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ConocoPhillips Swaps Assets With BP, Expands Alaska Base

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ConocoPhillips COP and BP plc BP have swapped assets under two deals.

Per the first deal, ConocoPhillips will divest its subsidiary to BP. The subsidiary will hold 16.5% interest in the Clair field, offshore Scotland. Post completion of the transaction, BP’s stake in the field will increase to 45.1%. ConocoPhillips will retain an interest of 7.5%.

A second phase in the BP-operated field, Clair Ridge, is scheduled to commence production later in 2018 and is projected to have a yield capacity of capacity of 120,000 barrels of oil equivalent per day.

The 16.5% interest in the Clair Ridge attained a production capacity of about 3,000 barrels of oil equivalent per day in 2017 and about 40 million barrels of oil equivalent of proved reserves by 2017 end.

In the second deal, ConocoPhillips will acquire BP’s entire 39.2% stake in the Greater Kuparuk oil field in Alaska and a 38% interest in the Kuparuk Transportation Co.

The interest in the Greater Kuparuk Area touched production levels of about 38,000 barrels of oil equivalent per day in 2017 production and about 190 million barrels of oil equivalent of proved reserves by 2017 end.

The financial terms of the deals were not revealed.  The transactions will be effective Jul 1, 2018. The transactions are expected to be cash-neutral for the companies and are expected to close in 2018.

The deals are in sync with the companies’ strategies. BP’s holding in a major North Sea development has increased, while ConocoPhillips has expanded its base in Alaska. With an intention to focus on the shale operations domestically, ConocoPhillips was looking for buyers for North Sea assets. For BP, Clair field is a major asset in the North Sea, where it intends to boost yield to 200,000 barrels per day by the end of the decade.

In June, ConocoPhillips announced that the completion of its earlier announced $400 million purchase of Alaskan assets.

Price Performance

In the past three months, ConocoPhillips’ shares have gained 17% compared with the industry’s 18.1% rise.



 

Zacks Rank & Other Key Picks

ConocoPhillips currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked players in the same sector are Occidental Petroleum Corporation OXY and China Petroleum and Chemical Corporation SNP, also known as Sinopec. These stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the last four quarters.

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