U.S. energy giant
) has agreed to divest its Algerian business unit for about $1.75
billion to Indonesia's state owned oil company - PT Pertamina.
The intended sale forms part of ConocoPhillips' 2012-2013 asset
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ConocoPhillips' wholly owned subsidiary - ConocoPhillips Algeria
Ltd. - has stakes in the Berkhine basin trio - Menzel Lejmat
North (65% operatorship stake), Ourhoud (3.7%) and EMK (16.9%),
which lie either fully or partially in Block 405a.
Other partners of ConocoPhillips in the fields comprise
Talisman Energy Inc.
Anadarko Petroleum Corp.
) and Sonatrach Petroleum Corp., Algeria's state-owned oil
The average yield from the fields for the year through October
was 11,000 barrels of oil equivalent per day. Prior to the
proposed sale, ConocoPhillips had placed a book value of about
$850 million on its Algerian assets. The company anticipates the
transaction to close by mid-2013.
The Houston-based explorer is shedding those assets it considers
as least productive and has raised over $2 billion through the
sale of refineries, pipelines and other assets since 2010.
ConocoPhillips has announced further asset sales, together with
the latest transaction, which are expected to raise funds of
about $7 billion upon completion. These funds are expected to be
used for general corporate purposes.
ConocoPhillips' divestment of its Algerian unit will be value
accretive for its shareholders as well as raise funds for
concentrating on higher return assets. It will facilitate the
company to focus on capital investments that will benefit
production and cash margins and enhance returns on capital.
The proposed sale is subject to co-venturer pre-emption rights
and Algerian government approval, over and above the customary
adjustments and closing conditions.
ConocoPhillips holds a Zacks #3 Rank that is equivalent to a Hold
rating for a period of one to three months. Longer term, we
maintain our Neutral recommendation.