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ConocoPhillips Divests San Juan Basin Assets for $3 Billion
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ConocoPhillips (COP - Free Report) recently entered into a definitive agreement to divest its interest in the San Juan Basin to an affiliate of Hilcorp Energy Company for about $3 billion of total proceeds.
Of the total proceeds, $2.7 billion will be in cash and about $300 million will be a contingent payment. The cash portion of the proceeds is subject to customary closing conditions. The contingent payment is effective from Jan 1, 2018, and has a duration of six years. The funds generated from this deal will be used for general corporate purposes.
In 2016, total production related to the San Juan Basin assets was 124 thousand barrels of oil equivalent per day, of which around 80% was natural gas. Cash provided by operating activities was around $0.2 billion in the year. Proved reserves were 0.6 billion barrels of oil equivalent at year-end 2016.
As of Dec. 31, 2016, the net book value of the assets was about $5.9 billion, comprising about $2.8 billion of step-up basis related with the Burlington buyout in 2006. The company expects to register a non-cash impairment on the assets in the second quarter of 2017. The transaction is subject to the fulfillment if certain important conditions, including regulatory approval. The agreement is anticipated to close in the third quarter of 2017.
The latest transaction, along with the recently announced Canadian asset sales, is likely to take the company’s total consideration to over $16 billion in 2017. They will help ConocoPhillips’ to substantially reduce its exposure to North American gas and attain immediate step change improvement in its balance sheet and cash margins. These business moves will also help it to enhance return of cash to shareholders.
Investor confidence on the ConocoPhillips’ stock is reflected in its price chart. Shares of the company declined 3.3% in the last three months, while the Zacks categorized Oil & Gas – International Integrated industry lost 8.7% in the same time span.
Currently, ConocoPhillips carries a Zacks Rank #3 (Hold). Some better-ranked from the same space are Diamond Offshore Drilling Inc. (DO - Free Report) , Cenovus Energy Inc. (CVE - Free Report) and Bellatrix Exploration Ltd. . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Diamond Offshore Drilling posted a positive earnings surprise of 341.67% in the preceding quarter. It beat estimates in all of the four trailing quarters with an average positive earnings surprise of 353.28%.
Cenovus Energy posted a positive earnings surprise of 583.33% in the preceding quarter. It beat estimates in two of the four trailing quarters with an average positive earnings surprise of 74.89%.
Bellatrix Exploration posted a positive earnings surprise of 240.00% in the preceding quarter. It beat estimates in three of the four trailing quarters with an average positive earnings surprise of 58.54%.
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Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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ConocoPhillips Divests San Juan Basin Assets for $3 Billion
ConocoPhillips (COP - Free Report) recently entered into a definitive agreement to divest its interest in the San Juan Basin to an affiliate of Hilcorp Energy Company for about $3 billion of total proceeds.
Of the total proceeds, $2.7 billion will be in cash and about $300 million will be a contingent payment. The cash portion of the proceeds is subject to customary closing conditions. The contingent payment is effective from Jan 1, 2018, and has a duration of six years. The funds generated from this deal will be used for general corporate purposes.
In 2016, total production related to the San Juan Basin assets was 124 thousand barrels of oil equivalent per day, of which around 80% was natural gas. Cash provided by operating activities was around $0.2 billion in the year. Proved reserves were 0.6 billion barrels of oil equivalent at year-end 2016.
As of Dec. 31, 2016, the net book value of the assets was about $5.9 billion, comprising about $2.8 billion of step-up basis related with the Burlington buyout in 2006. The company expects to register a non-cash impairment on the assets in the second quarter of 2017. The transaction is subject to the fulfillment if certain important conditions, including regulatory approval. The agreement is anticipated to close in the third quarter of 2017.
The latest transaction, along with the recently announced Canadian asset sales, is likely to take the company’s total consideration to over $16 billion in 2017. They will help ConocoPhillips’ to substantially reduce its exposure to North American gas and attain immediate step change improvement in its balance sheet and cash margins. These business moves will also help it to enhance return of cash to shareholders.
Investor confidence on the ConocoPhillips’ stock is reflected in its price chart. Shares of the company declined 3.3% in the last three months, while the Zacks categorized Oil & Gas – International Integrated industry lost 8.7% in the same time span.
Currently, ConocoPhillips carries a Zacks Rank #3 (Hold). Some better-ranked from the same space are Diamond Offshore Drilling Inc. (DO - Free Report) , Cenovus Energy Inc. (CVE - Free Report) and Bellatrix Exploration Ltd. . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Diamond Offshore Drilling posted a positive earnings surprise of 341.67% in the preceding quarter. It beat estimates in all of the four trailing quarters with an average positive earnings surprise of 353.28%.
Cenovus Energy posted a positive earnings surprise of 583.33% in the preceding quarter. It beat estimates in two of the four trailing quarters with an average positive earnings surprise of 74.89%.
Bellatrix Exploration posted a positive earnings surprise of 240.00% in the preceding quarter. It beat estimates in three of the four trailing quarters with an average positive earnings surprise of 58.54%.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks "Strong Sells" absolutely free >>