ConocoPhillips (COP) 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. (500312.BY),
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.