ConocoPhillips said it plans to sell its 8.4% interest in Kazakhstan's Kashagan offshore oil field to India's ONGC Videsh Ltd. for $5 billion.
The company expects proceeds of about $5 billion, which represents the purchase price plus expected working capital and customary adjustments at closing. ConocoPhillips expects to record an after-tax impairment of about $400 million in the fourth quarter of 2012 to reduce the carrying value to fair value.
ConocoPhillips has notified government authorities in Kazakhstan and its co-venturers of the company's intent to sell its 8.4 percent interest in the North Caspian Sea Production Sharing Agreement (Kashagan) to ONGC Videsh.
ONGC Videsh, the international arm of Oil and Natural Gas Corp. Ltd., India, would acquire ConocoPhillips' interest in Kashagan, which is located in the Kazakh sector of the Caspian Sea, subject to various government approvals, Kazakhstan state preemption rights and co-venturers' preemption rights.
At Sept. 30, 2012, the carrying value of the net assets related to ConocoPhillips' interest in Kashagan was about $5.5 billion. Through Sept. 30, 2012, the company's 2012-13 disposition program has yielded proceeds of $2.1 billion.
Once closed, this transaction would increase that total to about $7 billion, and strongly position the company to accomplish its target of $8 billion to $10 billion by the end of 2013.
The proposed sale of its Kashagan interest is part of ConocoPhillips' plan to increase value for shareholders through focused capital investments and a commitment to deliver growth in production and cash margins, improved returns on capital, and sector-leading shareholder distributions.
The transaction is expected to close in the first half of 2013. Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 30 countries, $115 billion of assets, and about 16,700 employees as of Sept. 30, 2012.
COP is trading down 0.86% at $56.18 on Monday. The stock has been trading between $50.62 and $78.29 for the past 52 weeks.