleum, which acquired Kodiak Oil and Gfor \\$6bn to become the biggest Bakken producer, is looking at divestments of between \\$500mn and \\$1bn this year, including midstream assets, chief executive Jim Volker said.