Hess Continues Dismantling Downstream
Selling commercial fuels business to Sprague Resources as part of refocusing on E&P
NEW YORK -- As part of its ongoing strategy to become a pure-play exploration and production (E&P) entity, Hess Corp. is selling its commercial fuels business outside of the New York City service area to Sprague Resources LP.
Portsmouth, N.H.-based Sprague Resources announced that it has signed an agreement to acquire the Hess commercial business, one of the largest marketers of refined products on the East Coast, serving commercial, industrial and government accounts through both former Hess terminal locations and third-party facilities.
Sprague Resources said that it expects the transaction to be finalized prior to the end of the year.
"This acquisition will significantly increase our existing commercial fuels business and expand our geographic footprint along the East Coast," said David Glendon, CEO of Sprague Resources. "The fact that Hess approached us to service their accounts following the sale of their terminals business reflects Sprague's reputation in the industry for providing superior customer service and reliable delivery. We look forward to extending these services to the Hess Commercial Fuels customer base and ensuring seamless service provision to these accounts."
Separately, Aegean Marine Petroleum Network Inc. said on Thursday that it has closed the acquisition of the U.S. East Coast bunkering business of Hess, valued at more than $30 million.
New York City-based Hess said in February that it would divest its various businesses, including its retail network, as part of a broad restructuring to exit the entirety of its downstream business and transform itself into an E&P company. It did not specify whether it would do so by selling the retail network or by spinning it out into a separate business. Hess has approximately 1,360 gas stations, many with convenience stores, spread among several East Coast states.
According to speculation by industry analysts, possible suitors for the retail assets include B.J. Wholesale Club, Marathon Petroleum (Speedway) and Alimentation Couche-Tard Inc. (Circle K), among other companies.
In July, it enlisted Goldman Sachs Group Inc. to sell its gas station network as the oil company moves to reshape itself into a pure exploration-and-production (E&P) company.
In October, Hess entered into an agreement with Buckeye Partners LP to sell its U.S. East Coast and St. Lucia terminal network for $850 million.
In November, it sold its energy marketing business, which supplies natural gas and electricity to 23,000 commercial, industrial and small business customers in the eastern half of the United States, to Direct Energy for $1.2 billion.
Sprague Resources is engaged in the purchase, storage, distribution and sale of refined petroleum products and natural gas. The company also provides storage and handling services for a broad range of materials.