NEWS BULLETIN

April 05, 2012 --- Vol. 18, No. 27April 2012

ConocoPhillips: Mackenzie pipeline partners suspend funding

In a first-quarter interim update this morning, April 5, ConocoPhillips said on April 4 the company’s board of directors approved the separation of Phillips 66 from ConocoPhillips. The update, being issued in anticipation of the “when-issued” trading commences on or about April 12, also said that ConocoPhillips and its three partners in the $16.2 billion Mackenzie Gas Project had suspended funding of the Mackenzie gas pipeline and gathering system due to a continued decline in natural gas prices and the lack of acceptable fiscal terms.

Here is what the interim update said about the project: “ConocoPhillips has been involved with three other energy companies, as members of the Mackenzie Gas Project, on the development of the Mackenzie Valley Pipeline and gathering system, which was proposed to transport onshore gas production from the Mackenzie Delta in northern Canada to established markets in North America. The company has a 75 percent interest in the Parsons Lake natural gas field, one of the primary fields in the Mackenzie Delta, which would have anchored the pipeline development. In the first quarter of 2012, the co-venturers elected to suspend funding of the project due to a continued decline in market conditions and the lack of acceptable commercial terms. The company expects to record a noncash impairment for the carrying value of the undeveloped leasehold and capitalized project development costs of approximately $525 million after-tax, during the first quarter of 2012.”

The partners in the Mackenzie Gas Project are Imperial 34.4 percent, Aboriginal Pipeline Group 33.3 percent, ConocoPhillips 15.7 percent and ExxonMobil Canada 5.2 percent. Imperial is largely owned by ExxonMobil.

—Kay Cashman


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