Hess Corporation has agreed to sell a 50 percent interest in its Bakken midstream assets to Global Infrastructure Partners for a cash consideration of US$2.675 billion.
The two firms will create a new midstream joint venture – Hess Infrastructure Partners. On closing, the joint venture will incur $600 million of debt through a five year term loan A facility with proceeds distributed equally to both partners, resulting in total after-tax cash proceeds, net to Hess, of $3 billion.
In addition the joint venture will have independent access to capital including a $400 million five year senior revolving credit facility, which is fully committed. The joint venture plans to pursue a proposed initial public offering (IPO) of Hess Midstream Partners LP common units.
John Hess, CEO of Hess Corporation, said: “This transaction delivers significant and immediate value to shareholders. The joint venture with its strategically located assets will be one of the largest midstream operators in the Bakken. By capitalising on the financial strength and midstream energy experience of Global Infrastructure Partners, the joint venture will be in a strong position to fund future energy infrastructure investments and continue to grow its midstream business.”
With the proceeds from this transaction, plus cash on hand and an untapped $4 billion revolving credit facility, Hess will have a highly advantaged liquidity position compared to its peer group. 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.
