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ConocoPhillips to Sell $10B in Assets to Improve Financial Position

October 12, 2009
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Oil and gas heavyweight ConocoPhillips said last week it is planning on divesting billions of dollars in assets over the next two years as part of a plan to improve its financial position and increase returns on capital. The company said it plans to achieve its goals through a combination of enhanced capital discipline and portfolio rationalization.

ConocoPhillips said it expects capital expenditures in 2010 to be approximately $11 billion, down from $12.5 billion in 2009. At this level of funding the company will support exploration, production and reserve replacement while preserving its project portfolio for future development. ConocoPhillips said it intends to meet its objective of replacing reserves through organic growth, noting that upstream production growth will occur from a reduced base as a result of the asset rationalizations.

The company said it will sell approximately $10 billion of assets over the next two years. The dispositions will occur across the company's Exploration & Production and Refining & Marketing portfolio. Proceeds will be targeted to debt reduction, accelerating the company's return to its stated target debt-to-capital ratio of 20-25%.

"This plan capitalizes on our large resource base and our strong portfolio of projects while providing flexibility for potential changes in business conditions. We will replace reserves and grow production from a reduced, but more strategic, asset base," said CEO Jim Mulva.

Further details of the company's 2010 capital program will be announced near the end of 2009. The announcement follows a warning from the companyearlier this month that its third quarter results would be crimped by weak North American natural gas prices (see NGI, Oct. 5).

The company also announced last week a quarterly dividend of 50 cents/share, payable Dec. 1, to stockholders of record at the close of business Oct. 30. This represents an increase of approximately 6% in the dividend rate for the company's common stock.

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