ConocoPhillips to sell Kazakh interests for $5 billion
BY SAABIRA CHAUDHURI
HOUSTON -- ConocoPhillips unveiled plans to sell its 8.4% interest in the North Caspian Sea Production Sharing Agreement, or Kashagan, to ONGC Videsh Ltd. for proceeds of about $5 billion, as the exploration and production company continues its effort to divest itself of billions of dollars in assets this year.
"The sale of this quality asset is an important component of our ongoing strategic asset disposition program," said Don Wallette, executive vice president of commercial, business development and corporate planning.
The company noted that as of Sept. 30, the carrying value of the net assets related to ConocoPhillips's interest in Kashagan was about $5.5 billion. As such, it expects to record a write-down of about $400 million in the fourth quarter.
ConocoPhillips said it has notified government authorities in Kazakhstan and its co-venturers of its intent to sell. ONGC Videsh Ltd.--which is the international arm of Oil and Natural Gas Corp., India--will buy ConocoPhillips's interest in Kashagan, which is located in the Kazakh sector of the Caspian Sea.
The deal is expected to close in the first half of next year.
ConocoPhillips is in the midst of a three-year repositioning aimed at improving its balance sheet and making itself more attractive to investors. That plan includes the sale of $15 billion to $20 billion in assets, large-scale share buybacks and the spinoff of its refining arm earlier this year to Phillips 66 (PSX).
ConocoPhillips said the disposition program has yielded proceeds of $2.1 billion through Sept. 30. Once closed, the latest deal would increase that total to about $7 billion, positioning the company to accomplish its target of $8 billion to $10 billion by the end of 2013.
Shares closed Friday at $56.67 and were inactive in recent premarket trading. The stock has risen 12% in the past year.
Dow Jones Newswires