Oct. 28 (Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, said it will consider selling its stake in Canadian tar-sands producer Syncrude Canada Ltd. under a plan to divest $10 billion in assets over two years.

The company has seen “a great deal of interest” from prospective buyers of its 9 percent stake in Syncrude in the past five years, Chief Executive Officer Jim Mulva told investors today on a conference call. He said Houston-based ConocoPhillips will be “testing the market.”

Mulva’s comments mark the most detail ConocoPhillips has offered on possible asset sales since announcing the divestiture program on Oct. 7. He said ConocoPhillips may sell $2 billion worth of assets deemed to be in the weakest 10 percent of its exploration and production holdings in North America. Pipelines, fuel terminals and southern North Sea gas properties also may go on the block, he said, and the company’s 20 percent stake in Russia’s OAO Lukoil probably won’t be sold.

“I still have difficulty understanding how you get to $10 billion with Lukoil off the table in terms of transactions that would be what I would consider to be accretive in the environment we’re currently in,” said Mark Gilman, an analyst at the Benchmark Co. in New York who has a “hold” rating on ConocoPhillips shares and owns none.

Gilman said anyone who values the Syncrude stake at more than $1 billion sees higher oil prices than he does “or you better check the math.” Other partners in the venture include Canadian Oil Sands Trust, Imperial Oil Ltd., Suncor Energy Inc., Murphy Oil Corp., Nexen Inc. and Japan’s Mocal Energy Ltd.

Canadian Oil Sands Trust

Cheryl Robb, a spokeswoman for Syncrude, declined to comment on possible ownership changes. Siren Fisekci, a spokeswoman for Canadian Oil Sands Trust, the lead owner of Syncrude, declined to comment on whether the trust is in talks with ConocoPhillips.

“We have been very consistent in that message that we would look at Syncrude assets should they become available in general terms,” Fisekci said.

The number of suitors will affect the prices for assets that ConocoPhillips wants to sell, said Philip Weiss, an analyst at Argus Research in New York who has a “hold” rating on the company’s shares and doesn’t own any.

“Are you selling to a market of one, two or 10, because obviously that has an impact,” Weiss said.

Mulva said market conditions are poor for refinery sales. Plant sales could occur as the refining outlook improves, possibly in 2012 and 2013, he said.

ConocoPhillips fell $1.41, or 2.8 percent, to $49.49 in New York Stock Exchange composite trading.

Earlier today, ConocoPhillips reported a 71 percent drop in third-quarter net income to $1.5 billion. Exxon Mobil Corp. and Chevron Corp. are the largest U.S. oil companies, ranking ahead of ConocoPhillips.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net

Last Updated: October 28, 2009 16:17 EDT