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ConocoPhillips COP has inked an agreement with the government of Timor-Leste for the sale of 30% interest in the offshore gas Greater Sunrise fields. The transaction is valued at $350 million and is anticipated to close in the first quarter of 2019.
The Sunrise and Troubadour gas and condensate fields are collectively known as Greater Sunrise. The fields are located about 150 kilometers (90 miles) south east of Timor-Leste and 450 kilometers (280 miles) north west of Darwin, Australia. They lie in water depth of about 600 meters (2,000 feet).
The long-running maritime border dispute between Timor-Leste and Australia was finally resolved in February 2018, which paved the way for field development. About 20% of the Greater Sunrise fields are situated in a Joint Development Petroleum Area, jointly managed by Timor-Leste and Australia, while 80% are in Australian waters.
Australia wanted a boundary aligned with its continental shelf. However, East Timor disputed that the border should be located between the country and Australia, putting a significant part of the Greater Sunrise fields under its control.
Per the agreement between the two nations in the Permanent Court of Arbitration in The Hague, the revenue share from the offshore gas field will vary depending on downstream gains that arise from different development concepts.
Timor-Leste is keener for an onshore gas processing plant rather than a floating plant. According to some media reports, the nation can obtain about 80% of the field's revenue, but may agree to less if gas is transferred to a shoreside plant.
Discovered in 1974, Greater Sunrise is estimated to hold 5.1 trillion cubic feet of LNG and 226 million barrels of condensate. Woodside Petroleum, the operator of the project, has a share of 33.44%. Other partners include Royal Dutch Shell plc RDS.A and Osaka Gas, holding 26.56% and 10%, respectively. In 2010, Woodside announced its preference for using a FLNG processing plant.
In the past year, ConocoPhillips’ shares have surged 59% compared with the industry’s 40.6% rally.
Zacks Rank & Stocks to Consider
ConocoPhillips currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Petroleo Brasileiro S.A. PBR or Petrobras SA and CNX Resources Corporation CNX. Both these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.
CNX Resources is an independent oil and gas exploration and production company. The company delivered a positive earnings surprise of 250.0% in the preceding quarter.
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