The U.S. oil integrated company Hess Corporation (HES) beefed up its interest in the Tubular Bells oil and gas field in the Gulf of Mexico (GoM). The company purchased an additional 20% interest from BP plc (BP) for $40 million. Following this deal, Hess will become the operator of this field with a total interest of 40%.
 
Other partners in the Tubular Bells field are Chevron (CVX) and BP with each holding 30% interest. Discovered in 2003, the Tubular field is located 135 miles offshore New Orleans.
 
Separately, Hess also announced the completion of its interest acquisition in a couple of Norwegian North Sea offshore fields — Valhall and Hod. In June, the company assumed 7.85% and 12.5% interest in Valhall and Hod fields, respectively, for a total consideration of $496 million. The transaction brought Hess’ interests in Valhall and Hod to 64.05% and 62.5%, respectively.
 
We believe the needle had moved positively for Hess with its recent initiatives in exploration and production. Historically, the company had been lagging its peers in terms of upstream growth and balance sheet strength. The trend has, however, reversed with the recent momentum.   
 
Notably, the company keeps maintaining the balance between domestic as well as international upstream development efforts. We are, however, more optimistic about Hess’ international operations in terms of reserves and production growth. We like Hess’ oil-weighted production profile given our positive near- to medium-term oil outlook. The company’s valuation adequately reflects all these positives that force us to maintain a Neutral recommendation with the Zacks #3 Rank (Hold).
 
BP PLC (BP): Free Stock Analysis Report
 
CHEVRON CORP (CVX): Free Stock Analysis Report
 
HESS CORP (HES): Free Stock Analysis Report
 
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