(Corrects fifth paragraph to show that HOVENSA refinery was
closed last year)
* Elliott Associates may nominate directors to Hess board
* Hedge fund may also buy $800 mln of Hess shares
* Hess to close New Jersey refinery, sell 20 oil terminals
* Hess says moves will free up $1 bln in capital
* Shares up 6 pct
Jan 28 Hess Corp on Monday announced
plans to sell its oil storage terminal network and exit the oil
refining business, after activist hedge fund Elliott Associates
said it was considering nominating directors to the Hess board.
Hess' decision to become predominantly an exploration and
production company is similar to the strategy employed by others
such as ConocoPhillips and Marathon Oil, which
spun off their refining operations in recent years.
"Hess is now facing some activist shareholder interest. In
order to deflect or preempt pressure from Elliot, Hess announced
it will be becoming a pure E&P company," said Pavel Molchanov,
an oil analyst for Raymond James.
Molchanov said the move to simplify Hess' asset base should
be appreciated by investors. Hess shares rose 6 percent in
Hess has been shifting away from refining since early last
year, when the HOVENSA refinery, a joint venture between Hess
and Venezuela's PDVSA, was closed. Chief Executive John Hess has
said the company's strategy is to focus on lower-risk,
higher-return assets like its position in the Bakken oil shale
in North Dakota.
Hess said in a statement on Monday that it received a letter
from Elliott late last week saying the hedge fund might buy more
than $800 million of Hess shares, or a roughly 4 percent stake.
Such a purchase would make Elliott one of the top three
shareholders in Hess, according to Thomson Reuters data.
Elliott also said it was considering nominating candidates
for election to the Hess board at the 2013 annual meeting.
Hess said it has not had any discussions with Elliott and
does not know the hedge fund's intentions.
The oil and gas producer said its plans to sell 20 oil
storage terminals and close its money-losing New Jersey refinery
will free up $1 billion of capital.
The Port Reading refinery, which will be closed by the end
of February, incurred losses in two of the past three years.
"By closing the Port Reading refinery and selling our
terminal network, Hess will complete its transformation from an
integrated oil and gas company to one that is predominantly an
exploration and production company," John Hess said.
U.S. gasoline futures rose following news of the planned
closure of the 70,000 barrel-per-day refinery, which raised
concerns about dwindling fuel supplies on the U.S. East Coast.
Nineteen of the Hess terminals up for sale are located along
the East Coast and have a combined storage capacity of 28
million barrels. The other terminal, in the Caribbean, has a
capacity of 10 million barrels.
Hess has retained Goldman Sachs as financial adviser for the
terminal network divestiture.
Shares of New York-based Hess were up 6.2 percent at $62.55
in afternoon trade on the New York Stock Exchange.
(Reporting By Michael Erman and Thyagaraju Adinarayan;
Additional reporting By Anna Driver in Houston; Editing by
Sriraj Kalluvila and John Wallace)