ConocoPhillips embarks on $10 billion asset sale

ConocoPhillips, the third largest energy company in the US, has announced it is to sell up to $10 billion worth of assets. Under the two-year program, the Houston-based company is considering selling the bottom-performing 10 percent of its producing assets in North America, as well as a selection of its natural gas properties in the North Sea. The company is also considering selling pipelines and terminals in the US in addition to its nine percent interest in Syncrude, a joint venture to develop oil sands in Canada. The company has confirmed it has no intention of selling either its 20 percent stake in RussiaÔÇÖs Lukoil or any of its refineries. However, it has not ruled out offloading its less competitive refineries by 2012 or 2013 if valuations for them improve. The company announced earlier in the month that it plans to cut its 2010 capital spending budget by 12 percent, to $11 billion. The move ties in with the asset sales and is designed to reduce debt and boost value for shareholders. Conoco has already pledged to retire its growth-through-acquisition strategy to focus on organic growth.  The company said changes are necessary given the dramatic drop in energy demand with the global recession and increasing difficulty in accessing new reserves within the industry.  The news of the asset sale came as the company reported a 71 percent drop in its third quarter earningsÔÇöthough this still beat Wall Street expectations.  Net income fell to $1.5 billion from $5.2 billion for the same period a year ago. Similarly, third quarter revenue dropped to $41.3 billion from $71.4 billion in the previous year. ÔÇ£Although we operated well, we were adversely impacted by low North American natural gas prices and worldwide refining margins,ÔÇØ said ConocoÔÇÖs chairman and CEO Jim Mulva in a statement. This led the company to curtail 300 million cubic feet per day of natural gas production starting in late August, and to slow output at its refineries, he said.  Other oil and gas majors such as Exxon Mobil and Chevron are also expected to report weaker third-quarter earnings this week due to lower commodity prices and a drop in global energy demand.  Conoco is HoustonÔÇÖs largest public company, with total revenues reaching $225 billion last year. *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *