ConocoPhillips (COP), the third-largest U.S. oil company, said it plans to sell its stake in three oil and natural gas assets off Vietnam’s coast.
The energy producer is seeking to dispose of its holdings in the projects located in the South China Sea, said John McLemore, a company spokesman.
The Houston-based company plans $5 billion to $10 billion in asset sales over 2011 and 2012 as it seeks cash to fund share buybacks and growth. ConocoPhillips sold about $7 billion in assets last year through a program announced in 2009 and intended in part to help reduce debt. The company expanded the total sales target earlier this year to as much as $17 billion.
The company is marketing its assets in Vietnam as part of the divestiture program, McLemore said in an e-mail yesterday. ConocoPhillips’s Vietnam assets are valued at about $1.5 billion, Paul Sankey, a Deutsche Bank AG analyst, said in an April 27 note to clients.
ConocoPhillips holds a 23.3 percent stake in a cluster of five fields in Block 15-1 in the Cuu Long Basin, according to data on the Vietnam page of its website. It has a 36 percent share of the Rang Dong field in Block 15-2, also in the basin. The fields produced 32,000 barrels of oil equivalent a day on average in 2009, the data show.
The company also is offering its 16.3 percent stake in the Nam Con Son gas pipeline, a 700 million cubic-feet-a-day link that connects the Nam Con Son Basin with southern Vietnam.
Reducing its Stake
A sale would allow the company to reduce its stake in an area that isn’t a significant part of its business, said Jason Gammel, an analyst at Macquarie Capital Europe in London who has a “neutral” rating on ConocoPhillips shares and owns none.
“It’s a pretty small piece of their overall production, so there likely would be other parties who would find it of more interest,” Gammel said. Potential buyers may include Chinese or Indian parties, he said, although it’s unclear whether the Vietnamese government would approve a sale to such owners.
ConocoPhillips has discussed the sale plans with Vietnam Oil & Gas Group, the state-owned company known as PetroVietnam, which also has stakes in the assets, said two senior executives who declined to be identified because the matter is not public.
The sale would require approval from PetroVietnam’s board of directors and the Ministry of Industry and Trade, one of the company officials said. Deputy Minister of Industry and Trade Le Duong Quang declined to comment on the sale plan.
PetroVietnam has a 50 percent stake in Block 15-1, with ConocoPhillips, Korea National Oil Corp., SK Corp. and Geopetrol holding the rest, according to the U.S. company’s website.
Japan Vietnam Petroleum Co. has a 46.5 percent share of Rang Dong field, while PetroVietnam holds a 17.5 percent stake. ConocoPhillips owns the rest, data from the website show.
The Vietnamese state oil company has a 51% stake in the Nam Con Son pipeline. BP Plc (BP/) in October agreed to sell its 32.7 percent stake in the pipeline to Moscow-based TNK-BP. ConocoPhillips owns the remaining share.