PVR Partners LP (PVR), Hess Corp. (HES), CONSOL Energy Inc. (CNX): Shape Shifting Might Be Required to Promote Growth

Another shifting business
Hess Corp. (NYSE:HES) managed to reduce its well costs around 30% last year. Through the first six months of this year, those costs were reduced an additional 5%. With gas prices still trading at historically low levels, cost containment is a key factor that will support continued expansion efforts.

In addition to that, the company is in the midst of shifting to a pure exploration and production model. To that end, it has been shedding non-core assets such as the Energy Marketing business it recently agreed to sell to Direct Energy for about $1 billion. Such sales will not only help refocus the company and return value to shareholders via dividends and share buybacks, but they will also lend support to the company’s drilling efforts.

Dipping a toe in
It’s also noteworthy that this is PVR Partners LP (NYSE:PVR)’s first foray into the Utica Shale area. So not only is PVR Partners LP (NYSE:PVR) getting a new partner, adding Hess Corp. (NYSE:HES) to a list that includes such dominant companies as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Royal Dutch Shell plc (ADR) (NYSE:RDS.A), it’s also entering an entirely new operating region. While it is too soon to tell if this pipeline will be the foundation on which a larger regional presence is built, the prospects are promising. And that makes growth potential beyond 2015 look increasingly alluring.

The market, however, appears to be put off by PVR’s slow well connections so far this year. The units are down about 20% since mid to late July and yield around 9.5%. This, however, could be a buying opportunity if you are willing to look beyond near-term weakness. In fact, the partnership appears to be setting up a “pipeline” for long-term growth.

The article Shape Shifting Might Be Required to Promote Growth originally appeared on Fool.com is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Chevron.

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