Hess Corp. To Sell 50% Interest In Bakken Midstream Assets For $2.68 Bln

(RTTNews) - Hess Corporation (HES) announced that it has agreed to sell a 50 percent interest in its Bakken midstream assets to Global Infrastructure Partners for cash consideration of $2.68 billion. Hess and Global Infrastructure Partners will create a premier midstream joint venture - Hess Infrastructure Partners.

Upon closing, the joint venture will incur $600 million of debt through a 5-year Term Loan A facility with proceeds distributed equally to both partners, resulting in total after-tax cash proceeds, net to Hess, of $3.0 billion. In addition the joint venture will have independent access to capital including a $400 million 5-year Senior Revolving Credit Facility, which is fully committed, the company stated.

The joint venture upon closing plans to continue to pursue a proposed initial public offering or IPO of Hess Midstream Partners LP common units.

Consistent with its financial strategy, the company 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 on a disciplined basis.

The company said the transaction is subject to customary closing conditions and is expected to be completed early in the third quarter of 2015.

As a result of the joint venture, Hess will begin reporting its Bakken-related midstream operations as a separate midstream segment in its consolidated financial statements and will begin disclosing certain historical and forward-looking financial information for this segment.

Further, Hess said it expects midstream segment EBITDA for the twelve months ending March 31, 2016 to be $290 million to $300 million. Hess also expects capital expenditures to be funded by the joint venture on a 100 percent basis for the same period to be $325 million to $350 million.