By Denny Thomas
HONG KONG | Fri Jun 21, 2013 3:58am EDT
(Reuters) – U.S. energy companies Hess Corp (HES.N) and Newfield Exploration Co (NFX.N) have launched two separate auctions to sell part of their Asian oil and gas field stakes that have a combined value of about $3 billion, people familiar with the matter said.
Hess and Newfield, like a number of U.S. energy companies, have been unloading ageing and less productive oil and gas fields and investing back into more strategic and profitable projects, particularly in and close to their home markets, driven in part by activist shareholders.
Their retreat has been met by interest from Asian state oil companies and others keen to boost their portfolios in the region.
Hess, under the gun from hedge fund Elliot Management since January for changes to its governance and long-term strategy, has announced plans to become a pure-play exploration and production company.
It has sold or exited a number of businesses, announced plans to quit its retail gasoline, marketing and trading operations, and stripped CEO John Hess of his role as chairman.
Moody’s Investors Service expects the number of activist shareholder campaigns in the United States and Canada this year to exceed last year’s record levels.
“We don’t expect shareholder activism to quiet down anytime soon,” Moody’s Vice President Christian Plath said in a report released on Thursday.
The campaigns have been fed by record levels of cash on corporate balance sheets, a ready supply of inexpensive debt and activists’ own success in attracting investment capital.
Woodlands, Texas-based Newfield was also prodded to sell its interest inChina and Malaysian fields after suffering a fourth-quarter loss in February.
KUFPEC, a unit of Kuwait Petroleum Corp, London-listed Premier Oil (PMO.L), Indonesian state oil company Pertamina Persero PT, and Thailand’s state energy company PTT Exploration and Production PTTE.BK are among companies considering making bids for the assets, the people familiar with the matter said.
Unlisted KrisEnergy, owned by private equity firm First Reserve, and Canada’s Talisman Energy Inc (TLM.TO) are also expected to place bids, they added.
Preliminary offers for Newfield’s assets are due by the end of June, while Hess has set a mid-July deadline for its auction, one person familiar with the matter told Reuters.
Goldman Sachs (GS.N), which is handling both of the sales, has sent out information packages to potential suitors, the person added.
Newfield and Hess are among U.S. energy companies scaling back their global ambitions to focus on more profitable opportunities in their home market. They are also rebalancing their energy portfolios by focusing on their most productive assets and shedding others.
In Asia, Hess is selling its interests in Indonesia and Thailand, with an estimated value of up to $2 billion, to focus on the North Malay basin, the people said.
Hess, which has a market value of $22 billion, is the operator of Thailand’s Phu Horm onshore field with a 35 percent stake. In Indonesia, Hess has a controlling stake in the Pangkah gas producing asset, with KUFPEC as its partner with a 25 percent interest.
Newfield, which has a market value of $3.2 billion, is selling its interest in Chinese and Malaysian fields with an estimated value of about $1 billion, based on its production and reserve data, the people said.
Petroliam Nasional Bhd (Petronas) PETR.UL, Malaysia’s state oil firm, will be the key to that sale, since it is the operator of some of the blocks in the Malay Basin in which Newfield holds an interest.
“You need to have Petronas as a partner supporting you. That limits the buyer universe,” another person familiar with the process said.
Newfield did not comment directly on the launch of the auction but referred to a statement issued in April that said a data room providing information about its international businesses was expected to open in the second quarter.
KrisEnergy, Talisman, Premier and PTT Exploration declined comment.
“Pertamina is always keen to expand its upstream business and explore every opportunity available. Naturally domestic (Indonesia) assets are prioritized,” Pertamina Corporate Communications chief Ali Mundakir told Reuters via a text message. He declined to comment further.
Hess did not offer an immediate comment. Kuwait Petroleum was not available for comment.
(Reporting by Denny Thomas; Additional reporting by Charlie Zhu, Dinesh Nair, Fergus Jenkins, Sarah Young, Khettiya Jittapong and Scott Haggett; Editing by Michael Flaherty and Edmund Klamann)