Latest News by Industry
• The oil company working with adviser on
auction for assets
• Conoco bought Shell’s Permian assets in
December for $9.5 billion
ConocoPhillips Co (NYSE: COP),
one of North America’s largest oil and gas producers, is reportedly planning to
sell assets in the Permian Basin worth over $1 billion.
The company is in talk with an adviser to run an auction
process for the assets, Bloomberg reported on Friday, citing a source familiar
with the matter.
Potential suitors are being invited to the company’s data
room to examine information, the report mentioned.
With crude prices heading towards $100 a barrel, oil companies
are trying to control production growth and capital spending, which are also
rising to pre-pandemic levels.
The rising operating expenses are also providing an
opportunity for companies like ConocoPhillips to offload non-core assets.
The global oil benchmark, West Texas Intermediate (WTI) was
up nearly 4% at $93.42 a barrel.
Ways to reduce debt
The report follows ConocoPhillips’ acquisition of Royal
Dutch Shell Plc’s Permian operations for $9.5 billion in December, which
positioned the oil company as one of the basin’s most prominent producers.
A sale would trim the company’s position in the Delaware
region within the larger Permian Basin located in West Texas and New Mexico.
With the U.S. shale industry rebounding and increasing
crude prices, analysts expect record cash flow this year.
Oil companies that survived the pandemic are trying to
reduce debt and rein in production growth to shift to a more
shareholder-friendly financial model to win back investors after giving poor
returns for a decade.
Divesting assets
Earlier Houston-based ConocoPhillips raised its asset sale
target to 80% and said it would raise between $4 billion and $5 billion by 2023
as part of its high-grading asset base while also returning cash to
shareholders.
The first major sale came at the end of January, with
Maverick Natural Resources announcing to buy some ConocoPhillips assets in the
Permian region’s Central Basin and Northwest Shelf for $440 million.
Picture Credit: FT