Conoco sells stake in Syncrude

ConocoPhillips, the third biggest US oil company, has agreed to sell its 9.03 percent stake in Canadian oil sands project Syncrude to ChinaÔÇÖs Sinopec for $4.65 billion.  Houston, Texas-based Conoco has been seeking a buyer for the stake in Syncrude, one of the worldÔÇÖs biggest oil sands mining and synthetic crude processing sites, since it announced last October that it planned to sell $10 billion worth of assets over the next two years to reduce it debt levels. Syncrude has been in operation since 1978 and can now pump out 350,000 barrels a dayÔÇöaround 13 percent of Canada's overall oil output. The sale is the second big deal announced by Conoco in recent weeks. In March the company said it would halve its 20 percent stake in Lukoil, RussiaÔÇÖs second-biggest oil producer, through which it hoped to raise up to $4.9 billion. ConocoÔÇÖs restructuring began following investor disquiet at the start of 2009, when the company announced a $34 billion writedown due to falling commodity prices. It announced then that it would cut 1,300 jobs and wind up its acquisition strategy. Commenting on the announcement, Jim Mulva, chairman and chief executive officer of Conoco said: ÔÇ£This is an important step in the $10 billion divestiture program which we announced last October, and we are pleased that SIPC has recognized the value of this quality asset. ÔÇ£The completion of this transaction demonstrates the strength of the asset base available to meet our asset sales goals.ÔÇØ The company went on to say that the Syncrude sale was just one facet of its plan to ÔÇ£create value for shareholders through a continued focus on disciplined capital investment, a strengthened financial position, improved returns on capital, and growth in shareholder distributions.ÔÇØ SinopecÔÇÖs purchase brings total Chinese investment in CanadaÔÇÖs oil sands region in Alberta to around $10 billion. PetroChina agreed to pay C$1.9 billion last year for a majority stake in two oil sands projects in northern AlbertaÔÇöMackay River and DoverÔÇöwhich are being developed by Calgary-based Athabasca Oil Sands. And China Investment Corporation has bought 17 percent of Teck Resources, the Vancouver-based metals producer that has a minority interest in the Fort Hills oil sands project. Syncrude's other owners are Imperial Oil, Suncor Energy, Nexen, Murphy Oil and the Nippon Oil unit Mocal Energy. The transaction with Sinopec is expected to close in the third quarter of this year, subject to approval from the Canadian and Chinese governments. As of December 31, 2009, Conoco had approximately 30,000 employees, $153 billion of assets, and $149 billion of revenues.