ConocoPhillips to sell additional $5 - $10 billion in assets

Company sits on ‘firmer foundation’ as it plans to invest heavily in E&P

ConocoPhillips (NYSE:COP) told the financial community in New York on March 22 that it plans to sell an additional $5-$10 billion of non-core assets over the next two years.

ConocoPhillips initiated its multi year returns-enhancement plan in 2010, designed to improve capital efficiency, reduce debt and increase shareholder distributions. Proceeds from the increased asset sales are expected to be used primarily to fund the company’s recently announced $10 billion share repurchase program and for capital investment opportunities.

Additional asset sales were anticipated. A March 17 research note from Jefferies & Co. Inc. speculated that additional upstream disposals, a mix of North American and international non-core assets, would be made.

“We are executing the plan set out last year to improve returns and create value through disciplined capital spending, non-core asset sales and growing production per share,” said Jim Mulva, chairman and chief executive officer (CEO).

Almost 90% of ConocoPhillips’ $13.5 billion 2011 capital program has been allocated to its exploration and production (E&P) segment.

In the US ConocoPhillips is focusing on onshore, liquid-rich shale plays like the Eagle Ford, the Bakken and North Barnett. In Canada the FCCL JV and the Surmont SAGD projects should drive substantial near-term growth as these developments ramp up, noted Jefferies.

E&P's 2011 capital program of $12 billion supports the company’s greater-than-100% reserve replacement target.

Internationally, Australia will play a key role in the company’s progress.

“Exploration activities should be focused in Australia, where appraisal of the promising Poseidon discovery should be carried out; China, where the initial wells in the onshore shale gas play could be drilled; in Poland we expect further activity on ConocoPhillp’s nascent European shale gas play,” continued Jefferies.

Financially, notes Jefferies, ConocoPhillips has a “much firmer foundation, with net debt to capital currently at 16%, half of that two years ago.”

ConocoPhillips is currently the world's sixth largest OECD-listed integrated oil company by market value.

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