) is all set to divest its Nigerian assets to bring billions of
dollars for the largest independent oil and natural-gas producer in
The company's Nigerian properties - which accounted for less
than 3% of ConocoPhillips' daily output as of 2011 - comprises
onshore, offshore oil and gas fields, and a stake in its LNG Brass
facility. The divestitures of these assets are likely to support
ConocoPhillips to raise as much as $2.5 billion and even more if
those are sold separately.
The onshore assets are considered to be the most important parts
of the to-be sold properties and are fully functional. Conoco has
shares in the four onshore leases that contributed 45,000 barrels
of oil equivalent on a daily basis last year.
However, the value for the Brass project is still uncertain as
it is in its early stages. Additionally, the company also plans to
construct a liquefied natural gas facility in the Niger Delta.
The company also holds interest in the Uge oil project off
The U.S. oil behemoth is looking to divest $8 billion to $10
billion within a year mainly to concentrate on improving returns.
This latest intention of Conoco will likely draw attention from
Nigerian as well as Asian companies that include Conoil and Oando,
China Petroleum and Chemical Corporation
), Oil and Natural Gas Corporation ("ONGC") of India and Korea
National Oil Corporation ("KNOC").
Recently, ConocoPhillips reported lower-than-expected first
quarter 2012 adjusted earnings, mainly due to lower production
volume. Although, the latest asset sale program may again hinder
the company's production volume, it will facilitate it's focus on
the three-year strategic operation that includes large-scale share
buybacks. The U.S. oil company intends to use the proceeds from the
sale for its share repurchase program.
ConocoPhillips has already separated its refinery unit,
) and became two leading, independent energy companies,
ConocoPhillips and Phillips 66. Although we remain positive on the
outlook for the new ConocoPhillips post-split and its ability to
generate free cash flow by unlocking capital tied to non-core
assets, we remain on the sidelines considering its sensitivity to
changes in the crude oil price, as well as geopolitical risks
associated with international operations and operational
Hence, we believe that ConocoPhillips' shares will perform in
line with the broader market and maintain our long-term Neutral
The company currently retains a Zacks #4 Rank, which is
equivalent to a short-term Sell rating.
CONOCOPHILLIPS (COP): Free Stock Analysis
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