NEW YORK, N.Y. – Hess is getting out of the gas station business and ridding itself of its energy trading and marketing businesses, as it shifts its focus further into exploration and production.
The company will also nominate a slate of six independent directors to its board, replacing six that already hold seats.
The announcement arrives about a month after the hedge fund Elliott Management, one of the company’s largest shareholders, accused the board of “poor oversight,” and said that the company’s management was responsible for more than a “decade of failures.”
Elliott, which holds a 4 per cent stake in Hess Corp., is pushing to seat five outsiders on the board.
But Hess rejected Elliott’s nominees in a letter to shareholders Monday, accusing the firm of trying to disrupt progress it has already made in reshaping itself. It said that Elliott hasn’t taken into account how much company shares have risen since it began to shed previous business models.
Hess said the nominees chosen by Elliott would effectively dismantle the company.
Elliott released a statement later Monday saying that while Hess’ moves incorporate parts of its suggestions, they “fall dramatically short of what’s needed.” It touted its own slate of five board nominees, which include four with energy industry experience, and questioned the independence of Hess’ slate, noting that one of the nominees has ties to the Hess family.
Hess shares fell sharply after the recession, as did shares of most energy companies, but the stock began to rebound last summer and on Monday, they hit their highest level almost two years.
Shedding the green and white gas stations that stretch from New Hampshire to Florida, the vast majority of which are owned by Hess rather than franchisees, will allow the company to broaden exploration and production capabilities.
Spokesman Jon Pepper would not elaborate further on the sale.
Hess, based in New York, has already announced the sale of U.S. oil storage terminals and plans to close a New Jersey refinery as it exits the volatile refining business. Other energy companies are doing much the same, focusing the booming domestic drilling and also high-risk drilling operations at deep-water drill sites.
Murphy Oil, ConocoPhillips and Marathon Oil Corp. have all split off their refining businesses in recent years to focus on exploration and production.
Elliott has said it wants Hess to boost shareholder value through various means, including a potential spin-off of the oil company’s holdings in North Dakota’s Bakken shale-oil field.
Hess shares rose $2.52, or 3.8 per cent, to $69.06 in afternoon trading, after earlier changing hands as high as $70. The stock has changed hands between $39.67 and $70.77 in the past 52 weeks.