Hess Sells Russian Subsidiary To Lukoil

Closed the sale of its Russian subsidiary, Samara-Nafta.

Hess Corp. (NYSE: HES) has closed on the sale of its Russian subsidiary, Samara-Nafta, to OAO Lukoil for $2.05 billion.

Prior to the sale, Hess owned 90% of the Russian subsidiary, which has operations in the Volga-Urals region, including exploration and production rights in 23 license areas. The region includes more than 50 fields and two oil treatment plants. In November 2012, Hess announced it wanted to sell its stake in Samara-Nafta.

Once working capital adjustments and taxes are deducted from the transaction, Hess will collect around $1.9 billion from the sale. The company will take the proceeds to repay short-term debt and strengthen its balance sheet in an effort to give itself additional flexibility for future growth.

So far this year, Hess has sold around $3.5 billion in assets as part of a corporate restructuring program announced two years ago. Hess is also looking to sell its upstream assets in Indonesia and Thailand and the remaining downstream business, including terminals, retail, energy marketing and trading. Most of the proceeds from these additional sales will be used to return capital to shareholders.

Hess anticipates that it will begin to repurchase shares under its existing $4 billion authorization in the second half of this year. Hess is a global oil and gas company based in New York.