HOUSTON -- ConocoPhillips said it expects to complete the spinoff of its refining arm in the second quarter of next year and that under the deal stockholders will receive one share in the new refining firm for every two shares they currently own in the company, according to a report in the Wall Street Journal.
Speaking to analysts during a conference call in New York, ConocoPhillips chief executive Jim Mulva said the stand-alone refining company is expected to have a capital-expenditure budget between $2 billion and $2.5 billion per year from 2013 to 2015.
During that time, the refining company would focus on growing its pipeline, storage and chemical businesses and could make strategic acquisitions, Mulva said. The new refining firm is expected to have an annual dividend of 80 cents, an integrated model that would include pipelines and chemical businesses, and would start with new debt, he said.
ConocoPhillips, the third-largest U.S. oil company by market value after Exxon Mobil Corp. and Chevron Corp., unveiled in July plans to split into two companies in order to boost shareholder's value.
The head of ConocoPhillips said Wednesday that the upstream assets of its joint venture with Canada's Cenovus Energy Inc. will be part of the new exploration and production company, including the Foster Creek and Christina Lake assets. The joint venture's two U.S. refineries will go to the new refining company, Mulva said.
Chevron Phillips, Conoco's chemical joint venture with Chevron, will also be part of the new refining company, Mulva said.
The new exploration and production company's capital-expenditure budget is expected to be about $15 billion per year starting in 2013. Total output is expected to grow 3% to 4% starting that year, Mulva said.
ConocoPhillips plans to continue selling exploration and production assets and also small and less sophisticated refineries this and next year as part of a three-year restructuring plan it started in 2009.
Mulva said the company expects to sell as much as $25 billion in assets through next year, including sale of its 20% stake in Russia's OAO Lukoil, with a large part of the proceeds going to finance the company's share-buyback program. ConocoPhillips expects to spend $11 billion in share repurchases this year, Mulva said.
ConocoPhillips' plans are based on the assumption that Brent oil prices will average about $104 a barrel from 2013 to 2015 and that natural-gas prices will trade around $5.20 a million British thermal units, Mulva said. If commodities prices trade below those levels, the company will still be able to perform, he said.
Mulva said ConocoPhillips' exploration and production arm is expected to have profits of $9 billion this year, while its refining and marketing business could have $3 billion in profits.
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