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ConocoPhillips to exit Vietnam, sell assets to Perenco for $1.29 billion
ConocoPhillips (COP), the third-largest U.S. oil company, agreed to sell its Vietnam operations for $1.29 billion to Perenco SA, exiting the country after more than 15 years.
The Vietnam business unit sale is part of ConocoPhillips’ efforts to unload less profitable businesses and boost returns, the Houston-based company said in a statement today. The transaction is expected to close in the first half of 2012.
ConocoPhillips is in the midst of a three-year plan to sell $15 billion to $20 billion of assets by the end of 2012 to fund share repurchases and position itself for future growth. The company completed $10.7 billion in asset sales during 2010 and 2011. ConocoPhillips’ stake in Vietnam may not have been meaningful enough for the company, said Pavel Molchanov, a Houston-based analyst with Raymond James & Associates Inc.
“It’s a country where there is growth potential, but it’s fairly difficult for Western majors to perhaps navigate it,” said Molchanov, who has a “market perform” rating on ConocoPhillips shares and doesn’t own any. Molchanov, speaking in a telephone interview, called the sales price “reasonable.”
ConocoPhillips had the equivalent of about 20,000 barrels a day of oil production from Vietnam in 2011 out of worldwide daily output of 1.62 million barrels, according to data on its website. The transaction includes a stake in two areas off the coast of Vietnam and a 16.3 percent interest in a pipeline, ConocoPhillips said.
Refining spinoff
Closely held Perenco, based in Paris, produces oil and natural gas from basins in Brazil, Peru, Iraq, Australia and North Sea, according to its website.
ConocoPhillips plans to spin off its refining business in the second quarter so it can focus on finding and producing oil and natural gas. The new company will be known as Phillips 66.
HSBC Securities (USA) Inc. said it acted as financial adviser to ConocoPhillips on the Vietnam transaction.
ConocoPhillips fell 1 cent to $72.78 at the close in New York.
Exxon Mobil Corp. and Chevron Corp. are the largest U.S. oil companies.
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