ConocoPhillips Asset Sale Update
May let go of refineries sooner than planned; will be "more upstream, less downstream"
HOUSTON -- ConocoPhillips CEO James Mulva said Wednesday that he hopes to speed up a restructuring of the company's global portfolio by selling more than $10 billion in assets targeted under a previously announced plan and unloading refining properties sooner than expected, reported The Houston Chronicle.
"We're really focused on how we can accelerate this a little more quickly than what guidance we've given in the past," Mulva told analysts in a conference call to discuss the company's third-quarter financial results.
As part of that effort, he signaled [image-nocss] a shift in thinking about the company's refining business, said the report. While previously he had said ConocoPhillips would not put refining assets on the block until 2012 or 2013, hoping a recovery in the business would yield better prices later, Mulva said he now sees opportunities to act before then, though he was not specific.
He made the remarks after the company said its profit more than doubled in the third quarter because of higher commodity prices and better refining performance. U
ConocoPhillips, the nation's third-largest oil company, announced in late 2009 that it planned to sell $10 billion in assets by the end of 2011, slash spending and take other steps to help pay down big acquisition-related debts and improve shareholder value.
( Click here for previous CSP Daily News coverage of ConocoPhillips' asset sales.)
Now, a year into the plan, the Houston-based oil company may have the opportunity to sell somewhat more than the $10 billion initially identified, Mulva said, citing an improved economic environment for deals.
This year, ConocoPhillips expects some $7 billion in proceeds from asset sales, including from its 9% stake in Syncrude, a joint venture to develop oil sands in Canada, its 50% ownership in the Flying J truck stop chain and oil and gas properties in North America.
Assets that could be sold in 2011 include the company's Wilhelmshaven refinery in Germany, additional oil and gas properties in the United States and western Canada and other international assets in the upstream and downstream units, said Clayton Reasor, vice president of investor relations, according to the newspaper.
As part of its ongoing restructuring, ConocoPhillips aims to focus its portfolio more on profitable oil and gas exploration and production and less on the volatile refining sector, the report said.
The company also plans to spend $2 billion to $3 billion to buy assets in the Gulf of Mexico and the continental United States, Mulva said.
But the company could face difficulty in convincing investors to hang in with the strategy as sales of oil and gas properties take a bite out of production and the company rebuilds in coming years, the Chronicle said.
Mulva also said the company's October 6 announcement to bring in two outside executives and reshuffle senior management ranks would help establish a "robust" succession plan for when he steps down, the report added. Mulva, 64, said he is not ready to retire, but that "you can expect from this group will come my replacement over the next several years."
In a press statgement, the Houston-based company announced that Alan J. Hirshberg, formerly vice president of worldwide deepwater and Africa projects, for ExxonMobil, joined the company as senior vice president of planning and strategy. Greg C. Garland, formerly president and CEO of Chevron Phillips Chemical Co., will join the company as senior vice president of exploration and production for the Americas. Jeff W. Sheets, formerly senior vice president of commercial and planning and strategy, was elected senior vice president of finance and CFO. And Willie C.W. Chiang, senior vice president of refining, marketing and transportation, was also given responsibility for the company's commercial business activities.
Said Mulva during the conference call: "We want to make sure that putting this group together that it has a lot of operating expertise. We wanted also to develop our own senior management within the company, but we wanted to augment it with others from the outside with experience both in upstream and downstream. That can give us also fresh set of eyes to help us with respect to as we restructure and execute, implement the portfolio changes [and] become a more upstream and less downstream.