ConocoPhillips Spinoff Details Emerge

As ConocoPhillips splits, it reveals which assets are set to be part of its new exploration-and-production company.

ConocoPhillips plans to complete the spinoff of its refining company in the second quarter of 2012, providing stockholders with one share in the new refining entity for every two shares they currently own, the Wall Street Journal reported.

In July, ConocoPhillips, the third-largest U.S. oil company announced plans to split into two companies in order to boost shareholder value.

During a conference call with analysts, ConocoPhillips Chief Executive Jim Mulva said the refining company is expected to have a capital-expenditure budget between $2 billion and $2.5 billion per year from 2013 to 2015, as it focuses on expanding its pipeline, storage and chemical business to allow for strategic acquisitions. .

The company also released more details on the split, noting that the upstream assets of its joint venture with Canada’s Cenovus Energy Inc. will be part of the new exploration-and-production company, including the Foster Creek and Christina Lake assets. Chevron Phillips, Conoco’s chemical joint venture with Chevron, is also set to be part of the new refining company, as are ConocoPhillips’ two U.S. refineries in Illinois and Texas.

The new exploration-and-production company’s capital-expenditure budget is expected to be about $15 billion per year beginning in 2013, and total output is expected to increase 3-4% starting that year, Mulva told the Wall Street Journal.

ConocoPhillips plans to continue selling exploration and production assets, as well as smaller refineries over the next few years as part of a three-year restructuring plan it started in 2009.

It expects to divest as much as $25 billion in assets through next year. This would include the sale of its 20% stake in Russia’s OAO Lukoil, from which much of the proceeds would be used to finance the company’s share-buyback program. ConocoPhillips anticipates spending $11 billion in share repurchases this year, according to Mulva.





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