Arab Today, arab today conoco spins off refining arm
Last Updated : GMT 01:29:04
Arab Today, arab today
Arab Today, arab today

Conoco spins off refining arm

Arab Today, arab today

Arab Today, arab today Conoco spins off refining arm

New York - Arabstoday

ConocoPhillips will spin off its refining arm in a bid to improve investment returns for shareholders, abandoning the bigger-is-better strategy that drove oil giants into mergers. As an integrated oil major with exploration and production, as well as refining and marketing, Conoco-Phillips ranked sixth globally and was often overshadowed by larger rivals such as ExxonMobil, Royal Dutch Shell and Chevron. By splitting the $107 billion (Dh392.97 billion) Conoco into two, each unit becomes the No 1 pure play in their segments, a move the company hopes will attract new investors and boost market valuations. Shares of Conoco initially jumped 7.5 per cent on the news, but those gains faded and the stock closed up only 1.6 per cent at $75.61 per share on Thursday. Article continues below Some analysts welcomed the move and said it would unlock value in the exploration and production unit, which accounted for 80 per cent of profit last year. But others said nothing fundamentally had changed in the business. \"I\'m not a fan of these fin-ancial engineering manoeuvres,\" The Benchmark analyst Mark Gilman said. \"I don\'t see any incremental value associated with two separate companies.\" Conoco is the latest and biggest integrated oil company to break up, following Marathon Oil\'s split, which was finalised on July 1. Other energy companies, such as Williams and El Paso, have sought to split off operations to narrow their focus. Conoco is the smallest of the oil majors that include ExxonMobil, Royal Dutch Shell, Chevron, BP and Total. Exxon and Chevron had strongly defended their integrated strategies in the past. By splitting up, Conoco\'s refining arm will become the top independent refiner in the US above Valero Energy. Similarly, its exploration and production business will become the biggest independent player in that market above Occidental Petroleum. \"We believe more value is created in the formation of two very clear, stand-alone companies,\" said chief executive Jim Mulva, who will retire upon the completion of the split. Conoco did not name new heads of the separate businesses. Strong oil demand The decision to split comes as confidence rises that global oil prices will remain strong for years as rising demand from China, India and other emerging markets soak up supplies. Mulva \"built this company in a different commodity price environment and different outlook\", said Barrow, Hanley, Mewhinney and Strauss analyst and portfolio manager R. Lewis Ropp, \"and now we have an opportunity to separate back and really get peer group multiples that are much higher than the integrated multiples investors are assigning to the company\". The split should unlock value in the exploration and production business, which is very undervalued, said Ropp, who is a long-time owner of ConocoPhillips shares. Raymond James analyst Stacey Hudson estimates Conoco\'s two companies would have a combined value of $80 to $85 a share, or $113 billion to $120 billion. The refining business would probably be worth about a quarter of that, Hudson said, although ConocoPhillips\' decision about where to place its pipelines and storage operation and chemical business could have an effect on the final value. Portfolio shift In the past two years, ConocoPhillips embarked on a massive portfolio shift to sell up to $17 billion in assets and reduce its debt, while buying back shares and raising its dividend. The plan to return cash to shareholders will continue at both companies. The exploration company will contemplate share repurchases in 2012, when the split is expected to be complete, while both companies will pay a dividend, Mulva said. Strategies at both companies will remain the same, the executive told analysts. ConocoPhillips\' exploration business will continue to shed mature oil and gas properties while looking to increase production and reserves that deliver good returns. The company\'s refining arm will sell, shut or make joint ventures of refineries that are unable to process cheaper grades of crude oil, Mulva said. Shift from general industry strategy ConocoPhillips will be the first of the so-called super majors to shift away from a strategy that led the industry to consolidate into a handful of players with global reach in the oil and gas production and oil products businesses. The announcement marks an abrupt change in the company\'s views on a spin-off of its refining business. In March, Mulva, asked at an analysts\' meeting if he would consider a split like Marathon, said: \"I think for them, they\'ve decided it seems to make sense and work for them. Whether that\'s something that we should do, I don\'t think so.\" Options including a spinoff for the refining business came into the picture last fall, he told analysts more recently.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today conoco spins off refining arm Arab Today, arab today conoco spins off refining arm

 



Arab Today, arab today
Arab Today, arab today Jordan airline suggests flyers 'talk'

GMT 11:59 2017 Friday ,24 March

Jordan airline suggests flyers 'talk'
Arab Today, arab today 5 Crafty Must-Have Limited-Budget Ideas

GMT 17:03 2017 Saturday ,25 March

5 Crafty Must-Have Limited-Budget Ideas
Arab Today, arab today Dozens dead in US-led Syria strikes

GMT 08:35 2017 Thursday ,23 March

Dozens dead in US-led Syria strikes
Arab Today, arab today Former head of Egypt’s syndicate submits appeal

GMT 20:11 2017 Saturday ,25 March

Former head of Egypt’s syndicate submits appeal
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemen children dream of school

GMT 07:25 2017 Friday ,24 March

Yemen children dream of school
Arab Today, arab today MP submits a petition to dismiss university head

GMT 06:21 2017 Friday ,24 March

MP submits a petition to dismiss university head
Arab Today, arab today Salvage of South Korea's Sewol ferry

GMT 04:51 2017 Friday ,24 March

Salvage of South Korea's Sewol ferry
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Audi RS 5 Coupe acquires new design

GMT 13:22 2017 Thursday ,23 March

Audi RS 5 Coupe acquires new design
Arab Today, arab today Renault Trezor wins design award

GMT 11:56 2017 Tuesday ,21 March

Renault Trezor wins design award
Arab Today, arab today Haifa Wahby bets on her new drama show

GMT 06:04 2017 Thursday ,23 March

Haifa Wahby bets on her new drama show
Arab Today, arab today 2017 already marked

GMT 15:25 2017 Tuesday ,21 March

2017 already marked

GMT 07:03 2017 Wednesday ,22 March

Merna Waleed praises her work with Soad Hosni

GMT 22:00 2017 Thursday ,23 March

Number of unwedded girls amounts to 2.5m

GMT 18:57 2017 Tuesday ,21 March

Accessories designer reveals her new collection

GMT 10:34 2017 Tuesday ,21 March

Mexico threatens to ditch US corn imports

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures

GMT 15:06 2017 Saturday ,25 March

Dialysis Supplies Dwindle for Syrians

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 19:27 2017 Saturday ,11 March

Boualsof launches "Priestess Kahina" collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday