ConocoPhillips (NYSE: COP) today confirmed receiving official notification that the Kazakhstan Ministry of Oil and Gas is exercising its right under the Subsoil Law of Kazakhstan to pre-empt ConocoPhillips’ proposed sale of its 8.4 percent interest in the North Caspian Sea Production Sharing Agreement (Kashagan) to ONGC Videsh Limited.
As part of such notice, the Ministry of Oil and Gas designated KazMunayGas (KMG) as the entity that will acquire ConocoPhillips’ interest in Kashagan, located in the Kazakhstan sector of the Caspian Sea.
The proceeds received by ConocoPhillips under the pre-emption will remain unchanged at approximately $5 billion, including customary adjustments.
KMG will proceed with finalizing all necessary approvals, including approval from the Kazakhstan Anti-Monopoly Agency. The transaction is expected to close in the fourth quarter of 2013.
“This is another important milestone in progressing our asset disposition program,” said Don Wallette, executive vice president, Commercial, Business Development and Corporate Planning. “The decision by the Kazakhstan government to exercise its pre-emptive right demonstrates the value of this asset and moves us closer to completing this transaction.”
The sale of its Kashagan interest is part of ConocoPhillips’ plan to increase value for shareholders through portfolio optimization, focused capital investments that deliver growth in production and cash margins, improved returns on capital, and a compelling dividend.