ConocoPhillips To Divest Barnett Shale Stake: Here's Why
Zacks Investment Research | Jun 29, 2017 09:26PM ET
Upstream energy player ConocoPhillips (NYSE:COP) has decided to divest its stake in the Barnett Shale for a consideration of roughly $305 million plus net customary adjustments. The buyer of the asset is a unit of Miller Thomson & Partners, involved in the acquisition and development of natural gas resources.
It is to be noted that proceeds from the sale will likely be utilized for ConocoPhillips’ general corporate activities.
What’s Behind the Divestment?
The divestment reflects the company’s objective to lower its exposure to natural gas rich resources. During 2016, net production from the Barnett Shale was 11,000 barrels of oil equivalent per day (BOE/D).
Of the total output, natural gas accounted for 55%, while natural gas liquids comprised 45%. Investors should know that other gas rich plays likely to be divested by ConocoPhillips are situated in the Gulf of Mexico and Anadarko basin.
Impact on Cashflow
With the Barnett Shale transaction likely to close by the third quarter of 2017, the company’s 2017 production guidance is likely to get slashed by 5 thousand barrels of oil equivalent per day (MBOED).
However, the company believes that there will not be any material impact on cashflows for this year following the divestment.
About the Company
Houston, TX-based ConocoPhillips is among the leading exploration and production players in the world. The company has huge base of proved reserves and production.
We appreciate the company’s divestment of the bulk of its Canadian resources for $13.3 billion. With this, ConocoPhillips has reduced its oil sands exposure and can now use the proceeds to develop core acres in the Eagle Ford shale and Permian Basin. The upstream firm’s last one-year pricing chart shows positive investors’ sentiment as reflected by the company’s 1.3% gain, comparing favorably with the Zacks categorized Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.