Replies to post #3299 on The Rising Influence of Rising Affluence

[DewDiligence]

Insiders have been unusually heavy buyers at many companies:

http://www.cnbc.com/id/44161947

[DewDiligence]

HES was +5.2% today; the company’s refinery in Port Reading, NJ (a stone’s throw from Staten Island, NY) suffered no damages from Irene, as had originally been feared.

[DewDiligence]

HES, CNX Ink Exploration Collaboration for Utica Shale

[HES is paying $593M for a 50% stake in CNX’s acreage, consisting of $59 up-front and $534M over time as the acreage is developed. Like such shale formations as the Bakken and Eagle Ford, the Utica shale is believed to be rich in liquids.]

http://www.reuters.com/article/2011/09/07/consol-hess-idUSN1E78605P20110907

›Wed Sep 7, 2011 1:02pm EDT

HOUSTON, Sept 7 (Reuters) - Oil and gas producer Hess Corp (HES) will pay CONSOL Energy (CNX) $593 million to form a joint venture and develop CONSOL's properties in the Utica shale in Ohio, the companies said on Wednesday.

The Utica shale in eastern Ohio has drawn heated interest from oil and gas companies like Chesapeake Energy Corp (CHK), but its potential is still a question mark because few wells have been drilled.

CONSOL owns about 200,000 acres in the basin, most of which it bought last year from Dominion Resources. The new deal with Hess will give it a pretax gain of about $59 million.

The companies' plan to jointly develop the assets calls for Hess to generally operate in areas that have a high liquids content. Drilling will begin in a few weeks.

The joint venture values the Utica properties at about $6,000 per acre, well below the prices for the more mature Marcellus and Eagle Ford shales.

The Utica shale, which stretches southwest from New York and Canada to Tennessee, lies roughly 3,000 to 7,000 feet beneath the better-known Marcellus shale formation.

Bob Brackett, analyst at Bernstein Research, said the price and structure of the Hess deal underscore the fact that the Utica is an exploration, not a development opportunity.

By his calculation, the Hess joint venture consists of an upfront payment of $600 per acre, with the balance going to cover drilling costs over the next five years.

Chesapeake, which has 1.2 million acres to drill in the Utica, has valued its acreage at up to $20 billion or $16,000 per acre. The company has not yet released any production or estimated reserve data but says it sees big potential for the field.

On Tuesday, Chesapeake Chief Executive Aubrey McClendon said he expected to strike a joint venture deal for a portion of its Utica acreage by the end of October.

The Hess deal may cause that deadline to slip, Bernstein said.

"Any counter-party offering a deal at a significantly greater premiums may desire CONSOL-like terms," Brackett wrote in a note to clients.‹

[DewDiligence]

HES CEO, John Hess, bought $10M worth of stock (!) yesterday on the open market at $57.17/sh:

http://www.sec.gov/Archives/edgar/data/4447/000120919111047595/xslF345X03/doc4.xml

The $10M purchase increases the size of John Hess’ holding by 60%, giving him 470K shares worth $28M at the current market price.

Hess’ purchase comes on the heels of a $545K purchase by one of HES’ independent directors one month ago (#msg-66113344).