Oil and gas explorer
) has announced the sale of its 30% indirect stake in
NaryanMarNefteGaz to co-owner Lukoil Holdings. Although the
financial terms of the agreement were not disclosed by the
companies, ConocoPhillips anticipates an after-tax gain of $400
million from the deal.
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This latest deal is in sync with the company's ongoing three-year
strategic plan to reposition the company. ConocoPhillips focuses on
improving portfolio returns and increasing value and distributions
Back in 2004, ConocoPhillips entered into a joint venture with
Lukoil to set up NaryanMarNefteGaz for the development of oil and
natural gas resources in the northern part of the country's
Timan-Pechora province. The Russian joint venture has seven
licenses with production from five fields.
ConocoPhillips intends to sell $8 billion to $10 billion worth of
assets over the coming years. This plan also includes the
divestment of $15 billion to $20 billion of assets in total, with
large-scale share buybacks and the spin-off of its refining arm
earlier this year.
In May 2012, ConocoPhillips completed the spin-off of its
refining/sales business into a separate, independent and publicly
). The idea behind the spin-off was to create value for
shareholders who like the volatility in the refining business.
Houston, Texas-based ConocoPhillips is a major global exploration
and production (E&P) company with operations and activities in
30 countries that mainly include the U.S., Canada, UK/Norway,
China, Australia, offshore Timor-Leste, Indonesia, Libya, Nigeria,
Algeria, Russia and Qatar.
However, we remain cautious about the company's weak production
volume, which experienced a 6.1% downfall in the second quarter
from the year-ago period. The decline was mainly due to the impact
of divestitures and maintenance downtime, accompanied by reductions
in North American conventional natural gas.
We maintain an Underperform recommendation on ConocoPhillips for
the long term.