HOUSTON -- ConocoPhillips announced 2007 cash capital expenditures of approximately $11.8 billion yesterday, part of a strategy that on the retailmarketing side included the divestiture of all of its 830 direct-owned gas stations.
Our asset rationalization program is progressing well, said Jim Mulva, chairman and CEO of the Houston-based major oil company. Consistent with our previously announced expectations, we are on target to achieve proceeds of approximately $3 billion to $4 billion by the end of 2007. In addition, we are completing a study on how [image-nocss] best to market our domestic refinery system's clean products. ConocoPhillips plans to market gasoline, diesel fuel and aviation fuel through approximately 10,000 outlets, the majority of which utilize the Phillips 66, Conoco or 76 brands; however, our company-owned and operated outlets will be divested to existing or new wholesale marketers.
Of the approximately 830 retail outlets scheduled for divestiture, 330 are company-owned and company-operated. The remaining outlets are operated by dealers.
As a result of the adoption of this plan, the company said it anticipates recording a charge to earnings for a held-for-sale impairment of about $200 million (after tax) in fourth-quarter 2006.
Some 84% of the company's 2007 total authorized capital program will be allocated to its Exploration & Production segment. The Refining & Marketing segment will receive approximately 13%, with the remaining being spent in Emerging Businesses and Corporate.
The 2007 capital program for Refining & Marketing is approximately $1.7 billion, with about $1.3 billion of this amount allocated to ConocoPhillips' U.S. businesses. The company has allocated $1.1 billion for U.S. refining, primarily for projects related to sustaining and improving the existing business with a focus on reliability, energy efficiency, capital maintenance and regulatory compliance. Work continues at a number of refineries on projects to increase crude oil capacity, expand conversion capability and increase clean product yield.
A memo obtained by CSP Daily News reads in full:
Company-Owned Site Divestiture
To U.S. Marketing Employees:
As you may be aware from earlier communications, we have decided to divest U.S. Marketing's company-owned outlets, which include our company-operated Retail and Dealer-operated sites. The decision to discontinue ownership was made in a thoughtful manner, recognizing the impact it would have on employees, customers, and the future of our U.S. Marketing business. Many ConocoPhillips employees have dedicated some or all of their careers to building the Retail or Dealer business and we owe them gratitude for making our Direct business what it is today.
ConocoPhillips has a history of being in Retail and is known for doing it well. Our safety performance is the industry's best-in-class, and we have made continuous improvement in our environmental performance. Retail's unit operating costs are among the lowest in the industry and PMPS results are very competitive. There have been periods of time when Retail has made a significant financial contribution to our downstream business. In the past, we have used Retail as a seed for branded Wholesale marketer growth, introducing our brands into new markets to provide a foundation for our branded Wholesale network. The decision to sell these sites was made with these contributions in mind.
We understand that this decision may create challenges for some of you. For those directly impacted, you may be concerned about future employment opportunities at ConocoPhillips. While we don't have the answers to your questions about asset sale timing and plan implementation, we do intend to share as much information as we can during this process. We will make every effort to be available to answer your questions as quickly as we can. A U.S. Marketing Town Hall meeting is scheduled for December 14 at 10:00 am, central time. In the meantime, if you have immediate questions, please contact your supervisor or HR business partner. Additionally, you should be aware that there are other resources available to you, including the Employee Assistance Program, which can be reached at (800) 628-1103. I know that this decision has the potential to create distractions from your normal job related responsibilities, but I request that you focus on your work and support our decision as we begin implementing this plan. Most importantly, I ask that you continue to prioritize your safety as well as the safety and well being of those around you.
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