ConocoPhillips (COP), the third-largest U.S. oil company, named two men to lead the independent production and refining companies that will be created by its breakup next year.
Ryan M. Lance, 49, will be chairman and CEO of the oil and gas company and Greg C. Garland, 53, will take those positions at the refining business, ConocoPhillips said in a statement today. Both men currently oversee exploration and production for the company. Lance is senior vice president for international exploration and production and Garland has the same title for the Americas. Garland is the former head of Chevron Phillips Chemical Co., half-owned by ConocoPhillips,
The company, based in Houston, said July 14 it would spin off its refining segment next year and Chairman and CEO Jim Mulva, 65, would retire after the split. The production company will keep the ConocoPhillips name and have an estimated $110 billion in assets. The refining company will have $50 billion in assets, including pipelines, chemical and marketing units, according to a Sept. 7 company presentation.
“Ryan Lance and Greg Garland are both longtime ConocoPhillips people, so I would not expect the day-to-day way the business runs is going to change too much under their leadership,” Jason Gammel, an analyst at Macquarie Capital Europe Ltd. in London, said in a telephone interview today. Gammel has a “neutral” rating on ConocoPhillips shares and owns none.
Group of Six
The selection of new leadership comes a year after ConocoPhillips initiated a series of changes that included the departures of President John Carrig and Chief Financial Officer Sigmund Cornelius. At the time, the company listed Garland and Lance among a group of six executives who were part of its top management.
Other executives who were considered in the running for a top job at the company included Alan Hirshberg, who formerly worked for Exxon Mobil Corp. (XOM), and Willie Chiang, who has run the company’s refining business. Chief Financial Officer Jeff Sheets also has been part of ConocoPhillips’s leadership.
Both CEOs face challenges after the spinoff, Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston, said in a telephone interview today.
For the exploration and production company, that includes gaining access to oil and natural-gas fields to try to boost output and reserves, said Molchanov, who has a “market perform” rating on ConocoPhillips shares and owns none.
‘Effective, Relaxed Manner’
In refining, the new CEO will have to manage a business facing a decline in North American and European demand, he said.
Garland understands strategy, is a good leader and has a demeanor that makes him well liked by people who work for him, said George Pilko, founder of Pilko & Associates, a Houston- based company that advises chemical and energy companies on risk and has done work for ConocoPhillips in the past.
“He’s got a very effective, relaxed manner,” Pilko said. “Many CEOs are so hyper and wound tight, and Greg is always relaxed and in control.”
Garland received a degree in chemical engineering from Texas A&M University and has been with ConocoPhillips or affiliated entities for more than 30 years, according to the company.
Lance will take over the oil and gas business with a degree in petroleum engineering from Montana Tech in Butte. That technical background will help the company in future years as it seeks to improve in exploration and possibly add acreage, said Philip Weiss, an analyst at Argus Research in New York, who has a “buy” on ConocoPhillips shares and doesn’t own any.
Lance has more than 26 years of oil and gas experience, the company said, including 17 years at Atlantic Richfield, now a subsidiary of BP Plc.
ConocoPhillips announced a plan in 2009 to sell $10 billion in assets during two years to reduce debt and will expand that by as much as $10 billion next year.
The company also plans to spend as much as $10 billion buying back shares in 2012, after this year’s planned $11 billion stock repurchases.
ConocoPhillips fell 0.3 percent to $64.16 at the close in New York. The shares have fallen 5.8 percent this year.
Exxon and Chevron Corp. (CVX) are the two largest U.S. oil companies.
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