October 10, 2013 [Reuters] - Hess Corp plans to sell its East Coast and St. Lucia storage terminal network to Buckeye Partners LP for $850 million as the U.S. oil and gas company reshapes its sprawling energy business to focus on exploration and production.
Buckeye will acquire 20 liquid petroleum products terminals with total storage capacity of about 39 million barrels, the companies said in statements on Wednesday.
All of the terminals are located along the U.S. East Coast, except for Hess’ Santa Lucia terminal in the Caribbean, which has a capacity of about 10 million barrels of crude oil and refined petroleum products.
Along the East Coast, Buckeye currently owns over 4 million barrels of storage in New York, nearly 1.6 million barrels in Pennsylvania, as well as smaller facilities in Florida, Massachusetts, Maine and Virginia. The company also owns several product pipelines in the Northeast.
Hess, which is one of the largest oil producers in North Dakota’s Bakken shale play, has been selling off assets due in part to efforts by activist investor Elliott Management’s to shake up the company. The company said it has sold assets worth $5.4 billion so far this year.
In February, it shut its 70,000 barrel per day Port Reading refinery due to poor margins, and has sought to sell its retail and trading arm Hetco.
The terminal sale, which will free up around $900 million of working capital, did not include a storage terminal on St. Croix owned by Hess’ Hovensa refining joint venture with Petroleos de Venezuela.
Since Elliott began making its case for change in January, Hess announced plans to become a pure play exploration and production (E&P) company by selling or exiting a number of businesses, put eight new independent directors on the company’s board and stripped longtime chief executive John Hess of his role as chairman.
