OilVoice - US Major ConocoPhillips Sets Fundraising Target For North American Divestments

US Major ConocoPhillips Sets Fundraising Target For North American Divestments

Wednesday, April 28, 2010

US oil industry giant ConocoPhillips is set to wave goodbye to a number of its North American assets as part of its wider $10 billion divestment project. In particular, the firm's onshore portfolio is set to be targeted.

The assets ring-fenced for disposal by ConocoPhillips' divestment advisor Scotia Waterous illustrates the firm's move to severely curtail its exposure in the continental US market, which has traditionally been one of Conoco's primary operating areas. The underlying aim is to boost profits, as part of a wider strategic reorganization.

With the help of Scotia Waterous, the oil and gas mergers and acquisitions division of Canadian bank Scotia Capital, ConocoPhillips has listed three grouping of assets for sale in Western US: in Permian Basin, the Rockies and the Texas Panhandle; and nine packages in Western Canada:
one in both Saskatchewan and British Columbia and seven in Alberta. Interestingly, however, Alaska - the seminal asset in Conoco's upstream portfolio - has been left out of the divestment programme. At present, the Canadian properties have a flow rate of around 10,000 barrels per day (bpd). Despite this, the majority of the profits from the spin-offs are expected to come from the US-based assets in the oil major's portfolio.

The sell-off does not stop there, however. The firm is also planning to dispose of assets in South Louisiana, the Barnett Shale and in the lucrative Gulf of Mexico region. Beyond its Furthermore, the company is reported to be planning to put assets in its exploration, production, refining and marketing portfolios 'on the block' in the near future.

Given the diverse scope and number of assets up for sale, analysts believe ConocoPhillips will have little problem in reaching is $10 billion fundraising target. Earlier this year, Conoco went public with its plans to halve its 20% stake in Russian oil producer Lukoil. The 10% stake sale alone should put around $5 billion in the firm's coffers.

In sum, despite the mass sell-off of mature assets in North America, it is important to note that the firm is not withdrawing altogether from its operations in the region. Cementing its interest in certain mature block, last month ConocoPhillips unveiled its plans to build a secondary recovery project in the North Sea off the Norwegian coastline.