) has validated that it is on the receiving end of a formal
notification by the Kazakhstan Ministry of Oil and Gas. The
Ministry is exercising its right under the Subsoil Law of
Kazakhstan to pre-empt ConocoPhillips' proposed sale of its 8.4%
interest in the North Caspian Sea Production Sharing Agreement
(Kashagan) to ONGC Videsh Limited.
As part of such notice, the Ministry of Oil and Gas has
nominated KazMunayGas (KMG) as the body that will obtain
ConocoPhillips' interest in Kashagan. The asset is located in the
Kazakhstan sector of the Caspian Sea.
Under the pre-emption, the proceeds received by ConocoPhillips
will remain unchanged at about $5 billion, including customary
Subsequently, KMG will proceed on finalizing all essential
approvals, which will include a consent from the Kazakhstan
Anti-Monopoly Agency. The transaction is likely to conclude in
the fourth quarter of 2013.
The latest sale of the company's interest in Kashagan forms
part of ConocoPhillips' strategy to enhance shareholder value
through portfolio optimization as well as focused capital
investments. These will likely lead to growth in production and
cash margins, superior returns on capital and a compelling
ConocoPhillips remains on track with its divestment program,
with a total of over $12 billion completed. The company has
generated $1.1 billion in proceeds from asset sales during the
quarter and expects to raise an additional $8.5 billion from the
disposition program by the end of 2013. In this regard,
ConocoPhillips is trying to shed part of the Surmont and APLNG
projects this year. This would enable ConocoPhillips to generate
a healthy cash surplus in 2013.
ConocoPhillips carries a Zacks Rank #3 (Hold). However, Zacks
Ranked #1 (Strong Buy) stocks -
PetroQuest Energy Inc.
Ocean Rig UDW Inc.
Hornbech Offshore Services, Inc.
) - are expected to perform impressively over the short term.
CONOCOPHILLIPS (COP): Free Stock Analysis
HORNBECK OFFSHR (HOS): Free Stock Analysis
PETROQUEST ENGY (PQ): Free Stock Analysis
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