Energy stocks gain as Hess rallies a second day

SAN FRANCISCO (MarketWatch) � Hess Corp. shares jumped more than 10% on Tuesday, rallying for a second day as Elliott Management sent a scathing letter to shareholders, calling the oil and gas company �scattered� and suggesting asset sales and spinoffs.

The hedge fund, which owns about 4% of Hess HES , also called for a management shake-up, saying �tremendous value is trapped� inside Hess as a result of �poor oversight� by the company�s inexperienced board of directors. See: Investors losing patience with energy stocks

Hess �is an incredibly scattered organization,� the hedge fund said in the letter to shareholders. It suggested the oil company ought to spin off its Bakken holdings and its retail and marketing operations, as well as exit other businesses.

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Elliott also named five candidates to Hess�s board of directors and two alternates, a day after the hedge fund disclosed its intention to buy more Hess shares and take an activist role in the company.

Hess on Monday said it would sell fuel terminals and its Port Reading, N.J., refinery by the end of February. Hess shares earlier Tuesday hit a 52-week high of $70.77 and were among the top gainers on the S&P 500. Shares ended the day up 9%.

Refiner Valero Energy Corp. VLO �also rallied, with shares up 13% as the company earlier Tuesday reported fourth-quarter results that beat Wall Street expectations by a mile.

Profits surged to $1.01 billion, or $1.82 a share, up from $45 million, or 8 cents a share, in the year-earlier period. Margins more than doubled on lower crude-oil prices and lower operating costs. Analysts expected per-share profits of around $1.18.

Reuters Enlarge Image Hess�s Port Reading refinery in New Jersey.

Valero�s results lent some shine to rivals, with Tesoro Corp. TSO �shares up 4.8% and shares of Phillips 66 PSX �up 4.9%. Phillips 66 is scheduled to report fourth-quarter results on Wednesday, while Tesoro is set to report on Feb. 6.

Shares of big oil companies posted more muted gains, with Exxon Mobil Corp. XOM � up 0.7%. Chevron Corp. CVX �advanced 1%, and ConocoPhillips COP �rose 0.9%.

Coal miner Peabody Energy Corp. BTU �shares gained 5.6%. The company reported fourth-quarter losses of $1.01 billion, or $3.78 a share, from a profit of $222.4 million, or 82 cents a share, in the year-earlier period. The October-to-December period included write-downs and mine closures and losses were lower than expected.

It was �a messy release,� analysts at Simmons said in a note to clients. But operations in the western U.S. surprised �to the upside� and Australian volumes were much higher than expected while costs were lower than expected, the analysts added.

All energy stocks on the S&P 500 gained. Among the laggards, Williams Cos. Inc. WMB �rose 0.1%. Natural-gas producer Chesapeake Energy Co. CHK �shares were up 0.2%.

The SPDR Energy Select Sector XLE , an exchange-traded fund tracking energy names, rose 1.6%. Crude-oil futures CLH3 �gained 1.1% to $97.57 a barrel on the New York Mercantile Exchange.