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The divestiture program at ConocoPhillips (COP - Analyst Report) continues. This time, the U.S. energy major has inked a deal with the subsidiaries of Oando PLC to sell its Nigerian business unit.

Per the deal, the company plans to offload its Nigerian business component for approximately $1.79 billion. The properties up for sale comprise 95% operational stakes in OML 131 (Chota Field), and non-operated stakes of 20% in OPL 214 (Uge Field), 20% in onshore OMLs 60-63 (NAOC joint venture), 20% in the Kwale-Okpai Independent Power Plant and 17% in the Brass LNG project.

These assets generated about 43,000 barrels of oil equivalent per day through October 2012 with approximately 60% natural gas and 40% liquids. With this transaction, which is expected to close by the middle of 2013, ConocoPhillips makes its departure from the African nation.

As part of ConocoPhillips’ three-year strategic plan, this Houston, Texas-based company plans to shed assets that do not fit well within its business model. It has generated $2.1 billion in proceeds from asset sales in the first nine months of 2012 and has maintained a divestment target of $8–$10 billion through 2013.

Once completed, the latest sale will bring about $11 billion in proceeds for the company during the year. The proceeds are earmarked for portfolio optimization, debt reduction and increasing shareholder distribution. ConocoPhillips said that the net carrying value of its Nigerian assets was approximately $600 million at October 31, 2012.

With leading positions in both natural gas and heavy crude oil in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term. ConocoPhillips’ exploration initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and North Barnett shale plays.

However, we remain cautious about the company’s weak production volume that experienced a downfall in the third quarter. The decline was mainly due to the impact of divestitures. Again, ConocoPhillips remains vulnerable to unstable movements in crude oil and natural gas prices, as well as the volatile nature of the macro backdrop.

We have a Zacks #3 Rank (short-term Hold rating) for the third biggest U.S. integrated oil company – ConocoPhillips – following ExxonMobil Corporation (XOM - Analyst Report) and Chevron Corporation (CVX - Analyst Report).

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